Shares of American Woodmark ($AMWD) witnessed a substantial drop during intraday trading on Tuesday as the cabinet maker reported disappointing fiscal first-quarter results, reflecting a year-over-year decline. Furthermore, the company has revised its full-year guidance downwards, attributing this shift to a noticeable weakness in the home remodeling market. The revenue for the three months ending July 31 was recorded at $459.1 million, a decrease from $498.3 million in the corresponding quarter of the previous year.
Additionally, the adjusted earnings per share fell to $1.89 compared to $2.78 a year earlier. Analysts surveyed by Capital IQ had previously estimated sales and normalized EPS to be around $475.4 million and $2.37, respectively, indicating a shortfall against market expectations. Consequently, the shares of American Woodmark fell by 10% in trading on Tuesday, reflecting investor concerns over future performance. In a statement, Chief Executive Scott Culbreth remarked, "Our team delivered net sales growth in the new construction market; however, this growth was offset by weaker than anticipated demand in the remodeling sector.
We are observing a continued soft demand in the remodel market, alongside a recent deceleration in new construction single-family starts." Looking ahead to fiscal 2025, the company now forecasts a decline in sales, projecting a low-single-digit decrease from the fiscal 2024 revenue of $1.85 billion, which had already shown a nearly 11% decline year-over-year.
Previously, American Woodmark had expected a low-single-digit sales increase for the current fiscal year. Analysts from the Capital IQ survey are estimating the revenue to reach about $1.88 billion for the upcoming fiscal period. Moreover, American Woodmark has adjusted its outlook for earnings before interest, taxes, depreciation, and amortization (EBITDA), now forecasting between $225 million and $245 million, down from its previous prediction of $235 million to $255 million. Culbreth further explained in a conference call, "Our home center customers have pointed out that the rise in interest rates and broader macroeconomic pressures are leading to diminished spending on projects.
This trend appears to be more pronounced for high-priced discretionary projects, such as kitchens and baths." Despite these challenges, American Woodmark is not losing market share. As interest rates decrease, it is anticipated that existing home sales and home projects will begin to rise, providing a potential tailwind for the company in the calendar year 2025.
Current Share Price: $89.57, Change: -$10.29, Percent Change: -10.30 $AMWD.