American Woodmark Corp. (NASDAQ:AMWD) Q2 2018 Earnings Conference Call Transcript

Dec 01, 2017 • 11:00 am ET


American Woodmark Corp. (NASDAQ:AMWD) Q2 2018 Earnings Conference Call Transcript


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Good day and welcome to the American Woodmark Corporation Second Quarter 2018 Conference Call. Today's call is being recorded, December 1, 2017. Please note American Woodmark's earnings release and this morning's presentation are available on the Investor Relations page of the Company's website at (Forward-Looking Cautionary Statements)

I would now like to turn the call over to Scott Culbreth, Senior Vice President and CFO. Please go ahead, sir.

Scott Culbreth

Good morning, ladies and gentlemen. Welcome to American Woodmark's second fiscal quarter conference call. Thank you for taking time to participate. Joining me today is Cary Dunston, Chairman and CEO. Cary will begin with a review of the quarter and I will add additional details regarding our financial performance. We will then walk through the presentation available on our website regarding the transaction announced this morning. After the presentation, we'll be happy to answer your questions. Cary?

Cary Dunston

Thank you, Scott, and good morning to you all. Certainly an exciting time for American Woodmark and I look forward to presenting the information on the acquisition. But I'd like to begin with our second quarter, which ended with mixed results. The quarter proved to be challenging from a revenue perspective with a 4% year-over-year growth. With Florida and Texas being very large operations for us within new construction, we did see an impact from the two hurricanes. With the remodel, we continued to gain share in our index and our dealer channel. However, home center was hit especially hard by promotional activity. Looking specifically at new construction, for the quarter we grew our Timberlake business 9%. Sales under index reported single-family starts driven by the impact of the hurricanes and the increase in delay between starts and closing.

Regarding the hurricanes, though those were not only shutdown for a period of time, but start-ups have been delayed with the most visible impact in Florida, one of our largest operations. One key question we're often asked is if builders will be able to catch up in these markets. We continue to work closely with our builders on this very topic, particularly with the year-end approaching for many of them. Although they are driving hard, the challenge associated with labor shortages remains a key bottleneck. We do expect demand to remain healthy and our Timberlake business to regain prior momentum. The industry as a whole remains very favorable with increasing demand from first-time home buyers. Although headwinds remain, we continue to see strengthening in the lower price point, which is very favorable for long-term growth within new construction and remodel.

Taking a look at our dealer channel, we grew the business 11% over prior year. Although the industry has seen some softening with the more affluent consumer, demand remains strong and we continue to gain market share and outpace industry growth. Regarding our home center business, we unfortunately saw a decline of 7% for the quarter. Promotional activity proved to be even stronger than we had hoped. As many recall, it was one year ago that