American Woodmark Corp. (NASDAQ:AMWD) Q3 2018 Earnings Conference Call Transcript

Mar 09, 2018 • 11:00 am ET

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American Woodmark Corp. (NASDAQ:AMWD) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Please standby. Good day, and welcome to the American Woodmark Corporation Third Quarter 2018 conference call. Today's call is being recorded March 9th, 2018. Please note American Woodmark's earnings release is available on the Investor Relations page of the Company's website at www.americanwoodmark.com. We will begin the call by reading the Company's Safe Harbor statement under the Private Securities Litigation Reform Act of 1995.

All forward-looking statements made by the Company involve material risks and uncertainties, and are subject to change based on factors that may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission and the annual report to shareholders.

The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

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

Executive
M. Scott Culbreth

Good morning, ladies and gentlemen, welcome to American Woodmark's third 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. After the presentation, we'll be happy to answer your questions. Cary?

Executive
S. Cary Dunston

Thank you, Scott, and good morning to you all.

Our third quarter of our fiscal year proved to have some challenges, as well as some significant positives. As it's being reported throughout the industry, growth slowed in our third quarter, while facing one of our toughest comps on revenue. We also observed a more pronounced shift downward towards opening price point homes in a number of markets we serve. In addition, we faced some cost challenges that impacted our gross margin. However, we had some great successes, as we grew sales in all channels, closed on the acquisition of RSI Home Products, and we have made tremendous progress in the integration work. I will talk specifically to the integration after my comments on performance.

Regarding performance, we will talk to both our consolidate results and organic results excluding the RSI acquisition. Please recognize the results include only one month of RSI's performance. For the quarter, we grew sales 17% over prior year. Excluding the acquisition, sales increased 2% over prior year. Although, this growth is slightly above reported KCMA Cabinet growth for the quarter, it is below our expectations.

Looking specifically at new construction, we grew our business 7%, with 3% growth excluding the acquisition. We have been reporting for some time that builders were beginning to make a move towards the lower priced housing market. This movement was a key strategic reason for our acquisition of RSI Home Products, given their strength in the lower priced, value-based