Executive Summary
Overview: American Woodmark (AMWD) delivered a modest top-line decline in QQ2 2025, with net sales of $452.5 million, down 4.5% year over year, as softer remodel demand and slower single-family new construction weighed on volumes. Despite the revenue headwind, the company maintained disciplined cost controls and continued its strategic push into higher-margin channels and brands, notably the 1951 Cabinetry conversion, while accelerating digital initiatives and platform design investments. Adjusted EBITDA declined to $60.2 million (13.3% of net sales) from $72.3 million (15.3%) a year earlier, underscoring deleveraging effects from lower volumes and higher input costs, though the company remains cash-generative with positive free cash flow of $30.1 million year-to-date and usable liquidity from a fresh debt facility and revolver capacity.
Key Performance Indicators
QoQ: -7.70% | YoY:-16.91%
Key Insights
Revenue and mix: Net sales of $452.5 million, -4.5% YoY and -1.45% QoQ. Gross margin: 18.9% in QQ2 2025, down 290 bps from 21.8% prior year due to weaker manufacturing leverage and higher input costs (materials, labor, freight). Operating margin: 9.41% (operating income of $42.6 million on $452.5 million revenue). EBITDA: GAAP EBITDA $51.37 million (11.35% margin); Adjusted EBITDA $60.2 million (13.3% margin). Net income: $27.69 million; EPS (GAAP) $1.81; Adjusted EPS $2.08 (note: adjusted EPS d...
Financial Highlights
Revenue and mix: Net sales of $452.5 million, -4.5% YoY and -1.45% QoQ. Gross margin: 18.9% in QQ2 2025, down 290 bps from 21.8% prior year due to weaker manufacturing leverage and higher input costs (materials, labor, freight). Operating margin: 9.41% (operating income of $42.6 million on $452.5 million revenue). EBITDA: GAAP EBITDA $51.37 million (11.35% margin); Adjusted EBITDA $60.2 million (13.3% margin). Net income: $27.69 million; EPS (GAAP) $1.81; Adjusted EPS $2.08 (note: adjusted EPS definition excludes mark-to-market FX hedges per management). Leverage and liquidity: Net leverage 1.4x as of QQ2 2025 end; cash $56.7 million; revolver capacity ~$313.2 million available; new senior secured debt facility established Oct 2024 ($500m revolver and $200m term loan). Cash flow: Operating cash flow $11.92 million; free cash flow $1.11 million for the quarter’s year-to-date; cash balance declined from $89.3 million prior year to $56.7 million, reflecting working capital needs in a softer demand environment. Capital allocation: Stock repurchases of 620,000 shares (~4.1% of shares outstanding) in the first half; management re-emphasized a capital-allocation framework prioritizing digital transformation/ERP investments, automation, and share repurchases, with debt repayments deprioritized while leverage targets are pursued.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
452.48M |
-4.51% |
-1.45% |
| Gross Profit |
85.71M |
-16.91% |
-7.70% |
| Operating Income |
42.60M |
-6.24% |
-9.41% |
| Net Income |
27.69M |
-8.75% |
-6.57% |
| EPS |
1.81 |
-2.69% |
-5.24% |
Key Financial Ratios
operatingProfitMargin
9.42%
operatingCashFlowPerShare
$0.78
freeCashFlowPerShare
$0.07
Management Commentary
Key management themes and context from the QQ2 2025 earnings call:
- Macro backdrop and market trajectory: “We believe that the long-term fundamentals of the housing industry are still sound, but they are currently dampened by persistently high interest rates and lower consumer confidence,” highlighting why remodel activity and higher-ticket projects underperformed in the quarter.
- Operational strategy and product progression: “Conversion activity continues with our distribution business as almost 80% of customers have moved to our new brand, 1951 Cabinetry,” underscoring progress in channel transformation and brand migration.
- Pricing, channels and margins: “Pricing clearly in the dealer channel would be a tailwind as we go into the second half,” with monthly input-cost reviews and conditional actions across channels depending on triggers. Management noted there were no incremental pricing actions beyond dealer channel at this time.
- Financial governance and liquidity: The company entered a new senior secured debt facility (Oct 2024) providing a $500 million revolver and a $200 million term loan, with $56.7 million cash and $313.2 million of additional availability; leverage was cited as 1.4x by management.
- Guidance and outlook: Net sales expected to be down low single digits for FY2025; Adjusted EBITDA guidance narrowed to $225–$235 million, reflecting volume pressure and manufacturing deleverage. Q3 sales were acknowledged as seasonally weaker due to holidays and fewer selling days; however, the long-term housing thesis remains supportive.
- Cost pressures and external risks: Ongoing input-cost inflation (particle board, labor, final-mile delivery, linerboard) cited as headwinds; tariff policy uncertainty remains, with management prepared to adjust supply chains or pricing if policy changes materialize.
- Operational investments and capital allocation: ERP go-live planning at the West Coast Maidstock facility; Monterrey, Mexico and Hamlet, NC ramp-ups; emphasis on automation to deliver future efficiency gains. Management reiterated its prioritization of continuing digital transformation and automation ahead of debt repayment.
"We believe that the long-term fundamentals of the housing industry are still sound, but they are currently dampened by persistently high interest rates and lower consumer confidence. This led to the continued softness in large-ticket purchases, primarily impacting our remodel business."
— Scott Culbreth
"Conversion activity continues with our distribution business as almost 80% of customers have moved to our new brand, 1951 Cabinetry."
— Scott Culbreth
Forward Guidance
AMWD’s FY2025 guidance envisions a low-single-digit revenue decline with adjusted EBITDA of $225–$235 million. The company attributes most of the volume weakness to the repair-and-remodel (R&R) market and a softer large-ticket category, offset partially by a rebound in new construction activity in the back half of the year. Pricing actions in the dealer channel have already been implemented (effective Oct 1) and input-cost inflation is monitored monthly, suggesting a disciplined pricing and cost-management approach. The outlook hinges on multiple macro variables: (1) mortgage rates and consumer confidence trajectory, (2) housing starts recovery in single-family and multi-family segments, (3) policy developments around tariffs and immigration, and (4) continued progress in the company’s digital transformation and automation initiatives.
Risks to the forecast include: a sharper-than-expected deterioration in remodel spend, higher-than-anticipated input costs (raw materials, labor, freight, linerboard), supply-chain disruptions, and potential negative tariff developments that could affect sourcing costs or pass-through pricing. Upside potential could arise from a faster housing-market rebound in 2025-2026, stronger adoption of 1951 Cabinetry across the channel, and incremental efficiency gains from ERP deployment and automation that could alleviate manufacturing deleverage and improve margins.