American Woodmark Corporation (NASDAQ:AMWD) Q2 2023 Earnings Call Transcript

Tim Wojs: Okay. That’s helpful. Thank a lot. And then I guess with the expectation to see a slower environment, I guess, in the fourth quarter, I mean, what levers could you pull internally to kind of offset the decremental margins? And I guess, what would you kind of help us with in terms of what a decremental margin on lower volumes would look like?

Scott Culbreth: So Tim, specific to the forecasting, we’ve held our EBITDA forecast for the year, even with the softer Q4, so we’ll be able to still deliver on expectations there. What are the things that we’ll do as we see volumes slow. The first thing we’ll do is we’ll right-size and adjust where we need to inside our factories. We’re able to do that relatively easily through attrition at this stage. But that’s the current thought process as we go forward. We’ll continue to tightly manage and control our SG&A spending, which we’ve always historically done. So we’ll throttle that as appropriate to ensure we can deliver the results we need to. I don’t have an exact decremental number I want to quote for you at this particular point in time because I don’t think it’s a big story for Q4.

I think that will matter more as we start thinking about ’24. But we’ve not started our planning process for that yet. As you know, we’ll kick that off in the January-February time frame.

Tim Wojs: Okay. Good. That’s helpful. And then just like a bigger picture question, just how is Woodmark investing or, I guess, positioning themselves in two areas. The first, I was thinking about it was e-commerce and if that could be kind of a growing channel for cabinets over time? And then the second, I guess, would just be alternative materials, maybe using things that are more composite relative to wood. I’m just kind of curious how you’re thinking of those two types of opportunities and maybe the receptivity of those on the part of the consumer?

Scott Culbreth: Sure. I’ll take the second one first. So with respect to alternate materials, we have introduced an all-MDF door in the marketplace. That’s been very well received. We’ve been producing that for quite some time. It provides a nice substrate from a finish standpoint with regards to paint, types up some of the joint lines that we sometimes have quality concerns about. So we have done quite a bit of work in alternate materials and we’ve launched this in the marketplace, and they’ve been well received. Specific to e-commerce, we do engage in e-commerce today through our retail partners. So we do about 5% of our business now online through a retail partner. So our work in that space is continuing to drive asset rich content.

So whether it would be 360 views or visualizer, et cetera, to be able to see what’s inside the cabinet to really get folks excited about our purchase, it’s also how do we continue to engage with consumers. Maybe they start off on our website, it can go to our retailer’s website, get to a purchase. So how do we keep them engaged from the onset of inspiration all the way through to purchase. So yes, that’s an active piece of our business. It’s something we partner on with our retailers, and we’re going to continue to drive more sales to that overall channel.

Tim Wojs: Okay. Good. Good luck on the rest of the year guys. Thanks for the time.

Scott Culbreth: Thanks, Tim.

Paul Joachimczyk: Thanks, Tim.

Operator: The next question is from Collin Verron with Jefferies. Please go ahead.