American Woodmark Reports 12% Q1 Drop
Key Points
GAAP revenue fell 12.2% to $403.0 million in Q1 FY2026, GAAP revenue exceeded analyst expectations by about $9.4 million in Q1 FY2026.
Non-GAAP earnings per share dropped 52.8% to $1.01 in the first quarter of fiscal 2026.
No forward guidance issued due to the pending merger with MasterBrand; strategic uncertainty remains.
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American Woodmark (NASDAQ:AMWD), a major cabinet manufacturer serving the residential building and remodeling industry, released its financial results for the first quarter of fiscal 2026 on August 26, 2025. The report detailed a significant decline in both sales and profit, highlighting sharply lower demand and higher operating costs. GAAP revenue was $403.0 million, a 12.2% drop from the same quarter last fiscal year. Non-GAAP earnings per share were $1.01, a 52.8% decrease in non-GAAP EPS compared with the same quarter last fiscal year, from $2.14 to $1.01. Adjusted EBITDA also fell by almost one-third (32.8%). Management did not provide a new financial outlook, citing the proposed merger with MasterBrand. Overall, the period highlighted considerable weakness in the company’s core markets and heightened strategic uncertainty.
| Metric | Q1 fiscal 2026(ended July 31, 2025) | Q1 fiscal 2025(ended July 31, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $1.01 | $2.14 | (52.8 %) |
| Revenue | $403.0 million | $459.1 million | (12.2%) |
| Adjusted EBITDA (Non-GAAP) | $42.2 million | $62.9 million | (32.8 %) |
| Operating Margin | 5.0 % | 10.2% | (5.2 pp decrease) |
| Free Cash Flow (Non-GAAP) | $24.9 million | $29.4 million | (15.2 %) |
Business Overview and Key Focus Areas
American Woodmark designs, manufactures, and distributes kitchen, bath, and home organization cabinetry. Its offerings span both made-to-order and stock product types for households and builders. This allows it to reach a variety of customers and projects, from large-scale new construction to individual room remodels.
Recent business strategy has focused on maintaining strong ties with major home improvement retailers, offering a diversified product portfolio, and operating an integrated manufacturing network. Customer relationships, especially with large home centers like Home Depot and Lowe’s (which together represented about 40.8% of sales in FY2025), are especially important. Key success also depends on controlling raw material and distribution costs in a competitive, price-sensitive market.
Quarterly Performance and Notable Developments
Sales declined 12.2% compared with the same quarter last fiscal year. Management attributed this decline to continued weakness in both the new construction and home remodel markets.
The reduction in profitability came partly from a shift in product mix toward lower-priced, value-based product lines, which carry slimmer margins compared to the company’s custom products. Management stated that this unfavorable mix significantly contributed to the erosion of both gross profit and Adjusted EBITDA margin. Raw material cost inflation and elevated tariffs added further pressure, while a favorable $8.9 million swing in foreign exchange contract gains provided a temporary offset.
The quarter included one-time costs: $2.0 million for post-launch support of a recently implemented enterprise resource planning (ERP) system, $2.8 million in transaction expenses related to the pending merger with MasterBrand, and $0.8 million in restructuring charges related to staff reduction in Mexico and the closure of a manufacturing facility in Orange, Virginia. Interest expenses increased by $1.8 million compared with the same quarter last fiscal year. Capital expenditures decreased by nearly 29% compared with the same quarter last fiscal year, and discretionary spending was tightly managed.
On the capital allocation side, Free cash flow was $24.9 million. The company bought back roughly 1.4% of its outstanding shares, spending $12.4 million, which helped reduce its weighted average shares outstanding for the period. Cash on hand was reported at $54.9 million, with total debt of $372.3 million and net leverage at 1.69x trailing adjusted EBITDA.
There was little commentary on value versus premium sales trends outside of the unfavorable mix impact. Other recurring themes included execution on cost containment and continued optimization of its network and processes.
Outlook and Guidance
Management did not provide a forward earnings outlook. It stated that, in light of the proposed merger with MasterBrand announced August 6, 2025, no conference call would be held and previously issued guidance would not be updated or replaced. As a result, investors did not receive estimates for sales, volume, margins, or capital plans for coming quarters.
Looking ahead, watchers of American Woodmark will need to monitor for new information on the proposed combination and integration with MasterBrand, as well as continuing market demand trends in both new construction and remodeling.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends American Woodmark. The Motley Fool has a disclosure policy.
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