- The Washington Times - Thursday, August 30, 2001

An "extraordinary summer" led to record quarterly earnings for American Woodmark Corp., a Winchester, Va.-based kitchen-cabinet manufacturer.
The company announced record income of $7,385,000 for the quarter ending July 31. That income was 105 percent more than the same quarter in 2000. Sales rose 16 percent over the year to $121,262,000, and earnings per share of 88 cents topped analysts' estimates.
"Demand for the company's products remains strong through the fourth quarter, despite continuing softness through the industry," said Kent Guichard, American Woodmark's chief financial officer, in a conference call yesterday.
American Woodmark manufactures and distributes kitchen cabinets and vanities to the new-home market and to Lowe's and Home Depot home-improvement stores.
American Woodmark does not release a breakdown of its income. But analysts said the company historically pulls in between 60 percent and 70 percent of its revenue from the home-improvement chains and the rest from distributors and builders of new homes. American Woodmark saw double-digit revenue growth from its distributor channel.
While Lowe's and Home Depot have recorded poor overall sales as a result of the slow economy, the new-home market has been solid owing to lower mortgage rates.
The Commerce Department said last week that new-home sales estimates for the end of the year were up 5 percent. The Midwest and Sunbelt states displayed solid growth, and other areas of the country are experiencing a turnaround in sales, executives said.
"The Mid-Atlantic region, which is the one market that had shown signs of a slowdown, does appear to be recovering," Mr. Guichard said.
American Woodmark reported an increase in gross margins of nearly 4 percent. The company paid less for materials and freight owing to a decline in demand for certain goods and a decrease in the price of diesel fuel.
Strong revenues from the summer bucked a trend. Executives said the spring and fall are usually the company's strongest times of year.
"For years, this business had a spring and fall peak that was pretty clearly defined," said American Woodmark's president, James J. Gosa. "This year, it's a little bit of a mystery."
While Home Depot and Lowe's have struggled along with the economy both companies have announced increased sales of just 1 percent this year American Woodmark said sales at the two chains have been strong, in part because each opened new stores during the quarter.
Analysts said American Woodmark's success is almost entirely credited to its business ethic, which de-emphasizes quick expansion.
"It's a good company, it's well-run, and it doesn't have a voracious appetite for growth," said Sam Darkatsh, an analyst with Raymond James.
American Woodmark's stock price has benefited from the company's success. Investors ran the price to record highs above $50 last week before some late profit-taking brought the price down to $44.05 by week's end. Meanwhile, the company said it would explore options including a stock split that would result in more available stock.
American Woodmark shares closed at $46.90 on the New York Stock Exchange yesterday.


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