American Woodmark Corp., a manufacturer and distributor of Timberlake kitchens and cabinets for the new-home market as well as house brands for The Home Depot and Lowe's, announced today that it swung to a net loss of $6.4 million in its fiscal 2010 first quarter ended July 31 from a $156,000 profit in the year-earlier period.
Net sales shrank 28% to $100.8 million, the Winchester, Va.-based company said. Sales fell more than 20% in both the remodeling and new construction sales channels.
The change in operating income was even more severe, sinking to a $10.3 million loss from a $50,000 deficit in May through July 2008. The loss included $1.6 millon in restructuring charges incurred during the quarter for several initiatives announced this spring, including the permanent closure of two manufacturing plants, suspension of oeprations at a third plan, and layoffs of salaried personnel. Another $900,000 worth of restructuring charges weren't specified in the company's announcement.
"Our sales decline and net loss for the quarter were disappointing, but in line with our expectations, when considering the difficult market conditions confronting our industry," president and CEO Kent Guichard stated. "Our company had been somewhat insulated against these difficult conditions in our two previous quarters by a favorable retail promotional environment, but that impact ended during the fourth quarter of our last fiscal year.
"Because we chose to maximize our liquidity last year, we began the current fiscal year with a record amount of cash on hand," Guichard continued. "Although we had negative free cash flow, we ended the first quarter with over $72 million of cash on hand, and a debt to capital ratio of only 11.7%. While prevailing market conditions remain difficult, we remain confident about the long-term prospects for our industry and for our company in particular."
Gross profit shrank to 11.7% of net sales in the fiscal first quarter from 15.9% a year before. Selling, general and administrative costs rose to 19.4% of net sales from 15.9%, even though American Woodmark reduced its operating expenses by $2.5 million.