Good day, everyone, welcome to this American Woodmark Corporation Conference Call. Today's call is being recorded. The company has asked us to read the following Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors that may be beyond the company's control. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statement. Such factors include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission and the annual report to shareholders. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected result expressed or implied therein will not be realized. At this time, I'd like to turn the call over to Glenn Eanes, Vice President and Treasurer. Go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to this American Woodmark Conference Call to review the results of our third fiscal quarter of 2012 ending January 31, 2012. Thanks for taking time to participate. Participating on the call today from American Woodmark will be Kent Guichard, Chairman and Chief Executive Officer; and Jon Wolk, Chief Financial Officer. Jon will begin with a review of the quarter and the year concluding with an outlook on the future. After Jon's comments, Kent and Jon will be happy to answer your questions. Jon?

Thank you, Glenn. This morning we released the results of our third quarter of fiscal year 2012 that ended on January 31, 2012. Our earnings release contain the following highlights: Net sales for the third quarter were $120 million, representing an 8% increase over the prior year's third quarter. Net loss excluding restructuring charges was $2.8 million or $0.19 per diluted share, compared with a net loss of $5.8 million or $0.41 per diluted share in the prior year's third quarter. The company generated positive $2.6 million of free cash flow during the third quarter of fiscal year 2012, compared with negative $1.8 million of free cash flow in the prior year's third quarter. For the 9-month period ended January 31, 2012, net sales were $379.6 million up 16% over prior year. Net loss excluding restructuring charges was $8.5 million or $0.59 per diluted share compared with a net loss of $16.6 million or $1.17 per diluted share in the prior year. The company generated positive $5.8 million of free cash flow compared with positive $3.4 million in the prior year. Last December, we announced several restructuring actions to reduce the company's manufacturing capacity and cost structure. These actions include permanently closing 2 manufacturing plants and placing a previously closed plant up for sale and realigning its retirement program. These actions are targeted for completion by the end of the company's fiscal year on April 30 of this year. The company's results for the 3 and 9-month periods ended January 31, 2012, included restructuring charges related to these initiatives with a net of tax impact of $6.3 million or $0.44 per diluted share. Including these charges, the company's results for the third quarter of fiscal 2012 were a net loss of $9.1 million or $0.63 per diluted share, and for…

[Operator Instructions] We'll take our first question from Sam Darkatsh with Raymond James.

A couple of questions here. First off, you mentioned easing off on the promotional activity somewhat during the quarter. Was that tactical with respect to just the quarter or is that going to be a bit of a strategy for you over the coming quarters?

From a tactical standpoint, as we have all along, we kind of pick our spots when we want to run and when we don't want to run. More I think of what kind of Jon was referring to is we have seen some indication in the marketplace, on the competitive marketplace of an easing up the level of promotions. So it's not where it was -- the big hike was about a year and a half ago, it was really a year ago last fall, the fall of 2010 was when we saw the last real big jump. We're not back in the marketplace below where we were before that jump in late 2010, but what we did see when we went through the fall is we did see lower levels than the peak the year previous. So we continue to pick our spots and when we do go in, we have seen in a competitive set that people have eased off a little bit. When you come off these high promotional periods it is a little bit problematic. It's not a smooth line down, but we are starting to see -- we believe some indications is the marketplace that all the way through the distribution chain, not only the manufacturers, but also the retailers are trying to ease back a little bit. Of course the $64 question is where's the breakpoint where you don't get a consumer in. So we do have a consumer that is pretty accustomed to incentives, so I don't -- as we've talked about on previous calls, I don't see them going away, but we are encouraged by the fact that at least through the fall and now early into calendar 2012, we have seen some indications in the marketplace that the level of promotions is easing.

I was surprised and based on that, Jon in your commentary with respect to what the drivers were on gross margin on a year-on-year, it wasn't reduced promotional spend, unless that falls on the different line item from an accounting standpoint that it was more volume-based, am I reading too much into it or was the promotional spend eaten up somewhere else?

It was a little bit in gross margin, a little bit in operating expenses.

Okay, got it. Next question. This morning Home Depot reported and they mentioned that their taking kitchen business comped positively. Your remodeling activity is down on a year-on-year basis. Was that a mix between the 2 major retailers or is that related to the promotional activity being eased off a little bit? I'm not talking about the gap between what you guys saw and what they reported on an overall segment -- or category basis.

Yes. Sam, our remodeling activity I think probably mirrors that of our customers. I think we did align with their performance for the quarter.

Got you. I understand. And the last thing, the 30%-plus growth in the new home construction segment is fantastic obviously. And it's been real good the last few quarters for you all. And I know you mentioned this at all -- you mentioned this during your prepared remarks, but is there any way to figure out how much of that was driven by the weather in the quarter being so benign that a lot of the builders were able to get jobs done in a period of time that they don't normally do that? Or was it more pure historic base demand from a quarter or 2 back?

Well, Sam there's a couple of things. One of them is we still actually through early February, but for the -- for certainly all of our third quarter -- number one, as we've talked about in the last couple of calls, the comps on a prior year your basis are extremely low. There was very, very little builder activity in the fourth calendar quarter of 2010 and even going into January and early February of 2011. So a lot of those increases are -- those kind of numbers, 30% are really coming from the fact that there was not lot of activity in the marketplace, new construction marketplace a year ago. Having said that, our order rates have held up, there is a little bit that's related to the construction activity although the winter, particularly the January number that Jon referred to, which jumped up to almost 700 on annualized basis. We would not have seen activity from that, we're 60 days -- 50 to 60 days into the build cycle. So the warm weather for us really did not impact our third quarter. Again, what we'll have to see is what that does to us as we get into the fourth quarter. Our comps are going to get more difficult as we get into March and April although our activity in January was actually above what it was in March and April last year on a little bit of tougher comps. So, is some of that related to the weather? It's probably too early to tell and particularly related to January, we wouldn't have seen that in our impact anyway. So to me the bigger question is whether or not the activity holds up through May in terms of new construction activity. Do we stay in that close to 700 range plus or minus, which is a little bit better than we've been running and most people have been forecasting.

So you believe you gained -- the inference then will be, you believe you gained share in the builder channel in the quarter then?

That's correct.

And next we'll go to Jarrod Rapalje with Longbow Research.

Just following up on that share gains in the builder channel, are those kind of a onetime initial bump or do you see a runway of penetration where those are going to continue to able to expand over the next -- over the coming 12 months?

Well, our share gain, I think, has come from 2 different areas. The first one is, is we've been fortunate enough to identify and partner with builders who are gaining share in the builder market. So to some degree we're getting the advantage of their efforts, that our partners happen to be in geographic locations that are doing better than some of the other ones and also they happen to be customers that are gaining shares. So we're kind of going along with them. It also comes in -- some customers we've penetrated additional share. So as we've talked about for a while, we think we can continue to outperform the market as it relates to growth activity and growth, but what we all need is, we all need just higher builder activity. So there, at some point, our share gains are in fact going to kind of stall out here and until we get some real lift from the market. So whatever the market is, we think we -- we'll get a little bit more over the coming period, but to get the real kind of big increases that everybody's anticipating when the market comes back, it really does require that overall activity to increase.

Okay. In the last part you guys talks about orders have tailed off near the end of the quarter. Is that -- I'm assuming that was within the remodel portion of the business. Did you see the similar trends carried through by month as they're kind of down mid-single digits through January? And then have you seen that change at all here in February?

I think orders were pretty steady throughout the quarter, as Ken alluded, at new construction they were particularly strong compared to seasonally historical experience during the quarter and that's continued so far into February. And the remodeling side, I think that we had a traditional cycle where you're lower in December just because of seasonality, January spikes backup with closeouts of promotions at the home centers. I'd say that activity so far through the beginning of February has been in line with what we would have expected.

And last question, just on -- with the dividend being cut recently, what is your view on how long it takes to reinstitute the dividend to the extent you guys see free cash flow -- positive free cash flow this year and then maybe at the beginning of next year? Do you guys consider that or is that more of a longer-term until the recovery starts to gain hold.

From the dividend standpoint it's probably more of a longer-term thing for us to consider. When we did that, if you recall, part of what we talked about at that time was, until we get a better sense for the stability -- the recovery and stability of the marketplace, when we get to the point where we feel, we have some excess cash in light of our -- our kind of view of where the world's headed that we would buy back stock, given obviously an attractive price. But for the next period of time, that's probably to the extent that we would come to the conclusion we have excess cash, we'd put it into our buyback program as opposed to restarting the dividend program.

[Operator Instructions] Let's go to Josh Chan with Robert W Baird.

I'm filling in for Pete today. A number of cabinet manufacturers including yourself have continued to trim back on capacity even as demand, I guess, as you have alluded, have sort of bottom. Where do you think the industry capacity stands right now relative to where it should be and the ability to pull back on some of the promotions?

Well, there's a lot in that question. Let me start by saying that the action we took, it reduced our excess capacity. So we still, certainly on a brick-and-mortar basis, crewing is a separate issue, but on a brick-and-mortar basis we still have an ability to probably increase our output of -- by 50%. We had been carrying capacity that was almost an ability to double our output. So what we really did it was the trend excess capacity. Part of it was to get rid of the capacity and quite frankly also part of that because of the efficiency gains we've made, even in a recovered market we don't need as much hard capacity, plant footprint to get the same output. So we have plenty of running room from a hard capacity. I believe -- while it's difficult in a relatively fragmented industry like cabinets, I believe that, that's generally the case out there particularly with our major competitors. They have also trimmed excess capacity, but they have upside potential. So unless you can come up with a scenario that takes us back to the million, 4 million, 5 million start level on a very short period of time, 12, 18, 24 months, I think that the industry as a whole has an ability to support both the remodeling and new construction through any type of -- industry recover other than a real quick bounce back to kind of a normalized level. So I think the industry is in pretty good shape from a capacity standpoint.

Okay, great. And I guess relative to the cost-savings, some of the actions that were announced in December, were there any benefits realized in the third quarter or would those mainly be realized after April sort of?

Those are really going to be realized after April, Josh because what we're doing very hard right now is working toward reaching -- to executing on all those initiatives that we've laid out for ourselves and we've got a pretty full plate to digest, but I think once you look beyond April, that's when you'll really see the savings to start to bear fruit.

And next we'll go to Robert Kelly with Sidoti.

Is there a margin or mix differential between the builder and remodel channel?

It's pretty subtle, Bob, because you have a higher -- a richer mix on the remodeling side. So when people remodel they tend to go for a bit higher-priced cabinet, but then again the cost of selling the retail channel are higher. On the builder -- or new construction side it tends to be a little bit of lower take per unit, but then again your cost on the backend are a lot lower too. So it's -- they pretty new ones and it's pretty close.

Okay. And just following on the last question from the previous caller, the cost cuts you implemented mid-December didn't have a tremendous impact on the quarter just ended. When do we start to see those benefits seep into your results? Is it mid-year F'13, is it fourth quarter F'12?

I think, Bob realistically it's not going to be until first quarter of '13, so the quarter that will start May 1 and end July 31 is when you'll begin to see the benefits there.

Okay. I might have missed this at the beginning of your prepared remarks, you usually talk about market outlook, what are you seeing as far as cabinet market, and then starts and remodel spending, what whatever metrics you use for calendar '12?

Well, for calendar '12 we tend to give our updated guidance on that with our next call, which -- fiscal year, so on this call, we did was really just sort of update the remainder of our fiscal year that ends April '12. And we've got some thoughts on that, but I think we need to finalize those before we actually come forward with those.

[Operator Instructions] Next we'll go to Keith Johnson with Morgan Keegan.

Just a couple of quick follow-ups. Maybe first on the cost savings. How should we look at that kind of split between the operating expenses since I know you mention you did some work on some of the Retirement Plans and then versus hospital as we go forward?

You'll see it in both places, Keith. The pension changes will on help both operating expenses and gross margin, but obviously the plant closing initiatives will be almost entirely gross margin. So I think you'll see more of it there, but you'll see it in both places.

And then you made a couple of comments on doing better within the new construction space, working with builders, taking some share. What about from a geography standpoint? Is there any color you could give us as far as where you're seeing some of those better trend?

Yes. We, actually -- in the Southwest, we're finally starting to see some life in the Southwest, which is probably a little bit different. So that's probably I would say the leading headline is we haven't see any life out of -- for example Phoenix and Vegas, Tucson even in the Southern California, we haven't seen life in there probably in 4 or 5 years. And we're starting -- certainly not back to where it was, but we're certainly starting to see some there. The other places we've seen some pickup in the Southeast as well, really kind of from -- Carolinas maybe as far North as you want to go, but certainly you get down through Atlanta and then to some parts of Florida you're starting to see some more there. Texas has held up pretty well through the entire thing -- through the entire downturn, so activity there is good although I wouldn't say that's different than what it's been. If there's a weak area that we've seen in the last 90, maybe 120 days it's probably in the Northeast, Mid-Atlantic to the Northeast, but certainly the Southwest and the Southeast, which have been extremely depressed for the last 4, 5 years, we're starting to see some -- a real pickup in activity there.

Great. And just one final question, just point of clarification. I think Jon mentioned that there was a tax benefit. Was that all rolled within the restructuring line is the way you presented it?

Yes.

[Operator Instructions] And it looks like we have no further questions this time, so I'd like to turn it back to our speakers for any additional or closing remarks.

Since there are no additional questions, this concludes our call. Thank you, again for taking time to participate, and speaking on behalf of the management of American Woodmark, we appreciate your continuing support. Thank you, have a good day.

And that does conclude today's conference. We thank everyone for their participation.