Good day and 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 statements made by the company involve material risks and uncertainties and are subject to change based on factors that maybe 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 statements. 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 results expressed or implied therein will not be realized. At this time, I would like to turn the call over to Mr. Glenn Eanes. Please go ahead sir.

Good morning, ladies and gentlemen, and welcome to this American Woodmark conference call to review our first fiscal quarter results for fiscal 2010. I’d like to thank you for taking time to participate. Participating on the call from American Woodmark Corporation will be Kent Guichard, our Chief Executive Officer and President; and Jon Wolk, our Chief Financial Officer. Jon will begin with the review of the quarter, concluding with a brief outlook on the future. After Jon’s comments, Kent and Jon will be happy to answer any of your questions. Jon.

Thanks, Glenn. This morning, we released the results of our first quarter of fiscal year 2010 that ended on July 31, 2009. Our earnings release contained the following highlights for the first quarter. Net sales for the quarter were $100.8 million, down 28% below the prior year’s first quarter. During the fourth quarter of its prior fiscal year, the company announced it was permanently closing two manufacturing plants and suspending operations in the third. These actions were completed during the first quarter. The company recorded restructuring charges relating to these initiatives of $1.6 million, net of tax benefit during its first quarter. The company recorded a loss inclusive of these charges of $6.4 million in the first quarter. The net loss exclusive of these charges was $4.8 million for the quarter compared with net income of $0.2 prior year’s first quarter. Earnings per diluted share, including restructuring charges was a loss of $0.45 for the quarter. Excluding restructuring charges, earnings per diluted share for the first quarter was a loss of $0.34 compared with income of $0.01 per diluted share in the prior year’s first quarter. The company generated negative $9.1 million of free cash flow during the first quarter, down from $7.4 million of positive free cash flow generated in the prior year’s first quarter. Regarding our first quarter sales performance, net sales for the first quarter of fiscal 2010 were 28% less than in the prior fiscal year. In the remodeling market, several factors combined to continue the market’s negative sales momentum. Gross private fixed residential investment as supplied by the bureau of economic analysis was down more than 30% below prior year levels for the first six months of the calendar year. Existing home sales, a leading indicator for home improvement spending, were just shy of $5…

(Operator Instructions) Your first question comes from Joel Havard - Hilliard Lyons.

Jon or Kent, on gross margin, a 35% reduction in the breakeven point the old target was 20%. What’s a reasonable bogey to hangout there internally this year? Maybe you won’t get there, but this is what you’re working for based on the previous restructuring round.

Joel, we’re not guiding. So we’re not going to give out internal gross margin targets for the year, but I would say that in general, we have maintained that we should be able to operate in the 21% to 23% gross margin range in a reasonably healthy market and, by lowering our breakeven point as we have, it’s conceivable that we could operate a bit beyond that target once the market has come back. In the meantime, where we operated during the first quarter, I think is roughly representative of how we’re going to operate if sales continue at these levels.

That was my concern here, and I was trying to be hypothetical. I appreciate that you all weren’t giving guidance, but if we say sort of at this level, was there rather, anything non-recurring, restructuring related charges, non-operating cost that were built into the Q1 gross margin. Was that truly an organic or fundamental throughput metric?

The 11.7% gross margin that we report, Joel, is pretty clean. We have a separate restructuring charges line…

I saw the 2.5 or whatever it was, but there wasn’t other sort of unallocated tucked into gross margin, cost of goods.

There are still cost that will come out of the operating run rate, to answer the question. This was a transition quarter in the sense that we were in the process of closing two of the three plant operations that we did close. So there were some charges in cost of sales that ultimately won’t continue to reoccur, but the 11.7% was a pretty clean quarter.

Lastly, then probably for you, Jon, given the, you know, the restructuring behind us, the removal of two and at least temporary closure of the third, what does D&A look like for this year?

It’s going to be pretty comparable to what it was last year, Joel. We had accelerated a little bit in a couple of plants that we did close operations in, but it’s not going to be very different from what it was last year.

Last question, if I read too closely between your comments, I understand, but I think you said something to the effect of given this round of closure and something about evaluating as you go forward, I know you guys really held on to your production capacity as long as you could. This recession that fortuning had to be much more per knishes in long lasting. Were you perhaps leaving an opening that yet more reductions are conceivable or have you all modeled that out? What would be the trigger point if that’s true?

You got a whole lot of caveats there in your thing. I mean you never rule anything out obviously. Everything depends on what happens in the future. Having said that, I think you’re probably reading too much between the lines in terms of Jon’s comments. We’ve talked about it a couple times. I believe, we even mentioned it on last quarter’s call. When you’re in a cycle like this, the question is, where do you size the company? Ultimately, that’s what this all comes down to, is where do you size the company? Our kind of approach and feeling is you don’t size the company at the bottom of the cycle, certainly, cycle as severe as this one. So, we did in the fourth quarter going into the first quarter was, we had made the decision based on the depth, the length depth, severity of the cycle, to take out some capacity. A lot of that capacity ultimately we probably would have taken out anyway due to the age of those facilities and some of the improvements that we’re making in terms of efficiency in other plants. So, that was more of kind of a timing issue. I think that those, particularly the two plants that we closed, not the one we mothballed, but the two that we closed, you just couldn’t do modern lean manufacturing in those facilities and at some point, we were going to have to either close or replace those facilities anyway. So, it was kind of a catalyst, if you will, but where we are right now as we think that generally speaking, our production platform is a strong production platform in a normal market and that we’re happy with where we’ve sized the company, but I would also, to your point, say that if…

Your next question comes from Peter Lisnic - Robert W. Baird.

I guess, Jon or Kent, to the point about the breakeven and it sounded like there could be some more opportunities to lower that, can you give us a sense as to how much more opportunity you have to maybe take down breakeven levels if you look at quarters past, around 130 to 140 seemed to be sales wise where you were breaking even. Can you give us order of magnitude as to how much you could bring that down?

It’s hard to give a precise order of magnitude because there’s a lot of moving parts, as you would imagine, Pete, but as we continue to embark on this Lean manufacturing journey, we uncover lots of opportunities and some of those opportunities, we’re taking now, but they are being masked by the impact of declining sales. As things improve and as the market improves and as we continue to introduce new process improvements and so forth, we think there’s some more room there.

Wouldn’t that argue that your gross margin range and then should be higher than that 21% to 23% that you targeted? I know you said that there’s, it’s conceivable that the number could be higher, but I’m wondering if it’s materially higher. Could this be a mid-20s kind of gross margin business?

That’s certainly possible, given the right market conditions. Again, there’s a lot of moving parts in there, but as we look at this, certainly we’re thinking about that in our future planning.

Then totally separate question, I guess, can you maybe it sounds like what people are saying is that fundamentals are indeed bottoming, but I’m wondering what you’re seeing out of your customers or not specifically the customers, but people that are walking the store, do you have any insight into maybe traffic or conversion trends, if you will, people looking at kitchen remodels and then actually going forward and executing on those? Is that percentage maybe increased? Do you have any access to that kind of data? What sort of anecdotes are you getting about your business that would suggest things are indeed flattening out or maybe getting better?

This is Kent, I’ll take that one. You seem to focus there on remodel. Let me give you a few comments, new construction first, and then I’ll talk about remodel. The reason I think is new construction is a little bit from our perspective might be a better indicator. New construction has a tendency to go into the cycle first. We’ve talked about it before. Housing usually leads cycles almost exclusively, if you look historically, housing has led the country into recessions or downturns, that’s the bad news. The good news, of course housing usually leads the country out. New construction is more a direct connection, because there’s not as much noise that can happen between a triggering event and an actual sale for us showing up, but we are starting to see on the new construction side particularly with our major builders, we are starting to see some activity. They’re getting a little more active in land, and they’re getting a little more, we’re starting to see strengthening in terms of starts. I wouldn’t get carried away with it, but I think that we are starting to hear from our major builder customers that they’re seeing more activity. They’re getting more activity through their sales centers. They’re feeling a little bit more bullish. They are, again will not getting carried away, they are starting to put some spec inventory into the ground and so we are starting to see from the new construction side, we’re starting to see the beginnings of life out there, the chutes are starting to come out of the ground. On the remodel side, it’s a little bit more difficult. Again, overtime probably the big transaction that we watch is sales of existing homes. You either dress up your kitchen to sell your house or…

Your next question comes from Robert Kelly - Sidoti.

On the gross margin for 1Q, you talked about it being a transition quarter. How much opportunity is there or how much drag was there from closing the plants and efficiencies related to that and do we see that as soon as Q2? Is that more of the second half story?

I think that there’s probably half a point or so of margin there. Bob, in terms of costs that we incurred in the first quarter that as the rest of the year progresses will start to go away, but it’s not several points.

Then as far as right sizing capacity, you’ve done a lot of work there, but maybe how much more do you have to do at the selling and marketing line? Are you pretty much fixed as a $13.5 million run rate or so?

Yes, I mean I think that it will vary a little bit in terms, of course we have a sales force that’s on a pay performs commission, at least partial commission kind of structure. They do get a base pay, but again this is another one of those choices that we’ve made. As Jon has mentioned on many of our calls over the last couple of years, we have made a choice to maintain service levels and contact with the customer. So, our customer service centers are staffed to answer the phones. We have actually increased our feet on the street in terms of store coverage and those types of things. We have done some things on the G&A side we’re pretty much done there from our perspective; we think we’re down to a good level. So I would look for that to continue from a dollar perspective now we’ll have to see what happens in relation to sales. Sales go up suddenly we’ll certainly get some short term leverage off of that, but we have made the decision, consistently made the decision to be here to service the customer and so I would anticipate going forward that level of spending would be pretty consistent.

Then just on the comments you had seen signs of life in the new construction universe, first, is that driven by their effort to get a more value price point in their homes? Two, what does August look like compared to what you saw in 1Q ‘10?

I think it’s a little early on August. We’re only halfway through and there is a little bit delay. I wouldn’t react so much to those numbers as I would when you start to put together one month does not a trend make. It’s when you start to put together three, four, five sequentially that I think, as my comment, which you’re starting to see some chutes come out of the ground, you’re starting to see a little bit of life. What will normally happen if it holds, you’ll get a nice build here through October and then the new construction season will start to kind of tail off a little bit. We are starting to see, not only in the activity, but in the attitude and the conversations with our builder customers that they are starting to feel that this is in the bottom and they’re starting to think about how they start to re-grow their businesses. There are still some differences by region that we go through, but some of the Sunbelt regions that have been extremely depressed for some period of time are in the activity, are in the group of builders and subdivisions where we are starting to see a little bit of a pickup.

Your next question comes from Keith Johnson - Morgan Keegan.

Stay maybe follow-up on some of the comments some of the green chutes and the construction side of it. Could you kind of help us understand maybe what price point or if there is a way to think about it that way, price point of maybe increased activity level for the homes? Is it at the starter side? In other words, $8000 first time home buyer tax credit starting to kind of work its way into the system and that’s a factor that we need to keep in mind? Or how should we look at that?

The tax credit’s an interesting kind of a thing. I think the Jury’s still out in my opinion on the effectiveness of the tax credit. I know that it gets a lot of press and I know that there are a lot of suppositions about that. I have not seen a lot of data that would suggest that that is kind of the event that has people go out and buy a house. I know there are a lot of people out there that think that’s been a big inducement that’s driven behavior I kind of have a feeling not so much, considering everything that’s going on. I personally have a tough time thinking somebody’s going to commit to buying a home in this environment with unemployment, with the worries about what’s going on in the economy, that $8000 is going to make them go out and plunk down a quarter of a million, 200 or quarter of a million for a house, but we’ll see I just haven’t seen a lot of daily yet that correlates any activity with the housing credit. So I could be wrong, but I think that’s a story left to be told. In terms of price points, again, make a real kind of general statement, what we’ve seen is a trend now for I think sometime of really kind of a bimodal impact on the business. I think that you have some builders or some divisions of large builders, large production builders, certainly their opening price point where there’s been a lot of effort in value engineering and other ways to get the initial price down for a home buyer. We also, however have seen, continued to see a pretty healthy stream of business, again considering the mix within the overall activity. At the…

Is there a way you could help us kind of get an idea, you talked about housing, with those operation still having, capacity to move up and meet customer needs as demand improves. From a revenue standpoint, with the current structure you’ve got, I guess hard assets, is there a way we could think of kind of a revenue capacity level that could generate?

Yes, if you’re talking about hard assets and particularly, as it relates to footprint, the number of factories not necessarily some of the equipment capacities within it. If you’re looking at footprint from a facility standpoint, generally speaking is a guideline we can probably double our revenue within that footprint.

So kind of the run rate we’re seeing today?

Yes.

It sounds like, and I may have looked at the timing or past comments incorrectly, but sounded like you may have gotten ahead on the plant closures and the way that it kind of sets everything up as you came through the quarter. It sounded like it was going to take a little bit longer maybe than what you initially thought, if I read that correctly?

No, we were almost dead-on schedule. Sorry if we gave you that kind of that feeling. In terms of the three plants, the one by the end of the fourth quarter and then the two in the first quarter, we were pretty much dead-on our plan.

Yes, the thing is that you can’t, take the charges as soon as you make the decision and the announcement. You have to let some of those charges fall based upon the closure activities.

Should we think about the $20 million that’s kind of annualized saving starting into the second quarter of fiscal 2010 and kind of carrying through the rest of the year, or how should we kind of think about that?

We probably experienced about half to maybe a little bit more than half of the savings on a quarter basis in the first quarter. So the pace will pick up a bit, but we experienced a chunk of it during the first quarter.

(Operator Instructions) Your final question comes from Eric Bosshard - Cleveland Research Co.

Couple things first of all, Jon I guess I want to understand that last comment. Is that savings from the facility closures, where we had a full run rate in 1Q or we were at kind of half of the run rate in 1Q, could you just…?

Roughly half, Eric.

So the improvement from that, realizing all of that benefit, I mean is there another couple of million bucks and does that show up in gross margin related to absorption or sort of how much and where do we see that benefit in 2Q that we didn’t see in 1Q?

Not necessarily in Q2 per say, but, my expectation as the remainder of the year rolls out that it will be in cost of sales and gross margin. Yes, overhead absorption primarily.

Secondly, from a cash flow perspective, how much of this was operating and how much of it was sort of ketch up on accruals or incentive payments or whatever it was last year, within that secondly trying to figure out what the free cash run rate’s likely to look like for the year?

Yes, good question, Eric. There was about $8 million of stuff related to last year for the things that I mentioned, plus we had to make an income tax payment, because we’ve had a taxable profit pertaining to last fiscal year and when we paid our extensions, or filed our extensions on the tax return, we had to make that installment. So it’s about $8 million, factored into that negative $9 million of free cash outflow that was I would call, non-recurring.

As you think about this year, than 1Q is kind of representative of it probably quarterly revenue run rate for the year, is kind of a breakeven full year free cash flow. Is that a reasonable assumption?

My expectation is that, if we were to continue to operate at this revenue level, that we would have a negative cash outflow in the free cash line, driven primarily by the first quarter’s outflow. In terms of signs of life, you talked about some green chutes on the new construction side. On the remodel side, I know that everyone’s historically looked at existing home sales as being the best indicator demand, but we’ve got flat existing home sales and the demand is down a bunch. Anything that is making you feel that the future growth or contraction in the remodel side of the business is going to be any different than what we’ve experienced here for the last couple quarters?

I’m not sure. I didn’t quite follow what your baseline was going to be there. I think that overtime, and we’ve been one of the proponents of existing home sales is kind of the closest we can get to remodeled business overtime. The existing home sales increase has been relatively recent. So if you factor into that any lag time to actually get the mortgage and close, you’re running 45 to 60 days, once you buy a house to get it in there and then you’re going to go through whatever you go through before you actually do a remodel job. So I would not expect it to have the recent increase in existing home sales roll through the remodel business kind of yet. Having said that, I do think that the remodel recovery will lag new construction, probably by a couple of quarters, on kind of a general basis that’s historically what we’ve experienced. So I would, suspect that the remodel business, again all adjusting for context, that the remodel business will remain relatively weak through the remainder of calendar ‘09 as an industry, and that I would suspect that you start to get into spring next year. If the green chutes, as I guess we’re talking about it now, but if the new construction, if this really is the signal of starting to come off the bottom, add six months to that, which would tell you on the remodel side for major ticket, big ticket categories, not just ours, but big ticket categories. You start to see some life in the remodel business next spring and then a year from this fall, the fall of calendar 2010, you might be back in the range where you’re starting to get some year-over-year growth and see some activity that might make you a little more excited.

Then lastly, just to make sure I understand that from a capacity utilization standpoint, I understand the desire to maintain service levels. Are you basically looking at the world where we reside right now and saying, okay that’s it, we’re done taking capacity and infrastructure out, we’re going to play with this capacity or live with this capacity going forward and wait for the demand to recover, or is there a scenario under, which you would take another bite at the apple and pull more capacity offline?

Sure, there’s a scenario. I mean if we experience what we did a year ago in October, which was really seems like it’s a lot longer than that, but the tipping point that happened with the Lehman collapse, if you get another incredible shock to the system like that, that takes the whole step function down, certainly that’s a scenario where you have to start to really question, if you need to make any additional adjustments. It’s difficult for me to put a high probability to that scenario. When you’re building at rates that we’ve been building at, if you’re creating new households at the rate of $1.25 million to $1.3 million a year and you’re building 500,000 houses, 550,000 houses a year, that’s just not sustainable for a long period of time. Once you’re on the floor, it’s pretty tough to fall off. So that is pretty dire scenario. So I don’t anticipate that one. If that were to happen however, yes, there are plans, contingency plans we would pull off the shelf to deal with those. Absence of that, if this in fact does turn out as we get through the fall and into next spring, if this does turn out to have been the bottom here in June, July, maybe August, if this turns out to have been the bottom, then the footprint that we have going forward through the recovery, we’re pretty comfortable with that. At this time, we have no further questions.

Well, since there’s no additional question, this concludes our call. Again, thank you for taking time to participate. Speaking on behalf of the management of American Woodmark, we appreciate your continuing support. Thank you.

Thank you for your participation.