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Research Outline

Prepared for trevor_burns | Delivered May 6, 2021

Lumber Markets: Price Increases

Goals

To provide what companies in the lumber market including Quanex, American Woodmark, Armstrong Flooring, UFPI, and Mohawk Industries are saying in their earnings call surrounding price increases that they are facing or putting in place within lumber, particularly in cabinets and hardwood. For each, this will include:
  • A spreadsheet with rows containing the companies, quotes on impact to pricing, date, and link.

Early Findings

The initial round of research indicates that there is a wealth of information available on this topic.
  • As requested, the findings from the first hour of research have been provided in the attached spreadsheet. Below, are further explanations to some of our findings.
  • Also, note that their earnings calls were not accessible, as they required viewers to log in. However, we've leveraged their Form 10-Qs since the management's discussion and analysis section do provide every business and financial detail during the reportable period - in this case, quarter.

American Woodmark

  • The company only operates in the cabinet remodeling and new home construction markets - with a significant focus on cabinets. Therefore, references to commodity price dynamics are assumed and expected to be related to cabinets.

Armstrong Flooring

  • Armstrong Flooring appears to not significantly operate in the lumbering space, as it only offers an extensive portfolio of resilient flooring products such as vinyl sheets, luxury vinyl plank and tile, bio-flooring, and vinyl tile.
  • Based on the above, there's no price dynamics statement and its impact surrounding lumber, cabinet, or hardwood; however, we included their statements concerning price increases and their impact in general.

Mohawk Industries

  • Mohawk Industries did not provide any price dynamics that are explicit to wood, hardwood, or cabinet although its flooring segment includes wood flooring. Therefore, since its price increase statement covered the company in general, we have included the statement - which included price changes in raw materials, inflation, and a corrective mechanism of passing such effects to through selling price increases.


Summary

  • Within the first hour, we were able to scan through their quarterly financial filings to address what Quanex, American Woodmark, Armstrong Flooring, and Mohawk Industries have said concerning pricing increases that they are facing or putting in place within lumber, particularly in cabinets and hardwood.
  • We could not address the same for UFPI due to time constraints. Therefore, further research will be required.
  • With this, we recommend a continuation of this project to identify more public companies in the lumber/furniture space to further understand what they've said or are saying in this regard. We'll continue to populate the spreadsheet to achieve this. Some of these companies include Weyerhaeuser Company (WY), PotlatchDeltic Corporation (PCH), Masonite International Corporation (DOOR), Louisiana-Pacific Corporation, Lumber Liquidators Holdings, among others.
  • Details on our recommended research paths have been provided in our proposals below.