WINCHESTER, Va., Aug. 27, 2018 /PRNewswire/ -- American
Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced
results for its first fiscal quarter ended July 31, 2018.
Fiscal First Quarter 2019
Net sales for the first fiscal quarter increased 55% to
$429.0 million compared with the same
quarter of the prior fiscal year. The current first fiscal
quarter results include three months of results from the Company's
acquisition of RSI Home Products, Inc. ("RSI"), which closed
December 29, 2017. Excluding
the impact of the RSI acquisition, net sales for the first fiscal
quarter increased 8% to $299.0
million compared with the same quarter of the prior fiscal
year. Excluding the impact of the RSI acquisition, the
Company experienced growth in all channels during the first quarter
of fiscal year 2019.
Net income was $24.8 million
($1.41 per diluted share) for the
first quarter of the current fiscal year compared with $22.3 million ($1.36 per diluted share) in the same quarter of
the prior fiscal year. Net income was positively impacted by
the RSI acquisition and additional sales volumes which were
partially offset by restructuring charges of $2.4 million, intangible amortization of
$12.3 million and raw material
inflation. Adjusted EPS per diluted share was $2.04 for the first quarter of the current fiscal
year compared with $1.36 in the same
quarter of the prior fiscal year.
Adjusted EBITDA was $68.1 million,
or 15.9% of net sales compared to $37.4
million, or 13.5% of net sales for the same quarter of the
prior fiscal year. The increase is primarily due to sales
growth in the quarter and the inclusion of three months of results
for RSI.
"We are very pleased with our solid performance for the first
quarter of our new fiscal year", said Cary
Dunston, Chairman and CEO. "We experienced growth in
all channels, over-indexing the market as a whole. Our
integration work remains on plan as we have come together as one
team with a clear vision for success."
Cash provided by operating activities for the first fiscal
quarter was $52.9 million. Free
cash flow totaled $41.4 million for
the first fiscal quarter. Additionally, the Company paid down
$63.0 million of its term loan
facility during the first fiscal quarter.
On August 23, 2018, the Company's
Board of Directors reinstated the Company's previously suspended
stock repurchase program, subject to the approval of certain
changes to the Company's existing credit facility currently being
negotiated with lenders. The Company previously announced the
suspension of its stock repurchase program in December 2017 in connection with its
then-proposed acquisition of RSI. Approximately $36 million remains available under the program
for repurchases.
About American Woodmark
American Woodmark Corporation manufactures and distributes
kitchen, bath and home organization products for the remodeling and
new home construction markets. Its products are sold on a
national basis directly to home centers, builders and through a
network of independent dealers and distributors. At
July 31, 2018, the Company operated
eighteen manufacturing facilities in the
United States and Mexico
and seven primary service centers located throughout the United States.
Use of Non-GAAP Financial Measures
We have presented certain financial measures in this press
release which have not been prepared in accordance with U.S.
generally accepted accounting principles (GAAP). Definitions
of our non-GAAP financial measures and a reconciliation to the most
directly comparable financial measure calculated in accordance with
GAAP are provided below following the financial highlights under
the heading "Non-GAAP Financial Measures."
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 statements. Such factors
include, but are not limited to, those described in the Company's
filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K. 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.
AMERICAN WOODMARK
CORPORATION
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Unaudited
Financial Highlights
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(in thousands, except
share data)
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Operating
Results
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Three Months
Ended
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July
31
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2018
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2017
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Net sales
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$
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428,962
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$
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276,827
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Cost of sales &
distribution
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333,226
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218,469
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Gross
profit
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95,736
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58,358
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Sales & marketing
expense
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22,938
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18,198
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General &
administrative expense
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29,830
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9,527
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Restructuring
charges
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2,441
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—
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Operating
income
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40,527
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30,633
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Interest expense
& other income
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7,988
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(739)
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Income tax
expense
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7,772
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9,091
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Net income
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$
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24,767
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$
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22,281
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Earnings Per
Share:
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Weighted average
shares outstanding - diluted
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17,618,943
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16,355,045
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Net income per
diluted share
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$
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1.41
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$
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1.36
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Condensed
Consolidated Balance Sheet
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(Unaudited)
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July
31
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April
30
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2018
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2018
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Cash & cash
equivalents
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$
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50,186
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$
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78,410
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Investments -
certificates of deposit
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7,250
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8,000
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Customer
receivables
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131,398
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136,355
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Inventories
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113,547
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104,801
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Income taxes
receivable
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17,964
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25,996
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Other current
assets
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10,023
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10,805
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Total current
assets
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330,368
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364,367
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Property, plant &
equipment, net
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216,300
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218,102
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Investments -
certificates of deposit
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500
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1,500
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Trademarks,
net
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8,056
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8,889
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Customer relationship
intangibles, net
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247,361
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258,778
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Goodwill
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767,914
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767,451
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Other
assets
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26,514
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26,258
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Total
assets
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$
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1,597,013
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$
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1,645,345
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Current portion -
long-term debt
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$
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4,264
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$
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4,143
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Accounts payable
& accrued expenses
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156,199
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166,312
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Total current
liabilities
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160,463
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170,455
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Long-term
debt
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747,381
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809,897
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Deferred income
taxes
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69,924
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71,563
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Other
liabilities
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9,338
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11,765
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Total
liabilities
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987,106
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1,063,680
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Stockholders'
equity
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609,907
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581,665
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Total liabilities
& stockholders' equity
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$
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1,597,013
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$
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1,645,345
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Condensed
Consolidated Statements of Cash Flows
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(Unaudited)
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Three Months
Ended
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July
31
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2018
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2017
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Net cash provided by
operating activities
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$
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52,937
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$
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26,570
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Net cash used by
investing activities
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(16,406)
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(21,178)
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Net cash used by
financing activities
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(64,755)
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(6,773)
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Net decrease in cash
and cash equivalents
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(28,224)
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(1,381)
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Cash and cash
equivalents, beginning of period
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78,410
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176,978
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Cash and cash
equivalents, end of period
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$
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50,186
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$
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175,597
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NON-GAAP FINANCIAL MEASURES
We have reported our financial results in accordance with
generally accepted accounting principles (GAAP). In addition,
we have discussed our financial results using the non-GAAP measures
described below.
Management believes all of these non-GAAP financial measures
provide an additional means of analyzing the current period's
results against the corresponding prior period's results.
However, these non-GAAP financial measures should be viewed in
addition, and not as a substitute for, the Company's reported
results prepared in accordance with GAAP. Our non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable GAAP measures and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with GAAP.
Adjusted EPS per diluted share
We use Adjusted EPS per diluted share in evaluating the
performance of our business and profitability. Management
believes that this measure provides useful information to investors
by offering additional ways of viewing the Company's results by
providing an indication of performance and profitability excluding
the impact of unusual and/or non-cash items. We define
Adjusted EPS per diluted share as diluted earnings per share
excluding the per share impact of (1) expenses related to the RSI
acquisition, (2) inventory step-up amortization due to the increase
in the fair value of inventory acquired through the RSI
acquisition, (3) the amortization of intangible assets, and (4) the
tax benefit of RSI acquisition expenses and the inventory step-up
and intangible amortization. The amortization of intangible
assets is driven by the RSI acquisition and will recur in future
periods. Management has determined that excluding
amortization of intangible assets from our definition of Adjusted
EPS per diluted share will better help it evaluate the performance
of our business and profitability and we have also received similar
feedback from some of our investors regarding the same.
Adjusted EBITDA and Adjusted EBITDA margin
We use Adjusted EBITDA and Adjusted EBITDA margin in evaluating
the performance of our business, and we use each in the preparation
of our annual operating budgets and as indicators of business
performance and profitability. We believe Adjusted EBITDA and
Adjusted EBITDA margin allow us to readily view operating trends,
perform analytical comparisons and identify strategies to improve
operating performance.
We define Adjusted EBITDA as net income adjusted to exclude (1)
income tax expense, (2) interest (income) expense, net, (3)
depreciation and amortization expense, (4) amortization of customer
relationship intangibles and trademarks, (5) expenses related to
the RSI acquisition and subsequent restructuring charges, (6)
inventory step-up amortization, (7) stock-based compensation
expense, (8) gain/loss on asset disposal and (9) unrealized
gain/loss on foreign exchange forward contracts. We believe
Adjusted EBITDA, when presented in conjunction with comparable GAAP
measures, is useful for investors because management uses Adjusted
EBITDA in evaluating the performance of our business.
We define Adjusted EBITDA margin as Adjusted EBITDA as a
percentage of net sales.
Free cash flow
To better understand trends in our business, we believe that it
is helpful to subtract amounts for capital expenditures consisting
of cash payments for property, plant and equipment and cash
payments for investments in displays from cash flows from
continuing operations which is how we define free cash flow.
Management believes this measure gives investors an additional
perspective on cash flow from operating activities in excess of
amounts required for reinvestment. It also provides a measure
of our ability to repay our debt obligations.
Net sales excluding RSI sales
To better understand and compare the performance of our core
American Woodmark business by our management and our investors, we
believe it is helpful to subtract the amount of sales from our
recently acquired and now wholly-owned subsidiary, RSI, from our
net sales and report this amount with our quarterly earnings
announcements. We may discontinue using this non-GAAP
financial measure at a later juncture once RSI has become fully
integrated into our Company and the quarter to quarter comparisons
of our core business are no longer as helpful to compare
performance.
A reconciliation of these non-GAAP financial measures and the
most directly comparable measures calculated and presented in
accordance with GAAP are set forth on the following tables:
Reconciliation of
Net Sales and Percentage of Net Sales Excluding RSI
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Three Months
Ended
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July
31
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(in
thousands)
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2018
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2017
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Percent
Change
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Net sales excluding
RSI
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$
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299,036
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$
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276,827
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8
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%
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RSI sales
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129,926
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—
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—
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Net Sales
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$
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428,962
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$
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276,827
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55
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%
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Reconciliation of
Adjusted Non-GAAP Financial Measures to the GAAP
Equivalents
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Three Months
Ended
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July
31
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(in
thousands)
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2018
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2017
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Net income
(GAAP)
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$
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24,767
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$
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22,281
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Add back:
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Income tax
expense
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7,772
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9,091
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Interest (income)
expense, net
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9,425
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(517)
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Depreciation and
amortization expense
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10,768
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5,536
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Amortization of
customer relationship intangibles and trademarks
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12,250
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—
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EBITDA
(Non-GAAP)
|
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$
|
64,982
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$
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36,391
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Add back:
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Acquisition related
expenses (1)
|
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2,761
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—
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Unrealized gain on
foreign exchange forward contracts (2)
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(794)
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—
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Stock compensation
expense
|
|
786
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|
945
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Loss on asset
disposal
|
|
354
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|
32
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|
Adjusted EBITDA
(Non-GAAP)
|
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$
|
68,089
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$
|
37,368
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|
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Net Sales
|
|
$
|
428,962
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|
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$
|
276,827
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Adjusted EBITDA
margin (Non-GAAP)
|
|
15.9
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%
|
|
13.5
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%
|
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(1)
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Acquisition related
expenses are comprised of expenses related to the RSI acquisition
and the subsequent restructuring charges that the Company
incurred.
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(2)
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In the normal course
of business the Company is subject to risk from adverse
fluctuations in foreign exchange rates. The Company manages
these risks through the use of foreign exchange forward
contracts. The changes in the fair value of the forward
contracts are recorded in other income in the operating
results.
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Reconciliation of
Net Income to Adjusted Net Income
|
|
|
Three Months
Ended
|
|
|
July
31
|
(in thousands, except
share data)
|
|
2018
|
|
2017
|
|
|
|
|
|
Net income
(GAAP)
|
|
$
|
24,767
|
|
|
$
|
22,281
|
|
Add back:
|
|
|
|
|
Acquisition related
expenses
|
|
2,761
|
|
|
—
|
|
Amortization of
customer relationship intangibles and trademarks
|
|
12,250
|
|
|
—
|
|
Tax benefit of add
backs
|
|
(3,798)
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|
|
—
|
|
Adjusted net income
(Non-GAAP)
|
|
$
|
35,980
|
|
|
$
|
22,281
|
|
|
|
|
|
|
Weighted average
diluted shares
|
|
17,618,943
|
|
|
16,355,045
|
|
Adjusted EPS per
diluted share (Non-GAAP)
|
|
$
|
2.04
|
|
|
$
|
1.36
|
|
|
Free Cash
Flow
|
|
|
Three Months
Ended
|
|
|
July
31
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Cash provided by
operating activities
|
|
$
|
52,937
|
|
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$
|
26,570
|
|
Less: Capital
expenditures (1)
|
|
11,563
|
|
|
11,680
|
|
Free cash
flow
|
|
$
|
41,374
|
|
|
$
|
14,890
|
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(1)
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Capital expenditures
consist of cash payments for property, plant and equipment and cash
payments for investments in displays. During the first
quarter of fiscal 2019 and 2018, approximately $4.5 million and
$3.6 million, respectively, in cash outflows were incurred related
to the new company headquarters.
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content:http://www.prnewswire.com/news-releases/american-woodmark-corporation-announces-first-quarter-results-300702402.html
SOURCE American Woodmark Corporation