WINCHESTER, Va., May 28, 2019 /PRNewswire/ -- American Woodmark
Corporation (NASDAQ: AMWD) (the "Company") today announced results
for its fourth fiscal quarter ended April
30, 2019.
Net sales for the fourth fiscal quarter increased 0.4% to
$407 million compared with the same
quarter of the prior fiscal year. Net sales for the current
fiscal year increased 32% to $1,645
million from the prior fiscal year. The Company
experienced growth in the builder channel and independent dealers
and distributors channel during the fourth quarter of fiscal year
2019. The current fiscal year results include eight
incremental months (May through December) 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, the Company
experienced growth in all channels during fiscal year 2019 versus
the comparable prior year period.
Net income was $22.0 million
($1.30 per diluted share) for the
fourth quarter of the current fiscal year compared with
$19.1 million ($1.08 per diluted share) in the same quarter of
the prior fiscal year. Net income for the current quarter was
positively impacted by lower interest expense and taxes. Net
income for the current fiscal year was $83.7
million ($4.83 per diluted
share) compared with $63.1 million
($3.77 per diluted share) for the
prior fiscal year. Adjusted EPS per diluted share was
$1.87 for the fourth quarter of the
current fiscal year compared with $1.64 in the same quarter of the prior fiscal
year and $6.91 for the current fiscal
year compared with $5.24 for the
prior fiscal year.
Adjusted EBITDA for the fourth fiscal quarter was $63.8 million, or 15.7% of net sales, compared to
$65.3 million, or 16.1% of net sales,
for the same quarter of the prior fiscal year. Adjusted
EBITDA for the current fiscal year was $244.9 million, or 14.9% of net sales, compared
to $175.8 million, or 14.1% of net
sales, for the prior fiscal year. The increase in the current
fiscal year is primarily due to the inclusion of eight incremental
months of results for RSI.
"Volatility by channel continued into our fourth fiscal
quarter," said Cary Dunston,
Chairman and CEO. "We experienced solid growth in the builder
channel, and independent dealer and distributor channel, however
the home center channel proved to be challenging. Despite the
lower growth and market cost headwinds, we continued to gain cost
leverage through our integration work and are pleased with our
adjusted EBITDA performance. Despite the quarter-to-quarter
uncertainty in the market, we remain very confident in the
underlying industry fundamentals and our ability to grow in all
channels."
Cash provided by operating activities for the current fiscal
year was $190.8 million. Free
cash flow totaled $151.5 million for
the current fiscal year. The Company paid down $120.0 million of its term loan facility during
the current fiscal year and repurchased 745,232 shares of common
stock at a cost of $50.0 million.
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
April 30, 2019, the Company operated
eighteen manufacturing facilities in the
United States and Mexico
and eight 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 and Quarterly Reports on Form
10-Q. 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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|
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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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Twelve Months
Ended
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April
30
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April
30
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2019
|
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2018
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2019
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2018
|
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|
|
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|
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|
Net sales
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$
|
407,399
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|
$
|
405,887
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$
|
1,645,319
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$
|
1,250,274
|
Cost of sales &
distribution
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|
320,277
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316,692
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1,298,846
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|
994,871
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Gross
profit
|
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87,122
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|
89,195
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|
346,473
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|
255,403
|
Sales & marketing
expense
|
|
21,736
|
|
22,446
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|
89,875
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77,843
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General &
administrative expense
|
|
26,907
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|
28,413
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|
112,917
|
|
69,855
|
Restructuring
charges
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|
(74)
|
|
—
|
|
1,987
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|
—
|
Operating
income
|
|
38,553
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|
38,336
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|
141,694
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107,705
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Interest expense,
net
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|
8,448
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|
10,167
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|
35,652
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|
13,054
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Other (income)
expense, net
|
|
1,291
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|
8
|
|
(4,846)
|
|
(109)
|
Income tax
expense
|
|
6,790
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|
9,052
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|
27,200
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|
31,619
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Net income
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|
$
|
22,024
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$
|
19,109
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$
|
83,688
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$
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63,141
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Earnings Per
Share:
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Weighted average
shares outstanding - diluted
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16,906,081
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17,618,977
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17,330,419
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16,744,705
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Net income per
diluted share
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$
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1.30
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$
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1.08
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$
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4.83
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$
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3.77
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Condensed
Consolidated Balance Sheet
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(Unaudited)
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April
30
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April
30
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2019
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2018
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Cash & cash
equivalents
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|
$
|
57,656
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$
|
78,410
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Investments -
certificates of deposit
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|
1,500
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|
8,000
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Customer
receivables
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125,901
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136,355
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Inventories
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108,528
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104,801
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Income taxes
receivable
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|
1,009
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25,996
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Other current
assets
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11,441
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10,805
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Total current
assets
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306,035
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364,367
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Property, plant &
equipment, net
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208,263
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218,102
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Investments -
certificates of deposit
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—
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1,500
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Trademarks,
net
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5,555
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8,889
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Customer relationship
intangibles, net
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213,111
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258,778
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Goodwill
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767,612
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767,451
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Other
assets
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29,355
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26,258
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Total
assets
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$
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1,529,931
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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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2,286
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$
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4,143
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Accounts payable
& accrued expenses
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147,304
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166,312
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Total current
liabilities
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149,590
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170,455
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Long-term
debt
|
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689,205
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809,897
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Deferred income
taxes
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64,749
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71,563
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Other
liabilities
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|
6,034
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11,765
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Total
liabilities
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909,578
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|
1,063,680
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Stockholders'
equity
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620,353
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|
581,665
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Total liabilities
& stockholders' equity
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|
$
|
1,529,931
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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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|
Twelve Months
Ended
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|
April
30
|
|
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2019
|
|
2018
|
|
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|
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Net cash provided by
operating activities
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|
$
|
190,845
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|
$
|
86,775
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Net cash used by
investing activities
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(37,923)
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|
(44,316)
|
Net cash used by
financing activities
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|
(173,676)
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|
(141,027)
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Net decrease in cash
and cash equivalents
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|
(20,754)
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|
(98,568)
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Cash and cash
equivalents, beginning of period
|
|
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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57,656
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$
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78,410
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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 and subsequent restructuring charges, (2) inventory
step-up amortization due to the increase in the fair value of
inventory acquired through the RSI acquisition, (3) the
amortization of customer relationship intangibles and trademarks,
(4) net gain on debt forgiveness and modification and (5) the tax
benefit of RSI acquisition expenses and subsequent restructuring
charges, the inventory step-up amortization, the net gain on debt
forgiveness and modification and the amortization of customer
relationship intangibles and trademarks. 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 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 due to the increase in the fair value of
inventory acquired through the RSI acquisition, (7) stock-based
compensation expense, (8) gain/loss on asset disposals, (9) change
in fair value of foreign exchange forward contracts and (10) net
gain on debt forgiveness and modification. 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.
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
Adjusted Non-GAAP Financial Measures to the GAAP
Equivalents
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|
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|
Three Months
Ended
|
|
Twelve Months
Ended
|
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|
April
30
|
|
April
30
|
(in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
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|
|
|
Net income
(GAAP)
|
|
$
|
22,024
|
|
|
$
|
19,109
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|
$
|
83,688
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|
|
$
|
63,141
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|
Add back:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
6,790
|
|
|
9,052
|
|
|
27,200
|
|
|
31,619
|
|
Interest expense,
net
|
|
8,448
|
|
|
10,167
|
|
|
35,652
|
|
|
13,054
|
|
Depreciation and
amortization expense
|
|
11,912
|
|
|
11,092
|
|
|
45,446
|
|
|
28,671
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|
Amortization of
customer relationship intangibles
|
|
|
|
|
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and
trademarks
|
|
12,250
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|
|
12,250
|
|
|
49,000
|
|
|
16,333
|
|
EBITDA
(Non-GAAP)
|
|
$
|
61,424
|
|
|
$
|
61,670
|
|
|
$
|
240,986
|
|
|
$
|
152,818
|
|
Add back:
|
|
|
|
|
|
|
|
|
Acquisition related
expenses (1)
|
|
116
|
|
|
2,739
|
|
|
4,118
|
|
|
12,902
|
|
Inventory step-up
amortization
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,334
|
|
Change in fair value
of foreign exchange forward
|
|
|
|
|
|
|
|
|
contracts (2)
|
|
291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net gain on debt
forgiveness and modification (3)
|
|
(95)
|
|
|
—
|
|
|
(5,266)
|
|
|
—
|
|
Stock-based
compensation expense
|
|
750
|
|
|
591
|
|
|
3,040
|
|
|
3,097
|
|
Loss on asset
disposal
|
|
1,312
|
|
|
335
|
|
|
1,973
|
|
|
615
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
|
63,798
|
|
|
$
|
65,335
|
|
|
$
|
244,851
|
|
|
$
|
175,766
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
407,399
|
|
|
$
|
405,887
|
|
|
$
|
1,645,319
|
|
|
$
|
1,250,274
|
|
Adjusted EBITDA
margin (Non-GAAP)
|
|
15.7
|
%
|
|
16.1
|
%
|
|
14.9
|
%
|
|
14.1
|
%
|
(1) Acquisition related expenses are comprised of expenses
related to the RSI acquisition and the subsequent restructuring
charges that the Company incurred.
(2) 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 expense (income) in the
operating results.
(3) The Company had loans and interest forgiven relating to
four separate economic development loans totaling $0.1 million and $5.5
million, for the fourth quarter and fiscal year 2019,
respectively, and the Company incurred $0.3
million in loan modification expense in connection with an
amendment to the credit agreement during fiscal year 2019.
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
April
30
|
|
April
30
|
(in thousands, except
share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$
|
22,024
|
|
$
|
19,109
|
|
$
|
83,688
|
|
$
|
63,141
|
Add back:
|
|
|
|
|
|
|
|
|
Acquisition related
expenses
|
|
116
|
|
2,739
|
|
4,118
|
|
12,902
|
Inventory step-up
amortization
|
|
—
|
|
—
|
|
—
|
|
6,334
|
Amortization of
customer relationship intangibles
|
|
|
|
|
|
|
|
|
and
trademarks
|
|
12,250
|
|
12,250
|
|
49,000
|
|
16,333
|
Net gain on debt
forgiveness and modification
|
|
(95)
|
|
—
|
|
(5,266)
|
|
—
|
Tax benefit of add
backs
|
|
(2,763)
|
|
(5,134)
|
|
(11,824)
|
|
(10,970)
|
Adjusted net income
(Non-GAAP)
|
|
$
|
31,532
|
|
$
|
28,964
|
|
$
|
119,716
|
|
$
|
87,740
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares
|
|
16,906,081
|
|
17,618,977
|
|
17,330,419
|
|
16,744,705
|
Adjusted EPS per
diluted share (Non-GAAP)
|
|
$
|
1.87
|
|
$
|
1.64
|
|
$
|
6.91
|
|
$
|
5.24
|
Free Cash
Flow
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
April
30
|
|
|
2019
|
|
2018
|
|
|
|
|
|
Cash provided by
operating activities
|
|
$
|
190,845
|
|
$
|
86,775
|
Less: Capital
expenditures (1)
|
|
39,385
|
|
49,893
|
Free cash
flow
|
|
$
|
151,460
|
|
$
|
36,882
|
(1) Capital expenditures consist of cash payments for property,
plant and equipment and cash payments for investments in
displays. During fiscal 2019 and 2018, approximately
$6.7 million and $21.1 million, respectively, in cash outflows
were incurred related to the new company headquarters.
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SOURCE American Woodmark Corporation