WINCHESTER, Va., Feb. 25, 2020 /PRNewswire/ -- American
Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced
results for its third fiscal quarter ended January 31, 2020.
Net sales for the third fiscal quarter increased 3.0% to
$395.8 million compared with the same
quarter of the prior fiscal year. The Company experienced
growth in the builder and home center channels during the third
quarter of fiscal year 2020. Net sales for the first nine
months of the current fiscal year increased 1.1% to $1,251.1 million from the comparable period of
the prior fiscal year. The Company experienced growth in the
builder channel during the first nine months of fiscal year 2020,
which was partially offset by declines in the home center and
independent dealers and distributors channels.
Net income was $12.8 million
($0.75 per diluted share) for the
third quarter of the current fiscal year compared with $18.4 million ($1.07 per diluted share) in the same quarter of
the prior fiscal year. Net income for the current quarter was
negatively impacted by tariffs, particleboard supply disruption
costs and expenses related to the completion of our facility move
in California. Net income for the first nine months of the
current fiscal year was $61.8 million
($3.65 per diluted share) compared
with $61.7 million ($3.53 per diluted share) for the same period of
the prior fiscal year. Adjusted EPS per diluted share was
$1.30 for the third quarter of the
current fiscal year compared with $1.40 in the same quarter of the prior fiscal
year and $5.27 for the first nine
months of the current fiscal year compared with $5.05 for the same period of the prior fiscal
year.
Adjusted EBITDA for the third fiscal quarter was $50.1 million, or 12.7% of net sales, compared to
$52.2 million, or 13.6% of net sales,
for the same quarter of the prior fiscal year. Adjusted
EBITDA for the first nine months of the fiscal year was
$182.6 million, or 14.6% of net
sales, compared to $181.1 million, or
14.6% of net sales, for the same period of the prior fiscal
year.
"Although we believe we experienced good growth relative to the
market, our third fiscal quarter financials proved to be
challenging due to ongoing volatility in the market and a more
prominent impact from cost headwinds," said Cary Dunston, Chairman and CEO. "We had
solid growth within our builder, dealer and stock home center
businesses, which was partially offset by a decline in our
made-to-order home center business. Margins were challenged
due to the completion of our facility move in California and the continued cost associated
with tariffs and particle board disruption."
Cash provided by operating activities for the first nine months
of the current fiscal year was $112.2
million and free cash flow totaled $80.2 million. The Company paid down
$90.0 million of its term loan
facility during the first nine months of the current fiscal
year.
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
January 31, 2020, 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. 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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Nine Months
Ended
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January
31
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January
31
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2020
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2019
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2020
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2019
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Net sales
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$
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395,755
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$
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384,080
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$
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1,251,136
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$
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1,237,920
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Cost of sales &
distribution
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323,407
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307,227
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997,219
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978,569
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Gross
profit
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72,348
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76,853
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253,917
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259,351
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Sales & marketing
expense
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21,401
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22,215
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62,539
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68,139
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General &
administrative expense
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26,914
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27,462
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86,246
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86,010
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Restructuring
charges
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—
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26
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(207)
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2,061
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Operating
income
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24,033
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27,150
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105,339
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103,141
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Interest expense,
net
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6,924
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8,836
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22,448
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27,204
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Other (income)
expense, net
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(165)
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(5,812)
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(699)
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(6,137)
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Income tax
expense
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4,470
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5,717
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21,742
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20,410
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Net income
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$
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12,804
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$
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18,409
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$
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61,848
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$
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61,664
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Earnings Per
Share:
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Weighted average
shares outstanding - diluted
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16,974,956
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17,216,327
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16,947,449
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17,466,936
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Net income per
diluted share
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$
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0.75
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$
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1.07
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$
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3.65
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$
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3.53
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Condensed
Consolidated Balance Sheet
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(Unaudited)
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January
31
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April
30
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2020
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2019
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Cash & cash
equivalents
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$
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47,063
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$
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57,656
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Investments -
certificates of deposit
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—
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1,500
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Customer
receivables
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122,353
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125,901
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Inventories
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121,930
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108,528
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Income taxes
receivable
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6,238
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1,009
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Other current
assets
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14,627
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11,441
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Total current
assets
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312,211
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306,035
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Property, plant &
equipment, net
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208,780
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208,263
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Operating lease
assets, net
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90,530
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—
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Trademarks,
net
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3,056
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5,555
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Customer relationship
intangibles, net
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178,861
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213,111
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Goodwill
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767,612
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767,612
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Other
assets
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32,784
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29,355
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Total
assets
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$
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1,593,834
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$
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1,529,931
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Current portion -
long-term debt
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$
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2,309
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$
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2,286
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Short-term operating
lease liabilities
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20,837
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—
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Accounts payable
& accrued expenses
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146,056
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147,304
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Total current
liabilities
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169,202
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149,590
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Long-term
debt
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600,573
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689,205
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Deferred income
taxes
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56,634
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64,749
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Long-term operating
lease liabilities
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73,297
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—
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Other
liabilities
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4,843
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6,034
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Total
liabilities
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904,549
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909,578
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Stockholders'
equity
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689,285
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620,353
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Total liabilities
& stockholders' equity
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$
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1,593,834
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$
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1,529,931
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Condensed
Consolidated Statements of Cash Flows
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(Unaudited)
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Nine Months
Ended
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January
31
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2020
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2019
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Net cash provided by
operating activities
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$
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112,208
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$
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137,950
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Net cash used by
investing activities
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(30,213)
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(31,299)
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Net cash used by
financing activities
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(92,588)
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(143,052)
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Net decrease in cash
and cash equivalents
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(10,593)
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(36,401)
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Cash and cash
equivalents, beginning of period
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57,656
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78,410
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Cash and cash
equivalents, end of period
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$
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47,063
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$
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42,009
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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
acquisition of RSI Home Products, Inc. ("RSI acquisition") and
subsequent restructuring charges, (2) the amortization of customer
relationship intangibles and trademarks, (3) net gain on debt
forgiveness and modification and (4) the tax benefit of RSI
acquisition expenses and subsequent restructuring charges, 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) stock-based
compensation expense, (7) gain/loss on asset disposals, (8) change
in fair value of foreign exchange forward contracts and (9) 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.
Net leverage
Net leverage is a performance measure that we believe provides
investors a more complete understanding of our leverage position
and borrowing capacity after factoring in cash and cash equivalents
that eventually could be used to repay outstanding debt.
We define net leverage as net debt (total debt less cash and
cash equivalents) divided by the trailing 12 months Adjusted
EBITDA.
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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|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
January
31
|
|
January
31
|
(in
thousands)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$
|
12,804
|
|
|
$
|
18,409
|
|
|
$
|
61,848
|
|
|
$
|
61,664
|
|
Add back:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
4,470
|
|
|
5,717
|
|
|
21,742
|
|
|
20,410
|
|
Interest expense,
net
|
|
6,924
|
|
|
8,836
|
|
|
22,448
|
|
|
27,204
|
|
Depreciation and
amortization expense
|
|
12,585
|
|
|
11,308
|
|
|
36,612
|
|
|
33,534
|
|
Amortization of
customer relationship intangibles
|
|
|
|
|
|
|
|
|
and
trademarks
|
|
12,250
|
|
|
12,250
|
|
|
36,750
|
|
|
36,750
|
|
EBITDA
(Non-GAAP)
|
|
$
|
49,033
|
|
|
$
|
56,520
|
|
|
$
|
179,400
|
|
|
$
|
179,562
|
|
Add back:
|
|
|
|
|
|
|
|
|
Acquisition related
expenses (1)
|
|
60
|
|
|
593
|
|
|
(29)
|
|
|
4,002
|
|
Change in fair value
of foreign exchange forward
|
|
|
|
|
|
|
|
|
contracts (2)
|
|
(148)
|
|
|
(490)
|
|
|
(244)
|
|
|
(291)
|
|
Net gain on debt
forgiveness and modification (3)
|
|
—
|
|
|
(5,171)
|
|
|
—
|
|
|
(5,171)
|
|
Stock-based
compensation expense
|
|
1,047
|
|
|
668
|
|
|
3,122
|
|
|
2,290
|
|
Loss on asset
disposal
|
|
133
|
|
|
76
|
|
|
350
|
|
|
661
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
|
50,125
|
|
|
$
|
52,196
|
|
|
$
|
182,599
|
|
|
$
|
181,053
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
395,755
|
|
|
$
|
384,080
|
|
|
$
|
1,251,136
|
|
|
$
|
1,237,920
|
|
Adjusted EBITDA
margin (Non-GAAP)
|
|
12.7
|
%
|
|
13.6
|
%
|
|
14.6
|
%
|
|
14.6
|
%
|
|
(1) Acquisition
related expenses are comprised of expenses related to the
acquisition of RSI Home Products, Inc. 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 $5.5 million and the Company incurred
$0.3 million in loan modification expense with amendment to the
credit agreement during the third quarter of fiscal
2019.
|
Reconciliation of
Net Income to Adjusted Net Income
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
January
31
|
|
January
31
|
(in thousands, except
share data)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
|
$
|
12,804
|
|
|
$
|
18,409
|
|
|
$
|
61,848
|
|
|
$
|
61,664
|
|
Add back:
|
|
|
|
|
|
|
|
|
Acquisition related
expenses
|
|
60
|
|
|
593
|
|
|
(29)
|
|
|
4,002
|
|
Amortization of
customer relationship intangibles
|
|
|
|
|
|
|
|
|
and
trademarks
|
|
12,250
|
|
|
12,250
|
|
|
36,750
|
|
|
36,750
|
|
Net gain on debt
forgiveness and modification
|
|
—
|
|
|
(5,171)
|
|
|
—
|
|
|
(5,171)
|
|
Tax benefit of add
backs
|
|
(3,127)
|
|
|
(1,972)
|
|
|
(9,327)
|
|
|
(9,061)
|
|
Adjusted net income
(Non-GAAP)
|
|
$
|
21,987
|
|
|
$
|
24,109
|
|
|
$
|
89,242
|
|
|
$
|
88,184
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares
|
|
16,974,956
|
|
|
17,216,327
|
|
|
16,947,449
|
|
|
17,466,936
|
|
Adjusted EPS per
diluted share (Non-GAAP)
|
|
$
|
1.30
|
|
|
$
|
1.40
|
|
|
$
|
5.27
|
|
|
$
|
5.05
|
|
|
|
Free Cash
Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
January
31
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities
|
|
|
|
|
|
|
|
|
|
$
|
112,208
|
|
|
$
|
137,950
|
|
Less: Capital
expenditures (1)
|
|
|
|
|
|
|
|
|
|
32,034
|
|
|
31,756
|
|
Free cash
flow
|
|
|
|
|
|
|
|
|
|
$
|
80,174
|
|
|
$
|
106,194
|
|
|
(1) Capital
expenditures consist of cash payments for property, plant and
equipment and cash payments for investments in displays.
During the first nine months of fiscal 2020 and 2019, approximately
$0.6 million and $6.6 million, respectively, in cash outflows were
incurred related to the new company headquarters.
|
Net
Leverage
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
January
31
|
(in
thousands)
|
|
2020
|
|
|
|
Net income
(GAAP)
|
|
$
|
83,872
|
|
Add back:
|
|
|
Income tax
expense
|
|
28,532
|
|
Interest expense,
net
|
|
30,896
|
|
Depreciation and
amortization expense
|
|
48,524
|
|
Amortization of
customer relationship intangibles
|
|
|
and
trademarks
|
|
49,000
|
|
EBITDA
(Non-GAAP)
|
|
$
|
240,824
|
|
Add back:
|
|
|
Acquisition related
expenses (1)
|
|
85
|
|
Change in fair value
of foreign exchange forward contracts (2)
|
|
47
|
|
Net gain on debt
forgiveness and modification (3)
|
|
(95)
|
|
Stock-based
compensation expense
|
|
3,873
|
|
Loss on asset
disposal
|
|
1,662
|
|
Adjusted EBITDA
(Non-GAAP)
|
|
$
|
246,396
|
|
|
|
|
|
|
As
of
|
|
|
January
31
|
|
|
2020
|
Current maturities of
long-term debt
|
|
$
|
2,309
|
|
Long-term debt, less
current maturities
|
|
600,573
|
|
Total debt
|
|
602,882
|
|
Less: cash and cash
equivalents
|
|
(47,063)
|
|
Net debt
|
|
$
|
555,819
|
|
|
|
|
Net leverage
(4)
|
|
2.26
|
|
|
(1) Acquisition
related expenses are comprised of expenses related to the
acquisition of RSI Home Products, Inc. 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 during the fourth quarter
of fiscal year 2019.
(4) Net debt
divided by Adjusted EBITDA for the twelve months ended January 31,
2020.
|
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content:http://www.prnewswire.com/news-releases/american-woodmark-corporation-announces-third-quarter-results-301010142.html
SOURCE American Woodmark Corporation