American Woodmark Corporation (NASDAQ: AMWD) (the "Company")
today announced results for its third fiscal quarter ended January
31, 2021.
Net sales for the third fiscal quarter increased $36.2 million,
or 9.1%, to $432.0 million, compared with the same quarter of the
prior fiscal year. The Company experienced growth across all
channels, with low double-digit growth in the repair and remodel
sales channel and mid-single digit growth in our new construction
sales channel during the third quarter of fiscal 2021 as market
demand recovered with consumer confidence remaining strong. Net
sales for the first nine months of the current fiscal year
increased $19.5 million, or 1.6%, to $1,270.6 million from the
comparable period of the prior fiscal year.
Net income was $17.2 million ($1.01 per diluted share) for the
third quarter of fiscal 2021 compared with $12.8 million ($0.75 per
diluted share) in the same quarter of the prior fiscal year. Net
income for the third quarter of fiscal 2021 increased $4.4 million
due to an increase in net sales, offset by higher material and
logistics costs. In addition, the Company made an investment to
establish a distribution center and continued to enhance our labor
benefits for our hourly workforce. Net income for the first nine
months of the current fiscal year was $55.9 million ($3.28 per
diluted share) compared with $61.8 million ($3.65 per diluted
share) for the same period of the prior fiscal year. The Company
had a pre-tax $0.8 million restructuring related gain during the
third quarter of fiscal 2021, which was driven by a gain of $2.3
million from its sale of its Humboldt, Tennessee manufacturing
facility. The Company incurred net pre-tax restructuring costs of
$5.4 million during the first nine months of 2021 related to the
permanent layoffs due to COVID-19 announced in the fourth quarter
of fiscal 2020 and the first quarter of fiscal 2021 and the closure
of its Humboldt, Tennessee manufacturing plant announced in June
2020. Adjusted EPS per diluted share was $1.50 for the third
quarter of fiscal 2021 compared with $1.30 in the same quarter of
the prior fiscal year and $5.12 for the first nine months of the
current fiscal year compared with $5.27 for the same period of the
prior fiscal year.
Adjusted EBITDA for the third fiscal quarter increased $4.0
million, or 7.9%, to $54.1 million, or 12.5% of net sales, compared
to $50.1 million, or 12.7% of net sales, for the same quarter of
the prior fiscal year. Adjusted EBITDA for the first nine months of
the fiscal year was $176.0 million, or 13.9% of net sales, compared
to $182.6 million, or 14.6% of net sales, for the same period of
the prior fiscal year.
“Our teams delivered positive sales growth across all channels,
achieved adjusted EBITDA margins of 12.5% and we paid down an
additional $40.0 million of our term loan facility during the third
fiscal quarter," said Scott Culbreth, President and CEO. "Looking
forward our focus will be on continuing to increase production to
match a strong demand environment and mitigate inflationary
pressures in material, logistics and labor."
Cash provided by operating activities for the first nine months
of the current fiscal year was $107.5 million and free cash flow
totaled $74.3 million. As of January 31, 2021, the Company had
$91.8 million of cash on hand with no term loan debt maturities
until December 2022 plus access to $93.0 million of additional
availability under its revolving credit facility. The Company paid
down $80.0 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, 2021, the
Company operated seventeen manufacturing facilities in the United
States and Mexico and eight primary service centers and one
distribution center 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. (AMWD-ER)
AMERICAN WOODMARK
CORPORATION
Unaudited Financial
Highlights
(in thousands, except share
data)
Operating Results
Three Months Ended
Nine Months Ended
January 31
January 31
2021
2020
2021
2020
Net sales
$
431,954
$
395,755
$
1,270,624
$
1,251,136
Cost of sales & distribution
356,134
323,407
$
1,025,155
$
997,219
Gross profit
75,820
72,348
$
245,469
$
253,917
Sales & marketing expense
21,862
21,401
$
63,368
$
62,539
General & administrative expense
26,202
26,914
$
86,414
$
86,246
Restructuring charges, net
(847
)
—
$
5,404
$
(207
)
Operating income
28,603
24,033
$
90,283
$
105,339
Interest expense, net
5,746
6,924
$
17,757
$
22,448
Other income, net
(259
)
(165
)
$
(2,928
)
$
(699
)
Income tax expense
5,921
4,470
$
19,518
$
21,742
Net income
$
17,195
$
12,804
$
55,936
$
61,848
Earnings Per Share:
Weighted average shares outstanding -
diluted
17,047,211
16,974,956
17,036,586
16,947,449
Net income per diluted share
$
1.01
$
0.75
$
3.28
$
3.65
Condensed Consolidated Balance
Sheet
(Unaudited)
January 31
April 30
2021
2020
Cash & cash equivalents
$
91,792
$
97,059
Customer receivables
147,834
106,344
Inventories
144,592
111,836
Other current assets
19,836
9,933
Total current assets
404,054
325,172
Property, plant & equipment, net
200,885
203,824
Operating lease assets, net
121,600
127,668
Trademarks, net
—
2,222
Customer relationship intangibles, net
133,194
167,444
Goodwill
767,612
767,612
Other assets
29,523
28,864
Total assets
$
1,656,868
$
1,622,806
Current portion - long-term debt
$
2,044
$
2,216
Short-term operating lease liabilities
18,435
18,896
Accounts payable & accrued
expenses
190,404
134,494
Total current liabilities
210,883
155,606
Long-term debt
516,556
594,921
Deferred income taxes
45,609
52,935
Long-term operating lease liabilities
108,939
112,454
Other liabilities
11,490
6,352
Total liabilities
893,477
922,268
Stockholders' equity
763,391
700,538
Total liabilities & stockholders'
equity
$
1,656,868
$
1,622,806
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Nine Months Ended
January 31
2021
2020
Net cash provided by operating
activities
$
107,509
$
112,208
Net cash used by investing activities
(29,364
)
(30,213
)
Net cash used by financing activities
(83,412
)
(92,588
)
Net decrease in cash and cash
equivalents
(5,267
)
(10,593
)
Cash and cash equivalents, beginning of
period
97,059
57,656
Cash and cash equivalents, end of
period
$
91,792
$
47,063
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 to,
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 the subsequent restructuring
charges that the Company incurred related to the RSI acquisition,
(2) non-recurring restructuring charges, (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 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.
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 the subsequent restructuring charges that the
Company incurred related to the acquisition, (6) non-recurring
restructuring charges, (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.
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 EBITDA,
Adjusted EBITDA and Adjusted EBITDA margin
Three Months Ended
Nine Months Ended
January 31
January 31
(in thousands)
2021
2020
2021
2020
Net income (GAAP)
$
17,195
$
12,804
$
55,936
$
61,848
Add back:
Income tax expense
5,921
4,470
19,518
21,742
Interest expense, net
5,746
6,924
17,757
22,448
Depreciation and amortization expense
12,732
12,585
38,710
36,612
Amortization of customer relationship
intangibles and trademarks
11,972
12,250
36,472
36,750
EBITDA (Non-GAAP)
$
53,566
$
49,033
$
168,393
$
179,400
Add back:
Acquisition and restructuring related
expenses (1)
33
60
154
(29
)
Non-recurring restructuring charges, net
(2)
(847
)
—
5,404
—
Change in fair value of foreign exchange
forward contracts (3)
101
(148
)
(1,720
)
(244
)
Stock-based compensation expense
1,316
1,047
3,543
3,122
(Gain) loss on asset disposal
(97
)
133
235
350
Adjusted EBITDA (Non-GAAP)
$
54,072
$
50,125
$
176,009
$
182,599
Net Sales
$
431,954
$
395,755
$
1,270,624
$
1,251,136
Adjusted EBITDA margin (Non-GAAP)
12.5
%
12.7
%
13.9
%
14.6
%
(1) Acquisition and restructuring related
expenses are comprised of expenses related to the acquisition of
RSI Home Products, Inc. and the subsequent restructuring charges
that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges
are comprised of expenses incurred related to the permanent layoffs
due to COVID-19 and the closure of the manufacturing plant in
Humboldt, Tennessee. The nine months ended January 31, 2021
includes accelerated depreciation expense of $1.3 million related
to Humboldt. The three and nine months ended January 31, 2021
includes gain on asset disposal of $2.5 million and $2.2 million,
respectively, related to Humboldt.
(3) 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.
Reconciliation of Net Income
to Adjusted Net Income
Three Months Ended
Nine Months Ended
January 31
January 31
(in thousands, except share data)
2021
2020
2021
2020
Net income (GAAP)
$
17,195
$
12,804
$
55,936
$
61,848
Add back:
Acquisition and restructuring related
expenses
33
60
154
(29
)
Non-recurring restructuring charges,
net
(847
)
—
5,404
—
Amortization of customer relationship
intangibles and trademarks
11,972
12,250
36,472
36,750
Tax benefit of add backs
(2,815
)
(3,127
)
(10,718
)
(9,327
)
Adjusted net income (Non-GAAP)
$
25,538
$
21,987
$
87,248
$
89,242
Weighted average diluted shares
17,047,211
16,974,956
17,036,586
16,947,449
Adjusted EPS per diluted share
(Non-GAAP)
$
1.50
$
1.30
$
5.12
$
5.27
Free Cash Flow
Nine Months Ended
January
2021
2020
Cash provided by operating activities
$
107,509
$
112,208
Less: Capital expenditures (1)
33,236
32,034
Free cash flow
$
74,273
$
80,174
(1) Capital expenditures consist of cash
payments for property, plant and equipment and cash payments for
investments in displays.
Net Leverage
Twelve Months Ended
January 31
(in thousands)
2021
Net income (GAAP)
$
68,950
Add back:
Income tax expense
23,463
Interest expense, net
24,336
Depreciation and amortization expense
51,612
Amortization of customer relationship
intangibles and trademarks
48,722
EBITDA (Non-GAAP)
$
217,083
Add back:
Acquisition and restructuring related
expenses (1)
215
Non-recurring restructuring charges, net
(2)
5,593
Change in fair value of foreign exchange
forward contracts (3)
(375
)
Stock-based compensation expense
4,409
Loss on asset disposal
2,514
Adjusted EBITDA (Non-GAAP)
$
229,439
As of
January 31
2021
Current maturities of long-term debt
$
2,044
Long-term debt, less current
maturities
516,556
Total debt
518,600
Less: cash and cash equivalents
(91,792
)
Net debt
$
426,808
Net leverage (4)
1.86
(1) Acquisition and restructuring related
expenses are comprised of expenses related to the acquisition of
RSI Home Products, Inc. and the subsequent restructuring charges
that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges
are comprised of expenses incurred related to the permanent layoffs
due to COVID-19 and the closure of the manufacturing plant in
Humboldt, Tennessee.
(3) 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.
(4) Net debt divided by Adjusted EBITDA
for the twelve months ended January 31, 2021.
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version on businesswire.com: https://www.businesswire.com/news/home/20210225005243/en/
Kevin Dunnigan Treasury Director 540-665-9100
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