Fiscal First Quarter 2024 Financial Highlights:
- Net sales decreased 8.2% year-over-year to $498.3 million
- Net income increased 89% year-over-year to $37.9 million
- GAAP EPS of $2.28; Adjusted EPS of $2.78
- Adjusted EBITDA increased 33% year-over-year to $75.2
million
- Cash provided by operating activities of $86.7 million, free
cash flow of $72.5 million
- Repurchased 328,295 shares for $22.1 million
American Woodmark Corporation (NASDAQ: AMWD) (the "Company")
today announced results for its first fiscal quarter ended July 31,
2023.
“Our team delivered strong financial performance in the first
quarter of fiscal year 2024 despite the softening demand
environment,” said Scott Culbreth, President and CEO. “Net sales
and Adjusted EBITDA exceeded our expectations for the quarter as
improved operational performance continues. The Company’s net sales
outlook remains unchanged from the prior outlook but we now expect
stronger Adjusted EBITDA performance consistent with the
improvements needed to meet our long-term goals.”
First Quarter Results
Net sales for the first quarter of fiscal 2024 decreased $44.6
million, or 8.2%, to $498.3 million compared with the same quarter
of the prior fiscal year. Net income was $37.9 million ($2.28 per
diluted share) compared with $20.1 million ($1.21 per diluted
share) in the same quarter of the prior fiscal year. Net income for
the first quarter of fiscal 2024 increased $17.8 million due to
operational improvements in our manufacturing facilities, a
stabilizing supply chain and reduced overhead spending, partially
offset by a decrease in net sales and a $4.9 million pre-tax charge
related to the plywood case. Adjusted EPS per diluted share was
$2.78 for the first quarter of fiscal 2024 compared with $1.71 in
the same quarter of the prior fiscal year. Adjusted EBITDA for the
first quarter of fiscal 2024 increased $18.7 million, or 33.0%, to
$75.2 million, or 15.1% of net sales, compared to $56.5 million, or
10.4% of net sales, for the same quarter of the prior fiscal
year.
Balance Sheet & Cash Flow
As of July 31, 2023, the Company had $89.7 million in cash plus
access to $323.2 million of additional availability under its
revolving credit facility. Also, as of July 31, 2023, the Company
had $206.3 million in term loan debt and $163.8 million drawn on
its revolving credit facility.
Cash provided by operating activities for the current fiscal
quarter was $86.7 million and free cash flow totaled $72.5 million.
The Company repurchased 328,295 shares, or approximately 2% of
shares outstanding, for $22.1 million during the first quarter of
fiscal 2024.
Fiscal 2024 Financial Outlook
For fiscal 2024 (which includes the now completed first quarter)
the Company expects:
- Low double digit net sales decline year-over-year
- Adjusted EBITDA in the range of $225 million to $245
million
“Our teams improved Adjusted EBITDA by 470 BPS to $75.2 million,
or 15.1% of net sales, despite the decline in sales of 8.2% during
the first quarter of fiscal 2024. Our team continues to deliver on
the commitment to improving our results,” said Paul Joachimczyk,
Senior Vice President and Chief Financial Officer. “Given our
strong performance at the start of the fiscal year, we are
increasing our fiscal year 2024 Adjusted EBITDA outlook by $20
million which expands the range to $225 million to $245
million.”
Our Adjusted EBITDA outlook excludes the impact of certain
income and expense items that management believes are not part of
underlying operations. These items may include restructuring costs,
interest expense, stock-based compensation expense, and certain tax
items. Our management cannot estimate on a forward-looking basis
the impact of these income and expense items on its reported net
income, which could be significant, are difficult to predict, and
may be highly variable. As a result, the Company does not provide a
reconciliation to the closest corresponding GAAP financial measure
for its Adjusted EBITDA outlook.
About American Woodmark
American Woodmark celebrates the creativity in all of us. With
over 8,800 employees and more than a dozen brands, we’re one of the
nation’s largest cabinet manufacturers. From inspiration to
installation, we help people find their unique style and turn their
home into a space for self-expression. By partnering with major
home centers, builders, and independent dealers and distributors,
we spark the imagination of homeowners and designers and bring
their vision to life. Across our service and distribution centers,
our corporate office, and manufacturing facilities, you’ll always
find the same commitment to customer satisfaction, integrity,
teamwork, and excellence. Visit americanwoodmark.com to learn more
and start building something distinctly your own.
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
Unaudited Financial
Highlights
(in thousands, except share
data)
Operating Results
Three Months Ended
July 31,
2023
2022
Net sales
$
498,255
$
542,893
Cost of sales & distribution
388,646
456,146
Gross profit
109,609
86,747
Sales & marketing expense
24,360
25,766
General & administrative expense
35,594
30,180
Restructuring charges, net
(172
)
—
Operating income
49,827
30,801
Interest expense, net
2,437
4,053
Pension settlement, net
—
(239
)
Other (income) expense, net
(1,075
)
226
Income tax expense
10,615
6,691
Net income
$
37,850
$
20,070
Earnings Per Share:
Weighted average shares outstanding -
diluted
16,589,481
16,619,916
Net income per diluted share
$
2.28
$
1.21
Condensed Consolidated Balance
Sheet
(Unaudited)
July 31,
April 30,
2023
2023
Cash & cash equivalents
$
89,650
$
41,732
Customer receivables
117,763
119,163
Inventories
167,539
190,699
Other current assets
19,160
16,661
Total current assets
394,112
368,255
Property, plant and equipment, net
223,810
219,415
Operating lease assets, net
96,609
99,526
Customer relationship intangibles, net
19,028
30,444
Goodwill
767,612
767,612
Other assets
29,458
33,546
Total assets
$
1,530,629
$
1,518,798
Current portion - long-term debt
$
2,177
$
2,263
Short-term operating lease liabilities
25,231
24,778
Accounts payable & accrued
expenses
148,094
151,083
Total current liabilities
175,502
178,124
Long-term debt
369,362
369,396
Deferred income taxes
9,817
11,930
Long-term operating lease liabilities
77,806
81,370
Other liabilities
3,777
4,190
Total liabilities
636,264
645,010
Stockholders' equity
894,365
873,788
Total liabilities & stockholders'
equity
$
1,530,629
$
1,518,798
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Three Months Ended
July 31,
2023
2022
Net cash provided by operating
activities
$
86,721
$
37,295
Net cash used by investing activities
(14,223
)
(4,560
)
Net cash used by financing activities
(24,580
)
(21,364
)
Net increase in cash and cash
equivalents
47,918
11,371
Cash and cash equivalents, beginning of
period
41,732
22,325
Cash and cash equivalents, end of
period
$
89,650
$
33,696
Non-GAAP Financial Measures
We have reported our financial results in accordance with U.S.
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.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
We use EBITDA, 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 EBITDA, 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 EBITDA as net income (loss) adjusted to exclude (1)
income tax expense (benefit), (2) interest expense, net, (3)
depreciation and amortization expense, (4) amortization of customer
relationship intangibles and trademarks. We define Adjusted EBITDA
as EBITDA adjusted to exclude (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 acquisition, (2) non-recurring restructuring charges, (3)
net gain/loss on debt forgiveness and modification, (4) stock-based
compensation expense, (5) gain/loss on asset disposals, (6) change
in fair value of foreign exchange forward contracts, and (7)
pension settlement charges. 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.
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 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/loss on debt forgiveness and modification,
(5) pension settlement charges, and (6) 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.
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
July 31,
(in thousands)
2023
2022
Net income (GAAP)
$
37,850
$
20,070
Add back:
Income tax expense
10,615
6,691
Interest expense, net
2,437
4,053
Depreciation and amortization expense
11,745
12,430
Amortization of customer relationship
intangibles
11,417
11,417
EBITDA (Non-GAAP)
$
74,064
$
54,661
Add back:
Acquisition and restructuring related
expenses (1)
20
20
Non-recurring restructuring charges, net
(2)
(172
)
—
Pension settlement, net
—
(239
)
Change in fair value of foreign exchange
forward contracts (3)
(1,015
)
238
Stock-based compensation expense
2,247
1,635
Loss on asset disposal
7
177
Adjusted EBITDA (Non-GAAP)
$
75,151
$
56,492
Net Sales
$
498,255
$
542,893
Net income margin (GAAP)
7.6
%
3.7
%
Adjusted EBITDA margin (Non-GAAP)
15.1
%
10.4
%
(1) Acquisition and restructuring related expenses are comprised
of expenses related to the RSI acquisition 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 nationwide reduction-in-force
implemented in the third and fourth quarters of fiscal 2023.
(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) expense, net in the
operating results.
Reconciliation of Net Income
to Adjusted Net Income
Three Months Ended
July 31,
(in thousands, except share data)
2023
2022
Net income (GAAP)
$
37,850
$
20,070
Add back:
Acquisition and restructuring related
expenses
20
20
Non-recurring restructuring charges,
net
(172
)
—
Pension settlement, net
—
(239
)
Amortization of customer relationship
intangibles and trademarks
11,417
11,417
Tax benefit of add backs
(2,940
)
(2,900
)
Adjusted net income (Non-GAAP)
$
46,175
$
28,368
Weighted average diluted shares (GAAP)
16,589,481
16,619,916
EPS per diluted share (GAAP)
$
2.28
$
1.21
Adjusted EPS per diluted share
(Non-GAAP)
$
2.78
$
1.71
Free Cash Flow
Three Months Ended
July 31,
2023
2022
Net cash provided by operating
activities
$
86,721
$
37,295
Less: Capital expenditures (1)
14,227
4,575
Free cash flow
$
72,494
$
32,720
(1) Capital expenditures consist of cash payments for property,
plant and equipment and cash payments for investments in
displays.
Net Leverage
Twelve Months Ended
July 31,
(in thousands)
2023
Net income (GAAP)
$
111,504
Add back:
Income tax expense
32,886
Interest expense, net
14,378
Depreciation and amortization expense
47,393
Amortization of customer relationship
intangibles
45,667
EBITDA (Non-GAAP)
$
251,828
Add back:
Acquisition and restructuring related
expenses (1)
80
Non-recurring restructuring charges, net
(2)
1,353
Pension settlement
232
Net gain on debt modification
(2,089
)
Change in fair value of foreign exchange
forward contracts (3)
(1,254
)
Stock-based compensation expense
8,008
Loss on asset disposal
880
Adjusted EBITDA (Non-GAAP)
$
259,038
As of
July 31,
2023
Current maturities of long-term debt
$
2,177
Long-term debt, less current
maturities
369,362
Total debt
371,539
Less: cash and cash equivalents
(89,650
)
Net debt
$
281,889
Net leverage (4)
1.09
(1) Acquisition and restructuring related expenses are comprised
of expenses related to the RSI acquisition 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 nationwide reduction-in-force
implemented in the third and fourth quarters of fiscal 2023.
(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) expense, net in the
operating results.
(4) Net debt divided by Adjusted EBITDA for the twelve months
ended July 31, 2023.
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Kevin Dunnigan VP & Treasurer 540-665-9100
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