Fiscal Second Quarter 2024 Financial Highlights:
- Net sales decreased 15.6% year-over-year to $473.9 million
- Net income increased 5.4% year-over-year to $30.3 million
- GAAP EPS of $1.85; Adjusted EPS of $2.36
- Adjusted EBITDA increased 7.0% year-over-year to $72.3
million
- Cash provided by operating activities of $57.0 million; free
cash flow of $37.4 million
- Repurchased 394,220 shares for $30.0 million
- Board approved a new $125 million authorization for future
share repurchases
Fiscal 2024 Financial Highlights:
- Net sales decreased 12.0% year-over-year to $972.1 million
- Net income increased 39.6% year-over-year to $68.2 million
- GAAP EPS of $4.13; Adjusted EPS of $5.15
- Adjusted EBITDA increased 18.8% year-over-year to $147.5
million
- Cash provided by operating activities of $143.7 million; free
cash flow of $109.9 million
- Repurchased 722,515 shares for $52.1 million
American Woodmark Corporation (NASDAQ: AMWD) (the "Company")
today announced results for its second fiscal quarter ended October
31, 2023.
“Our teams delivered strong financial performance in the second
quarter of fiscal year 2024 despite the slowing demand
environment,” said Scott Culbreth, President and CEO. “Consistent
with the first quarter of fiscal year 2024 performance, net sales
and Adjusted EBITDA exceeded our expectations as improved
operational performance continues. The Company’s net sales outlook
for the remainder of the fiscal year remains unchanged from the
prior outlook but we now expect stronger Adjusted EBITDA
performance for the remainder of the fiscal year consistent with
the improvements needed to meet our long-term goals.”
Second Quarter Results
Net sales for the second quarter of fiscal 2024 decreased $87.6
million, or 15.6%, to $473.9 million compared with the same quarter
of the prior fiscal year. Net income was $30.3 million ($1.85 per
diluted share) compared with $28.8 million ($1.73 per diluted
share) in the same quarter of the prior fiscal year. Net income for
the second quarter of fiscal 2024 increased $1.6 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. Adjusted EPS per diluted share
was $2.36 for the second quarter of fiscal 2024 compared with $2.24
in the same quarter of the prior fiscal year. Adjusted EBITDA for
the second quarter of fiscal 2024 increased $4.7 million, or 7.0%,
to $72.3 million, or 15.3% of net sales, compared to $67.6 million,
or 12.0% of net sales, for the same quarter of the prior fiscal
year.
Fiscal Year to Date Results
Net sales for the first six months of fiscal 2024 decreased
$132.3 million, or 12.0%, to $972.1 million compared with the same
period of the prior fiscal year. Net income was $68.2 million
($4.13 per diluted share) compared with $48.9 million ($2.94 per
diluted share) in the same period of the prior fiscal year. Net
income for the first six months of fiscal 2024 increased $19.3
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 Antidumping and Countervailing
Duty Orders on Vietnamese plywood imports recognized in the first
quarter of fiscal 2024, which we have previously disclosed.
Adjusted EPS per diluted share was $5.15 for the first six months
of fiscal 2024 compared with $3.94 in the same period of the prior
fiscal year. Adjusted EBITDA for the first six months of fiscal
2024 increased $23.4 million, or 18.8%, to $147.5 million, or 15.2%
of net sales, compared to $124.1 million, or 11.2% of net sales,
for the same period of the prior fiscal year.
Balance Sheet & Cash Flow
As of October 31, 2023, the Company had $96.4 million in cash
plus access to $323.2 million of additional availability under its
revolving credit facility. Also, as of October 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 first six months
of fiscal 2024 was $143.7 million and free cash flow totaled $109.9
million. The Company repurchased 394,220 shares, or approximately
2.5% of shares outstanding, for $30.0 million during the second
quarter of fiscal 2024, and 722,515 shares, or approximately 4.5%
of shares outstanding, for $52.1 million during the first six
months of fiscal 2024.
On November 29, 2023, the Board of Directors authorized a stock
repurchase program of up to $125 million of the Company's
outstanding common shares. In conjunction with this authorization
the Board of Directors cancelled the remaining $22.9 million that
had yet to be repurchased under the $100 million existing
authorization from May 25, 2021. Any repurchases under the stock
repurchase program are subject to market conditions, the Company’s
cash requirements for other purposes, compliance with applicable
laws and regulations and contractual covenants and any other
factors management may deem relevant at the time of such
repurchases. The Company is not obligated to make any stock
repurchases in the future.
Fiscal 2024 Financial Outlook
For fiscal 2024 (which includes the now completed second
quarter) the Company expects:
- Low double digit net sales decline year-over-year
- Adjusted EBITDA in the range of $235 million to $250
million
“During the recently completed second quarter, our teams
improved Adjusted EBITDA by 330 BPS to $72.3 million, or 15.3% of
net sales, exceeding our expectations. 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 for the first half of the fiscal
year, we are increasing our full fiscal year 2024 Adjusted EBITDA
outlook to $235 million to $250 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
Six Months Ended
October 31,
October 31,
2023
2022
2023
2022
Net sales
$
473,867
$
561,499
$
972,122
$
1,104,392
Cost of sales & distribution
370,708
462,765
759,354
918,911
Gross profit
103,159
98,734
212,768
185,481
Sales & marketing expense
22,685
24,651
47,045
50,417
General & administrative expense
35,036
32,101
70,630
62,281
Restructuring charges, net
(26
)
—
(198
)
—
Operating income
45,464
41,982
95,291
72,783
Interest expense, net
1,953
4,422
4,390
8,475
Pension settlement, net
—
(6
)
—
(245
)
Other (income) expense, net
3,050
(897
)
1,975
(671
)
Income tax expense
10,120
9,679
20,735
16,370
Net income
$
30,341
$
28,784
$
68,191
$
48,854
Earnings Per Share:
Weighted average shares outstanding -
diluted
16,420,760
16,657,454
16,505,266
16,638,741
Net income per diluted share
$
1.85
$
1.73
$
4.13
$
2.94
Condensed Consolidated Balance
Sheet
(Unaudited)
October 31,
April 30,
2023
2023
Cash & cash equivalents
$
96,381
$
41,732
Customer receivables
120,742
119,163
Inventories
162,062
190,699
Other current assets
22,880
16,661
Total current assets
402,065
368,255
Property, plant and equipment, net
235,172
219,415
Operating lease assets, net
94,601
99,526
Customer relationship intangibles, net
7,611
30,444
Goodwill
767,612
767,612
Other assets
27,044
33,546
Total assets
$
1,534,105
$
1,518,798
Current portion - long-term debt
$
2,269
$
2,263
Short-term operating lease liabilities
25,775
24,778
Accounts payable & accrued
expenses
153,445
151,083
Total current liabilities
181,489
178,124
Long-term debt
370,930
369,396
Deferred income taxes
7,275
11,930
Long-term operating lease liabilities
74,995
81,370
Other liabilities
3,836
4,190
Total liabilities
638,525
645,010
Stockholders' equity
895,580
873,788
Total liabilities & stockholders'
equity
$
1,534,105
$
1,518,798
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
Six Months Ended
October 31,
2023
2022
Net cash provided by operating
activities
$
143,722
$
55,426
Net cash used by investing activities
(33,837
)
(10,966
)
Net cash used by financing activities
(55,236
)
(21,951
)
Net increase in cash and cash
equivalents
54,649
22,509
Cash and cash equivalents, beginning of
period
41,732
22,325
Cash and cash equivalents, end of
period
$
96,381
$
44,834
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
Six Months Ended
October 31,
October 31,
(in thousands)
2023
2022
2023
2022
Net income (GAAP)
$
30,341
$
28,784
$
68,191
$
48,854
Add back:
Income tax expense
10,120
9,679
20,735
16,370
Interest expense, net
1,953
4,422
4,390
8,475
Depreciation and amortization expense
11,647
12,334
23,392
24,764
Amortization of customer relationship
intangibles
11,417
11,417
22,834
22,834
EBITDA (Non-GAAP)
$
65,478
$
66,636
$
139,542
$
121,297
Add back:
Acquisition and restructuring related
expenses (1)
20
20
40
40
Non-recurring restructuring charges, net
(2)
(26
)
—
(198
)
—
Pension settlement, net
—
(6
)
—
(245
)
Change in fair value of foreign exchange
forward contracts (3)
3,116
(818
)
2,101
(580
)
Stock-based compensation expense
2,155
1,754
4,402
3,389
Loss on asset disposal
1,586
37
1,593
214
Adjusted EBITDA (Non-GAAP)
$
72,329
$
67,623
$
147,480
$
124,115
Net Sales
$
473,867
$
561,499
$
972,122
$
1,104,392
Net income margin (GAAP)
6.4
%
5.1
%
7.0
%
4.4
%
Adjusted EBITDA margin (Non-GAAP)
15.3
%
12.0
%
15.2
%
11.2
%
(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
Six Months Ended
October 31,
October 31,
(in thousands, except share data)
2023
2022
2023
2022
Net income (GAAP)
$
30,341
$
28,784
$
68,191
$
48,854
Add back:
Acquisition and restructuring related
expenses
20
20
40
40
Non-recurring restructuring charges,
net
(26
)
—
(198
)
—
Pension settlement, net
—
(6
)
—
(245
)
Amortization of customer relationship
intangibles and trademarks
11,417
11,417
22,834
22,834
Tax benefit of add backs
(2,956
)
(2,961
)
(5,896
)
(5,861
)
Adjusted net income (Non-GAAP)
$
38,796
$
37,254
$
84,971
$
65,622
Weighted average diluted shares (GAAP)
16,420,760
16,657,454
16,505,266
16,638,741
EPS per diluted share (GAAP)
$
1.85
$
1.73
$
4.13
$
2.94
Adjusted EPS per diluted share
(Non-GAAP)
$
2.36
$
2.24
$
5.15
$
3.94
Free Cash Flow
Six Months Ended
October 31,
2023
2022
Net cash provided by operating
activities
$
143,722
$
55,426
Less: Capital expenditures (1)
33,842
10,987
Free cash flow
$
109,880
$
44,439
(1) Capital expenditures consist of cash
payments for property, plant and equipment and cash payments for
investments in displays.
Net Leverage
Twelve Months Ended
October 31,
(in thousands)
2023
Net income (GAAP)
$
113,061
Add back:
Income tax expense
33,327
Interest expense, net
11,909
Depreciation and amortization expense
46,706
Amortization of customer relationship
intangibles
45,667
EBITDA (Non-GAAP)
$
250,670
Add back:
Acquisition and restructuring related
expenses (1)
1,327
Non-recurring restructuring charges, net
(2)
80
Pension settlement
238
Net gain on debt modification
(2,089
)
Change in fair value of foreign exchange
forward contracts (3)
2,681
Stock-based compensation expense
8,409
Loss on asset disposal
2,429
Adjusted EBITDA (Non-GAAP)
$
263,745
As of
October 31,
2023
Current maturities of long-term debt
$
2,269
Long-term debt, less current
maturities
370,930
Total debt
373,199
Less: cash and cash equivalents
(96,381
)
Net debt
$
276,818
Net leverage (4)
1.05
(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 October 31, 2023.
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version on businesswire.com: https://www.businesswire.com/news/home/20231130989205/en/
Kevin Dunnigan VP & Treasurer 540-665-9100
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