Press release

American Woodmark Corporation announces fourth quarter results

May 29, 2018

WINCHESTER, Va., May 29, 2018 /PRNewswire/ -- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its fourth fiscal quarter ended April 30, 2018.

Fiscal Fourth Quarter 2018

Net sales for the fourth fiscal quarter increased 57% to $405.9 million compared with the same quarter of the prior fiscal year.  The current fourth fiscal quarter results include three months 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, net sales for the fourth fiscal quarter increased 3% to $266.7 million compared with the same quarter of the prior fiscal year.  Excluding the impact of the RSI acquisition, the Company experienced growth in both the new construction and dealer channels during the fourth quarter of fiscal year 2018.

Net income was $19.1 million ($1.08 per diluted share) for the fourth quarter of the current fiscal year compared with $17.3 million ($1.06 per diluted share) in the same quarter of the prior fiscal year.  Net income was positively impacted by additional sales volumes and lower incentive costs which were partially offset by acquisition related costs of $2.7 million, intangible amortization of $12.3 million and gross margin declines in the core business mainly due to raw material inflation.  Adjusted EPS per diluted share was $1.64 for the fourth quarter of the current fiscal year compared with $1.13 in the same quarter of the prior fiscal year.  Beginning with this earnings release, the Company has revised its definition of Adjusted EPS per diluted share to exclude intangibles amortization charges.  Further details are contained below.

Adjusted EBITDA was $65.3 million or 16.1% of net sales compared to $34.5 million or 13.3% of net sales for the same quarter of the prior fiscal year.  The increase is primarily due to sales growth in the quarter and the inclusion of three months of results for RSI.

"With an Adjusted EBITDA margin of 16.1%, we were very pleased with our performance over the past quarter," said Cary Dunston, Chairman and CEO.  "We had solid growth in our dealer and new construction channels while home center channel sales continued to be challenging.  Our integration work is proceeding on plan as we remain focused on strategically leveraging our combined businesses to gain share in the market."

Fiscal Year 2018

Net sales for the 2018 fiscal year increased 21% to $1,250.3 million from the prior fiscal year.  Excluding the impact of the RSI acquisition, net sales for the 2018 fiscal year increased 4% to $1,072.6 million from the prior fiscal year.  Excluding the impact of the RSI acquisition, the Company experienced growth in both the new construction and dealer channels during the entire fiscal year.

Net income for the 2018 fiscal year was $63.1 million ($3.77 per diluted share) compared with $71.2 million ($4.34 per diluted share) for the prior fiscal year.  Adjusted EPS per diluted share was $5.24 for the 2018 fiscal year compared with $4.45 for the prior fiscal year.

Adjusted EBITDA was $175.8 million or 14.1% of net sales compared to $133.7 million or 13.0% of net sales for the prior fiscal year.  The year over year increase is primarily due to additional sales growth and the inclusion of four months of results for RSI.

Cash provided by operating activities for the 2018 fiscal year was $86.8 million.  Free cash flow totaled $36.9 million for the entire fiscal year.  Additionally, the Company paid down $40.0 million of its term loan facility during the fourth fiscal quarter.

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 distributors and through a network of independent dealers.  At April 30, 2018, the Company operated eighteen manufacturing facilities in the United States and Mexico and seven primary service centers located throughout the United States.

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.

USE OF NON-GAAP FINANCIAL MEASURES

This press release refers to the following non-GAAP financial measures:

Beginning with this earnings release, the Company has revised its definition of Adjusted EPS per diluted share to exclude intangibles amortization charges. Further details are contained below. Adjusted EPS per diluted share, which excludes expenses related to the RSI acquisition, the inventory step-up amortization related to the RSI acquisition, the amortization of intangibles and the related tax benefits of these items.
Adjusted EBITDA, which consists of EBITDA (net income adjusted to exclude interest income and adding back interest expense, income tax provision and depreciation and amortization) adjusted to exclude expenses related to the RSI acquisition, the inventory step-up amortization related to the RSI acquisition, stock compensation expense, and gain/loss of asset disposal.
Adjusted EBITDA margin, which is Adjusted EBITDA divided by net sales.
Free cash flow, which is cash flow from continuing operating activities less capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays.
Net sales excluding RSI sales, which is net sales minus sales from RSI.

Refer to the "Non-GAAP Financial Measures" section below for a discussion of these non-GAAP measures and their reconciliation to the most directly comparable GAAP measure.

 

AMERICAN WOODMARK CORPORATION

                   

Unaudited Financial Highlights

                   

(in thousands, except share data)

                   

Operating Results

                   
     

Three Months Ended

 

Twelve Months Ended

     

April 30

 

April 30

     

2018

 

2017

 

2018

 

2017

                   

Net sales

 

$

405,887

   

$

258,737

   

$

1,250,274

   

$

1,030,248

 

Cost of sales & distribution

 

316,692

   

201,166

   

994,871

   

805,612

 
 

Gross profit

 

89,195

   

57,571

   

255,403

   

224,636

 

Sales & marketing expense

 

22,446

   

18,851

   

77,843

   

70,979

 

General & administrative expense

 

28,413

   

12,336

   

69,855

   

45,419

 
 

Operating income

 

38,336

   

26,384

   

107,705

   

108,238

 

Interest expense & other income

 

10,175

   

(378)

   

12,945

   

(687)

 

Income tax expense

 

9,052

   

9,414

   

31,619

   

37,726

 
 

Net income

 

$

19,109

   

$

17,348

   

$

63,141

   

$

71,199

 
                   

Earnings Per Share:

               

Weighted average shares outstanding - diluted

 

17,618,977

   

16,389,578

   

16,744,705

   

16,398,240

 
                   

Net income per diluted share

 

$

1.08

   

$

1.06

   

$

3.77

   

$

4.34

 

 

Condensed Consolidated Balance Sheet

(Unaudited)

     

April 30

 

 April 30

     

2018

 

2017

           

Cash & cash equivalents

 

$

78,410

   

$

176,978

 

Investments - certificates of deposit

 

8,000

   

51,750

 

Customer receivables

 

136,355

   

63,115

 

Inventories

 

104,801

   

42,859

 

Income taxes receivable

 

25,996

   

301

 

Other current assets

 

10,805

   

4,225

 
 

Total current assets

 

364,367

   

339,228

 

Property, plant & equipment, net

 

218,102

   

107,933

 

Investments - certificates of deposit

 

1,500

   

20,500

 

Trademarks, net

 

8,889

   

 

Customer relationship intangibles, net

 

258,778

   

 

Goodwill

 

767,451

   

 

Other assets

 

26,258

   

33,612

 
 

Total assets

 

$

1,645,345

   

$

501,273

 
           

Current portion - long-term debt

 

$

4,143

   

$

1,598

 

Accounts payable & accrued expenses

 

166,312

   

99,899

 
 

Total current liabilities

 

170,455

   

101,497

 

Long-term debt

 

809,897

   

15,279

 

Deferred income taxes

 

71,563

   

 

Other liabilities

 

11,765

   

32,048

 
 

Total liabilities

 

1,063,680

   

148,824

 

Stockholders' equity

 

581,665

   

352,449

 
 

Total liabilities & stockholders' equity

 

$

1,645,345

   

$

501,273

 

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

     

Twelve Months Ended

     

April 30

     

2018

 

2017

           

Net cash provided by operating activities

 

$

86,775

   

$

77,080

 

Net cash used by investing activities

 

(44,316)

   

(53,744)

 

Net cash used by financing activities

 

(141,027)

   

(20,821)

 

Net (decrease) increase in cash and cash equivalents

 

(98,568)

   

2,515

 

Cash and cash equivalents, beginning of period

 

176,978

   

174,463

 
           

Cash and cash equivalents, end of period

 

$

78,410

   

$

176,978

 

 

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.

A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below.

These non-GAAP financial measures should be viewed in addition to, and not as a substitute for, our reported results prepared in accordance with GAAP, and such non-GAAP financial measures should not be construed as being more important than the comparable GAAP measures.

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, (2) inventory step-up amortization due to the increase in the fair value of inventory acquired through the RSI acquisition (that was fully expensed in the quarter ended January 31, 2018), (3) the amortization of intangible assets, and (4) the tax benefit of RSI acquisition expenses and the inventory step-up and intangible amortization.  The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods.  We began excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share beginning with this earnings release as management determined that such an exclusion would better help it evaluate the performance of our business and profitability and we also received 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 (income) expense, net, (3) depreciation and amortization expense, (4) amortization of customer lists and trademarks, (5) expenses related to the RSI acquisition, (6) inventory step-up amortization, (7) stock-based compensation expense, and (8) gain/loss on asset disposal.  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 sales excluding RSI sales

To better understand and compare the performance of our core American Woodmark business by our management and our investors, we believe it is helpful to subtract the amount of sales from our recently acquired and now wholly-owned subsidiary, RSI Home Products, Inc., from our net sales and report this amount with our quarterly earnings announcements.  We may discontinue using this non-GAAP financial measure at a later juncture once RSI has become fully integrated into our Company and the quarter to quarter comparisons of our core business are no longer as helpful to compare performance.

Summary

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.

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 Net Sales and Percentage of Net Sales Excluding RSI

   

Three Months Ended

 

Twelve Months Ended

   

April 30,

 

April 30,

(in thousands)

 

2018

 

2017

 

Percent Change

 

2018

 

2017

 

Percent Change

                         

Net sales excluding RSI

 

$

266,734

   

$

258,737

   

3

%

 

$

1,072,550

   

$

1,030,248

   

4

%

RSI sales

 

139,153

   

   

   

177,724

   

   

 

Net Sales

 

$

405,887

   

$

258,737

   

57

%

 

1,250,274

   

1,030,248

   

21

%

 

Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents

                 

(in thousands)

                 
   

Three Months Ended

 

Twelve Months Ended

   

April 30,

 

April 30,

   

2018

 

2017

 

2018

 

2017

                 

Net income (GAAP)

 

$

19,109

   

$

17,348

   

$

63,141

   

$

71,199

 

Add back:

               

      Income tax expense

 

9,052

   

9,414

   

31,619

   

37,726

 

      Interest (income) expense, net

 

10,167

   

(294)

   

13,054

   

(521)

 

      Depreciation and amortization expense

 

11,092

   

4,963

   

28,671

   

18,682

 

      Amortization of customer lists and trademarks

 

12,250

   

   

16,333

   

 

EBITDA (Non-GAAP)

 

$

61,670

   

$

31,431

   

$

152,818

   

$

127,086

 

Add back:

               

      Acquisition related expenses

 

2,739

   

1,958

   

12,902

   

2,686

 

      Inventory step-up amortization (1)

 

   

   

6,334

   

 

      Stock compensation expense

 

591

   

992

   

3,097

   

3,469

 

      Loss on asset disposal

 

335

   

158

   

615

   

444

 

Adjusted EBITDA (Non-GAAP)

 

$

65,335

   

$

34,539

   

$

175,766

   

$

133,685

 
                 

Net Sales

 

$

405,887

   

$

258,737

   

$

1,250,274

   

$

1,030,248

 

Adjusted EBITDA margin (Non-GAAP)

 

16.1

%

 

13.3

%

 

14.1

%

 

13.0

%

 

Reconciliation of Net Income to Adjusted Net Income

                 

(in thousands, except share data)

                 
   

Three Months Ended

 

Twelve Months Ended

   

April 30,

 

April 30,

   

2018

 

2017

 

2018

 

2017

                 

Net income (GAAP)

 

$

19,109

   

$

17,348

   

$

63,141

   

$

71,199

 

Add back:

               

      Acquisition related expenses

 

2,739

   

1,958

   

12,902

   

2,686

 

      Amortization of intangibles

 

12,250

   

   

16,333

   

 

      Inventory step-up amortization (1)

 

   

   

6,334

   

 

      Tax benefit of add backs

 

(5,134)

   

(708)

   

(10,970)

   

(969)

 

Adjusted net income (Non-GAAP)

 

$

28,964

   

$

18,598

   

$

87,740

   

$

72,916

 
                 

Weighted average diluted shares

 

17,618,977

   

16,389,578

   

16,744,705

   

16,398,240

 

Adjusted EPS per diluted share (Non-GAAP)

 

$

1.64

   

$

1.13

   

$

5.24

   

$

4.45

 

 

(1) The inventory step-amortization is the increase in the fair value of inventory acquired through the RSI acquisition that was fully expensed in the quarter ended January 31, 2018.

 

Revised Reconciliation of Net Income to Adjusted Net Income for Q3 FY2018

                 

(in thousands, except share data)

                 
   

Three Months Ended

 

Nine Months Ended

   

January 31,

 

January 31,

   

2018

 

2017

 

2018

 

2017

                 

Net income (GAAP)

 

$

1,996

   

$

14,553

   

$

44,032

   

$

53,851

 

Add back:

               

      Acquisition related expenses

 

10,163

   

728

   

10,163

   

728

 

      Amortization of intangibles

 

4,083

   

   

4,083

   

 

      Inventory step-up amortization (1)

 

6,334

   

   

6,334

   

 

      Tax benefit of add backs

 

(5,836)

   

(261)

   

(5,836)

   

(261)

 

Adjusted net income (Non-GAAP)

 

$

16,740

   

$

15,020

   

$

58,776

   

$

54,318

 
                 

Weighted average diluted shares

 

16,690,760

   

16,381,223

   

16,461,509

   

16,400,842

 

Adjusted EPS per diluted share (Non-GAAP) (2)

 

$

1.00

   

$

0.92

   

$

3.57

   

$

3.31

 

 

(2) Beginning with this earnings release, the Company has excluded the impact of intangible asset amortization (and the related tax benefit) from the calculation of Adjusted EPS per diluted share. The following table presents a reconciliation of Adjusted EPS per diluted share as reported to the prior method for the periods presented:

 

   

Three Months Ended

 

Nine Months Ended

   

January 31,

 

January 31,

   

2018

 

2017

 

2018

 

2017

                 

As reported

 

$

0.84

   

$

0.92

   

$

3.41

   

$

3.31

 

Intangible asset amortization (net of tax)

 

0.16

   

   

0.16

   

 

Prior method

 

$

1.00

   

$

0.92

   

$

3.57

   

$

3.31

 

Free Cash Flow

           
     

Twelve Months Ended

     

April 30,

     

2018

 

2017

           

Cash provided by operating activities

   

$

86,775

   

$

77,080

 

Less: Capital expenditures (3)

   

49,893

   

25,531

 

Free cash flow

   

$

36,882

   

$

51,549

 

 

(3) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.  During fiscal 2018 and 2017, approximately $21.1 million and $3.0 million, respectively, in costs were incurred related to the new company headquarters.

View original content: http://www.prnewswire.com/news-releases/american-woodmark-corporation-announces-fourth-quarter-results-300655445.html

SOURCE American Woodmark Corporation

Related press releases

  • American Woodmark Corporation announces second quarter results
    American Woodmark Corporation announces second quarter results Nov 29, 2018 American Woodmark Corporation (NASDAQ: AMWD) today announced results for its second fiscal quarter ended October 31, 2018. Net sales for the second fiscal quarter increased 55% to $424.9 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces fourth quarter results
    American Woodmark Corporation announces fourth quarter results Jun 02, 2015 Company Release - 6/2/2015 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its fourth fiscal quarter ended April 30, 2015. Read article
  • American Woodmark Corporation announces third quarter results
    American Woodmark Corporation announces third quarter results Feb 24, 2022 American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its third quarter of fiscal 2022 which ended January 31, 2022. Net sales for the third quarter of fiscal 2022 increased $27.8 million, or 6.4%, to $459.7 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces fourth quarter results
    American Woodmark Corporation announces fourth quarter results Jun 02, 2016 Company Release - 6/2/2016 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its fourth fiscal quarter ended April 30, 2016. Net sales for the fourth fiscal quarter increased 16% to $240.9 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces second quarter results
    American Woodmark Corporation announces second quarter results Nov 22, 2016 Company Release - 11/22/2016 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its second fiscal quarter ended October 31, 2016. Net sales for the second fiscal quarter increased 3% to $264.1 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces second quarter results
    American Woodmark Corporation announces second quarter results Nov 24, 2015 Authorizes Stock Repurchase Company Release - 11/24/2015 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its second fiscal quarter ended October 31, 2015. Read article
  • American Woodmark Corporation announces fourth quarter results
    American Woodmark Corporation announces fourth quarter results May 30, 2017 Company Release - 5/30/2017 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its fourth fiscal quarter ended April 30, 2017. Net sales for the fourth fiscal quarter increased 7% to $258.7 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces third quarter results
    American Woodmark Corporation announces third quarter results Feb 25, 2016 Company Release - 2/25/2016 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its third fiscal quarter ended January 31, 2016. Net sales for the third fiscal quarter increased 16% to $218.6 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces first quarter results
    American Woodmark Corporation announces first quarter results Aug 23, 2016 Company Release - 8/23/2016 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its first fiscal quarter ended July 31, 2016. Net sales for the first fiscal quarter increased 12% to $258.2 million compared with the same quarter of the prior fiscal year. Read article
  • American Woodmark Corporation announces third quarter results
    American Woodmark Corporation announces third quarter results Feb 27, 2017 Company Release - 2/27/2017 6:30 AM ET American Woodmark Corporation (NASDAQ: AMWD) today announced results for its third fiscal quarter ended January 31, 2017. Net sales for the third fiscal quarter increased 14% to $249.3 million compared with the same quarter of the prior fiscal year. Read article