Press release

American Woodmark Corporation announces fourth quarter results and authorization of a $100 million stock buyback program

May 27, 2021

WINCHESTER, Va.--(BUSINESS WIRE)-- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its fourth fiscal quarter ended April 30, 2021.

Net sales for the fourth fiscal quarter increased $74.2 million, or 18.6%, to $473.4 million compared with the same quarter of the prior fiscal year. The Company experienced double-digit growth across all channels (repair and remodel and new construction) during the fourth quarter of fiscal 2021 as market demand recovered with consumer confidence remaining strong. Net sales for the current fiscal year increased $93.7 million, or 5.7%, to $1,744.0 million from the prior fiscal year.

Net income was $2.8 million ($0.17 per diluted share) for the fourth quarter of fiscal 2021 compared with $13.0 million ($0.77 per diluted share) in the same quarter of the prior fiscal year. Net income for the fourth quarter of fiscal 2021 decreased $10.2 million due to a pre-tax loss on debt modification of $13.8 million and higher material and logistics costs, offset by an increase in net sales. Net income for the current fiscal year was $58.8 million ($3.45 per diluted share) compared with $74.9 million ($4.42 per diluted share) for the prior fiscal year. Net income for fiscal 2021 decreased primarily due to a pre-tax loss on debt modification of $13.8 million. The Company also incurred net pre-tax restructuring costs of $5.8 million during fiscal 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 $1.28 for the fourth quarter of fiscal 2021 compared with $1.33 in the same quarter of the prior fiscal year and $6.40 for the current fiscal year compared with $6.59 for the prior fiscal year.

Adjusted EBITDA for the fourth fiscal quarter was $47.2 million, or 10.0% of net sales, compared to $53.4 million, or 13.4% of net sales, for the same quarter of the prior fiscal year. Adjusted EBITDA for the current fiscal year was $223.2 million, or 12.8% of net sales, compared to $236.0 million, or 14.3% of net sales, for the prior fiscal year.

"During the fourth quarter of fiscal 2021, our teams delivered exceptional sales growth across all channels and were able to restructure our debt to increase liquidity and reduce interest expense," said Scott Culbreth, President and CEO. "Our focus remains on increasing production to match the strong demand environment and mitigate inflationary pressures in material, logistics and labor through pricing and productivity."

Cash provided by operating activities for the current fiscal year was $151.8 million and free cash flow totaled $105.4 million. As of April 30, 2021, the Company had $91.1 million of cash on hand with $243.8 million term loan debt and $264 million drawn on the revolving credit facility plus access to $236 million of additional availability under its revolving credit facility. The Company paid down $80 million of its term loan facility during the current fiscal year and completed $20.0 million of share repurchases.

On May 25, 2021, the Board of Directors authorized a stock repurchase program of up to $100 million of the Company's outstanding common shares. In conjunction with this authorization the Board of Directors cancelled the $50 million existing authorization, of which the Company had repurchased $20 million in the fourth quarter of fiscal 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.

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 April 30, 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

 

Twelve Months Ended

 

 

April 30

 

April 30

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net sales

 

$

473,390

 

 

$

399,197

 

 

$

1,744,014

 

 

$

1,650,333

 

Cost of sales & distribution

 

399,584

 

 

323,928

 

 

1,424,739

 

 

1,321,147

 

Gross profit

 

73,806

 

 

75,269

 

 

319,275

 

 

329,186

 

Sales & marketing expense

 

26,096

 

 

21,069

 

 

89,464

 

 

83,608

 

General & administrative expense

 

25,869

 

 

27,088

 

 

112,283

 

 

113,334

 

Restructuring charges, net

 

444

 

 

189

 

 

5,848

 

 

(18

)

Operating income

 

21,397

 

 

26,923

 

 

111,680

 

 

132,262

 

Interest expense, net

 

5,371

 

 

6,579

 

 

23,128

 

 

29,027

 

Other expense, net

 

14,045

 

 

3,386

 

 

11,117

 

 

2,687

 

Income tax (benefit) expense

 

(846

)

 

3,945

 

 

18,672

 

 

25,687

 

Net income

 

$

2,827

 

 

$

13,013

 

 

$

58,763

 

 

$

74,861

 

 

 

 

 

 

 

 

 

 

Earnings Per Share:

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

17,022,472

 

 

16,965,119

 

 

17,036,730

 

 

16,952,480

 

 

 

 

 

 

 

 

 

 

Net income per diluted share

 

$

0.17

 

 

$

0.77

 

 

$

3.45

 

 

$

4.42

 

 

Condensed Consolidated Balance Sheet

(Unaudited)

 

 

April 30

 

April 30

 

 

2021

 

2020

 

 

 

 

 

Cash & cash equivalents

 

$

91,071

 

 

$

97,059

 

Customer receivables

 

146,866

 

 

106,344

 

Inventories

 

140,282

 

 

111,836

 

Other current assets

 

13,861

 

 

9,933

 

Total current assets

 

392,080

 

 

325,172

 

Property, plant & equipment, net

 

204,002

 

 

203,824

 

Operating lease assets, net

 

123,118

 

 

127,668

 

Trademarks, net

 

 

 

2,222

 

Customer relationship intangibles, net

 

121,778

 

 

167,444

 

Goodwill

 

767,612

 

 

767,612

 

Other assets

 

27,924

 

 

28,864

 

Total assets

 

$

1,636,514

 

 

$

1,622,806

 

 

 

 

 

 

Current portion - long-term debt

 

$

8,322

 

 

$

2,216

 

Short-term operating lease liabilities

 

19,994

 

 

18,896

 

Accounts payable & accrued expenses

 

192,131

 

 

134,494

 

Total current liabilities

 

220,447

 

 

155,606

 

Long-term debt

 

513,450

 

 

594,921

 

Deferred income taxes

 

38,348

 

 

52,935

 

Long-term operating lease liabilities

 

109,628

 

 

112,454

 

Other liabilities

 

11,745

 

 

6,352

 

Total liabilities

 

893,618

 

 

922,268

 

Stockholders' equity

 

742,896

 

 

700,538

 

Total liabilities & stockholders' equity

 

$

1,636,514

 

 

$

1,622,806

 

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Twelve Months Ended

 

 

April 30

 

 

2021

 

2020

 

 

 

 

 

Net cash provided by operating activities

 

$

151,763

 

 

$

177,542

 

Net cash used by investing activities

 

(42,429

)

 

(38,916

)

Net cash used by financing activities

 

(115,322

)

 

(99,223

)

Net increase (decrease) in cash and cash equivalents

 

(5,988

)

 

39,403

 

Cash and cash equivalents, beginning of period

 

97,059

 

 

57,656

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

91,071

 

 

$

97,059

 

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/loss on debt forgiveness and modification and (5) the tax benefit of RSI acquisition expenses and subsequent restructuring charges, the net gain/loss 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/loss 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

 

Twelve Months Ended

 

 

April 30

 

April 30

(in thousands)

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

2,827

 

 

$

13,013

 

 

$

58,763

 

 

$

74,861

 

Add back:

 

 

 

 

 

 

 

 

Income tax (benefit) expense

 

(846

)

 

3,945

 

 

18,672

 

 

25,687

 

Interest expense, net

 

5,371

 

 

6,579

 

 

23,128

 

 

29,027

 

Depreciation and amortization expense

 

12,390

 

 

12,901

 

 

51,100

 

 

49,513

 

Amortization of customer relationship intangibles and trademarks

 

11,417

 

 

12,250

 

 

47,889

 

 

49,000

 

EBITDA (Non-GAAP)

 

$

31,159

 

 

$

48,688

 

 

$

199,552

 

 

$

228,088

 

Add back:

 

 

 

 

 

 

 

 

Acquisition and restructuring related expenses (1)

 

20

 

 

61

 

 

174

 

 

32

 

Non-recurring restructuring charges, net (2)

 

444

 

 

189

 

 

5,848

 

 

189

 

Net loss on debt modification

 

13,792

 

 

 

 

13,792

 

 

 

Change in fair value of foreign exchange forward contracts (3)

 

618

 

 

1,346

 

 

(1,102

)

 

1,102

 

Stock-based compensation expense

 

1,055

 

 

867

 

 

4,598

 

 

3,989

 

Loss on asset disposal

 

149

 

 

2,279

 

 

384

 

 

2,629

 

Adjusted EBITDA (Non-GAAP)

 

$

47,237

 

 

$

53,430

 

 

$

223,246

 

 

$

236,029

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

473,390

 

 

$

399,197

 

 

$

1,744,014

 

 

$

1,650,333

 

Adjusted EBITDA margin (Non-GAAP)

 

10.0

%

 

13.4

%

 

12.8

%

 

14.3

%

(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 fiscal year ended April 30, 2021 includes accelerated depreciation expense of $1.3 million and gain on asset disposal of $2.2 million 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

 

Twelve Months Ended

 

 

April 30

 

April 30

(in thousands, except share data)

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

2,827

 

 

$

13,013

 

 

$

58,763

 

 

$

74,861

 

Add back:

 

 

 

 

 

 

 

 

Acquisition and restructuring related expenses

 

20

 

 

61

 

 

174

 

 

32

 

Non-recurring restructuring charges, net

 

444

 

 

189

 

 

5,848

 

 

189

 

Amortization of customer relationship intangibles and trademarks

 

11,417

 

 

12,250

 

 

47,889

 

 

49,000

 

Net loss on debt modification

 

13,792

 

 

 

 

13,792

 

 

 

Tax benefit of add backs

 

(6,749

)

 

(2,978

)

 

(17,467

)

 

(12,305

)

Adjusted net income (Non-GAAP)

 

$

21,751

 

 

$

22,535

 

 

$

108,999

 

 

$

111,777

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares

 

17,022,472

 

 

16,965,119

 

 

17,036,730

 

 

16,952,480

 

Adjusted EPS per diluted share (Non-GAAP)

 

$

1.28

 

 

$

1.33

 

 

$

6.40

 

 

$

6.59

 

 

Free Cash Flow

 

 

 

 

 

Twelve Months Ended

 

 

April 30,

 

 

2021

 

2020

 

 

 

 

 

Cash provided by operating activities

 

$

151,763

 

 

$

177,542

 

Less: Capital expenditures (1)

 

46,318

 

 

40,739

 

Free cash flow

 

$

105,445

 

 

$

136,803

 

 

(1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.

 

Net Leverage

 

 

 

 

 

Twelve Months Ended

 

 

April 30

(in thousands)

 

2021

 

 

 

Net income (GAAP)

 

$

58,763

 

Add back:

 

 

Income tax expense

 

18,672

 

Interest expense, net

 

23,128

 

Depreciation and amortization expense

 

51,100

 

Amortization of customer relationship intangibles and trademarks

 

47,889

 

EBITDA (Non-GAAP)

 

$

199,552

 

Add back:

 

 

Acquisition and restructuring related expenses (1)

 

174

 

Non-recurring restructuring charges, net (2)

 

5,848

 

Net loss on debt modification

 

13,792

 

Change in fair value of foreign exchange forward contracts (3)

 

(1,102

)

Stock-based compensation expense

 

4,598

 

Loss on asset disposal

 

384

 

Adjusted EBITDA (Non-GAAP)

 

$

223,246

 

 

 

 

 

 

As of

 

 

April 30

 

 

2021

Current maturities of long-term debt

 

$

8,322

 

Long-term debt, less current maturities

 

513,450

 

Total debt

 

521,772

 

Less: cash and cash equivalents

 

(91,071

)

Net debt

 

$

430,701

 

 

 

 

Net leverage (4)

 

1.93

 

 

(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 April 30, 2021.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210527005248/en/

Kevin Dunnigan
Treasury Director
540-665-9100

Source: American Woodmark Corporation

 

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