American woodmark corporation announces second quarter results
Winchester, va.--(business wire)--american woodmark corporation (nasdaq: amwd) (the "company") today announced results for its second quarter of fiscal 2023 which ended october 31, 2022. net sales for the second quarter of fiscal 2023 increased $108.3 million, or 23.9%, to $561.5 million compared with the same quarter of the prior fiscal year. net sales for the first six months of the current fiscal year increased 23.3% to $1,104.4 million from the comparable period of the prior fiscal year. the company experienced growth in all sales channels during the second quarter and first half of fiscal 2023 versus the prior year periods. net income was $28.8 million ($1.73 per diluted share) for the second quarter of fiscal 2023 compared with net income of $2.0 million ($0.12 per diluted share) in the same quarter of the prior fiscal year. net income for the second quarter of fiscal 2023 increased due to an increase in net sales largely as a result of price increases and increased efficiencies, partially offset by higher material and logistics costs. net income for the first six months of the current fiscal year was $48.9 million ($2.94 per diluted share) compared with $5.0 million ($0.30 per diluted share) for the same period of the prior fiscal year. net income margin was 5.1% for the second quarter of fiscal 2023 compared to 0.4% for the same period in the prior fiscal year and 4.4% for the first six months of the current fiscal year compared with 0.6% for the same period of the prior fiscal year. adjusted eps per diluted share was $2.24 for the second quarter of fiscal 2023 compared with $0.62 in the same quarter of the prior fiscal year and $3.94 for the first six months of the current fiscal year compared with $1.32 for the same period of the prior fiscal year. adjusted ebitda for the second quarter of fiscal 2023 increased $36.8 million, or 119.6%, to $67.6 million, or 12.0% of net sales, compared to $30.8 million, or 6.8% of net sales, for the same quarter of the prior fiscal year. adjusted ebitda for the first six months of fiscal 2023 increased $61.2 million, or 97.3%, to $124.1 million, or 11.2% of net sales, compared to $62.9 million, or 7.0% of net sales, for the same period of the prior fiscal year. cash provided by operating activities for the first six months of fiscal 2023 was $55.4 million and free cash flow totaled $44.4 million. this $81.7 million increase in free cash flows versus the first six months of fiscal 2022 was primarily due to changes in our operating cash flows, specifically, higher net income and accrued expenses, in addition to lower capital spending which was partially offset by higher inventory positions. as of october 31, 2022, the company had $44.8 million of cash and cash equivalents on hand with no term loan debt maturities until july 2023 plus access to $239.4 million of additional availability under its revolving facility. the company paid down $21.2 million of its debt during the first six months of the current fiscal year. “during the second quarter of fiscal 2023, our teams delivered sales growth of 23.9% and improved adjusted ebitda by 119.6% to $67.6 million," said scott culbreth, president and ceo. "as stated in previous quarters, we committed to improving our results as price realization better matched inflationary impacts and we improved our costs through operating efficiency initiatives. our team has delivered on this commitment during the first half of the fiscal year and i thank each of them for their efforts." about us american woodmark celebrates the creativity in all of us. with over 10,000 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, 2022 2021 2022 2021 net sales $ 561,499 $ 453,163 $ 1,104,392 $ 895,744 cost of sales & distribution 462,765 401,549 918,911 790,784 gross profit 98,734 51,614 185,481 104,960 sales & marketing expense 24,651 21,484 50,417 44,372 general & administrative expense 32,101 24,623 62,281 48,357 restructuring charges, net — (3 ) — 310 operating income 41,982 5,510 72,783 11,921 interest expense, net 4,422 2,360 8,475 4,533 pension settlement, net (6 ) — (245 ) — other (income) expense, net (897 ) 840 (671 ) 868 income tax expense 9,679 280 16,370 1,509 net income $ 28,784 $ 2,030 $ 48,854 $ 5,011 earnings per share: weighted average shares outstanding - diluted 16,657,454 16,605,911 16,638,741 16,662,791 net income per diluted share $ 1.73 $ 0.12 $ 2.94 $ 0.30 condensed consolidated balance sheet (unaudited) october 31, april 30, 2022 2022 cash & cash equivalents $ 44,834 $ 22,325 customer receivables 153,644 156,961 inventories 252,961 228,259 other current assets 24,872 21,112 total current assets 476,311 428,657 property, plant and equipment, net 203,650 213,808 operating lease assets, net 103,041 108,055 customer relationship intangibles, net 53,278 76,111 goodwill 767,612 767,612 other assets 47,136 38,253 total assets $ 1,651,028 $ 1,632,496 current portion - long-term debt $ 2,466 $ 2,264 short-term operating lease liabilities 22,249 21,985 accounts payable & accrued expenses 186,481 191,979 total current liabilities 211,196 216,228 long-term debt 486,181 506,732 deferred income taxes 34,454 38,340 long-term operating lease liabilities 87,735 95,084 other liabilities 2,283 3,229 total liabilities 821,849 859,613 stockholders' equity 829,179 772,883 total liabilities & stockholders' equity $ 1,651,028 $ 1,632,496 condensed consolidated statements of cash flows (unaudited) six months ended october 31, 2022 2021 net cash provided (used) by operating activities $ 55,426 $ (10,176 ) net cash used by investing activities (10,966 ) (27,098 ) net cash used by financing activities (21,951 ) (45,790 ) net increase (decrease) in cash and cash equivalents 22,509 (83,064 ) cash and cash equivalents, beginning of period 22,325 91,071 cash and cash equivalents, end of period $ 44,834 $ 8,007 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 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, (5) 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, (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) 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, (4) pension settlement charges, 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. 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) 2022 2021 2022 2021 net income (gaap) $ 28,784 $ 2,030 $ 48,854 $ 5,011 add back: income tax expense 9,679 280 16,370 1,509 interest expense, net 4,422 2,360 8,475 4,533 depreciation and amortization expense 12,334 12,921 24,764 25,946 amortization of customer relationship intangibles 11,417 11,417 22,834 22,834 ebitda (non-gaap) $ 66,636 $ 29,008 $ 121,297 $ 59,833 add back: acquisition and restructuring related expenses (1) 20 20 40 40 non-recurring restructuring charges, net (2) — (3 ) — 310 pension settlement, net (6 ) — (245 ) — change in fair value of foreign exchange forward contracts (3) (818 ) 520 (580 ) 170 stock-based compensation expense 1,754 1,216 3,389 2,393 loss on asset disposal 37 36 214 151 adjusted ebitda (non-gaap) $ 67,623 $ 30,797 $ 124,115 $ 62,897 net sales $ 561,499 $ 453,163 $ 1,104,392 $ 895,744 net income margin (gaap) 5.1 % 0.4 % 4.4 % 0.6 % adjusted ebitda margin (non-gaap) 12.0 % 6.8 % 11.2 % 7.0 % (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 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) 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) 2022 2021 2022 2021 net income (gaap) $ 28,784 $ 2,030 $ 48,854 $ 5,011 add back: acquisition and restructuring related expenses 20 20 40 40 non-recurring restructuring charges, net — (3 ) — 310 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 (2,961 ) (3,100 ) (5,861 ) (6,167 ) adjusted net income (non-gaap) $ 37,254 $ 10,364 $ 65,622 $ 22,028 weighted average diluted shares (gaap) 16,657,454 16,605,911 16,638,741 16,662,791 eps per diluted share (gaap) $ 1.73 $ 0.12 $ 2.94 $ 0.30 adjusted eps per diluted share (non-gaap) $ 2.24 $ 0.62 $ 3.94 $ 1.32 free cash flow six months ended october 31, 2022 2021 net cash provided (used) by operating activities $ 55,426 $ (10,176 ) less: capital expenditures (1) 10,987 27,103 free cash flow $ 44,439 $ (37,279 ) (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) 2022 net income (gaap) $ 14,121 add back: income tax expense 1,605 interest expense, net 14,133 depreciation and amortization expense 49,756 amortization of customer relationship intangibles 45,667 ebitda (non-gaap) $ 125,282 add back: acquisition and restructuring related expenses (1) 80 non-recurring restructuring charges, net (2) (127 ) pension settlement 68,228 change in fair value of foreign exchange forward contracts (3) (750 ) stock-based compensation expense 5,704 loss on asset disposal 759 adjusted ebitda (non-gaap) $ 199,176 as of october 31, 2022 current maturities of long-term debt $ 2,466 long-term debt, less current maturities 486,181 total debt 488,647 less: cash and cash equivalents (44,834 ) net debt $ 443,813 net leverage (4) 2.23 (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 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) expense, net in the operating results. (4) net debt divided by adjusted ebitda for the twelve months ended october 31, 2022.
