American woodmark corporation announces first quarter results
Winchester, va.--(business wire)--american woodmark corporation (nasdaq: amwd) (the "company") today announced results for its first quarter of fiscal 2023 which ended july 31, 2022. net sales for the first quarter of fiscal 2023 increased $100.3 million, or 22.7%, to $542.9 million compared with the same quarter of the prior fiscal year. the company experienced growth in all sales channels during the first quarter of fiscal 2023 versus the prior year period. net income was $20.1 million ($1.21 per diluted share) for the first quarter of fiscal 2023 compared with net income of $3.0 million ($0.18 per diluted share) in the same quarter of the prior fiscal year. net income for the first 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. adjusted ebitda for the first quarter of fiscal 2023 increased $24.4 million, or 76.0%, to $56.5 million, or 10.4% of net sales, compared to $32.1 million, or 7.3% of net sales, for the same quarter of the prior fiscal year. cash provided by operating activities for the first three months of fiscal 2023 was $37.3 million and free cash flow totaled $32.7 million. cash flows were positively impacted by the increase in net income and higher accrued expenses. as of july 31, 2022, the company had $33.7 million of cash on hand with no term loan debt maturities until july 2023 plus access to $239.4 million of additional availability under its revolving loan facility. the company paid down a net of $20.6 million of its debt during the first three months of the current fiscal year. "during the first quarter of fiscal 2023, our teams delivered sales growth of 22.7%, improved adjusted ebitda by 76.0% to $56.5 million, and generated free cash flow of over $32 million," said scott culbreth, president and ceo. "we committed to improving our results as price realization started to better match inflationary impacts and we improved our costs through operating efficiency initiatives. our team has remained resilient and focused and i want to thank them for their efforts in delivering these results." 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 july 31, 2022 2021 net sales $ 542,893 $ 442,581 cost of sales & distribution 456,146 389,235 gross profit 86,747 53,346 sales & marketing expense 25,766 22,888 general & administrative expense 30,180 23,734 restructuring charges, net — 313 operating income 30,801 6,411 interest expense, net 4,053 2,173 pension settlement, net (239 ) — other (income) expense, net 226 28 income tax expense 6,691 1,229 net income $ 20,070 $ 2,981 earnings per share: weighted average shares outstanding - diluted 16,619,916 16,716,167 net income per diluted share $ 1.21 $ 0.18 condensed consolidated balance sheet (unaudited) july 31, april 30, 2022 2022 cash & cash equivalents $ 33,696 $ 22,325 customer receivables 162,447 156,961 inventories 247,021 228,259 other current assets 21,161 21,112 total current assets 464,325 428,657 property, plant and equipment, net 207,188 213,808 operating lease assets, net 104,943 108,055 customer relationship intangibles, net 64,694 76,111 goodwill 767,612 767,612 other assets 37,452 38,253 total assets $ 1,646,214 $ 1,632,496 current portion - long-term debt $ 2,390 $ 2,264 short-term operating lease liabilities 22,058 21,985 accounts payable & accrued expenses 212,416 191,979 total current liabilities 236,864 216,228 long-term debt 486,436 506,732 deferred income taxes 36,055 38,340 long-term operating lease liabilities 91,863 95,084 other liabilities 2,458 3,229 total liabilities 853,676 859,613 stockholders' equity 792,538 772,883 total liabilities & stockholders' equity $ 1,646,214 $ 1,632,496 condensed consolidated statements of cash flows (unaudited) three months ended july 31, 2022 2021 net cash provided by operating activities $ 37,295 $ 6,588 net cash used by investing activities (4,560 ) (14,706 ) net cash used by financing activities (21,364 ) (55,135 ) net increase (decrease) in cash and cash equivalents 11,371 (63,253 ) cash and cash equivalents, beginning of period 22,325 91,071 cash and cash equivalents, end of period $ 33,696 $ 27,818 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 july 31, (in thousands) 2022 2021 net income (gaap) $ 20,070 $ 2,981 add back: income tax expense 6,691 1,229 interest expense, net 4,053 2,173 depreciation and amortization expense 12,430 13,025 amortization of customer relationship intangibles 11,417 11,417 ebitda (non-gaap) $ 54,661 $ 30,825 add back: acquisition and restructuring related expenses (1) 20 20 non-recurring restructuring charges, net (2) — 313 pension settlement (239 ) — change in fair value of foreign exchange forward contracts (3) 238 (350 ) stock-based compensation expense 1,635 1,177 loss on asset disposal 177 115 adjusted ebitda (non-gaap) $ 56,492 $ 32,100 net sales $ 542,893 $ 442,581 net income margin (gaap) 3.7 % 0.7 % adjusted ebitda margin (non-gaap) 10.4 % 7.3 % (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 july 31, (in thousands, except share data) 2022 2021 net income (gaap) $ 20,070 $ 2,981 add back: acquisition and restructuring related expenses 20 20 non-recurring restructuring charges, net — 313 pension settlement (239 ) — amortization of customer relationship intangibles and trademarks 11,417 11,417 tax benefit of add backs (2,900 ) (3,067 ) adjusted net income (non-gaap) $ 28,368 $ 11,664 weighted average diluted shares (gaap) 16,619,916 16,716,167 eps per diluted share (gaap) $ 1.21 $ 0.18 adjusted eps per diluted share (non-gaap) $ 1.71 $ 0.70 free cash flow three months ended july 31, 2022 2021 cash provided by operating activities $ 37,295 $ 6,588 less: capital expenditures (1) 4,575 14,711 free cash flow $ 32,720 $ (8,123 ) (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) 2022 net loss (gaap) $ (12,633 ) add back: income tax expense (7,795 ) interest expense, net 12,070 depreciation and amortization expense 50,343 amortization of customer relationship intangibles 45,667 ebitda (non-gaap) $ 87,652 add back: acquisition and restructuring related expenses (1) 80 non-recurring restructuring charges, net (2) (130 ) pension settlement 68,234 change in fair value of foreign exchange forward contracts (3) 588 stock-based compensation expense 5,166 loss on asset disposal 759 adjusted ebitda (non-gaap) $ 162,349 as of july 31, 2022 current maturities of long-term debt $ 2,390 long-term debt, less current maturities 486,436 total debt 488,826 less: cash and cash equivalents (33,696 ) net debt $ 455,130 net leverage (4) 2.80 (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 july 31, 2022.
