American Woodmark Corporation Announces First Quarter Results

WINCHESTER, Va., Aug. 27, 2019 /PRNewswire/ -- American Woodmark Corporation AMWD (the "Company") today announced results for its first fiscal quarter ended July 31, 2019.

Net sales for the first fiscal quarter decreased 0.4% to $427.4 million compared with the same quarter of the prior fiscal year.  The Company experienced growth in the builder channel which was offset by declines in the home center and independent dealers and distributors channels during the first quarter of fiscal year 2020.

Net income was $26.9 million ($1.59 per diluted share) for the first quarter of the current fiscal year compared with $24.8 million ($1.41 per diluted share) in the same quarter of the prior fiscal year.  Net income for the current quarter was positively impacted by lower sales and marketing expense and lower interest expense.  Adjusted EPS per diluted share was $2.13 for the first quarter of the current fiscal year compared with $2.04 in the same quarter of the prior fiscal year.

Adjusted EBITDA for the first fiscal quarter was $69.6 million, or 16.3% of net sales, compared to $68.1 million, or 15.9% of net sales, for the same quarter of the prior fiscal year.

"Despite the difficult market, we are very pleased with our financial performance in our first fiscal quarter," said Cary Dunston, Chairman and CEO.  "Our system is operating very efficiently, overcoming a number of cost headwinds as we continue to capitalize on integration synergies.  Within the market, we once again over indexed in the builder channel, however repair and remodel remained challenging."

Cash provided by operating activities for the first fiscal quarter was $62.6 million and free cash flow totaled $56.0 million for the first fiscal quarter.  The Company paid down $42.0 million of its term loan facility during the current fiscal quarter.

On August 22, 2019, the Board of Directors authorized a stock repurchase program of up to $50 million of the Company's outstanding common shares.

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 July 31, 2019, the Company operated eighteen manufacturing facilities in the United States and Mexico and eight primary service centers 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.

 

AMERICAN WOODMARK CORPORATION













Unaudited Financial Highlights













(in thousands, except share data)













Operating Results



















Three Months Ended







July 31







2019



2018













Net sales



$

427,365





$

428,962



Cost of sales & distribution



332,846





333,226





Gross profit



94,519





95,736



Sales & marketing expense



20,687





22,938



General & administrative expense



29,432





29,830



Restructuring charges



(19)





2,441





Operating income



44,419





40,527



Interest expense, net



8,088





9,425



Other (income) expense, net



(7)





(1,437)



Income tax expense



9,457





7,772





Net income



$

26,881





$

24,767















Earnings Per Share:









Weighted average shares outstanding - diluted



16,907,463





17,618,943















Net income per diluted share



$

1.59





$

1.41



 

 

Condensed Consolidated Balance Sheet

(Unaudited)







July 31



April 30







2019



2019













Cash & cash equivalents



$

71,049





$

57,656



Investments - certificates of deposit



500





1,500



Customer receivables



119,999





125,901



Inventories



115,341





108,528



Income taxes receivable







1,009



Other current assets



11,308





11,441





Total current assets



318,197





306,035



Property, plant & equipment, net



204,960





208,263



Operating lease assets, net



95,285







Trademarks, net



4,722





5,555



Customer relationship intangibles, net



201,694





213,111



Goodwill



767,612





767,612



Other assets



30,946





29,355





Total assets



$

1,623,416





$

1,529,931















Current portion - long-term debt



$

2,352





$

2,286



Accounts payable & accrued expenses



178,075





147,304





Total current liabilities



180,427





149,590



Long-term debt



647,697





689,205



Deferred income taxes



63,202





64,749



Long-term operating lease liabilities



76,271







Other liabilities



4,651





6,034





Total liabilities



972,248





909,578



Stockholders' equity



651,168





620,353





Total liabilities & stockholders' equity



$

1,623,416





$

1,529,931



 

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)







Three Months Ended







July 31







2019



2018













Net cash provided by operating activities



$

62,612





$

52,937



Net cash used by investing activities



(5,580)





(16,406)



Net cash used by financing activities



(43,639)





(64,755)



Net increase (decrease) in cash and cash equivalents



13,393





(28,224)



Cash and cash equivalents, beginning of period



57,656





78,410















Cash and cash equivalents, end of period



$

71,049





$

50,186



 

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, 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 RSI acquisition and subsequent restructuring charges, (2) the amortization of customer relationship intangibles and trademarks, (3) net gain on debt forgiveness and modification and (4) 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 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 expense, net, (3) depreciation and amortization expense, (4) amortization of customer relationship intangibles and trademarks, (5) expenses related to the RSI acquisition and subsequent restructuring charges, (6) stock-based compensation expense, (7) gain/loss on asset disposals, (8) change in fair value of foreign exchange forward contracts and (9) net gain 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 Adjusted Non-GAAP Financial Measures to the GAAP Equivalents











Three Months Ended





July 31

(in thousands)



2019



2018











Net income (GAAP)



$

26,881





$

24,767



Add back:









      Income tax expense



9,457





7,772



      Interest expense, net



8,088





9,425



      Depreciation and amortization expense



11,863





10,768



      Amortization of customer relationship intangibles









         and trademarks



12,250





12,250



EBITDA (Non-GAAP)



$

68,539





$

64,982



Add back:









      Acquisition related expenses (1)



41





2,761



      Change in fair value of foreign exchange forward









         contracts (2)



56





(794)



      Stock-based compensation expense



897





786



      Loss on asset disposal



66





354



Adjusted EBITDA (Non-GAAP)



$

69,599





$

68,089













Net Sales



$

427,365





$

428,962



Adjusted EBITDA margin (Non-GAAP)



16.3

%



15.9

%















(1)

Acquisition related expenses are comprised of expenses related to the acquisition of RSI Home Products, Inc. and the subsequent restructuring charges that the Company incurred.

(2)

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 expense (income) in the operating results.

 

 



Reconciliation of Net Income to Adjusted Net Income











Three Months Ended





July 31

(in thousands, except share data)



2019



2018











Net income (GAAP)



$

26,881





$

24,767



Add back:









      Acquisition related expenses



41





2,761



      Amortization of customer relationship intangibles









         and trademarks



12,250





12,250



      Tax benefit of add backs



(3,097)





(3,798)



Adjusted net income (Non-GAAP)



$

36,075





$

35,980













Weighted average diluted shares



16,907,463





17,618,943



Adjusted EPS per diluted share (Non-GAAP)



$

2.13





$

2.04



 

 

Free Cash Flow











Three Months Ended





July 31





2019



2018











Cash provided by operating activities



$

62,612





$

52,937



Less: Capital expenditures (1)



6,593





11,563



Free cash flow



$

56,019





$

41,374



(1)

Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.  During fiscal 2020 and 2019, approximately $0.5 million and $4.5 million, respectively, in cash outflows were incurred related to the new company headquarters.

 

 

Net Leverage











Twelve Months Ended





July 31

(in thousands)



2019







Net income (GAAP)



$

85,802



Add back:





      Income tax expense



28,885



      Interest expense, net



34,315



      Depreciation and amortization expense



46,541



      Amortization of customer relationship intangibles





         and trademarks



49,000



EBITDA (Non-GAAP)



$

244,543



Add back:





      Acquisition related expenses (1)



1,398



      Change in fair value of foreign exchange forward contracts (2)



850



      Net gain on debt forgiveness and modification (3)



(5,266)



      Stock-based compensation expense



3,151



      Loss on asset disposal



1,684



Adjusted EBITDA (Non-GAAP)



$

246,360













As of July 31





2019

Current maturities of long-term debt



$

2,352



Long-term debt, less current maturities



647,697



Total debt



650,049



Less: cash and cash equivalents



(71,049)



Net debt



$

579,000









Net leverage (4)



2.35











(1)

Acquisition related expenses are comprised of expenses related to the acquisition of RSI Home Products, Inc. and the subsequent restructuring charges that the Company incurred.

(2)

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 expense (income) in the operating results.

(3)

The Company had loans and interest forgiven relating to four separate economic development loans totaling $5.5 million for fiscal year 2019, and the Company incurred $0.3 million in loan modification expense in connection with an amendment to the credit agreement during fiscal year 2019.

(4)

Net debt divided by Adjusted EBITDA for the twelve months ended July 31, 2019.

 

Cision View original content:http://www.prnewswire.com/news-releases/american-woodmark-corporation-announces-first-quarter-results-300907221.html

SOURCE American Woodmark Corporation

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsPress Releases
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!