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Section 1: 8-K (8-K)

Document
 
 
 
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):
March 9, 2018
 
 
American Woodmark Corporation
(Exact name of registrant as specified in its charter)
 
 
Virginia
 
000-14798
 
54-1138147
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
 
3102 Shawnee Drive, Winchester, Virginia
 
22601
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:
(540) 665-9100
 
Not applicable
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




American Woodmark Corporation


ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On March 9, 2018, the Registrant issued a press release announcing results for its third quarter of fiscal year 2018 ended January 31, 2018. The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS

(d)    Exhibits

Exhibit 99.1Registrant’s Press Release dated March 9, 2018.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


AMERICAN WOODMARK CORPORATION
(Registrant)



 
 
/s/ M. SCOTT CULBRETH
 
/s/ S. CARY DUNSTON
 
 
 
M. Scott Culbreth
 
S. Cary Dunston
Senior Vice President and Chief Financial Officer
 
President & Chief Executive Officer
 
 
 
Date: March 9, 2018
 
Date: March 9, 2018
Signing on behalf of the registrant and as principal financial officer
 
Signing on behalf of the registrant and as principal executive officer
 
 
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
AMWD Announces Third Quarter Results
Page 1
March 9, 2018



Exhibit 99.1

392528362_awc_logoa03a02a01a01a12.jpg
 
 
 
P. O. Box 1980
 
Winchester, VA 22604-8090

 



Contact:
Kevin Dunnigan
Assistant Treasurer
540-665-9100




AMERICAN WOODMARK CORPORATION ANNOUNCES THIRD QUARTER RESULTS

WINCHESTER, Virginia (March 9, 2018) -- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its third fiscal quarter ended January 31, 2018.

Fiscal Third Quarter 2018

Net sales for the third fiscal quarter increased 17% to $293 million compared with the same quarter of the prior fiscal year. The current third fiscal quarter results include one month 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 third fiscal quarter increased 2% to $254 million compared with the same quarter of the prior fiscal year. Excluding the impact of the RSI acquisition, the Company experienced growth in all sales channels during the third quarter of fiscal year 2018.

Net income was $2.0 million ($0.12 per diluted share) for the third quarter of the current fiscal year compared with $14.6 million ($0.89 per diluted share) in the same quarter of the prior fiscal year. Net income was negatively impacted by purchase accounting entries of $6.3 million of inventory step-up amortization, acquisition related costs of $10.2 million, both offset by associated tax benefit of $4.4 million, and gross margin declines which were partially offset by additional sales volumes and lower incentive costs. Adjusted EPS per diluted share was $0.84 for the third quarter of the current fiscal year compared with $0.92 in the same quarter of the prior fiscal year.

Adjusted EBITDA was $36.0 million or 12.3% of net sales compared to $28.1 million or 11.3% of net sales for the same quarter of the prior fiscal year. The increase is primarily due to additional sales growth in the quarter and the inclusion of one month of results for RSI.

“Despite the third fiscal quarter being our toughest comp verses prior year, I am pleased to report that sales grew across all
channels,” said Cary Dunston, Chairman and CEO. “We did see our growth in single family new construction decline due to a
more aggressive market shift towards first-time buyers than we had planned. However, this shift towards opening price point homes further supports the strategic rationale for the RSI acquisition which was successfully completed in the quarter.”

Fiscal Year-to-Date 2018

Net sales for the first nine months of the current fiscal year increased 9% to $844 million from the comparable period of the prior fiscal year. Excluding the impact of the RSI acquisition, net sales for the first nine months of the current fiscal year increased 4% to $806 million from the comparable period 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 first nine months of the current fiscal year.

Net income for the first nine months of the current fiscal year was $44.0 million ($2.67 per diluted share) compared with $53.9 million ($3.28 per diluted share) for the same period of the prior fiscal year. Adjusted EPS per diluted share was $3.41 for the first nine months of the current fiscal year compared with $3.31 for the same period of the prior fiscal year.

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AMWD Announces Third Quarter Results
Page 2
March 9, 2018




Adjusted EBITDA was $110.4 million or 13.1% of net sales compared to $99.1 million or 12.9% of net sales for the same period of the prior fiscal year. The year over year increase is primarily due to additional sales growth and the inclusion of one month of results for RSI.

Free cash flow totaled $81.8 million for the first nine months of the current fiscal year.

“Shortly after the end of the third fiscal quarter, we also took advantage of the opportunity to refinance RSI’s 6½% $575 million senior secured second lien notes due 2023 with $350 million in 4.875% senior notes due 2026 and $250 million available under a delayed draw term loan facility,” said Scott Culbreth, CFO.

About American Woodmark

American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, major builders and through a network of independent distributors. The Company presently operates eighteen manufacturing facilities and seven service centers across the country.

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 and the Annual Report to Shareholders. 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.


NON-GAAP FINANCIAL MEASURES

This press release contains non-GAAP financial measures such as net sales and percentage change of net sales excluding the RSI acquisition, Adjusted EPS per diluted share, Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow, which are measurements of operational performance that are not prepared and presented in accordance with GAAP. Accordingly, these measures should not be considered as a substitute for data prepared and presented in accordance with GAAP. These non-GAAP financial measures are used by American Woodmark’s management when evaluating results of operations and cash flow. American Woodmark’s management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Please refer to the Non-GAAP Reconciliations contained in this press release.





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AMWD Announces Third Quarter Results
Page 3
March 9, 2018



AMERICAN WOODMARK CORPORATION










Unaudited Financial Highlights










(in thousands, except share data)










Operating Results













Three Months Ended

Nine Months Ended



January 31

January 31



2018

2017

2018

2017










Net sales

$
292,791


$
249,285


$
844,387


$
771,511

Cost of sales & distribution

242,412


197,689


678,179


604,446


Gross profit

50,379


51,596


166,208


167,065

Sales & marketing expense

19,167


18,519


55,397


52,128

General & administrative expense

23,492


11,476


41,442


33,083


Operating income

7,720


21,601


69,369


81,854

Interest expense & other income

3,956


(172
)

2,770


(309
)
Income tax expense

1,768


7,220


22,567


28,312


Net income

$
1,996


$
14,553


$
44,032


$
53,851











Earnings Per Share:








Weighted average shares outstanding - diluted

16,690,760


16,381,223


16,461,509


16,400,842











Net income per diluted share

$
0.12


$
0.89


$
2.67


$
3.28




























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AMWD Announces Third Quarter Results
Page 4
March 9, 2018



Condensed Consolidated Balance Sheet
(Unaudited)



January 31

 April 30



2018

2017






Cash & cash equivalents

$
139,624


$
176,978

Investments - certificates of deposit

8,000


51,750

Customer receivables

121,777


63,115

Inventories

108,003


42,859

Other current assets

37,665


4,526


Total current assets

415,069


339,228

Property, plant & equipment

210,628


107,933

Investments - certificates of deposit

2,500


20,500

Trademarks

9,722



Customer relationship intangibles

270,194



Goodwill

765,743



Other assets

28,133


33,612


Total assets

$
1,701,989


$
501,273







Current portion - long-term debt

$
14,864


$
1,598

Accounts payable & accrued expenses

167,832


99,899


Total current liabilities

182,696


101,497

Long-term debt

881,585


15,279

Other liabilities

75,062


32,048


Total liabilities

1,139,343


148,824

Stockholders' equity

562,646


352,449


Total liabilities & stockholders' equity

$
1,701,989


$
501,273



Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
Nine Months Ended
 
 
 
January 31
 
 
 
2018
 
2017
 
 
 
 
 
 
Net cash provided by operating activities
 
$
48,881

 
$
51,664

Net cash used by investing activities
 
(28,355
)
 
(51,734
)
Net cash used by financing activities
 
(57,880
)
 
(11,177
)
Net decrease in cash and cash equivalents
 
(37,354
)
 
(11,247
)
Cash and cash equivalents, beginning of period
 
176,978

 
174,463

 
 
 
 
 
 
Cash and cash equivalents, end of period
 
$
139,624

 
$
163,216






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AMWD Announces Third Quarter Results
Page 5
March 9, 2018




Reconciliation of Net Sales and Percentage of Net Sales Excluding RSI
 
 
Three Months Ended
 
Nine Months Ended
 
 
January 31,
 
January 31,
(in thousands)
 
2018
 
2017
 
Percent Change
 
2018
 
2017
 
Percent Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales excluding RSI
 
$
254,220

 
$
249,285

 
2
%
 
$
805,816

 
$
771,511

 
4
%
RSI sales
 
38,571

 

 

 
38,571

 

 

Net Sales
 
$
292,791

 
$
249,285

 
17
%
 
844,387

 
771,511

 
9
%

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


 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
      Income tax expense
 
1,768

 
7,220

 
22,567

 
28,312

      Interest expense
 
4,498

 
447

 
4,603

 
776

      Depreciation and amortization expense
 
6,602

 
4,846

 
17,579

 
13,719

      Amortization of customer lists and trademarks
 
4,083

 

 
4,083

 

EBITDA (Non-GAAP)
 
$
18,947

 
$
27,066

 
$
92,864

 
$
96,658

Add back:
 
 
 
 
 
 
 
 
      Acquisition related expenses
 
10,163

 
728

 
10,163

 
728

      Inventory step-up amortization (1)
 
6,334

 

 
6,334

 

      Stock compensation expense
 
897

 
828

 
2,506

 
2,477

      Loss on asset disposal
 
147

 
111

 
280

 
286

      Interest income
 
(463
)
 
(614
)
 
(1,716
)
 
(1,001
)
Adjusted EBITDA (Non-GAAP)
 
$
36,025

 
$
28,119

 
$
110,431

 
$
99,148

 
 
 
 
 
 
 
 
 
Net Sales
 
$
292,791

 
$
249,285

 
$
844,387

 
$
771,511

Adjusted EBITDA margin (Non-GAAP)
 
12.3
%
 
11.3
%
 
13.1
%
 
12.9
%














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AMWD Announces Third Quarter Results
Page 6
March 9, 2018



Reconciliation of Net Income to Adjusted Net Income


 
 
 
 
 
 
 
 
(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

      Inventory step-up amortization (1)
 
6,334

 

 
6,334

 

      Tax benefit of acquisition expenses and inventory step-up
 
(4,438
)
 
(261
)
 
(4,438
)
 
(261
)
Adjusted net income (Non-GAAP)
 
$
14,055

 
$
15,020

 
$
56,091

 
$
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)
 
$
0.84

 
$
0.92

 
$
3.41

 
$
3.31


(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.
Free Cash Flow
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
January 31,
 
 
 
2018
 
2017
 
 
 
 
 
 
Cash provided by operating activities
 
 
$
48,881

 
$
51,664

Capital expenditures (2)
 
 
32,919

 
17,521

Free cash flow
 
 
$
81,800

 
$
69,185


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










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