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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):
May 29, 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.)
 
561 Shady Elm Road, Winchester, Virginia
 
22602
(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 May 29, 2018, the Registrant issued a press release announcing results for its fourth quarter of fiscal year 2018 ended April 30, 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 May 29, 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: May 29, 2018
 
Date: May 29, 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 Fourth Quarter Results
Page 1
May 29, 2018



Exhibit 99.1

393677684_awc_logoa03a02a01a01a15.jpg
 
 
 
P. O. Box 1980
 
Winchester, VA 22604-8090

 



Contact:
Kevin Dunnigan
Treasury Director
540-665-9100




AMERICAN WOODMARK CORPORATION ANNOUNCES FOURTH QUARTER RESULTS

WINCHESTER, Virginia (May 29, 2018) -- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its fourth fiscal quarter ended April 30, 2018.

Fiscal Fourth Quarter 2018

Net sales for the fourth fiscal quarter increased 57% to $405.9 million compared with the same quarter of the prior fiscal year. The current fourth fiscal quarter results include three months 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 fourth fiscal quarter increased 3% to $266.7 million compared with the same quarter 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 fourth quarter of fiscal year 2018.

Net income was $19.1 million ($1.08 per diluted share) for the fourth quarter of the current fiscal year compared with $17.3 million ($1.06 per diluted share) in the same quarter of the prior fiscal year. Net income was positively impacted by additional sales volumes and lower incentive costs which were partially offset by acquisition related costs of $2.7 million, intangible amortization of $12.3 million and gross margin declines in the core business mainly due to raw material inflation. Adjusted EPS per diluted share was $1.64 for the fourth quarter of the current fiscal year compared with $1.13 in the same quarter of the prior fiscal year. Beginning with this earnings release, the Company has revised its definition of Adjusted EPS per diluted share to exclude intangibles amortization charges. Further details are contained below. 

Adjusted EBITDA was $65.3 million or 16.1% of net sales compared to $34.5 million or 13.3% of net sales for the same quarter of the prior fiscal year. The increase is primarily due to sales growth in the quarter and the inclusion of three months of results for RSI.

"With an Adjusted EBITDA margin of 16.1%, we were very pleased with our performance over the past quarter, "said Cary Dunston, Chairman and CEO. "We had solid growth in our dealer and new construction channels while home center channel sales continued to be challenging. Our integration work is proceeding on plan as we remain focused on strategically leveraging our combined businesses to gain share in the market."

Fiscal Year 2018

Net sales for the 2018 fiscal year increased 21% to $1,250.3 million from the prior fiscal year. Excluding the impact of the RSI acquisition, net sales for the 2018 fiscal year increased 4% to $1,072.6 million from 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 entire fiscal year.





AMWD Announces Fourth Quarter Results
Page 2
May 29, 2018



Net income for the 2018 fiscal year was $63.1 million ($3.77 per diluted share) compared with $71.2 million ($4.34 per diluted share) for the prior fiscal year. Adjusted EPS per diluted share was $5.24 for the 2018 fiscal year compared with $4.45 for the prior fiscal year.

Adjusted EBITDA was $175.8 million or 14.1% of net sales compared to $133.7 million or 13.0% of net sales for the prior fiscal year. The year over year increase is primarily due to additional sales growth and the inclusion of four months of results for RSI.

Cash provided by operating activities for the 2018 fiscal year was $86.8 million. Free cash flow totaled $36.9 million for the entire fiscal year. Additionally, the Company paid down $40.0 million of its term loan facility during the fourth fiscal quarter.

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 distributors and through a network of independent dealers.  At April 30, 2018, the Company operated eighteen manufacturing facilities in the United States and Mexico and seven primary service centers located throughout the United States.

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.

USE OF NON-GAAP FINANCIAL MEASURES

This press release refers to the following non-GAAP financial measures:

Beginning with this earnings release, the Company has revised its definition of Adjusted EPS per diluted share to exclude intangibles amortization charges. Further details are contained below. Adjusted EPS per diluted share, which excludes expenses related to the RSI acquisition, the inventory step-up amortization related to the RSI acquisition, the amortization of intangibles and the related tax benefits of these items.
Adjusted EBITDA, which consists of EBITDA (net income adjusted to exclude interest income and adding back interest expense, income tax provision and depreciation and amortization) adjusted to exclude expenses related to the RSI acquisition, the inventory step-up amortization related to the RSI acquisition, stock compensation expense, and gain/loss of asset disposal.
Adjusted EBITDA margin, which is Adjusted EBITDA divided by net sales.
Free cash flow, which is cash flow from continuing operating activities less capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays.
Net sales excluding RSI sales, which is net sales minus sales from RSI.

Refer to the “Non-GAAP Financial Measures” section below for a discussion of these non-GAAP measures and their reconciliation to the most directly comparable GAAP measure.









AMWD Announces Fourth Quarter Results
Page 3
May 29, 2018



AMERICAN WOODMARK CORPORATION










Unaudited Financial Highlights










(in thousands, except share data)










Operating Results













Three Months Ended

Twelve Months Ended



April 30

April 30



2018

2017

2018

2017










Net sales

$
405,887


$
258,737


$
1,250,274


$
1,030,248

Cost of sales & distribution

316,692


201,166


994,871


805,612


Gross profit

89,195


57,571


255,403


224,636

Sales & marketing expense

22,446


18,851


77,843


70,979

General & administrative expense

28,413


12,336


69,855


45,419


Operating income

38,336


26,384


107,705


108,238

Interest expense & other income

10,175


(378
)

12,945


(687
)
Income tax expense

9,052


9,414


31,619


37,726


Net income

$
19,109


$
17,348


$
63,141


$
71,199











Earnings Per Share:








Weighted average shares outstanding - diluted

17,618,977


16,389,578


16,744,705


16,398,240











Net income per diluted share

$
1.08


$
1.06


$
3.77


$
4.34































AMWD Announces Fourth Quarter Results
Page 4
May 29, 2018



Condensed Consolidated Balance Sheet
(Unaudited)



April 30

 April 30



2018

2017






Cash & cash equivalents

$
78,410


$
176,978

Investments - certificates of deposit

8,000


51,750

Customer receivables

136,355


63,115

Inventories

104,801


42,859

Income taxes receivable

25,996


301

Other current assets

10,805


4,225


Total current assets

364,367


339,228

Property, plant & equipment, net

218,102


107,933

Investments - certificates of deposit

1,500


20,500

Trademarks, net

8,889



Customer relationship intangibles, net

258,778



Goodwill

767,451



Other assets

26,258


33,612


Total assets

$
1,645,345


$
501,273







Current portion - long-term debt

$
4,143


$
1,598

Accounts payable & accrued expenses

166,312


99,899


Total current liabilities

170,455


101,497

Long-term debt

809,897


15,279

Deferred income taxes

71,563



Other liabilities

11,765


32,048


Total liabilities

1,063,680


148,824

Stockholders' equity

581,665


352,449


Total liabilities & stockholders' equity

$
1,645,345


$
501,273



Condensed Consolidated Statements of Cash Flows
(Unaudited)



Twelve Months Ended



April 30



2018

2017






Net cash provided by operating activities

$
86,775


$
77,080

Net cash used by investing activities

(44,316
)

(53,744
)
Net cash used by financing activities

(141,027
)

(20,821
)
Net (decrease) increase in cash and cash equivalents

(98,568
)

2,515

Cash and cash equivalents, beginning of period

176,978


174,463







Cash and cash equivalents, end of period

$
78,410


$
176,978






AMWD Announces Fourth Quarter Results
Page 5
May 29, 2018



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.

A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below.

These non-GAAP financial measures should be viewed in addition to, and not as a substitute for, our reported results prepared in accordance with GAAP, and such non-GAAP financial measures should not be construed as being more important than the comparable GAAP measures.

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, (2) inventory step-up amortization due to the increase in the fair value of inventory acquired through the RSI acquisition (that was fully expensed in the quarter ended January 31, 2018), (3) the amortization of intangible assets, and (4) the tax benefit of RSI acquisition expenses and the inventory step-up and intangible amortization. The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods. We began excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share beginning with this earnings release as management determined that such an exclusion would better help it evaluate the performance of our business and profitability and we also received 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 (income) expense, net, (3) depreciation and amortization expense, (4) amortization of customer lists and trademarks, (5) expenses related to the RSI acquisition, (6) inventory step-up amortization, (7) stock-based compensation expense, and (8) gain/loss on asset disposal. 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 sales excluding RSI sales

To better understand and compare the performance of our core American Woodmark business by our management and our investors, we believe it is helpful to subtract the amount of sales from our recently acquired and now wholly-owned subsidiary, RSI Home Products, Inc., from our net sales and report this amount with our quarterly earnings announcements. We may discontinue using this non-GAAP financial measure at a later juncture once RSI has become fully integrated into our Company and the quarter to quarter comparisons of our core business are no longer as helpful to compare performance.
 




AMWD Announces Fourth Quarter Results
Page 6
May 29, 2018



Summary

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.

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 Net Sales and Percentage of Net Sales Excluding RSI
 
 
Three Months Ended
 
Twelve Months Ended
 
 
April 30,
 
April 30,
(in thousands)
 
2018
 
2017
 
Percent Change
 
2018
 
2017
 
Percent Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales excluding RSI
 
$
266,734

 
$
258,737

 
3
%
 
$
1,072,550

 
$
1,030,248

 
4
%
RSI sales
 
139,153

 

 

 
177,724

 

 

Net Sales
 
$
405,887

 
$
258,737

 
57
%
 
1,250,274

 
1,030,248

 
21
%

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


 
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
April 30,
 
April 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
$
19,109

 
$
17,348

 
$
63,141

 
$
71,199

Add back:
 
 
 
 
 
 
 
 
      Income tax expense
 
9,052

 
9,414

 
31,619

 
37,726

      Interest (income) expense, net
 
10,167

 
(294
)
 
13,054

 
(521
)
      Depreciation and amortization expense
 
11,092

 
4,963

 
28,671

 
18,682

      Amortization of customer lists and trademarks
 
12,250

 

 
16,333

 

EBITDA (Non-GAAP)
 
$
61,670

 
$
31,431

 
$
152,818

 
$
127,086

Add back:
 

 
 
 
 
 
 
      Acquisition related expenses
 
2,739

 
1,958

 
12,902

 
2,686

      Inventory step-up amortization (1)
 

 

 
6,334

 

      Stock compensation expense
 
591

 
992

 
3,097

 
3,469

      Loss on asset disposal
 
335

 
158

 
615

 
444

Adjusted EBITDA (Non-GAAP)
 
$
65,335

 
$
34,539

 
$
175,766

 
$
133,685

 
 
 
 
 
 
 
 
 
Net Sales
 
$
405,887

 
$
258,737

 
$
1,250,274

 
$
1,030,248

Adjusted EBITDA margin (Non-GAAP)
 
16.1
%
 
13.3
%
 
14.1
%
 
13.0
%








AMWD Announces Fourth Quarter Results
Page 7
May 29, 2018



Reconciliation of Net Income to Adjusted Net Income


 
 
 
 
 
 
 
 
(in thousands, except share data)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
April 30,
 
April 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
$
19,109

 
$
17,348

 
$
63,141

 
$
71,199

Add back:
 
 
 
 
 
 
 
 
      Acquisition related expenses
 
2,739

 
1,958

 
12,902

 
2,686

      Amortization of intangibles
 
12,250

 

 
16,333

 

      Inventory step-up amortization (1)
 

 

 
6,334

 

      Tax benefit of add backs
 
(5,134
)
 
(708
)
 
(10,970
)
 
(969
)
Adjusted net income (Non-GAAP)
 
$
28,964

 
$
18,598

 
$
87,740

 
$
72,916

 
 
 
 
 
 
 
 
 
Weighted average diluted shares
 
17,618,977

 
16,389,578

 
16,744,705

 
16,398,240

Adjusted EPS per diluted share (Non-GAAP)
 
$
1.64

 
$
1.13

 
$
5.24

 
$
4.45


(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.

Revised Reconciliation of Net Income to Adjusted Net Income for Q3 FY2018


 
 
 
 
 
 
 
 
(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

      Amortization of intangibles
 
4,083

 

 
4,083

 

      Inventory step-up amortization (1)
 
6,334

 

 
6,334

 

      Tax benefit of add backs
 
(5,836
)
 
(261
)
 
(5,836
)
 
(261
)
Adjusted net income (Non-GAAP)
 
$
16,740

 
$
15,020

 
$
58,776

 
$
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) (2)
 
$
1.00

 
$
0.92

 
$
3.57

 
$
3.31


(2) Beginning with this earnings release, the Company has excluded the impact of intangible asset amortization (and the related tax benefit) from the calculation of Adjusted EPS per diluted share. The following table presents a reconciliation of Adjusted EPS per diluted share as reported to the prior method for the periods presented:





AMWD Announces Fourth Quarter Results
Page 8
May 29, 2018



 
 
Three Months Ended
 
Nine Months Ended
 
 
January 31,
 
January 31,
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
As reported
 
$
0.84

 
$
0.92

 
$
3.41

 
$
3.31

Intangible asset amortization (net of tax)
 
0.16

 

 
0.16

 

Prior method
 
$
1.00

 
$
0.92

 
$
3.57

 
$
3.31



Free Cash Flow
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
April 30,
 
 
 
2018
 
2017
 
 
 
 
 
 
Cash provided by operating activities
 
 
$
86,775

 
$
77,080

Less: Capital expenditures (3)
 
 
49,893

 
25,531

Free cash flow
 
 
$
36,882

 
$
51,549


(3) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays. During fiscal 2018 and 2017, approximately $21.1 million and $3.0 million, respectively, in costs were incurred related to the new company headquarters.



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