Document

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.

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 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."

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.

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

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.

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 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.

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.


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		%

(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


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



AMERICAN WOODMARK CORPORATION ANNOUNCES FIRST QUARTER RESULTS


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)



P. O. Box 1980
Winchester, VA 22604-8090



Contact:			Kevin Dunnigan Treasurer 540-665-9100