American Woodmark Corporation Announces Third Quarter Results

American Woodmark Corporation Announces Third Quarter Results

WINCHESTER, Va., March 9, 2018 /PRNewswire/ -- 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.

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.

                                                    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

                                            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
                                                                                                            ========                     ========

                                                  Reconciliation of Net Sales and Percentage of Net Sales Excluding RSI

                                                                              (in thousands)


                                       Three Months Ended                                              Nine Months Ended

                                          January 31,                                                     January 31,

                              2018                        2017                 Percent                      2018                   2017          Percent
                                                                                Change                                                            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%

                                                                    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.

CONTACT: Kevin Dunnigan, Assistant Treasurer, 540-665-9100

View original content:http://www.prnewswire.com/news-releases/american-woodmark-corporation-announces-third-quarter-results-300611255.html

SOURCE American Woodmark Corporation