Core Viewpoint - American Woodmark (AMWD) reported quarterly earnings of $1.66 per share, exceeding the Zacks Consensus Estimate of $1.13 per share, and showing an increase from $1.46 per share a year ago, indicating strong performance in the recent quarter [1] Financial Performance - The company achieved revenues of $422.1 million for the quarter ended January 2024, surpassing the Zacks Consensus Estimate by 15.05%, although this represents a decline from $480.71 million in the same quarter last year [1] - Over the last four quarters, American Woodmark has consistently exceeded consensus EPS and revenue estimates [1] Stock Performance - American Woodmark shares have increased approximately 8.8% since the beginning of the year, outperforming the S&P 500's gain of 6.3% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.18 on revenues of $452.2 million, and for the current fiscal year, it is $8.47 on revenues of $1.79 billion [4] - The trend of estimate revisions for American Woodmark is mixed, which may change following the recent earnings report [4] Industry Context - The Furniture industry, to which American Woodmark belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact the stock's performance [5]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the periods ended January 31, 2024 and 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $97,829 | $41,732 | | Customer receivables, net | $113,073 | $119,163 | | Inventories | $163,382 | $190,699 | | Total current assets | $402,130 | $368,255 | | Property, plant and equipment, net | $252,168 | $219,415 | | Total Assets | $1,573,837 | $1,518,798 | | Total current liabilities | $188,281 | $178,124 | | Long-term debt, less current maturities | $371,307 | $369,396 | | Total shareholders' equity | $896,910 | $873,788 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $1,573,837 | $1,518,798 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $422,102 | $480,713 | $1,394,224 | $1,585,105 | | Gross Profit | $80,940 | $75,340 | $293,708 | $260,821 | | Operating Income | $27,879 | $23,818 | $123,170 | $96,601 | | Net Income | $21,227 | $14,728 | $89,418 | $63,582 | | Basic Net earnings per share | $1.33 | $0.89 | $5.50 | $3.83 | | Diluted Net earnings per share | $1.32 | $0.88 | $5.46 | $3.82 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $21,227 | $14,728 | $89,418 | $63,582 | | Change in Cash flow hedges (swap), net of deferred taxes | $(2,807) | $(2,627) | $(2,879) | $1,360 | | Total Comprehensive Income | $18,420 | $12,101 | $86,539 | $64,942 | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Changes in Shareholders' Equity (in thousands, except share data) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Common Stock (Shares) | 15,812,027 | 16,635,295 | | Common Stock (Amount) | $360,354 | $370,259 | | Retained Earnings | $529,063 | $493,157 | | Accumulated Other Comprehensive Income | $7,493 | $10,372 | | Total Shareholders' Equity | $896,910 | $873,788 | Key Activities (Nine Months Ended January 31, 2024) * Net income: $89,418 * Stock repurchases: $(19,828) (215,629 shares) * Stock-based compensation: $7,186 [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,433 | $110,803 | | Net cash used by investing activities | $(55,713) | $(19,260) | | Net cash used by financing activities | $(75,623) | $(68,051) | | Net increase in cash and cash equivalents | $56,097 | $23,492 | | Cash and cash equivalents, end of period | $97,829 | $45,817 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note A--Basis of Presentation](index=10&type=section&id=Note%20A--Basis%20of%20Presentation) This note outlines the preparation basis for the unaudited financial statements and key accounting policies for goodwill and derivatives - **No impairment charges** related to goodwill or intangible assets were recorded for the three- and nine-month periods ended January 31, 2024 and 2023[29](index=29&type=chunk)[30](index=30&type=chunk) - The Company uses interest rate swap contracts to manage interest rate exposures and foreign exchange forward contracts to manage foreign exchange rate risks[31](index=31&type=chunk)[32](index=32&type=chunk) [Note B--New Accounting Pronouncements](index=10&type=section&id=Note%20B--New%20Accounting%20Pronouncements) This note discusses the upcoming FASB standard on income tax disclosures and the Company's evaluation of its impact - FASB issued **ASU No 2023-09 "Improvements to Income Tax Disclosures"** in December 2023[34](index=34&type=chunk) - The standard is effective for annual periods beginning after **December 15, 2024**, with early adoption permitted[35](index=35&type=chunk) [Note C--Net Earnings Per Share](index=11&type=section&id=Note%20C--Net%20Earnings%20Per%20Share) This note details the computation of basic and diluted net earnings per share, showing an increase from the prior year Net Earnings Per Share (except per share amounts) | Metric | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net income | $21,227 | $14,728 | $89,418 | $63,582 | | Denominator for diluted net earnings per common share - weighted-average shares and assumed conversions | 16,124 | 16,696 | 16,381 | 16,661 | | Diluted Net earnings per share | $1.32 | $0.88 | $5.46 | $3.82 | [Note D--Stock-Based Compensation](index=11&type=section&id=Note%20D--Stock-Based%20Compensation) This note describes the Company's stock-based compensation plans and the allocation of related expenses, which increased year-over-year Stock-Based Compensation Grants (Nine Months Ended Jan 31, 2024, in thousands) | Type | Amount | | :--- | :--- | | Service-based RSUs | 79,778 | | Performance-based RSUs | 155,062 | | Non-statutory stock options | 92,340 | Stock-Based Compensation Expense (in thousands) | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Jan 31 | $2,784 | $1,860 | | Nine Months Ended Jan 31 | $7,186 | $5,249 | [Note E--Customer Receivables](index=12&type=section&id=Note%20E--Customer%20Receivables) This note details the components of customer receivables, which decreased to $113.1 million as of January 31, 2024 Customer Receivables (in thousands) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Gross customer receivables | $123,126 | $130,655 | | Less: Allowance for credit losses | $(545) | $(449) | | Less: Allowance for returns and discounts | $(9,508) | $(11,043) | | Net customer receivables | $113,073 | $119,163 | [Note F--Inventories](index=13&type=section&id=Note%20F--Inventories) This note provides a breakdown of inventory components, which decreased to $163.4 million as of January 31, 2024 Inventories (in thousands) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Raw materials | $65,185 | $80,953 | | Work-in-process | $45,725 | $49,064 | | Finished goods | $52,472 | $60,682 | | Total inventories | $163,382 | $190,699 | [Note G--Property, Plant and Equipment](index=13&type=section&id=Note%20G--Property,%20Plant%20and%20Equipment) This note details the Company's property, plant, and equipment, whose net value increased to $252.2 million Property, Plant and Equipment, Net (in thousands) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Total property, plant and equipment | $628,137 | $573,589 | | Less accumulated amortization and depreciation | $(375,969) | $(354,174) | | Property, plant and equipment, net | $252,168 | $219,415 | - Depreciation and amortization expense on property, plant and equipment amounted to **$30.0 million** for the nine-months ended January 31, 2024, compared to $28.7 million in the prior year[46](index=46&type=chunk) [Note H--Intangibles](index=13&type=section&id=Note%20H--Intangibles) This note focuses on customer relationship intangibles, which were fully amortized as of January 31, 2024 Customer Relationship Intangibles (in thousands) | Metric | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Customer relationship intangibles | $274,000 | $274,000 | | Less accumulated amortization | $(274,000) | $(243,556) | | Total | $0 | $30,444 | - Amortization expense for customer relationship intangibles was **$30.4 million** for the nine-month period ended January 31, 2024, compared to $34.2 million in the prior year[47](index=47&type=chunk) [Note I--Product Warranty](index=14&type=section&id=Note%20I--Product%20Warranty) This note explains the reconciliation of product warranty costs, showing a decrease in the warranty liability to $5.8 million Product Warranty Liability (in thousands) | Metric | January 31, 2024 | January 31, 2023 | | :--- | :--- | :--- | | Beginning balance at May 1 | $8,014 | $6,878 | | Accrual | $14,934 | $26,566 | | Settlements | $(17,175) | $(25,777) | | Ending balance at January 31 | $5,773 | $7,667 | [Note J--Fair Value Measurements](index=14&type=section&id=Note%20J--Fair%20Value%20Measurements) This note outlines the Company's fair value hierarchy and summarizes assets measured at fair value on a recurring basis Assets at Fair Value (in thousands) | Metric | January 31, 2024 (Level 1) | January 31, 2024 (Level 2) | April 30, 2023 (Level 1) | April 30, 2023 (Level 2) | | :--- | :--- | :--- | :--- | :--- | | Mutual funds | $176 | — | $191 | — | | Interest rate swap contracts | — | $10,044 | — | $13,885 | | Foreign exchange forward contracts | — | $241 | — | — | | Total assets at fair value | $176 | $10,285 | $191 | $13,885 | - The Company has **no Level 3 assets or liabilities** measured on a recurring basis[51](index=51&type=chunk) [Note K--Loans Payable and Long-Term Debt](index=15&type=section&id=Note%20K--Loans%20Payable%20and%20Long-Term%20Debt) This note details the Company's A&R Credit Agreement, interest rate mechanisms, and compliance with financial covenants - The A&R Credit Agreement provides for a **$500 million revolving loan facility** and a **$250 million term loan facility**, both maturing on April 22, 2026[55](index=55&type=chunk) - As of January 31, 2024, the Company was **in compliance with all covenants** included in the A&R Credit Agreement[59](index=59&type=chunk) Outstanding Debt (in millions) | Facility | January 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Term Loan Facility | $206.3 | $206.3 | | Revolving Facility | $163.8 | $163.8 | | Available capacity under Revolving Facility | $322.9 | N/A | [Note L--Derivative Financial Instruments](index=16&type=section&id=Note%20L--Derivative%20Financial%20Instruments) This note describes the use of derivatives to manage interest rate and foreign exchange risks and their impact on earnings - The Company uses interest rate swap contracts with an aggregate notional amount of **$200 million** to hedge variable rate interest payments, converting a portion of variable rate debt to a **fixed rate of 0.53%**[60](index=60&type=chunk) - For the nine-month period ended January 31, 2024, **$5.6 million of realized gains**, net of deferred taxes, were reclassified from accumulated other comprehensive income to interest expense, net[62](index=62&type=chunk) - As of January 31, 2024, the Company anticipates reclassifying approximately **$8.1 million of net hedging gains** from accumulated other comprehensive income into earnings during the next 12 months[62](index=62&type=chunk) [Note M--Income Taxes](index=17&type=section&id=Note%20M--Income%20Taxes) This note reports the effective income tax rates, which were higher than the U.S. statutory rate primarily due to state income taxes Effective Income Tax Rates | Period | January 31, 2024 | January 31, 2023 | | :--- | :--- | :--- | | Three Months Ended | 25.4% | 25.0% | | Nine Months Ended | 23.8% | 25.1% | - The effective rates were higher than the **21.0% U.S. statutory rate** primarily due to state income taxes[64](index=64&type=chunk) [Note N--Revenue Recognition](index=17&type=section&id=Note%20N--Revenue%20Recognition) This note disaggregates consolidated revenue by major sales distribution channels, showing a decrease across all channels Net Sales by Distribution Channel (in thousands) | Channel | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Home center retailers | $174,270 | $202,881 | $578,602 | $681,631 | | Builders | $181,747 | $204,170 | $592,705 | $654,861 | | Independent dealers and distributors | $66,085 | $73,662 | $222,917 | $248,613 | | Net Sales | $422,102 | $480,713 | $1,394,224 | $1,585,105 | [Note O--Concentration of Risks](index=17&type=section&id=Note%20O--Concentration%20of%20Risks) This note addresses the Company's concentration of risks, highlighting significant dependence on two major customers - Customers A and B represented **33.5% and 18.6%** of the Company's gross customer receivables, respectively, as of January 31, 2024[68](index=68&type=chunk) Percentage of Net Sales Attributable to Largest Customers | Customer | Three Months Ended Jan 31, 2024 | Three Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Customer A | 29.1% | 29.5% | 28.4% | 29.5% | | Customer B | 12.2% | 12.8% | 13.1% | 13.5% | [Note P--Other Information](index=17&type=section&id=Note%20P--Other%20Information) This note details a significant legal matter concerning an antidumping and countervailing duties investigation - The Company recorded a **$4.9 million pre-tax loss** ($3.7 million net of tax) in the first quarter of fiscal 2024 due to antidumping and countervailing duties on hardwood plywood imports from Vietnam[73](index=73&type=chunk) - The Company intends to **vigorously appeal** the Final Determination regarding these duties[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, and future outlook, covering operations, liquidity, and key trends [Forward-Looking Statements](index=18&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements, and **actual results may differ materially** due to various risk factors[75](index=75&type=chunk) - Key risk factors include macroeconomic conditions (U.S. housing market, mortgage rates, economy), raw material and energy costs, labor developments, competition, and regulatory changes[75](index=75&type=chunk) - The Company **undertakes no obligation** to publicly update or revise any forward-looking statements[78](index=78&type=chunk) [Overview](index=19&type=section&id=Overview) - American Woodmark Corporation manufactures and distributes kitchen, bath, and home organization products for remodeling and new home construction markets[79](index=79&type=chunk) - The Company operates **18 manufacturing facilities** in the United States and Mexico, eight primary service centers, and one distribution center[79](index=79&type=chunk) [Financial Overview](index=19&type=section&id=Financial%20Overview) - Macroeconomic trends impacting Q3 fiscal 2024 include a **3.9% increase in median existing home prices**, a 9.5% decrease in existing home sales, and a rise in mortgage interest rates to approximately 6.7%[80](index=80&type=chunk) - Consumer sentiment increased from 64.9 in January 2023 to **79.0 in January 2024**, while the inflation rate decreased to 3.1% from 6.4% year-over-year[80](index=80&type=chunk) Net Income (in millions) | Period | Fiscal 2024 | Fiscal 2023 | | :--- | :--- | :--- | | Third Quarter | $21.2 (5.0% of net sales) | $14.7 (3.1% of net sales) | | First Nine Months | $89.4 (6.4% of net sales) | $63.6 (4.0% of net sales) | [Results of Operations](index=20&type=section&id=Results%20of%20Operations) [Net Sales](index=20&type=section&id=Net%20Sales) Net sales decreased for the third quarter and first nine months of fiscal 2024 across both remodeling and builder channels Net Sales (in thousands) | Period | 2024 | 2023 | Percent Change | | :--- | :--- | :--- | :--- | | Three Months Ended Jan 31 | $422,102 | $480,713 | (12.2)% | | Nine Months Ended Jan 31 | $1,394,224 | $1,585,105 | (12.0)% | - Remodeling sales **decreased 13.1%** during the third quarter and **13.8%** during the first nine months of fiscal 2024[82](index=82&type=chunk) - Builder sales **decreased 11.0%** in the third quarter and **9.5%** during the first nine months of fiscal 2024[83](index=83&type=chunk) [Gross Profit](index=20&type=section&id=Gross%20Profit) Gross profit margin significantly improved due to favorable product mix, effective pricing, and operational enhancements Gross Profit Margin | Period | 2024 | 2023 | Basis Point Change | | :--- | :--- | :--- | :--- | | Third Quarter | 19.2% | 15.7% | +350 bps | | First Nine Months | 21.1% | 16.5% | +460 bps | - Gross profit margin was positively impacted by **favorable product mix**, pricing matching inflationary cost impacts, operational improvements in manufacturing facilities, and stability in the supply chain[84](index=84&type=chunk) [Selling and Marketing Expenses](index=20&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses increased as a percentage of net sales due to higher incentive costs and lower overall sales Selling and Marketing Expenses (in thousands) | Period | 2024 | 2023 | Percent Change | | :--- | :--- | :--- | :--- | | Three Months Ended Jan 31 | $21,945 | $21,364 | 2.7% | | Nine Months Ended Jan 31 | $68,990 | $71,781 | (3.9)% | Selling and Marketing Expenses as % of Net Sales | Period | 2024 | 2023 | | :--- | :--- | :--- | | Third Quarter | 5.2% | 4.4% | | First Nine Months | 4.9% | 4.5% | [General and Administrative Expenses](index=20&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased, driven mainly by higher incentive and profit-sharing costs for employees General and Administrative Expenses (in thousands) | Period | 2024 | 2023 | Percent Change | | :--- | :--- | :--- | :--- | | Three Months Ended Jan 31 | $31,116 | $28,848 | 7.9% | | Nine Months Ended Jan 31 | $101,746 | $91,129 | 11.7% | General and Administrative Expenses as % of Net Sales | Period | 2024 | 2023 | | :--- | :--- | :--- | | Third Quarter | 7.4% | 6.0% | | First Nine Months | 7.3% | 5.7% | [Effective Income Tax Rates](index=21&type=section&id=Effective%20Income%20Tax%20Rates) The effective income tax rates were higher than the U.S. statutory rate primarily due to state income taxes Effective Income Tax Rates | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Jan 31 | 25.4% | 25.0% | | Nine Months Ended Jan 31 | 23.8% | 25.1% | [Non-GAAP Financial Measures](index=21&type=section&id=Non-GAAP%20Financial%20Measures) [EBITDA, Adjusted EBITDA and Adjusted EBITDA margin](index=21&type=section&id=EBITDA,%20Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20margin) This section reconciles non-GAAP measures, showing stable Adjusted EBITDA in Q3 and growth for the nine-month period Adjusted EBITDA (in thousands) | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Jan 31 | $50,615 | $50,990 | | Nine Months Ended Jan 31 | $198,095 | $175,105 | Adjusted EBITDA Margin | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Jan 31 | 12.0% | 10.6% | | Nine Months Ended Jan 31 | 14.2% | 11.0% | - The increase in Adjusted EBITDA for the first nine months of fiscal 2024 is primarily due to increased net income from pricing, product mix, and improved manufacturing efficiencies, partially offset by a **$4.9 million pre-tax charge** related to the plywood case[97](index=97&type=chunk) [Adjusted EPS per diluted share](index=21&type=section&id=Adjusted%20EPS%20per%20diluted%20share) This section presents the calculation of Adjusted EPS, which increased for both the third quarter and nine-month periods Adjusted EPS per diluted share | Period | 2024 | 2023 | | :--- | :--- | :--- | | Three Months Ended Jan 31 | $1.66 | $1.46 | | Nine Months Ended Jan 31 | $6.83 | $5.40 | [Outlook](index=23&type=section&id=Outlook) - The Company expects **low-double digit declines in net sales** for fiscal year 2024, with high single-digit declines in the fourth fiscal quarter[100](index=100&type=chunk) - Adjusted EBITDA expectation for the full fiscal year 2024 is increased and narrowed to a range of **$247 million to $253 million**, driven by strong operational performance[100](index=100&type=chunk) - New facility ramp-up expenses in Hamlet, North Carolina, and Monterrey, Mexico, are expected to negatively impact fiscal 2024 results by approximately **$8.0 million to $9.0 million**[100](index=100&type=chunk) - The Company is prioritizing investments in property, plant and equipment ($54.9 million in first nine months) and share repurchases ($71.8 million in first nine months) over debt repayments[101](index=101&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents totaled **$97.8 million** at January 31, 2024, a $56.1 million increase from April 30, 2023, primarily due to $187.4 million cash provided by operations[103](index=103&type=chunk) - Total long-term debt (including current maturities) was **$373.4 million** at January 31, 2024, with a long-term debt to total capital ratio of 29.3%[103](index=103&type=chunk) - Approximately **$322.9 million was available** under the Revolving Facility as of January 31, 2024[106](index=106&type=chunk) - The Board authorized a new **$125 million stock repurchase program** on November 29, 2023, with $105.4 million remaining as of January 31, 2024[110](index=110&type=chunk) [Seasonal and Inflationary Factors](index=25&type=section&id=Seasonal%20and%20Inflationary%20Factors) - The business has historically experienced higher sales in the first and fourth fiscal quarters, though seasonal fluctuations have been reduced[112](index=112&type=chunk) - The Company generally recovers the effects of inflation and commodity price fluctuations through sales price increases[112](index=112&type=chunk) [Critical Accounting Policies](index=25&type=section&id=Critical%20Accounting%20Policies) - There have been **no significant changes** to the Company's critical accounting policies as disclosed in its Annual Report on Form 10-K for the fiscal year ended April 30, 2023[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks including inflation, interest rates, and foreign exchange - The Company is subject to inflationary pressures and commodity price fluctuations, which are generally recovered through sales price increases[114](index=114&type=chunk) - A **100 basis point increase** in the variable interest rate component of borrowings would increase annual interest expense by approximately **$1.7 million**[114](index=114&type=chunk) - The Company uses interest rate swaps to hedge approximately **$200 million** of its variable interest rate debt and foreign exchange forward contracts to offset currency fluctuations[114](index=114&type=chunk)[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and notes no material changes to internal controls - The Company's disclosure controls and procedures were **effective** as of January 31, 2024[115](index=115&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended January 31, 2024[116](index=116&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses the Company's involvement in routine litigation and references Note P for details on a specific duties investigation - The Company is involved in **ordinary, routine litigation** incidental to its business[117](index=117&type=chunk) - Further discussion of the antidumping and countervailing duties investigation is provided in **Note P**[117](index=117&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to previously disclosed risk factors from the most recent Annual Report on Form 10-K - **No material changes** from the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2023[118](index=118&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on share repurchase activities during the third quarter, detailing the number of shares and remaining authorization Share Repurchases (Third Quarter Fiscal 2024) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining Under Programs (000) | | :--- | :--- | :--- | :--- | | January 1 - 31, 2024 | 215,629 | $91.16 | $105,367 | - The Board of Directors authorized a stock repurchase program of up to **$125 million** on November 29, 2023[120](index=120&type=chunk) - As of January 31, 2024, **$105.4 million of funds remained available** from the authorized amount to repurchase common stock[120](index=120&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) This section confirms no adoption, termination, or modification of Rule 10b5-1 trading plans by directors or officers during the quarter - None of the Company's directors or executive officers adopted, terminated, or modified a "Rule 10b5-1 trading agreement" or a "non-Rule 10b5-1 trading arrangement" during the fiscal quarter ended January 31, 2024[121](index=121&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, certifications, and interactive data files - Exhibits include Articles of Incorporation, Bylaws, Certifications of the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350), and Interactive Data Files (Inline XBRL) for the financial statements[123](index=123&type=chunk)

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Net sales declined in Q3 and the first nine months of fiscal 2024, but net income significantly increased, complemented by active share repurchases Fiscal Third Quarter 2024 Financial Highlights (YoY) | Metric | Q3 FY2024 | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $422.1 million | -12.2% | | Net Income | $21.2 million | +44.1% | | GAAP EPS | $1.32 | +50.0% | | Adjusted EPS | $1.66 | +13.7% | | Adjusted EBITDA | $50.6 million | -0.7% | | Cash from Operations | $43.7 million | N/A | | Free Cash Flow | $21.8 million | N/A | | Shares Repurchased | $19.6 million | N/A | Fiscal First Nine Months 2024 Financial Highlights (YoY) | Metric | First 9 Months FY2024 | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $1,394.2 million | -12.0% | | Net Income | $89.4 million | +40.6% | | GAAP EPS | $5.46 | +43.0% | | Adjusted EPS | $6.83 | +26.5% | | Adjusted EBITDA | $198.1 million | +13.1% | | Cash from Operations | $187.4 million | +69.2% | | Free Cash Flow | $131.7 million | +43.9% | | Shares Repurchased | $71.8 million | N/A | [Management Commentary](index=1&type=section&id=Management%20Commentary) The company delivered strong financial results in Q3 despite a slowing demand environment, exceeding expectations due to operational improvements - The company delivered **strong financial performance** in Q3 FY2024, **exceeding expectations** for **net sales** and **Adjusted EBITDA** despite a slowing demand environment[3](index=3&type=chunk) - Performance was driven by **improved operational efficiencies**, a trend consistent with the first half of the fiscal year[3](index=3&type=chunk) - The **net sales outlook** for the full fiscal year is **unchanged**, but the **Adjusted EBITDA performance expectation** has been **raised**[3](index=3&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) Despite declining sales in both the third quarter and first nine months of fiscal 2024, the company significantly improved net income and margins through operational efficiencies and strategic pricing [Third Quarter Results](index=1&type=section&id=Third%20Quarter%20Results) Q3 FY2024 saw a 12.2% decline in net sales, yet net income significantly increased to **$21.2 million** with improved margins, driven by operational efficiencies and favorable product mix Q3 FY2024 vs. Q3 FY2023 Performance | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Net Sales | $422.1M | $480.7M | | Net Income | $21.2M | $14.7M | | Diluted EPS | $1.32 | $0.88 | | Adjusted EPS | $1.66 | $1.46 | | Adjusted EBITDA | $50.6M | $51.0M | | Adjusted EBITDA Margin | 12.0% | 10.6% | - The **$6.5 million** increase in net income was attributed to favorable product mix, pricing matching inflation, operational improvements, a stabilizing supply chain, and reduced overhead, which offset the decrease in net sales[4](index=4&type=chunk) [Fiscal Year to Date Results](index=1&type=section&id=Fiscal%20Year%20to%20Date%20Results) For the first nine months of fiscal 2024, net sales declined 12.0%, but net income increased to **$89.4 million** with improved margins, despite a **$4.9 million** charge for plywood duties First 9 Months FY2024 vs. FY2023 Performance | Metric | First 9 Months FY2024 | First 9 Months FY2023 | | :--- | :--- | :--- | | Net Sales | $1,394.2M | $1,585.1M | | Net Income | $89.4M | $63.6M | | Diluted EPS | $5.46 | $3.82 | | Adjusted EPS | $6.83 | $5.40 | | Adjusted EBITDA | $198.1M | $175.1M | | Adjusted EBITDA Margin | 14.2% | 11.0% | - Profitability was negatively impacted by a **$4.9 million** pre-tax charge related to Antidumping and Countervailing Duty Orders on Vietnamese plywood imports, recognized in the first quarter[5](index=5&type=chunk)[6](index=6&type=chunk) [Balance Sheet & Cash Flow](index=3&type=section&id=Balance%20Sheet%20%26%20Cash%20Flow) As of January 31, 2024, the company maintained strong liquidity with **$97.8 million** in cash and significant free cash flow, while actively repurchasing shares - As of January 31, 2024, the company had **$97.8 million** in cash and **$322.9 million** available under its revolving credit facility[7](index=7&type=chunk) - Total debt comprised **$206.3 million** in term loan debt and **$163.8 million** drawn on its revolving credit facility[7](index=7&type=chunk) Cash Flow (First Nine Months FY2024) | Metric | Amount | | :--- | :--- | | Cash from Operating Activities | $187.4 million | | Free Cash Flow | $131.7 million | - The company repurchased **938,144 shares** (approx. **5.9%** of shares outstanding) for **$71.8 million** during the first nine months of fiscal 2024, with **$105.4 million** remaining available for future repurchases[7](index=7&type=chunk) [Fiscal 2024 Financial Outlook](index=3&type=section&id=Fiscal%202024%20Financial%20Outlook) The company reaffirms its full fiscal year 2024 net sales outlook for a low double-digit decline, while increasing and narrowing its Adjusted EBITDA guidance to **$247 million** to **$253 million** Full Fiscal Year 2024 Outlook | Metric | Outlook | | :--- | :--- | | Net Sales | Reaffirmed low double digit decline YoY | | Q4 Net Sales | High single digit decline YoY | | Adjusted EBITDA | Increased and narrowed to $247M - $253M | - The CFO, Paul Joachimczyk, noted that the **increased Adjusted EBITDA outlook** is a result of **sustained performance** and **margin improvement** throughout the year[8](index=8&type=chunk) - The company **does not provide a reconciliation** for its **forward-looking Adjusted EBITDA outlook** to the corresponding **GAAP measure** (net income) due to the **difficulty in predicting** certain variable items[8](index=8&type=chunk) [Unaudited Financial Statements](index=4&type=section&id=Unaudited%20Financial%20Statements) This section presents the core unaudited financial data, including the income statement, condensed consolidated balance sheet, and statement of cash flows [Unaudited Financial Highlights (Income Statement)](index=4&type=section&id=Unaudited%20Financial%20Highlights%20(Income%20Statement)) The income statement reveals decreased net sales for both periods, yet gross profit, operating income, and net income all increased year-over-year Income Statement Data (in thousands) | Account | Three Months Ended Jan 31, 2024 | Nine Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Net sales | $422,102 | $1,394,224 | | Gross profit | $80,940 | $293,708 | | Operating income | $27,879 | $123,170 | | Net income | $21,227 | $89,418 | | Net income per diluted share | $1.32 | $5.46 | [Condensed Consolidated Balance Sheet](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of January 31, 2024, total assets increased to **$1.57 billion**, driven by higher cash and lower inventories, while liabilities rose and stockholders' equity improved Balance Sheet Data (in thousands) | Account | Jan 31, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Cash & cash equivalents | $97,829 | $41,732 | | Inventories | $163,382 | $190,699 | | Total current assets | $402,130 | $368,255 | | Total assets | $1,573,837 | $1,518,798 | | Long-term debt | $371,307 | $369,396 | | Total liabilities | $676,927 | $645,010 | | Stockholders' equity | $896,910 | $873,788 | [Condensed Consolidated Statement of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities significantly increased for the nine months ended January 31, 2024, despite higher cash usage in investing and financing activities, ending with **$97.8 million** in cash Cash Flow Data (Nine Months Ended, in thousands) | Account | Jan 31, 2024 | Jan 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,433 | $110,803 | | Net cash used by investing activities | ($55,713) | ($19,260) | | Net cash used by financing activities | ($75,623) | ($68,051) | | Net increase in cash | $56,097 | $23,492 | | Cash and cash equivalents, end of period | $97,829 | $45,817 | [Non-GAAP Financial Measures and Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles key non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted EPS, Free Cash Flow, and Net Leverage, to their GAAP equivalents - The company uses **non-GAAP measures** like EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow to analyze performance, believing they provide **additional insight** into operating trends[15](index=15&type=chunk)[16](index=16&type=chunk) - **Adjusted EBITDA excludes items** such as restructuring charges, stock-based compensation, and pension settlement charges to **better reflect underlying operations**[17](index=17&type=chunk) - **Adjusted EPS excludes items** like non-recurring restructuring charges and the amortization of customer relationship intangibles to provide an indication of **performance excluding unusual or non-cash items**[19](index=19&type=chunk) [Reconciliation of EBITDA and Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) Net Income was reconciled to Adjusted EBITDA, showing **$50.6 million** for Q3 FY2024 and **$198.1 million** for the nine-month period, with improved Adjusted EBITDA margins Adjusted EBITDA Reconciliation Summary (Q3, in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Net Income (GAAP) | $21,227 | $14,728 | | EBITDA (Non-GAAP) | $50,336 | $47,166 | | Adjusted EBITDA (Non-GAAP) | $50,615 | $50,990 | Adjusted EBITDA Reconciliation Summary (Nine Months, in thousands) | Metric | Nine Months FY2024 | Nine Months FY2023 | | :--- | :--- | :--- | | Net Income (GAAP) | $89,418 | $63,582 | | EBITDA (Non-GAAP) | $189,878 | $168,463 | | Adjusted EBITDA (Non-GAAP) | $198,095 | $175,105 | [Reconciliation of Net Income to Adjusted Net Income](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) GAAP Net Income is adjusted to derive Adjusted Net Income and Adjusted EPS, with Q3 FY2024 Adjusted EPS at **$1.66** and nine-month Adjusted EPS at **$6.83** Adjusted EPS Reconciliation Summary | Metric | Q3 FY2024 | Q3 FY2023 | Nine Months FY2024 | Nine Months FY2023 | | :--- | :--- | :--- | :--- | :--- | | EPS per diluted share (GAAP) | $1.32 | $0.88 | $5.46 | $3.82 | | Adjusted EPS per diluted share (Non-GAAP) | $1.66 | $1.46 | $6.83 | $5.40 | [Reconciliation of Free Cash Flow](index=8&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) Free cash flow, calculated by subtracting capital expenditures from operating cash flow, significantly increased to **$131.7 million** for the nine months ended January 31, 2024 Free Cash Flow Reconciliation (Nine Months Ended, in thousands) | Metric | Jan 31, 2024 | Jan 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,433 | $110,803 | | Less: Capital expenditures | $55,736 | $19,283 | | Free cash flow | $131,697 | $91,520 | [Net Leverage Calculation](index=9&type=section&id=Net%20Leverage%20Calculation) The net leverage ratio, calculated as net debt divided by TTM Adjusted EBITDA, stood at **1.05x** as of January 31, 2024, reflecting **$275.6 million** in net debt Net Leverage Calculation (as of Jan 31, 2024, in thousands) | Metric | Amount | | :--- | :--- | | Total debt | $373,444 | | Less: cash and cash equivalents | ($97,829) | | Net debt | $275,615 | | TTM Adjusted EBITDA (Non-GAAP) | $263,371 | | **Net leverage** | **1.05x** |

Company Performance - American Woodmark (AMWD) closed at $95.17, with a +0.42% movement compared to the previous day, outperforming the S&P 500 which gained 0.04% [1] - The stock has gained 3.33% over the past month, while the Consumer Discretionary sector gained 2.85% and the S&P 500 gained 5.01% [1] - The upcoming earnings report is expected to show an EPS of $1.13, reflecting a 22.6% decrease from the same quarter last year, with revenue forecasted at $366.9 million, a 23.68% drop year-over-year [1] Fiscal Year Estimates - For the entire fiscal year, earnings are predicted to be $8.47 per share, indicating an increase of 11.15%, while revenue is expected to be $1.79 billion, showing a decrease of 13.31% from the previous year [2] - Recent changes to analyst estimates suggest evolving short-term business trends, with positive revisions indicating optimism about the company's outlook [2] Valuation Metrics - American Woodmark has a Zacks Rank of 3 (Hold), with no change in the Zacks Consensus EPS estimate over the past month [3] - The company is trading at a Forward P/E ratio of 11.19, compared to the industry average of 15.12, suggesting it is trading at a discount [3] - The PEG ratio for AMWD is 0.86, while the Furniture industry average PEG ratio is 1.1 [3] Industry Overview - The Furniture industry is part of the Consumer Discretionary sector and currently holds a Zacks Industry Rank of 88, placing it in the top 35% of over 250 industries [4] - The Zacks Industry Rank assesses the strength of industry groups, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [4]

Company Performance - American Woodmark (AMWD) closed at $92.61, reflecting a -1.53% change from the previous day, underperforming the S&P 500's daily loss of 0.48% [1] - Over the last month, AMWD shares increased by 2.42%, lagging behind the Consumer Discretionary sector's gain of 5% and the S&P 500's gain of 5.3% [1] - The upcoming earnings report on February 29, 2024, is anticipated to show earnings of $1.13 per share, representing a year-over-year decline of 22.6%, with revenue expected at $366.9 million, down 23.68% from the prior-year quarter [1] Annual Estimates - Zacks Consensus Estimates forecast earnings of $8.47 per share and revenue of $1.79 billion for the entire year, indicating changes of +11.15% and -13.31%, respectively, compared to the previous year [2] - Recent revisions to analyst forecasts for American Woodmark are crucial as they reflect the changing nature of near-term business trends [2] Valuation Metrics - American Woodmark has a Forward P/E ratio of 11.1, which is a discount compared to the industry average Forward P/E of 15.66 [3] - The company has a PEG ratio of 0.85, lower than the Furniture industry's average PEG ratio of 1.06 [3] Industry Overview - The Furniture industry is part of the Consumer Discretionary sector and currently holds a Zacks Industry Rank of 65, placing it in the top 26% of over 250 industries [4] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Group 1 - American Woodmark Corporation will host a conference call to discuss its third quarter results on February 29, 2024, at 4:30 p.m. Eastern Time [1] - The conference call will be available for live streaming on the company's website and will have a replay option for 30 days [1] - A telephonic replay will be accessible from February 29 at 7:30 p.m. to March 7 at 7:30 p.m. by calling a specified number and entering a passcode [1] Group 2 - American Woodmark is one of the largest cabinet manufacturers in the United States, employing over 8,800 people and operating more than a dozen brands [2] - The company focuses on helping customers express their unique style through its products, partnering with major home centers, builders, and independent dealers [2] - American Woodmark emphasizes customer satisfaction, integrity, teamwork, and excellence across its service and distribution centers, corporate office, and manufacturing facilities [2]

Improved housing market conditions, increasing consumer confidence on the back of expectations of series rate cuts and moderating inflation are encouraging for the Zacks Furniture industry. Along with the improving macro aspects, increasing investments in technological advancements and solutions are expected to drive the industry’s growth. Importantly, product innovation, along with accretive buyouts, should favor the furniture industry in expanding its global reach. Although continued investments in e-comm ...

In the latest trading session, American Woodmark (AMWD) closed at $91.55, marking a -1.76% move from the previous day. This change lagged the S&P 500's daily loss of 0.32%. At the same time, the Dow lost 0.71%, and the tech-heavy Nasdaq lost 0.2%.Shares of the cabinet maker have appreciated by 5.01% over the course of the past month, outperforming the Consumer Discretionary sector's gain of 2.23% and the S&P 500's gain of 4.59%.The investment community will be paying close attention to the earnings performa ...

Wall Street rallied in January on hopes that the Federal Reserve is likely done with interest rate hikes and rate cuts are in the anvil. The positive outlook has made consumers a lot more confident now, which saw the consumer confidence level and future outlook making a solid jump in January.The Conference Board said on Jan 30 that the U.S. consumer confidence level index raced to 114.8 in January, way above December’s reading of 108. January’s reading not only reflected the third straight monthly jump in c ...

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics a ...