American Woodmark (AMWD) - 2025 Q4 - Annual Report

Part I Business American Woodmark is a leading U.S. cabinet manufacturer serving remodeling and new construction markets through diverse brands and sales channels - The company is one of the nation's largest cabinet manufacturers with over 7,800 employees and more than a dozen brands[17] - The company's long-term strategy, "GDP", focuses on Growth (maximizing market opportunity), Digital Transformation (unifying under "One American Woodmark"), and Platform Design (reducing complexity and improving margins)[18] - Products are sold through three primary channels: home centers, builders, and independent dealers/distributors[23] Net Sales by Customer Channel (Fiscal 2025) | Customer Channel | Percentage of Net Sales | | :--- | :--- | | Builders | ~43.5% | | Home Centers (Home Depot & Lowe's) | ~40.8% | | Independent Dealers & Distributors | ~15.8% | - The company operates 17 manufacturing facilities across the United States and Mexico, with recent expansion in Monterrey, Mexico and Hamlet, North Carolina. The Orange, Virginia plant was approved for closure in Q3 fiscal 2025[30][32] - The OSHA recordable incident rate was 1.48 during fiscal 2025, which is 53% better than the industry average[47] Risk Factors The company faces multiple risks including international trade, supply chain, raw material costs, customer concentration, and housing market dependence - The company is exposed to risks from its international operations in Mexico and sourcing from Asia, including tariffs, trade disputes, and supply chain disruptions[59][62] - A high concentration of sales to Home Depot and Lowe's (approximately 40.8% of total net sales in fiscal 2025) presents a significant risk, as the loss of either customer would materially impact the business[69] - The business is heavily reliant on the U.S. housing market, with performance sensitive to economic conditions, interest rates, consumer confidence, and new construction activity[72] - The ongoing multi-year implementation of a new Enterprise Resource Planning (ERP) system carries inherent risks of disruption to supply chains, customer order fulfillment, and internal controls[83] - The company's debt level and the restrictive covenants in its credit agreement could limit its ability to fund operations, make capital expenditures, and pursue business opportunities[96][98] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[101] Cybersecurity The company manages cybersecurity risks through a NIST-aligned framework with Board oversight, reporting no material incidents to date - The company's cybersecurity risk management program is evaluated against the National Institute of Standards and Technology's Cybersecurity Framework (NIST-CSF)[102] - The Board of Directors executes its cybersecurity risk oversight function, delegating primary responsibility to the Audit Committee. The Chief Information Security Officer (CISO) presents to the Audit Committee at least quarterly[111] - As of the filing date, the company is not aware of any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[115] Properties The company operates through a mix of owned and leased manufacturing, service, and distribution facilities across the U.S. and Mexico - The company owns its corporate office and eight manufacturing facilities in the eastern and southern U.S[116] - It leases five manufacturing facilities in the U.S., four in Mexico, and one distribution center, along with various service centers and offices[116] Legal Proceedings The company is involved in routine legal claims and an AD/CVD investigation, potentially leading to a $3.8 million deposit refund - The aggregate range of estimated loss from routine lawsuits and claims is not considered material as of April 30, 2025, with the exception of the AD/CVD investigation[118] - In May 2025, the DOC's Final Review of the AD/CVD investigation found the company's two vendors eligible for certification. If not appealed, this could lead to a refund of the $3.8 million in deposits remitted by the company[279][280] Mine Safety Disclosures This item is not applicable to the company - None[119] Executive Officers of the Registrant This section lists the company's executive officers, detailing their age and positions held over the past five years Executive Officers | Name | Age | Position(s) | | :--- | :--- | :--- | | M. Scott Culbreth | 54 | President and Chief Executive Officer | | Paul Joachimczyk | 53 | Senior Vice President and Chief Financial Officer | | Robert J. Adams, Jr. | 59 | Senior Vice President, Chief Manufacturing and Supply Chain Officer | | Dwayne L. Medlin | 57 | Senior Vice President, Remodel Sales | | Kimberly G. Pascarella | 46 | Senior Vice President, Chief Human Resources Officer | | William L. Waszak | 64 | Senior Vice President, Chief Information Officer | Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities American Woodmark's common stock trades on NASDAQ, with $27.6 million in Q4 fiscal 2025 share repurchases and no current cash dividends - The company's common stock is listed on The NASDAQ Global Select Market under the symbol "AMWD"[123] - The company does not currently pay cash dividends and has no immediate plans to do so[124] Share Repurchases (Q4 Fiscal 2025) | Period | Total Shares Purchased | Average Price Paid | Dollar Value Remaining Under Program (000) | | :--- | :--- | :--- | :--- | | Feb 2025 | 195,339 | $76.57 | $130,358 | | Mar 2025 | — | $— | $130,358 | | Apr 2025 | 221,959 | $56.75 | $117,765 | | Total Q4 | 417,298 | $64.33 | $117,765 | - As of April 30, 2025, $117.8 million remained available for share repurchases under board-authorized programs[126] Selected Financial Data This item is reserved in the report - Item 6 is noted as [Reserved.] in the body of the report[130] Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2025 net sales decreased to $1.71 billion and net income fell to $99.5 million, with fiscal 2026 sales projected for low single-digit change Fiscal 2025 vs. 2024 Key Financial Results (in thousands) | Metric | Fiscal 2025 | Fiscal 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,709,585 | $1,847,502 | (7.5)% | | Gross Profit | $306,550 | $377,807 | (18.9)% | | Net Income | $99,456 | $116,216 | (14.4)% | - The decrease in net sales for fiscal 2025 was driven by a 9.3% decline in the home center channel, an 8.9% decline in the independent dealer and distributor channel, and a 5.1% decline in the builder channel[147][148] - Gross profit margin decreased by 250 basis points to 17.9% in fiscal 2025, primarily due to lower sales volume, fixed cost deleverage, and rising input costs[149] - General and administrative expenses decreased by 39.1%, mainly due to the end of $30.4 million in amortization of customer relationship intangibles from the RSI acquisition[151] - The company recorded pre-tax restructuring charges of $4.6 million in fiscal 2025 related to a reduction in force and the closure of its Orange, Virginia manufacturing plant[142] - For fiscal 2026, the company expects net sales to range from a low single-digit decline to a low single-digit increase, and Adjusted EBITDA to be between $175 million and $200 million[167] - Cash provided by operating activities decreased to $108.4 million in fiscal 2025 from $230.8 million in fiscal 2024, driven by lower net income and unfavorable changes in working capital[175] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from inflation, commodity prices, tariffs, and interest rates, mitigated by derivative instruments - A 100 basis point increase in the variable interest rate on its debt as of April 30, 2025, would increase annual interest expense by approximately $1.7 million[190] - The company uses interest rate swaps to hedge variable interest rate debt and foreign exchange forward contracts to manage currency fluctuation risks, particularly for transactions in Mexican Pesos[191][192] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for fiscal year 2025, including key financial statements and notes Consolidated Balance Sheet Data (in thousands) | | April 30, 2025 | April 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $364,453 | $402,710 | | Total Assets | $1,570,569 | $1,593,865 | | Total Current Liabilities | $182,942 | $195,726 | | Total Long-Term Debt | $365,825 | $371,761 | | Total Shareholders' Equity | $915,998 | $910,376 | | Total Liabilities and Shareholders' Equity | $1,570,569 | $1,593,865 | Consolidated Statement of Income Data (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Net Sales | $1,709,585 | $1,847,502 | $2,066,200 | | Gross Profit | $306,550 | $377,807 | $357,524 | | Operating Income | $140,239 | $161,394 | $136,352 | | Net Income | $99,456 | $116,216 | $93,723 | Consolidated Statement of Cash Flows Data (in thousands) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $108,447 | $230,750 | $198,837 | | Net Cash Used by Investing Activities | $(42,658) | $(92,191) | $(45,337) | | Net Cash Used by Financing Activities | $(104,992) | $(92,893) | $(134,093) | | Net (Decrease) Increase in Cash | $(39,203) | $45,666 | $19,407 | - The company's two largest customers accounted for 39.3% and 12.8% of gross customer receivables at April 30, 2025. For the fiscal year, they represented 29.4% and 11.4% of net sales, respectively[287][288] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting principles, financial disclosure, or auditing scope - None[331] Controls and Procedures Management concluded the company's disclosure controls and internal financial reporting controls were effective as of April 30, 2025 - Management concluded that the Company's disclosure controls and procedures were effective as of April 30, 2025[332] - Management concluded that the Company's internal control over financial reporting was effective as of April 30, 2025, based on the COSO 2013 Framework[321][333] - There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, the company's internal controls[335] Other Information No directors or executive officers adopted, terminated, or modified Rule 10b5-1 trading plans during Q4 fiscal 2025 - No directors or executive officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter ended April 30, 2025[336] Disclosure About Foreign Jurisdictions That Prevent Inspections This item is not applicable to the company - Not applicable[337] Part III Directors, Executive Officers and Corporate Governance This section incorporates director, executive officer, and corporate governance information from the 2025 Proxy Statement - Information regarding directors, executive officers, corporate governance, and the audit committee is incorporated by reference from the company's Proxy Statement[339][340] Executive Compensation This section incorporates executive and director compensation information from the company's 2025 Proxy Statement - Information regarding executive compensation is incorporated by reference from the company's Proxy Statement[341] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section incorporates security ownership information from the 2025 Proxy Statement and details equity compensation plans Equity Compensation Plan Information as of April 30, 2025 | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Equity plans approved by security holders | | | | | Options | 71,820 | $77.19 | 749,850 | | Performance-based RSUs | 321,451 | N/A | | | Service-based RSUs | 148,086 | N/A | | | Equity plans not approved by security holders | — | $— | — | | Total | 541,357 | $77.19 | 749,850 | Certain Relationships and Related Transactions, and Director Independence This section incorporates related party transactions and director independence information from the company's 2025 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement[346] Principal Accounting Fees and Services This section incorporates information on principal accounting fees and services from the company's 2025 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the company's Proxy Statement[347] Part IV Exhibits and Financial Statement Schedules This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including governance and material contracts - Lists all financial statements, schedules, and exhibits filed with the Form 10-K[349] - Includes Financial Statement Schedule II – Valuation and Qualifying Accounts[352] - Exhibits filed include governance documents, material contracts (such as the A&R Credit Agreement), executive employment agreements, equity incentive plans, and required certifications[353][355] Form 10-K Summary The company has not provided a summary under this item - None[359]