American Woodmark (AMWD) - 2024 Q3 - Quarterly Results

Financial Highlights 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 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] - Performance was driven by improved operational efficiencies, a trend consistent with the first half of the fiscal year[3] - The net sales outlook for the full fiscal year is unchanged, but the Adjusted EBITDA performance expectation has been raised[3] Financial Performance 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 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] Fiscal Year to Date Results 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][6] Balance Sheet & Cash Flow 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] - Total debt comprised $206.3 million in term loan debt and $163.8 million drawn on its revolving credit facility[7] 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] Fiscal 2024 Financial Outlook 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] - 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] Unaudited Financial Statements 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) 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 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 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 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][16] - Adjusted EBITDA excludes items such as restructuring charges, stock-based compensation, and pension settlement charges to better reflect underlying operations[17] - 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] Reconciliation of EBITDA and Adjusted EBITDA 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 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 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 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 |