American Woodmark (AMWD) - 2024 Q4 - Annual Results

Executive Summary & Financial Highlights Fiscal Fourth Quarter 2024 Highlights American Woodmark reported a decrease in net sales and net income for Q4 FY2024 compared to the prior year, with Adjusted EBITDA also declining, while generating positive cash flow from operations and free cash flow, and repurchasing shares Q4 FY2024 Financial Highlights | Metric | Q4 FY2024 | YoY Change (%) | | :-------------------------------- | :---------- | :--------- | | Net sales | $453.3 million | -5.8% | | Net income | $26.8 million | -11.1% | | GAAP EPS | $1.69 | | | Adjusted EPS | $1.70 | | | Adjusted EBITDA | $54.7 million | -16.2% | | Cash provided by operating activities | $43.3 million | | | Free cash flow | $6.8 million | | | Repurchased shares | 170,571 shares | | | Value of shares repurchased | $15.9 million | | Fiscal Year 2024 Highlights For the full fiscal year 2024, American Woodmark experienced a decrease in net sales but achieved a significant increase in net income and Adjusted EBITDA, generating strong cash flow and executing substantial share repurchases FY2024 Financial Highlights | Metric | FY2024 | YoY Change (%) | | :-------------------------------- | :----------- | :--------- | | Net sales | $1,847.5 million | -10.6% | | Net income | $116.2 million | +24.0% | | GAAP EPS | $7.15 | | | Adjusted EPS | $8.53 | | | Adjusted EBITDA | $252.8 million | +5.2% | | Cash provided by operating activities | $230.8 million | | | Free cash flow | $138.5 million | | | Repurchased shares | 1,108,715 shares | | | Value of shares repurchased | $87.7 million | | Management Commentary & FY2025 Outlook CEO Scott Culbreth highlighted strong Q4 performance, exceeding expectations for net sales and Adjusted EBITDA due to an improving demand environment and strategic focus on operational excellence, while projecting low single-digit net sales growth for FY2025 - CEO Scott Culbreth noted strong Q4 performance, exceeding expectations for net sales and Adjusted EBITDA, attributing it to an improving demand environment and strategic focus on automation and operational excellence[3] - Despite a 10.6% reduction in net sales for the full fiscal year, Adjusted EBITDA grew to $252.8 million, and Adjusted EBITDA margin improved by over 200 basis points[3] - The company plans to continue investing in automation, capacity, and digital transformation to achieve long-term targets[3] - For fiscal year 2025, the net sales outlook is for low single-digit growth across all channels[3] Detailed Financial Results Fourth Quarter Operating Results Net sales for Q4 FY2024 decreased by 5.8% year-over-year to $453.3 million, with net income declining by $3.3 million primarily due to lower net sales and one-time startup costs for new locations, and Adjusted EPS also decreased Q4 FY2024 Operating Results | Metric | Q4 FY2024 (USD Million) | Q4 FY2023 (USD Million) | Change (USD Million) | % Change (%) | | :-------------------- | :---------- | :---------- | :------- | :------- | | Net sales | $453.278 | $481.095 | -$27.817 | -5.8% | | Net income | $26.798 | $30.141 | -$3.343 | -11.1% | | GAAP EPS (diluted) | $1.69 | $1.80 | | | | Adjusted EPS (diluted) | $1.70 | $2.21 | | | | Adjusted EBITDA | $54.678 | $65.274 | -$10.596 | -16.2% | | Adjusted EBITDA margin | 12.1% | 13.6% | | | - The decrease in net income was primarily due to a decrease in net sales and one-time startup costs for new locations in Hamlet, North Carolina, and Monterrey, Mexico[4] Fiscal Year Operating Results For FY2024, net sales decreased by 10.6% to $1,847.5 million, yet net income increased significantly to $116.2 million, driven by improved pricing and operational efficiencies, with Adjusted EBITDA also rising and its margin notably improving FY2024 Operating Results | Metric | FY2024 (USD Million) | FY2023 (USD Million) | Change (USD Million) | % Change (%) | | :-------------------- | :----------- | :----------- | :-------- | :-------- | | Net sales | $1,847.502 | $2,066.200 | -$218.698 | -10.6% | | Net income | $116.216 | $93.723 | +$22.493 | +24.0% | | GAAP EPS (diluted) | $7.15 | $5.62 | | | | Adjusted EPS (diluted) | $8.53 | $7.62 | | | | Adjusted EBITDA | $252.773 | $240.379 | +$12.394 | +5.2% | | Adjusted EBITDA margin | 13.7% | 11.6% | | | - The increase in net income for fiscal 2024 was primarily due to pricing better matching inflationary pressures and overall increased efficiencies across existing operating locations[5] - These benefits were partially offset by one-time startup costs and inefficiencies from new locations in Hamlet, North Carolina, and Monterrey, Mexico, which are expected to ramp up production throughout the calendar year[5] Balance Sheet & Cash Flow As of April 30, 2024, the company maintained a healthy cash position and significant revolving credit facility availability, generating strong cash from operating activities and free cash flow for the fiscal year, and continuing its share repurchase program Balance Sheet & Cash Flow Highlights (as of April 30, 2024) | Metric | Amount | | :------------------------------------ | :----------- | | Cash & cash equivalents | $87.4 million | | Revolving credit facility availability | $322.9 million | | Term loan debt | $206.3 million | | Revolving credit facility drawn | $163.8 million | | Cash provided by operating activities (FY2024) | $230.8 million | | Free cash flow (FY2024) | $138.5 million | | Shares repurchased (Q4 FY2024) | 170,571 shares | | Value of shares repurchased (Q4 FY2024) | $15.9 million | | Shares repurchased (FY2024) | 1,108,715 shares | | Value of shares repurchased (FY2024) | $87.7 million | | Remaining share repurchase authorization | $89.5 million | Fiscal 2025 Financial Outlook Fiscal 2025 Financial Outlook Details For fiscal year 2025, American Woodmark anticipates low single-digit net sales growth and projects Adjusted EBITDA between $235 million and $255 million, excluding certain non-operating income and expense items for which a GAAP reconciliation is not provided due to estimation difficulties FY2025 Financial Outlook | Metric | Outlook | | :---------------- | :-------------------------------- | | Net sales | Low single digit increase year-over-year | | Adjusted EBITDA | $235 million to $255 million | - The Adjusted EBITDA outlook excludes certain income and expense items (e.g., restructuring costs, interest expense, stock-based compensation, tax items) that management believes are not part of underlying operations, and a reconciliation to GAAP net income is not provided due to the difficulty in estimating these highly variable items[9] Company Overview About American Woodmark American Woodmark Corporation is one of the nation's largest cabinet manufacturers, employing over 8,800 individuals across more than a dozen brands, partnering with major home centers, builders, and independent dealers to provide cabinet solutions while upholding core values of customer satisfaction, integrity, teamwork, and excellence - American Woodmark is one of the nation's largest cabinet manufacturers, with over 8,800 employees and more than a dozen brands[10] - The company partners with major home centers, builders, and independent dealers and distributors to help customers find their unique style and transform their homes[10] - Core values across all operations (service, distribution, corporate, manufacturing) include commitment to customer satisfaction, integrity, teamwork, and excellence[10] Non-GAAP Financial Measures Use and Definitions of Non-GAAP Measures American Woodmark presents non-GAAP financial measures like EBITDA, Adjusted EBITDA, Adjusted EPS, Free Cash Flow, and Net Leverage, which management uses for performance analysis and strategy identification, emphasizing they are supplementary to, not substitutes for, GAAP results - Non-GAAP financial measures are used by management to evaluate business performance, prepare annual operating budgets, view operating trends, perform analytical comparisons, and identify strategies for improvement[17][18][21] - These non-GAAP measures are intended to provide additional means of analyzing results and should be viewed in addition to, not as a substitute for, GAAP results[17] - Adjusted EBITDA is defined as net income adjusted for income tax, interest, depreciation & amortization, amortization of customer relationship intangibles, acquisition/restructuring expenses, non-recurring restructuring charges, stock-based compensation, asset disposals, foreign exchange changes, debt modification, and pension settlement charges[19] - Adjusted EPS per diluted share excludes the per share impact of acquisition/restructuring expenses, non-recurring restructuring charges, amortization of customer relationship intangibles, debt modification, pension settlement charges, and the tax benefit of these add-backs[21] - Free cash flow is defined as cash from continuing operations minus capital expenditures (cash payments for property, plant & equipment, and investments in displays)[22] - Net leverage is defined as net debt (total debt less cash and cash equivalents) divided by the trailing 12 months Adjusted EBITDA[23][24] Reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin This section provides a detailed reconciliation of net income (GAAP) to EBITDA and Adjusted EBITDA for the three and twelve months ended April 30, 2024, and 2023, including corresponding net income and Adjusted EBITDA margins Reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin (USD Thousands) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | Twelve Months Ended April 30, 2024 | Twelve Months Ended April 30, 2023 | | :----------------------------------------------------- | :-------------------------------- | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net income (GAAP) | $26,798 | $30,141 | $116,216 | $93,723 | | Add back: | | | | | | Income tax expense | 7,799 | 7,688 | 35,752 | 28,963 | | Interest expense, net | 1,885 | 3,216 | 8,207 | 15,994 | | Depreciation and amortization expense | 12,596 | 11,499 | 48,337 | 48,077 | | Amortization of customer relationship intangibles and trademarks | — | 11,417 | 30,444 | 45,667 | | EBITDA (Non-GAAP) | $49,078 | $63,961 | $238,956 | $232,424 | | Add back: | | | | | | Acquisition and restructuring related expenses | — | 20 | 47 | 80 | | Non-recurring restructuring charges, net | — | 215 | (198) | 1,525 | | Pension settlement, net | — | (55) | — | (7) | | Net gain on debt modification | — | (2,089) | — | (2,089) | | Change in fair value of foreign exchange forward contracts | 1,785 | 904 | 1,544 | — | | Stock-based compensation expense | 3,496 | 2,147 | 10,682 | 7,396 | | Loss on asset disposal | 319 | 171 | 1,742 | 1,050 | | Adjusted EBITDA (Non-GAAP) | $54,678 | $65,274 | $252,773 | $240,379 | | Net Sales | $453,278 | $481,095 | $1,847,502 | $2,066,200 | | Net income margin (GAAP) | 5.9 % | 6.3 % | 6.3 % | 4.5 % | | Adjusted EBITDA margin (Non-GAAP) | 12.1 % | 13.6 % | 13.7 % | 11.6 % | Reconciliation of Adjusted EPS per Diluted Share This section provides a reconciliation of net income (GAAP) to Adjusted net income and GAAP EPS per diluted share to Adjusted EPS per diluted share for the three and twelve months ended April 30, 2024, and 2023 Reconciliation of Adjusted EPS per Diluted Share (USD Thousands, except share data) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | Twelve Months Ended April 30, 2024 | Twelve Months Ended April 30, 2023 | | :----------------------------------------------------- | :-------------------------------- | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net income (GAAP) | $26,798 | $30,141 | $116,216 | $93,723 | | Add back: | | | | | | Acquisition and restructuring related expenses | — | 20 | 47 | 80 | | Non-recurring restructuring charges, net | — | 215 | (198) | 1,525 | | Pension settlement, net | — | (55) | — | (7) | | Amortization of customer relationship intangibles and trademarks | — | 11,417 | 30,444 | 45,667 | | Net gain on debt modification | — | (2,089) | — | (2,089) | | Tax benefit of add backs | 121 | (2,589) | (7,785) | (11,791) | | Adjusted net income (Non-GAAP) | $26,919 | $37,060 | $138,724 | $127,108 | | Weighted average diluted shares (GAAP) | 15,881,015 | 16,735,892 | 16,260,222 | 16,685,359 | | EPS per diluted share (GAAP) | $1.69 | $1.80 | $7.15 | $5.62 | | Adjusted EPS per diluted share (Non-GAAP) | $1.70 | $2.21 | $8.53 | $7.62 | Reconciliation of Free Cash Flow This section reconciles cash provided by operating activities to free cash flow for the twelve months ended April 30, 2024, and 2023 Reconciliation of Free Cash Flow (USD Thousands) | Metric | Twelve Months Ended April 30, 2024 | Twelve Months Ended April 30, 2023 | | :------------------------------------ | :--------------------------------- | :--------------------------------- | | Cash provided by operating activities | $230,750 | $198,837 | | Less: Capital expenditures | 92,241 | 45,380 | | Free cash flow | $138,509 | $153,457 | Net Leverage Calculation This section details the calculation of net debt and the net leverage ratio as of April 30, 2024, which is 1.14 Net Leverage Calculation (as of April 30, 2024) (USD Thousands) | Metric | Amount | | :------------------------------------ | :-------------------- | | Current maturities of long-term debt | $2,722 | | Long-term debt, less current maturities | 371,761 | | Total debt | $374,483 | | Less: cash and cash equivalents | (87,398) | | Net debt | $287,085 | | Adjusted EBITDA (trailing 12 months) | $252,773 | | Net leverage | 1.14 |