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| 8-K/A - 8-K/A - AMERICAN WOODMARK CORP | amwd-03918q318ka.htm |
AMWD Announces Third Quarter Results
Page 1
March 9, 2018
Exhibit 99.1
P. O. Box 1980 | |
Winchester, VA 22604-8090 | |
Contact: | Kevin Dunnigan Assistant Treasurer 540-665-9100 |
CORRECTED RELEASE
This press release corrects a prior version published on March 9, 2018. In the fourth paragraph under Fiscal Year-to-Date 2018, the amount of free cash flow should read $16.0 million, instead of $81.8 million and the related table reconciling Free Cash Flow has been updated. Also, the table under “Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents” calculating Adjusted EBITDA has been re-ordered.
AMERICAN WOODMARK CORPORATION ANNOUNCES THIRD QUARTER RESULTS |
WINCHESTER, Virginia (March 9, 2018) (Updated March 12, 2018) -- 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%
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AMWD Announces Third Quarter Results
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March 9, 2018
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 $16.0 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.
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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 | |||||||||
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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 | |||||
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Reconciliation of Net Sales and Percentage of Net Sales Excluding RSI | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
January 31, | January 31, | |||||||||||||||||||||
(in thousands) | 2018 | 2017 | Percent Change | 2018 | 2017 | Percent 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 (income) expense, net | 4,035 | (167 | ) | 2,887 | (225 | ) | ||||||||||
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) | $ | 18,484 | $ | 26,452 | $ | 91,148 | $ | 95,657 | ||||||||
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 | ||||||||||||
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 | % | ||||||||
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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 | |||||
Less: Capital expenditures (2) | 32,919 | 17,521 | |||||||
Free cash flow | $ | 15,962 | $ | 34,143 | |||||
(2) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.
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