American Woodmark Corporation Announces Second Quarter Results
American Woodmark Corporation (the “Company”) announced results for its second quarter of fiscal 2022 which ended October 31, 2021.
Net sales for the second quarter of fiscal 2022 increased $4.6 million, or 1.0%, to $453.2 million compared with the same quarter of the prior fiscal year. The Company experienced growth in the new construction sales channel during the second quarter of fiscal 2022 versus the prior year period as market demand continued at a strong pace. Net sales for the first six months of the current fiscal year increased 6.8% to $895.7 million from the comparable period of the prior fiscal year.
Net income was $2.0 million ($0.12 per diluted share) for the second quarter of fiscal 2022 compared with $23.1 million ($1.36 per diluted share) in the same quarter of the prior fiscal year. Net income for the second quarter of fiscal 2022 decreased $21.1 million due to the continued expansion of inflationary pressures outpacing our pricing actions taken across all our channels. Prior pricing actions have begun to partially offset the macro level inflationary impacts. Given the inherent lag in the realization of these pricing actions which in some cases can take up to six months or more, the current quarter inflation impacts could not be fully offset. Net income for the first six months of the current fiscal year was $5.0 million ($0.30 per diluted share) compared with $39.2 million ($2.30 per diluted share) for the same period of the prior fiscal year. Net income margin was 0.4% for the second quarter of fiscal 2022 compared to 5.2% for the same period in the prior fiscal year and 0.6% for the first six months of the current fiscal year compared with 4.7% for the same period of the prior fiscal year. Adjusted EPS per diluted share was $0.62 for the second quarter of fiscal 2022 compared with $2.02 in the same quarter of the prior fiscal year and $1.32 for the first six months of the current fiscal year compared with $3.65 for the same period of the prior fiscal year.
Adjusted EBITDA for the second quarter of fiscal 2022 decreased $35.3 million, or 53.4%, to $30.8 million, or 6.8% of net sales, compared to $66.1 million, or 14.7% of net sales, for the same quarter of the prior fiscal year. Adjusted EBITDA for the first six months of fiscal 2022 decreased $59.6 million, or 48.7%, to $62.9 million, or 7.0% of net sales, compared to $122.5 million, or 14.6% of net sales, for the same period of the prior fiscal year.
“Sales growth remained strong in our new construction channel with remodel sales slowing due to the timing of winter promotional product shipments and prior year restocking efforts. Our current quarter adjusted EBITDA margins of 6.8% were below expectations as sales were suppressed due to ongoing labor and supply chain challenges, primarily particle board. Our current quarter results include approximately $14 million of pricing impact that we realized in the second quarter of fiscal 2022. We have also completed an additional set of pricing actions due to ongoing inflationary pressures. Assuming our current sales level, we expect the impact of confirmed pricing actions to increase in the fourth fiscal quarter of 2022 by an additional $36 million versus the second quarter’s realized pricing actions, to over $50 million per quarter,” said Scott Culbreth, President and CEO. “Supply chain, labor, and logistics challenges remain, as well as increased costs associated with those challenges, but we expect retention efforts to continue improving our staffing levels which will result in incremental production capacity to reduce our backlog. We remain excited about the long-term potential for the business and expect Adjusted EBITDA margins to improve as price realization better matches inflationary impacts and we improve productivity and increase production levels.”
Cash used by operating activities for the first six months was $(10.2) million and free cash flow totaled $(37.3) million. Cash flows were negatively impacted by lower net income, higher inventory levels, timing of accounts payable, and lower accrued compensation expenses. As of October 31, 2021, the Company had $8.0 million of cash on hand with no term loan debt maturities until July 2023 plus access to $233.0 million of additional availability under its revolving facility. The Company paid down a net of $19.7 million of its debt and repurchased shares valued at $25.0 million during the first six months of the current fiscal year.
Effective May 1, 2021, the Company changed its accounting method for inventory costing for inventories which previously utilized a last-in, first-out (“LIFO”) basis to a first-in, first-out (“FIFO”) basis. All prior periods presented have been retrospectively adjusted to apply the effects of the change.
For the full second quarter results, click here.
About American Woodmark
American Woodmark celebrates the creativity in all of us. With over 10,000 employees and more than a dozen brands, we’re one of the nation’s largest cabinet manufacturers. From inspiration to installation, we help people find their unique style and turn their home into a space for self-expression. By partnering with major home centers, builders, and independent dealers and distributors, we spark the imagination of homeowners and designers and bring their vision to life. Across our service and distribution centers, our corporate office, and manufacturing facilities, you’ll always find the same commitment to customer satisfaction, integrity, teamwork, and excellence. Visit americanwoodmark.com to learn more and start building something distinctly your own.
Kevin Dunnigan – Treasury Director – (540) 665-9100
Source: American Woodmark Corporation