FinanceLooker

Excrept from filing document 2024-04-30

The aggregate market value of the registrant s Common Stock no par value held by non affiliates of the registrant as of October 31 2023 the last business day of the Company s most recent second quarter was 1 067 379 515
Portions of the Registrant s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on August 22 2024 Proxy Statement are incorporated by reference into Part III of this Form 10 K
American Woodmark Corporation American Woodmark the Company we our or us was incorporated in 1980 by the four principal managers of the Boise Cascade Cabinet Division through a leveraged buyout of that division We operated privately until 1986 when we became a public company through a registered public offering of common stock
From design to installation we believe we offer a higher level of service than our competitors serving both national and regional markets with the most relevant options This makes us the cabinetmaker of choice for many homeowners builders designers dealers distributors and retailers across the country Our customer base is expanding as we build our portfolio of brands and reach new markets beyond kitchen and bath Aspirational yet grounded we ve embraced an ambitious strategic vision that will advance us boldly into the future
Our annual reports on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K proxy statements and all amendments to those reports are available free of charge on our website americanwoodmark com as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission The contents of our website are not however part of or incorporated by reference into this report
American Woodmark celebrates the creativity in all of us With over 8 600 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
We believe the strength of our culture and connections will deliver profitability through Growth Digital Transformation and Platform Design GDP Our GDP strategy is the lens we use to view our long term decision making enabling growth and profitability through the cycle Growth will maximize our market opportunity through key initiatives Digital Transformation will strengthen our goal of becoming One American Woodmark Lastly Platform Design will leverage complexity reduction and operational excellence to drive margin improvement
We offer a wide variety of products that fall into product lines including kitchen cabinetry bath cabinetry office cabinetry home organization and hardware Our cabinetry products are available in a variety of designs finishes and finish colors and door styles
Made to order products are typically constructed with higher grade materials and more options compared to our stock products and are special ordered from all channels and shipped directly to the home from our factory Stock products typically have limited SKUs and high volumes and are primarily sold point of sale as cash and carry products through home centers Our kitchen cabinetry and bath cabinetry products are offered across all product categories made to order and stock while our home organization products are exclusively stock products
Our products are sold on a national basis across the United States to the remodeling and new home construction markets We service these markets through three primary channels home centers builders and independent dealers and distributors We distribute our products to each market channel directly from our assembly plants and through a third party logistics network
Pro business customers contractors builders remodelers and do it yourself homeowners use our products primarily for repair and remodel R R projects Products for R R projects are predominately purchased through home centers such as Home Depot and Lowe s Due to the market presence store network and customer reach of these large home centers our strategy has been to develop long term strategic relationships with both Home Depot and Lowe s to distribute our products During the fiscal year ended April 30 2024 fiscal 2024 Home Depot and Lowe s combined accounted for approximately 41 6 of net sales of the Company The loss of either Home Depot or Lowe s as a customer would have a material adverse effect on us
The builder business represents a large portion of our overall revenue and has historically been a strategic component of our go to market strategy We serve 19 of the top 20 U S builders with a high degree of geographic concentration around major metro areas where single family starts are most robust We also serve multi family builders primarily in the Southwest region of the U S Our various service center locations are close to these builders and enable us to deliver exceptional service to our builder partners During fiscal 2024 builders accounted for approximately 42 4 of net sales of the Company
In 2010 we expanded our business into the independent dealers channel with the launch of the Waypoint Living Spaces brand Today we sell this brand to over 1 500 regional and local dealers across the country The independent dealer and distributor channel is the largest by volume characterized by a high degree of entrepreneurship and one that rewards suppliers that deliver great service Our ability to provide superior value delivered with exceptional service has helped drive our expansion into this channel which will continue to be a strong growth and market share opportunity for us Within our distributor channel we also sell our newly launched 1951 Cabinetry
brand through a network of regional distributors who are focused on selling a complete variety of building materials to small and midsized builders and contractors within their local markets 1951 Cabinetry will be sold directly to distributors with a wide range of product offerings Their styles and finishes will blend both timeless and on trend designs that are curated to favor individual preferences for a traditional or contemporary feel The brand maintains a commitment to longevity without compromising the excitement surrounding modern flair Alongside the launch of 1951 Cabinetry comes 1951 Foundations and 1951 Progressions 1951 Foundations and 1951 Progressions utilize American Woodmark s Made to Stock options to address the market demand for high quality craftsmanship at an affordable price point with their focused selections of the most popular styles and finishes During fiscal 2024 independent dealers and distributors accounted for approximately 16 0 of net sales of the Company
Our manufacturing facilities are strategically located to serve our customers which enhances our ability to provide high quality value priced products with low production costs We manufacture our products across 18 facilities located in Maryland Indiana West Virginia Georgia Arizona Kentucky Virginia California Texas and North Carolina in the United States and Tijuana and Monterrey Mexico We built a new manufacturing facility in Monterrey Mexico which began operations in the third quarter of fiscal 2024 and expanded our Hamlet North Carolina facility This investment established a component operation in eastern Mexico and a stock kitchen and bath center of excellence delivering additional capacity for our east coast markets The geographic distribution of our facilities throughout the United States together with our third party logistics network for the American Woodmark business and beneficial freight arrangements with home centers enable us to provide a short supply chain to our U S customers The ordering patterns of Home Depot and Lowe s our two biggest customers require suppliers to have sufficient manufacturing capacity to meet demand and to serve a large number frequently hundreds to thousands of stores They impose strict logistics and performance criteria on us The scale and strategic locations of our manufacturing facilities help us to meet these demands of the home center customers as well as provide a logistics platform that we can leverage for builders and independent dealers and distributors We distribute our products through one stand alone distribution center distribution centers located in some of our manufacturing facilities and other third party locations to maximize efficiency Our vertically integrated production and assembly lines standardized product construction and investments in automation have allowed us to continuously improve productivity and develop an expertise in wood processing alternate materials and yield maximizing technologies We have standardized our raw material inputs and a number of our production processes which reduces logistical requirements to manufacture and gives us increased economies of scale in sourcing these inputs Certain of our inputs are also partially processed by our vendors which reduces cost In addition our production of labor intensive manufacturing and fabrication processes in our four Mexico facilities has enabled us to keep overall labor costs low while maintaining higher quality greater speed to market and transportation cost advantage over Asian based manufacturers
We also provide complete turnkey installation services to our direct builder customers via our network of eight primary service centers that are strategically located throughout the United States in Virginia Texas North Carolina Georgia Florida Arizona and California
We regularly evaluate our organizational productivity and supply chains and assess opportunities to reduce costs and enhance quality Through operational excellence we strive to improve quality speed and flexibility to meet changing and uncertain market conditions as well as manage cost inflation including wages and employee medical costs
The primary raw materials used in our products include various wood species including hard maple cherry and beech particle board medium density fiberboard high density fiberboard and plywood Additional raw materials include paint manufactured components and hardware We purchase these and other raw materials from more than one source and generally believe them to be readily available We rely on outside suppliers for some of our key components and do not typically enter into long term contracts with our suppliers or sourcing partners We source a portion of our components from third parties in Asia and Europe The distances involved in these arrangements together with the differences in business practices shipping and delivery requirements and laws and regulations add complexity to our supply chain logistics and increase the potential for interruptions in our production scheduling
We operate in a highly fragmented industry that is composed of several thousand local regional and national manufacturers Most of our competitors compete on a local or regional basis but others like us compete on a national basis as well Our competitors include importers and large consolidated operations as well as relatively small local cabinet manufacturers Moreover companies in other building products industries may compete with us Competitive factors within the industry include pricing quality product availability service delivery time and relationships with customers Our principal means for competition is our breadth and variety of product offerings expanded service capabilities geographic reach competitive price points for our products and affordable quality We believe we are a top three manufacturer of kitchen bath and home organization products in the United States based on publicly available information
Our operations are subject to federal state and local environmental laws and regulations relating to among other things the generation storage handling emission transportation and discharge of regulated materials into the environment Permits are required for certain of our operations and these permits are subject to revocation modification and renewal by issuing authorities Governmental authorities have the power to enforce compliance with their regulations and violations may result in the payment of fines or the entry of injunctions or both We may also incur liabilities for investigation and clean up of soil or groundwater contamination on or emanating from current or formerly owned and operated properties or at offsite locations at which regulated materials are located where we are identified as a responsible party Discovery of currently unknown conditions could require responses that could result in significant costs
We maintain trademarks copyrights and trade secrets We sell many of our products under a number of registered and unregistered trademarks which we believe are widely recognized in our industry We rely on trade secrets and confidentiality agreements to develop and maintain our competitive position Monitoring the unauthorized use of our intellectual property is difficult and the steps we have taken may not prevent unauthorized use of our intellectual property The disclosure or misappropriation of our intellectual property could harm our ability to protect our rights and our competitive position If we must litigate to protect our rights we may incur significant expenses and divert significant attention from our business operations To date we have not relied on material patents in operating our business
Our business has been subject to seasonal influences with higher sales typically realized in our first and fourth fiscal quarters General economic forces and changes in our customer mix have reduced seasonal fluctuations in revenue over the past few years and this trend is expected to continue The costs of the Company s products are subject to inflationary pressures and commodity price fluctuations The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases
As of April 30 2024 we employed over 8 600 full time employees with approximately 228 unionized employees in Anaheim California We believe that our employee relations and relationship with the union representing the employees in Anaheim are good
At American Woodmark our mission to create value through people remains unchanged The way we conduct our business and interact with our customers vendors and the communities in which we operate is driven by our core principles of Customer Satisfaction Integrity Teamwork and Excellence These principles also guide our interactions with employees and serve as a basis for setting goals for and evaluating our employees By living out these principles we believe we will be best positioned to attract develop and promote a broad range of talent and to conduct our business in a responsible ethical and professional manner To that end we have among other things established policies under which we strive to
Fund the American Woodmark Foundation and the AWCares Fund which serve as vehicles for our employees to serve the community and receive financial assistance for unforeseen personal disaster or tragedy and
Our training is designed and developed at the corporate and local level in order to further our goals of enterprise alignment and local integration We prefer a leader led approach to training whenever possible to foster engagement relationship building connection and shared learning experiences Depending on the course our training and development opportunities are offered through a variety of platforms and frequencies such as on an on demand semi annual annual or biannual basis
We have established comprehensive safety programs throughout our operations to provide our employees with the tools they need to comply with the safety standards established under federal state and local laws and regulations or independently by us Our safety leadership teams monitor our safety programs and related benchmarking with the goal of improving safety across the Company Our rate of incidents recordable under the standards of the Occupational Safety and Health Administration OSHA per one hundred employees per year also known as the OSHA recordable rate was 1 42 during fiscal 2024 which is 57 better than the industry average of 3 3 according to the U S Department of Labor
American Woodmark is an equal opportunity employer and we strive to create an opportunity that is free from discrimination and harassment That commitment extends to cultivating an inclusive environment where every individual is respected valued appreciated and empowered to contribute their unique perspectives We believe that embracing inclusion not only results in increased diversity but also contributes to more robust solutions through learning and innovation
In recent years we have made significant progress in promoting diversity and inclusion throughout our organization We have implemented Right Environment Councils across all our locations ensuring meaningful engagement with employees at all levels and within the communities we serve Moreover we have placed a strong emphasis on educating our leaders and staff through comprehensive training on diversity and inclusion topics across our hourly and salaried employees bolstering awareness and actionable insights through initiatives like our employee engagement survey which now includes categorized diversity and inclusion questions developed a Women in Operations mentorship program and launched a quarterly series podcast committed to discussing topics around inclusion to the organization
We have elevated our efforts and continue pursuing strategic initiatives led by our Inclusion Diversity Equity and Alignment IDEA team Our enterprise wide social strategic roadmap guides our ongoing endeavors incorporating representation metrics into our organizational scorecards
Looking ahead we are unwavering in our commitment to deepen our culture of inclusion and leverage the voices and perspectives within our company Our dedication to diversity and inclusion is not only rooted in our values but also vital to our organization s success
We believe our company holds the number two or three market position in the United States cabinet market with an estimated 10 market share based on publicly available information We are one of a select number of market participants with a national manufacturing and distribution footprint which includes 18 manufacturing facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the United States Our operating footprint provides us an ability to service our builder independent dealers and distributors and home centers customers nationwide offering them a broad set of products across a variety of price points Our facilities are strategically located in or near major metropolitan markets to facilitate efficient product distribution to our customers We believe the scale and breadth of our operations differentiate us and result in a competitive advantage providing superior customer service low cost distribution and on time delivery
We believe that the diversity of our product portfolio across categories channels and end markets enables our financial performance both in periods of growth and cyclicality Our made to order offerings provide products for customers looking for a designer product which can be used for both new home construction and remodeling applications Our stock offering allows us to further serve our existing end markets through the addition of a lower price point product that is well suited for areas of growing demand such as new home construction targeting the first time homebuyer We also offer turnkey cabinet solutions for our builder customers which we believe is a unique aspect of our service platform Our turnkey solution provides in house design and measurement as well as installation service We believe the ability to leverage our labor and expertise is a value added service to our builder customers which has helped strengthen our position in the new home construction market
We have built strong and stable relationships with a base of long standing customers across home centers builders and independent dealers and distributors We have an average relationship length of 20 plus years with our top 10 customers including long standing relationships with Home Depot and Lowe s We believe our customers value our North American manufacturing and distribution footprint which allows us to meet demanding logistics and performance criteria We believe our focus on providing exceptional customer service and a quality product at a competitive price have enabled us to establish ourselves as a vendor of choice
We operate 18 manufacturing facilities across the United States and Mexico Our vertically integrated production and assembly lines standardized product construction and investments in automation have allowed us to continuously improve productivity and efficiency We have standardized our raw material inputs and a number of our production processes which reduces logistical requirements and provides increased economies of scale in sourcing these inputs Our labor intensive manufacturing and fabrication processes in Mexico offer a low cost alternative to Asian based manufacturers while providing a quality product with lower transportation costs
We have assembled an executive team from leading organizations with a deep base of management experience within industrial manufacturing companies Our President and Chief Executive Officer M Scott Culbreth joined our team in 2014 as the Chief Financial Officer and was named Chief Executive Officer in 2020 Mr Culbreth s career in the manufacturing industry has been highlighted with multiple leadership roles in finance Our other senior executives all have over twenty plus years of experience working for multi national companies with individual backgrounds in manufacturing finance sales and human resources
There are a number of risks and uncertainties that may affect the Company s business results of operations and financial condition These risks and uncertainties could cause future results to differ from past performance or expected results including results described in statements elsewhere in this report that constitute forward looking statements under the Private Securities Litigation Reform Act of 1995 Additional risks and uncertainties not presently known to the Company or currently believed to be immaterial also may adversely impact the Company s business Should any risks or uncertainties develop into actual events these developments could have material adverse effects on the Company s business financial condition and results of
operations These risks and uncertainties which the Company considers to be most relevant to specific business activities include but are not limited to the following Additional risks and uncertainties that may affect the Company s business results of operations and financial condition are discussed elsewhere in this report including in Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations under the headings Forward Looking Statements Seasonality and Outlook for Fiscal 2025 and Item 7A Quantitative and Qualitative Disclosures about Market Risk
Because of the concentration of our sales to our two largest customers the loss of either customer or a significant reduction in orders from either customer could adversely affect our financial results
Home Depot and Lowe s collectively accounted for approximately 41 6 of total net sales during the fiscal year 2024 We do not typically enter into long term sales contracts with Home Depot or Lowe s and our sales usually occur on a purchase order basis Our customers can make significant changes in their purchase volumes and can seek to significantly affect the prices we receive for our products and services and the other terms and conditions on which we do business They have in the past discontinued and may in the future choose to discontinue purchasing some or all of our products with little or no notice In the past purchase volumes from our customers including Home Depot and Lowe s have fluctuated substantially and we expect such fluctuations to occur from time to time in the future Any reduction in or termination of our sales to either Home Depot or Lowe s could have a material adverse effect on our business financial condition or results of operations
In addition the potential for orders from these large retail customers to increase significantly from time to time requires us to have sufficient manufacturing capacity These large retailers also impose strict logistics and performance criteria and fines Failure to comply with these obligations may result in these customers reducing or stopping their purchase of our products
We could also experience delays or defaults in payment from Home Depot or Lowe s which could adversely affect our business financial condition or results of operations The loss of a substantial portion of our order volumes or revenue from either Home Depot or Lowe s for any reason would have a material adverse effect on our business financial condition or results of operations
Our business primarily relies on U S home improvement repair and remodel and new home construction activity levels all of which are impacted by risks associated with fluctuations in the housing market Downward changes in the general economy the housing market or other business conditions could adversely affect our results of operations cash flows and financial condition
Our business primarily relies on home improvement repair and remodel and new home construction activity levels in the United States The housing market is sensitive to changes in economic conditions and other factors such as the level of employment access to labor consumer confidence consumer income availability of financing and interest rate levels and available inventory Consistent with our fiscal 2024 net sales volume decrease adverse changes in any of these conditions generally or in any of the markets where we operate could decrease demand and could adversely impact our businesses by
We purchase various raw materials including among others wood wood based and resin products which are subject to price fluctuations that could materially increase our manufacturing costs Further increases in energy costs increase our production costs and also the cost to transport our products each of which could have a material adverse effect on our business and results of operations In addition some of our suppliers have consolidated and other suppliers may do so in the future Combined with increased demand such consolidation could increase the price of our supplies and raw materials
We also may be unwilling or unable to pass on to customers commensurate cost increases Competitive considerations and customer resistance to price increases may delay or make us unable to adjust selling prices To the extent we are unable to either re engineer or otherwise offset increased costs or are unwilling or unable to build price increases into our sales prices our margins will be negatively affected Even if we are able to increase our selling prices sustained price increases for our products may lead to sales declines and loss of market share particularly if our competitors do not increase their prices and there is usually a six to nine month lag before we are able to see the results of our pricing actions Conversely when raw materials or energy prices decline we may receive customer pressure to reduce our sales prices
These prices are market based and fluctuate based on factors beyond our control We do not have long term fixed supply agreements and do not hedge against price fluctuations We therefore cannot predict our raw materials or energy costs for the coming year
Our industry historically has been cyclical in nature and has fluctuated with economic cycles During economic downturns our industry could experience longer periods of recession and greater declines than the general economy We believe that our industry is significantly influenced by economic conditions generally and particularly by housing activity consumer confidence the level of personal discretionary spending demographics and credit availability These factors may affect not only the ultimate consumer of our products but also may impact home centers builders and our other primary customers As a result a worsening of economic conditions could adversely affect our sales and earnings as well as our cash flow and liquidity
We operate within a highly competitive U S cabinetry industry which is characterized by competition from a number of other manufacturers Competition is further intensified during economic downturns We compete with numerous large national and regional home products companies for among other things customers orders from Home Depot and Lowe s raw materials skilled management and labor resources Purchase volumes from our main home center customers have fluctuated substantially from time to time in the past and we expect such fluctuations to occur from time to time in the future
Some of our competitors may have greater financial marketing and other resources than we do and therefore may be able to adapt to changes in customer preferences more quickly devote more resources to the marketing and sale of their products generate greater national brand recognition or adopt more aggressive pricing policies than we can In addition some of our competitors may resort to price competition to sustain or gain market share and manufacturing capacity utilization and we may have to adjust the prices on some of our products to stay competitive which could reduce our revenues
We also face competition with respect to some of our products from competitors in countries with lower regulatory safety environmental and other costs such as China Vietnam Thailand and Malaysia These competitors may also benefit from certain local government subsidies or other incentives that are not available to us
Our failure to develop new products or respond to changing consumer preferences and purchasing practices could have a material adverse effect on our business financial condition or results of operations
The U S cabinetry industry is subject to changing consumer trends demands and preferences The uncertainties associated with developing and introducing new products such as gauging changing consumer preferences and successfully developing manufacturing marketing and selling new products could lead to among other things rejection of a new product line reduced demand and price reductions for our products If our products do not keep up with consumer trends demands and preference we could lose market share which could have a material adverse effect on our business financial condition or results of operations
Changes to consumer shopping habits and potential trends toward online purchases could also impact our ability to compete Further the volatile and challenging economic environment of recent years has caused shifts in consumer trends demands preferences and purchasing practices and changes in the business models and strategies of our customers Shifts in consumer preferences which may or may not be long term have altered the quantity type and prices of products demanded by the end consumer and our customers If we do not timely and effectively identify and respond to these changing consumer preferences and purchasing practices our relationships with our customers could be harmed the demand for our products could be reduced and our market share could be negatively affected
Part of our growth strategy depends on expanding our business in the home center independent dealer and distributor and builder channels We may fail to compete successfully against other companies that are already established providers within the home center independent dealer and distributor and builder channels Demand for our products within the home center builder and independent dealer and distributor channels may not grow or might even decline In addition we may not accurately gauge consumer preferences and successfully develop manufacture and market our products at a national level Further the implementation of our growth strategy may place additional demands on our administrative operational and financial resources and may divert management s attention away from our existing business and increase the demands on our financial systems and controls If our management is unable to effectively manage growth our business financial condition or results of operations could be adversely affected If our growth strategy is not successful then our revenue and earnings may not grow as anticipated or may decline we may not be profitable or our reputation and brand
may be damaged In addition we may change our financial strategy or other components of our overall business strategy if we believe our current strategy is not effective if our business or markets change or for other reasons which may cause fluctuations in our financial results
We continually review our manufacturing operations These reviews could result in the expansion of capacity manufacturing realignments and various cost savings programs Effects of manufacturing expansion realignments or cost savings programs could result in a decrease in our short term earnings until the additional capacity is in place cost reductions are achieved and or production volumes stabilize such as our expansion of stock kitchen and bath capacity in North Carolina and Mexico which was completed during the fiscal year Such manufacturing expansions realignments and programs involve substantial planning often require capital investments and may result in charges for fixed asset impairments or obsolescence and substantial severance costs We also cannot provide assurance that we will achieve all of the intended cost savings Our ability to achieve cost savings and other benefits within expected time frames is subject to many estimates and assumptions These estimates and assumptions are subject to significant economic competitive and other uncertainties some of which are beyond our control If these estimates and assumptions are incorrect if we experience delays or if other unforeseen events occur our business financial condition and results of operations could be materially and adversely affected In addition downturns in the economy could potentially have a larger impact on the Company as a result of any added capacity
We manufacture our products in the United States and Mexico and sell our products in the United States and Canada Accordingly we are subject to risks associated with potential disruption caused by changes in political monetary economic and social environments including civil and political unrest terrorism possible expropriation local labor conditions changes in laws regulations and policies of foreign governments and trade disputes with the United States including tariffs and compliance with U S laws affecting activities of U S companies abroad including tax laws economic sanctions and enforcement of contract and intellectual property rights
We are also subject to the Foreign Corrupt Practices Act and other anti bribery laws While we have implemented safeguards and policies to discourage these practices by our employees and agents our existing safeguards and policies to assure compliance and any future improvements may prove to be less than effective and our employees or agents may engage in conduct for which we might be held responsible If employees violate our policies we may be subject to regulatory sanctions Violations of these laws or regulations could result in sanctions including fines debarment from export privileges and penalties and could have a material adverse effect on our business financial condition or results of operations
We may continue to hedge certain foreign currency transactions in the future however a change in the value of the currencies may impact our financial statements when translated into U S dollars In addition fluctuations in currency can adversely impact the cost position in local currency of our products making it more difficult for us to compete Our success will depend in part on our ability to effectively manage our business through the impact of these potential changes
In addition we source raw materials and components from Asia where we have recently experienced higher manufacturing costs and longer lead times due to currency fluctuations higher wage rates labor shortages and higher raw material costs and we have also experienced higher shipping costs and shipping delays Our international operations and sourcing of materials including from Asia and Mexico could be harmed by a variety of factors including but not limited to
If any of these or other factors were to render the conduct of our business in a particular country undesirable or impractical our business financial condition or results of operations could be materially adversely affected
Our ability to offer a wide variety of products depends on our ability to obtain an adequate supply of components from manufacturers and other suppliers particularly wood based and resin products Transportation and container delays may adversely impact our supply chain Additionally failure by our suppliers to provide us with quality products on
commercially reasonable terms and to comply with legal requirements for business practices could have a material adverse effect on our business financial condition or results of operations Furthermore we rely heavily or in certain cases exclusively on outside suppliers for some of our key components While we do not rely exclusively on any one supplier for any particular raw materials the loss of a major supplier could increase our costs to obtain raw materials until we obtain an adequate alternative source
We typically do not enter into long term contracts with our suppliers or sourcing partners Instead most raw materials and sourced goods are obtained on a purchase order basis Although these components are generally obtainable in sufficient quantities from other sources resourcing them from another supplier could take time Financial operating or other difficulties encountered by our suppliers or sourcing partners or changes in our relationships with them could result in manufacturing or sourcing interruptions delays and inefficiencies and prevent us from manufacturing enough products to meet customer demands
Certain of our customers have been expanding and may continue to expand through consolidation and internal growth which may increase their buying power which could materially and adversely affect our sales results of operations and financial position
Certain of our customers are large companies with significant buying power In addition potential further consolidation in the distribution channels could enhance the ability of certain of our customers to seek more favorable terms including pricing for the products that they purchase from us Accordingly our ability to maintain or raise prices in the future may be limited including during periods of raw material and other cost increases If we are forced to reduce prices or to maintain prices during periods of increased costs or if we lose customers because of pricing or other methods of competition our sales operating results and financial position may be materially and adversely affected
Our consolidated indebtedness level could have important consequences to us including among other things increasing our vulnerability to general economic and industry conditions requiring a portion of our cash flow used in operations to be dedicated to the payment of principal and interest on our indebtedness therefore reducing our liquidity and our ability to use our cash flow to fund our operations capital expenditures and future business opportunities exposing us to the risk of increased interest rates and corresponding increased interest expense because borrowings under our credit facilities are at variable rates of interest reducing funds available for working capital capital expenditures acquisitions and other general corporate purposes due to the costs and expenses associated with such debt limiting our ability to obtain additional financing for working capital capital expenditures debt service requirements acquisitions and general corporate or other purposes and limiting our ability to adjust to changing marketplace conditions and placing us at a competitive disadvantage compared to our competitors who may have less debt
If our cash flows and capital resources are insufficient to fund our debt service obligations we may be forced to reduce or delay capital expenditures sell assets seek additional capital or restructure or refinance our indebtedness These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations which could cause us to default on our debt obligations and impair our liquidity In the event of a default under any of our indebtedness the holders of the defaulted debt could elect to declare all the funds borrowed to be due and payable together with accrued and unpaid interest The lenders under our credit facilities could also elect to terminate their commitments thereunder and cease making further loans and such lenders could institute foreclosure proceedings against their collateral all of which could adversely affect our financial condition in a material way
The credit agreement that governs our credit facility imposes operating and financial restrictions on us and our subsidiaries which may prevent us from capitalizing on business opportunities or otherwise negatively impact our business
The credit agreement that governs our credit facility imposes operating and financial restrictions on us These restrictions limit our ability and the ability of our subsidiaries to among other things to incur additional indebtedness create additional liens on its assets make certain investments dispose of assets or engage in a merger or other similar transaction or engage in transactions with affiliates subject in each case to the various exceptions and conditions described in the credit agreement The negative covenants further restrict the ability of the Company and certain of its subsidiaries to make certain restricted payments including in the case of the Company the payment of dividends and the repurchase of common stock in certain limited circumstances
As a result of these restrictions each of which is subject to certain exceptions and qualifications we may be limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities The terms of any future indebtedness we may incur could include more restrictive covenants We cannot assure you that we will be able to maintain compliance with these existing covenants in the future and if we fail to do so that we will be able to obtain waivers from the lenders and or amend the covenants
Our failure to comply with the restrictive covenants described above as well as other terms of our indebtedness and or the terms of any future indebtedness from time to time could result in an event of default which if not cured or waived could result in us being required to repay these borrowings before their due date
We recorded significant goodwill as a result of the acquisition of RSI Home Products Inc the RSI Acquisition or RSI in fiscal 2018 Goodwill represents a substantial portion of our assets We also have long lived assets consisting of property and equipment and other identifiable intangible assets which we review both on an annual basis as well as when events or circumstances indicate that the carrying amount of an asset may not be recoverable If a determination is made that a significant impairment in value of goodwill or long lived assets has occurred such determination could require us to impair a substantial portion of our assets Asset impairments could have a material adverse effect on our financial condition and results of operations
We are in the process of implementing a common Enterprise Resource Planning ERP platform over several fiscal years The first wave including the procurement general ledger accounts payable projects and fixed asset modules went live in the second half of fiscal 2022 During fiscal 2024 our new Monterrey Mexico facility went live We have begun planning for the next implementation in our Anaheim and Riverside California facilities in fiscal 2025 Although we currently expect the ERP implementation to increase efficiencies by leveraging a common cloud based system throughout the Company and standardizing processes and reporting our ERP system implementation may not result in improvements that outweigh its costs and may disrupt our operations Our inability to mitigate existing and future disruptions could adversely affect our sales earnings financial condition and liquidity The ERP system implementation subjects us to substantial costs and inherent risks associated with migrating from our legacy systems These costs and risks could include but are not limited to
We rely on a number of information technology systems to process transmit store and manage information to support our business activities Increased global cybersecurity vulnerabilities threats and more sophisticated and targeted attacks pose a risk to our information technology systems We have established security policies processes and layers of defense designed to help identify and protect against intentional and unintentional misappropriation or corruption of our systems and information and disruption of our operations Despite these efforts systems may be damaged disrupted or shut down due to attacks by unauthorized access malicious software undetected intrusion hardware failures or other events and in these circumstances our disaster recovery planning may be ineffective or inadequate These breaches or intrusions could lead to business interruption exposure of proprietary or confidential information data corruption damage to our reputation exposure to litigation and increased operational costs Such events could have a material adverse impact on our business financial condition and results of operation In addition we could be adversely affected if any of our significant customers or suppliers experience any similar events that disrupt their business operations or damage their reputation
Our facilities are subject to numerous environmental laws regulations and permits including those governing emissions to air discharges to water storage treatment and disposal of waste remediation of contaminated sites and protection of worker health and safety We may not be in complete compliance with these laws regulations or permits at all times Our efforts to comply with environmental requirements do not remove the risk that we may incur material liabilities fines or penalties for among other things releases of regulated materials occurring on or emanating from current or formerly owned or operated properties or any associated offsite disposal location or for contamination discovered at any of our properties from activities conducted by previous occupants Liability for environmental
Changes in environmental laws and regulations or the discovery of previously unknown contamination or other liabilities relating to our properties and operations could result in significant environmental liabilities that could impact our business financial condition or results of operation In addition we may incur capital and other costs to comply with increasingly stringent environmental laws and enforcement policies These laws including for example the regulations relating to formaldehyde emissions promulgated by the California Air Resources Board require us to rely on compliance by our suppliers of raw materials Should a supplier fail to comply with such regulations notify us of non compliance or provide us with a product that does not comply we could be subject to disruption in our business and incur substantial liabilities
We rely on the internet and other electronic methods to transmit confidential information and store confidential information on our networks If there were a disclosure of confidential information provided by or concerning our employees customers or other third parties including through inadvertent disclosure unapproved dissemination or unauthorized access our reputation could be harmed and we could be subject to civil or criminal liability and regulatory actions
Government regulations pertaining to health and safety and environmental concerns continue to emerge domestically as well as internationally These regulations include the Occupational Safety and Health Administration and other worker safety regulations for the protection of employees as well as regulations for the protection of consumers It is necessary for us to comply with current requirements including requirements that do not become effective until a future date and even more stringent requirements could be imposed on our products or processes Compliance with these regulations may require us to alter our manufacturing and installation processes and our sourcing Such actions could increase our capital expenditures and adversely impact our business financial condition or results of operations and our inability to effectively and timely meet such regulations could adversely impact our competitive position
We could pursue growth opportunities through either acquisitions mergers or internally developed projects which may be unsuccessful or may adversely affect our future financial condition and operating results
We could pursue opportunities for growth through either acquisitions mergers or internally developed projects as part of our growth strategy We cannot provide assurance that we will be successful in integrating an acquired business or that an internally developed project will perform at the levels we anticipate We may pay for future acquisitions using cash stock the assumption of debt or a combination of these Future acquisitions could result in dilution to existing shareholders and to earnings per share In addition we may fail to identify significant liabilities or risks associated with a given acquisition that could adversely affect our future financial condition and operating results or result in us paying more for the acquired business or assets than they are worth
Many of the products that we manufacture and assemble require manual processes in plant environments We believe that our success depends upon our ability to attract employ train and retain qualified personnel with the ability to design manufacture and assemble these products In addition our ability to expand our operations depends in part on our ability to increase our skilled labor force as the housing market continues to recover in the United States In addition we believe that our success depends in part on our ability to quickly and effectively train additional workforce to handle the increased volume and production while minimizing labor inefficiencies and maintaining product quality in a housing market recovery If either of these events were to occur our cost structure could increase our margins could decrease and any growth potential could be impaired
Any failure to maintain acceptable quality standards could require us to recall or redesign such products or pay substantial damages any of which would result in significant unexpected costs We may also have difficulty controlling the quality of products or components sourced from other manufacturers so we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers Further any claim or product recall could result in adverse publicity against us which could decrease our credibility harm our reputation adversely affect our sales or increase our costs Defects in our products could also result in decreased orders or sales to our customers which could have a material adverse effect on our business financial condition or results of operations
Many of our facilities are located in regions that are vulnerable to natural disasters and other risks such as earthquakes fires floods tropical storms hurricanes and snow and ice which at times have disrupted the local economy and posed physical risks to our property In addition the continued threat of terrorism and heightened security
and military action in response to this threat or any future acts of terrorism may cause further disruptions to the economies of the United States and other countries Our redundant multiple site capacity may not be sufficient in the event of a natural disaster terrorist act or other catastrophic event Such disruptions could among other things disrupt our manufacturing or distribution facilities and result in delays or cancellations of customer orders for our products which in turn could have a material adverse effect on our business financial condition and results of operations Further if a natural disaster occurs in a region from which we derive a significant portion of our revenue end user customers in that region may delay or forego purchases of our products which may materially and adversely impact our operating results for a particular period
Our operations rely on both on premises and cloud hosted IT solutions for critical business processes such as compliance reporting marketing e commerce operations product development manufacturing distribution data management and stakeholder communication Recognizing the paramount importance of cybersecurity in today s digital landscape we are committed to safeguarding our information assets protecting consumer data and maintaining the integrity and availability of our systems To this end we have implemented a comprehensive cybersecurity risk management framework designed to identify assess mitigate and prevent potential cybersecurity risks aligning with industry best practices and all applicable regulatory requirements We evaluate our cybersecurity risk management framework against the National Institute of Standards and Technology s Cybersecurity Framework NIST CSF which outlines the core components and responsibilities necessary to sustain a robust and well balanced cybersecurity program
The foundation of our framework rests on these key principles i risk assessment and threat intelligence gathering ii implementing robust security controls iii maintaining effective incident response capabilities iv promoting employee awareness and providing cybersecurity training and v managing third party risks We continue to integrate our cybersecurity framework into our overarching enterprise risk management processes enabling us to capitalize on our extensive enterprise wide experience in risk management and swiftly adapt to the ever evolving cybersecurity threat landscape
Under the oversight of the Chief Information Officer CIO we conduct periodic risk assessments to pinpoint potential cybersecurity vulnerabilities and threats These assessments entail evaluating the security posture of critical systems networks and applications as well as analyzing the potential impact of cybersecurity threats on our business operations financial condition and reputation Additionally we perform continuous threat monitoring and deployed monitoring systems encompassing technologies such as intrusion detection systems security information and event management tools and threat intelligence programs
To ensure the effectiveness of our existing cybersecurity controls and processes and identify areas for improvement based on the latest industry best practices we regularly engage third party consulting services to conduct independent audits and assessments Additionally we leverage external expertise to evaluate our cybersecurity and risk management strategy review policies and procedures to address emerging risks and maintain ongoing compliance with evolving legal and regulatory requirements
Our approach to cybersecurity employs a multi layered strategy implementing a range of technical administrative and physical controls to safeguard critical systems and data These controls encompass i firewalls intrusion detection and prevention systems to monitor and block unauthorized access attempts detect and prevent malicious activities and protect network infrastructure ii encryption including secure protocols and multi factor authentication to secure information in transit and at rest and iii a secure network architecture that segregates critical systems from the public internet limiting exposure to potential threats We also conduct regular security patching to mitigate emerging cyber threats proactively
We have implemented an incident response plan and playbook encompassing procedures designed to respond to and recover from cybersecurity incidents In collaboration with third party security consultants we conduct ongoing reviews and tabletop exercises of these procedures which provide detailed descriptions of the roles and responsibilities of key stakeholders as well as the protocols for communication and coordination during an incident The procedures also outline guidelines for escalating incident information to our Cybersecurity Steering Committee senior management our Audit Committee which as discussed below has been delegated the responsibility for our Board of Directors the Board cybersecurity risk oversight function our full Board and for providing timely public disclosure when necessary
Our employees play a pivotal role in maintaining a strong cybersecurity posture Our Information Security Policy Framework outlines the requirements for employee conduct concerning company information and company managed devices encompassing relevant privacy data security and data retention policies We believe our Information Security Policy Framework aligns with industry best practices and applicable legal and regulatory requirements Complementing our Information Security Policy Framework we conduct regular cybersecurity training campaigns that emphasize the importance of cybersecurity awareness These campaigns address relevant cybersecurity topics such as common cybersecurity threats phishing awareness and best practices for safeguarding sensitive information Employees are held accountable for completing all assigned cybersecurity programs and meeting certain performance thresholds in phishing awareness and testing exercises
We recognize the potential cybersecurity risks inherent in our relationships with third parties To address this we have implemented a comprehensive third party risk management program designed to identify and oversee such risks This program relies on key elements including risk assessment due diligence contractual provisions and ongoing monitoring to identify and mitigate impacts from high risk third parties and specific risks We utilize security risk assessment questionnaire tools to identify high risk third parties enabling us to proactively and effectively assess and mitigate potential security vulnerabilities
Our Board dedicates time and attention to our cybersecurity and information technology risks The Board executes its cybersecurity risk oversight function collectively and by delegating responsibility to our Audit Committee Our CIO presents to the Board at least annually and to our Audit Committee at least quarterly covering a broad range of topics such as recent and potential cybersecurity threats and incidents across our industry best practices and policies emerging trends vulnerability assessments and management s ongoing efforts to prevent detect and address internal and external cybersecurity threats specific to our organization These briefings also include periodic third party cybersecurity program assessments benchmarks and updates from our cybersecurity incident management exercises Cybersecurity risks are documented and shared with our Audit Committee and the Board quarterly
While our Board and Audit Committee oversees cybersecurity risk senior management is responsible for actively managing cybersecurity risk including overseeing and executing the risk management strategies discussed above Senior management reports to the Board semi annually on our enterprise risk management processes ensuring transparency and accountability
Additionally our Cybersecurity Steering Committee is co chaired by our CIO and Cybersecurity Governance Risk and Compliance manager along with other key leaders including the Chief Human Resources Officer Vice President of Finance Corporate Controller Senior Corporate Risk Manager Director of Enterprise Infrastructure and Senior Director of Internal Audit all overseeing the management of key cybersecurity risks and strategy for the organization The Cybersecurity Steering Committee meets and receives bi monthly updates which provide ongoing visibility into cybersecurity risks and mitigation efforts
Through this robust governance structure involving Board oversight senior management leadership and a cross functional committee we maintain a proactive and comprehensive approach to managing cybersecurity risks across the organization
As of the date of this filing we are not aware of any current cybersecurity threats or cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business results of operations or financial condition For further discussion of the risks related to cybersecurity see Item 1A
We own our corporate office located in Winchester Virginia In addition we lease five manufacturing facilities one manufacturing facility service center and one distribution center in the United States and we lease four manufacturing facilities in Mexico We own eight manufacturing facilities located primarily in the eastern and southern United States We also lease seven primary service centers ten satellite service centers and four additional offices located throughout the United States that support the sale and distribution of products to each market channel We consider our properties suitable for our business and adequate for our needs and believe that if necessary we could find additional and or replacement facilities to lease without suffering a material adverse effect on our business
The Company is involved in suits and claims in the normal course of business including without limitation product liability and general liability claims and claims pending before the Equal Employment Opportunity Commission On at least a quarterly basis the Company consults with its legal counsel to ascertain the reasonable likelihood that such claims may result in a loss
As required by ASC Topic 450 Contingencies ASC 450 the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss those that are probable those that are reasonably possible and those that are deemed to be remote The Company accounts for these loss contingencies in accordance with ASC 450 Where losses are deemed to be probable and estimable accruals are made Where losses are deemed to be reasonably possible a range of loss estimate is determined and considered for disclosure In determining these loss range estimates the Company considers known values of similar claims and consults with independent counsel
The Company believes that the aggregate range of estimated loss stemming from the various suits and asserted and unasserted claims which were deemed to be either probable or reasonably possible was not material as of April 30 2024 with the exception of the Antidumping and Countervailing Duties Investigation discussed in Note L
Executive officers of the Company are elected by the Board of Directors and generally hold office until the next annual election of officers There are no family relationships between any executive officer and any other officer or director of the Company or any arrangement or understanding between any executive officer and any other person pursuant to which such officer was elected The executive officers of the Company are as follows
Company Senior Vice President and Chief Financial Officer from August 2022 to present Company Vice President and Chief Financial Officer from July 2020 to August 2022 Vice President Financial Planning and Analysis from February 2019 to July 2020
Company Senior Vice President Manufacturing and Technical Operations from August 2015 to present Company Vice President of Value Stream Operations from September 2012 to August 2015 Company Vice President of Manufacturing and Engineering from April 2012 to September 2012
Company Senior Vice President Remodel Sales from August 2023 to present Company Vice President Remodel Sales from May 2021 to August 2023 Company Vice President Home Center Sales from June 2018 to May 2021
Company Senior Vice President Chief Human Resources Officer from August 2023 to present Company Vice President Chief Human Resources Officer from February 2021 to August 2023 Executive Vice President Chief Human Resources Officer at OmniMax International from 2019 to February 2021
As of June 17 2024 there were approximately 27 500 total shareholders of the Company s common stock including 6 300 shareholders of record and 21 100 beneficial owners whose shares are held in street name by securities broker dealers or other nominees The Company s shareholders also include approximately 70 of the Company s employees who are eligible to participate in the American Woodmark Corporation Retirement Savings Plan The Company does not currently pay cash dividends and has no current intention to do so in the near future The determination as to the payment of future dividends will be made by the Board of Directors the Board from time to time and will depend on the Company s then current financial
condition capital requirements and results of operations as well as any other factors then deemed relevant by the Board and will be subject to applicable restrictions in the credit agreement governing the Company s credit facility
1 Under a stock repurchase authorization approved by its Board on November 29 2023 the Company was authorized to purchase up to 125 million of the Company s common shares Management funded these share repurchases using available cash and cash generated from operations Repurchased shares became authorized but unissued common shares At April 30 2024 89 5 million of funds remained from the amounts authorized by the Board to repurchase the Company s common shares The Company purchased a total of 170 571 common shares for an aggregate purchase price of 15 9 million during the fourth quarter of fiscal 2024 under the authorization pursuant to a repurchase plan intended to comply with the requirements of Rule 10b5 1 and Rule 10b 18 under the Securities Exchange Act of 1934 as amended
The performance graph shown below compares the percentage change in the cumulative total shareholder return on our common stock against the cumulative total return of the Russell 2000 Index and Standard Poor s Household Durables Index for the period from May 1 2019 through April 30 2024 The graph assumes an initial investment of 100 and the reinvestment of dividends The graph is based on historical data and is not intended to be a forecast or indication of future performance of American Woodmark common stock
The graph and related information above are not deemed to be filed with the Securities and Exchange SEC for purposes of Section 18 of the Securities Exchange Act of 1934 as amended or incorporated by reference into any future filing made by us with the SEC except to the extent that we specifically incorporate it by reference into any such filing
This annual report contains statements concerning the Company s expectations plans objectives future financial performance and other statements that are not historical facts These statements may be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 In most cases the reader can identify forward looking statements by words such as anticipate estimate forecast expect believe should could would plan may intend estimate prospect goal will predict potential or other similar words Forward looking statements contained in this report including elsewhere in Management s Discussion and Analysis of Financial Condition and Results of Operations are based on current expectations and our actual results may differ materially from those projected in any forward looking statements In addition the Company participates in an industry that is subject to rapidly changing conditions and there are numerous factors that could cause the Company to experience a decline in sales and or earnings or deterioration in financial condition Factors that could cause actual results to differ materially from those in forward looking statements made in this report include but are not limited to
negative developments in the macro economic factors that impact our performance such as the U S housing market general economy unemployment rates and consumer sentiment and the impact of such developments on our and our customers business operations and access to financing
a failure to attract and retain certain members of management or other key employees or other negative labor developments including increases in the cost of labor competition from other manufacturers and the impact of such competition on pricing and promotional levels
the cost of compliance with or liabilities related to environmental or other governmental regulations or changes in governmental or industry regulatory standards especially with respect to health and safety and the environment
limitations on operating our business as a result of covenant restrictions under our indebtedness our ability to pay amounts due under our credit facilities and our other indebtedness and interest rate increases
Additional information concerning the factors that could cause actual results to differ materially from those in forward looking statements is contained in this annual report including elsewhere in Management s Discussion and Analysis of Financial Condition and Results of Operations and under Item 1A Risk Factors and Item 7A Quantitative and Qualitative Disclosures about Market Risk While the Company believes that these risks are manageable and will not adversely impact the long term performance of the Company these risks could under certain circumstances have a material adverse impact on its operating results and financial condition
Any forward looking statement that the Company makes speaks only as of the date of this annual report The Company undertakes no obligation to publicly update or revise any forward looking statements or cautionary factors as a result of new information future events or otherwise except as required by law
American Woodmark Corporation manufactures and distributes kitchen bath and home organization products for the remodeling and new home construction markets Its products are sold on a national basis directly to home centers and builders and through a network of independent dealers and distributors At April 30 2024 the Company operated 18 manufacturing facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the United States
There was an increase in single family housing starts during the Company s fiscal 2024 of 3 8 as compared to the Company s fiscal 2023 and a decrease in housing completions during the Company s fiscal 2024 of 2 3 as compared to the Company s fiscal 2023 according to the U S Department of Commerce
The Company s largest remodeling customers and competitors continued to utilize sales promotions in the Company s product category during fiscal 2024 The Company strives to maintain its promotional levels in line with market activity with a goal of remaining competitive
The Company had net income of 116 2 million in fiscal 2024 and net income of 93 7 million in fiscal 2023 Net income and gross profit for fiscal 2024 increased primarily due to the result of pricing better matching inflationary pressures and overall increased efficiencies across our existing operating locations These benefits were partially offset by one time startup costs and inefficiencies driven by our new locations in Hamlet North Carolina and Monterrey Mexico which will continue to ramp up production throughout the calendar year
The Company regularly considers the need for a valuation allowance against its deferred tax assets The Company has generated operating profits for the past 12 years As of April 30 2024 the Company had total deferred tax assets of 59 5 million net of valuation allowance up from 47 9 million of deferred tax assets net of valuation allowance at April 30 2023 Deferred tax assets are reduced by a valuation allowance when after considering all positive and negative evidence it is determined that it is more likely than not that some portion or all of the deferred tax asset will not be realized The Company has recorded a valuation allowance related to deferred tax assets for certain state investment tax credit ITC carryforwards These credits expire in various years beginning in fiscal 2028 The Company believes based on positive evidence of the housing industry improvement along with 12 consecutive years of operating profitability that the Company will more likely than not realize all other remaining deferred tax assets
For a comparison of our performance and financial metrics for the fiscal years ended April 30 2023 and April 30 2022 see Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10 K for the fiscal year ended April 30 2023 filed with the SEC on June 27 2023
Net sales for fiscal 2024 decreased 10 6 to 1 847 5 million from the prior fiscal year Sales in the home center channel decreased 13 9 and the independent dealer and distributor channel decreased 9 1 primarily due to lower in store traffic rates and consumers choosing smaller sized projects Sales in the builder channel decreased 7 7 primarily due to a decrease in housing completions which declined 2 3 year over year according to data provided by the U S Department of Commerce
Gross profit as a percentage of sales increased to 20 4 in fiscal 2024 as compared with 17 3 in fiscal 2023 representing a 310 basis point improvement The increase in gross profit was primarily due to the result of pricing better matching inflationary pressures and overall increased efficiencies across our existing operating locations These benefits were partially offset by one time startup costs and inefficiencies driven by our new locations in Hamlet North Carolina and Monterrey Mexico
Selling and marketing costs decreased by 2 0 million or 2 1 during fiscal 2024 versus the prior year Selling and marketing expenses in fiscal 2024 were 5 0 of net sales compared with 4 6 of net sales in fiscal 2023 The decrease in selling and marketing expenses was due to controlled discretionary spending within the function partially offset by static fixed costs within the function and increased digital spend
General and administrative expenses decreased by 1 0 million or 0 8 during fiscal 2024 versus the prior fiscal year General and administrative costs increased to 6 7 of net sales in fiscal 2024 compared with 6 1 of net sales in fiscal 2023 The decrease in general and administrative expenses was primarily due to controlled discretionary spending and reduced amortization of customer relationship intangibles partially offset by increased incentive and profit sharing costs digital spend and deleverage created from lower sales
Management believes these non GAAP financial measures provide an additional means of analyzing the current period s results against the corresponding prior period s results However these non GAAP financial measures should be viewed in addition to and not as a substitute for the Company s reported results prepared in accordance with GAAP Our non GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP
We use EBITDA Adjusted EBITDA and Adjusted EBITDA margin in evaluating the performance of our business and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability We believe EBITDA Adjusted EBITDA and Adjusted EBITDA margin allow us to readily view operating trends perform analytical comparisons and identify strategies to improve operating performance Additionally Adjusted EBITDA is a key measurement used in our Term Loans to determine interest rates and financial covenant compliance
We define EBITDA as net income loss adjusted to exclude 1 income tax expense benefit 2 interest expense net 3 depreciation and amortization expense and 4 amortization of customer relationship intangibles We define Adjusted EBITDA as EBITDA adjusted to exclude 1 expenses related to the RSI Acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition 2 non recurring restructuring charges 3 net gain loss on debt forgiveness and modification 4 stock based compensation expense 5 gain loss on asset disposals 6 change in fair value of foreign exchange forward contracts and 7 pension settlement charges We believe Adjusted EBITDA when presented in conjunction with comparable GAAP measures is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business
We use Adjusted EPS per diluted share in evaluating the performance of our business and profitability Management believes that this measure provides useful information to investors by offering additional ways of viewing the Company s results by providing an indication of performance and profitability excluding the impact of unusual and or non cash items We define
Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of 1 expenses related to the RSI Acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition 2 non recurring restructuring charges 3 the amortization of customer relationship intangibles 4 net gain loss on debt forgiveness and modification 5 pension settlement charges and 6 the tax benefit of RSI Acquisition expenses and subsequent restructuring charges the net gain loss on debt forgiveness and modification and the amortization of customer relationship intangibles The amortization of intangible assets is driven by the RSI Acquisition and will recur in future periods Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability
To better understand trends in our business we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property plant and equipment and cash payments for investments in displays from cash flows from continuing operations which is how we define free cash flow Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment It also provides a measure of our ability to repay our debt obligations
2 Non recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction in force implemented in fiscal 2023 and the closure of the manufacturing plant in Humboldt Tennessee in July 2020
3 In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates The Company manages these risks through the use of foreign exchange forward contracts The changes in the fair value of the forward contracts are recorded in other expense income net in the operating results
We expect low single digit increases in net sales for fiscal 2025 versus fiscal 2024 with growth expected in all channels Our outlook for Adjusted EBITDA for fiscal 2025 will range from 235 million to 255 million The change in net sales and Adjusted EBITDA is highly dependent upon overall industry economic growth trends material constraints labor impacts interest rates and consumer behaviors Adjusted EBITDA will also be impacted as we continue to ramp up production from our plant expansions in Monterrey Mexico and Hamlet North Carolina
During fiscal 2025 we will continue our investment back into the business by continuing our path for our digital transformation with investments in our cloud based ERP and CRM platforms and investing in automation We will be opportunistic in our
A reconciliation of EBITDA Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2025 is not provided because we do not forecast net income loss as we cannot without unreasonable effort estimate or predict with certainty various components of net income
Additional risks and uncertainties that could affect the Company s results of operations and financial condition are discussed elsewhere in this annual report including under Forward Looking Statements and elsewhere in Management s Discussion and Analysis of Financial Condition and Results of Operations as well as under Item 1A Risk Factors and Item 7A Quantitative and Qualitative Disclosures about Market Risk
The Company s cash and cash equivalents totaled 87 4 million at April 30 2024 representing a 45 7 million increase from its April 30 2023 levels At April 30 2024 total long term debt including current maturities was 374 5 million an increase of 2 8 million from the balance at April 30 2023 The Company s ratio of long term debt to total capital was 29 0 at April 30 2024 compared with 29 7 at April 30 2023 The Company s main source of liquidity is its cash and cash equivalents on hand and cash generated from its operating activities which we expect to continue into fiscal 2025 See Note F
The amended and restated credit agreement the A R Credit Agreement provides for a 500 million revolving loan facility with a 50 million sub facility for the issuance of letters of credit the Revolving Facility and a 250 million term loan facility the Term Loan Facility
Also on April 22 2021 the Company borrowed the entire 250 million under the Term Loan Facility and approximately 264 million under the Revolving Facility to fund in part the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of the Senior Notes
The A R Credit Agreement includes certain financial covenants that require the Company to maintain i a Consolidated Interest Coverage Ratio of no less than 2 00 to 1 00 and ii a Total Net Leverage Ratio of no greater than 4 00 to 1 00 subject in each case to certain limited exceptions
The A R Credit Agreement includes certain additional covenants including negative covenants that restrict the ability of the Company and certain of its subsidiaries to incur additional indebtedness create additional liens on its assets make certain investments dispose of its assets or engage in a merger or other similar transaction or engage in transactions with affiliates subject in each case to the various exceptions and conditions described in the A R Credit Agreement The negative covenants further restrict the ability of the Company and certain of its subsidiaries to make certain restricted payments including in the case of the Company the payment of dividends and the repurchase of common stock in certain limited circumstances See Note F
for a discussion of interest rates under the new A R Credit Agreement and our compliance with the covenants in the credit agreement We were in compliance with each of the covenants under the A R Credit Agreement during fiscal 2024 and expect to remain in compliance throughout fiscal 2025
Cash provided by operating activities in fiscal 2024 was 230 8 million compared with 198 8 million in fiscal 2023 The increase in the Company s cash from operating activities was driven primarily by an increase in net income decreased amortization of customer relationship intangibles and increased cash flows from accounts payable accrued marketing expenses and accrued compensation and related expenses which were partially offset by a decrease in cash flows from income taxes inventories and customer receivables
The Company s investing activities primarily consist of capital expenditures and investments in promotional displays Net cash used by investing activities in fiscal 2024 was 92 2 million compared with 45 3 million in fiscal 2023 Investments in property plant and equipment for fiscal 2024 were 91 0 million compared with 42 6 million in fiscal 2023 primarily due to
The Company realized a net outflow of 92 9 million from financing activities in fiscal 2024 compared with a net outflow of 134 1 million in fiscal 2023 During fiscal 2024 2 7 million net was used to repay long term debt compared with approximately 132 9 million in fiscal 2023
On November 29 2023 the Board of Directors authorized a stock repurchase program of up to 125 million of the Company s outstanding common shares In conjunction with this authorization the Board of Directors cancelled the remaining 22 9 million that had yet to be repurchased under the 100 million existing authorization from May 25 2021 The Company repurchased 87 7 million during fiscal 2024 The Company did not repurchase any of its shares during the fiscal year ended April 30 2023 and as of April 30 2024 the current stock repurchase program has a remaining authorization of 89 5 million
Cash flow from operations combined with accumulated cash and cash equivalents on hand are expected to be more than sufficient to support forecasted working capital requirements service existing debt obligations and fund capital expenditures for fiscal 2025
Future minimum annual commitments for contractual obligations under term loans the Revolving Facility capital and operating lease obligations and other long term debt amount to 35 1 million in fiscal 2025 426 0 million in fiscal 2026 27 36 9 million in fiscal 2028 29 and 31 1 million in fiscal 2030 and thereafter Estimated required interest payments based on rates as of April 30 2024 would be 14 7 million in fiscal 2025 21 0 million in fiscal 2026 27 6 2 million in fiscal 2028 29 and 5 0 million in fiscal 2030 and thereafter
Our business has been subject to seasonal influences with higher sales typically realized in our first and fourth fiscal quarters General economic forces and changes in our customer mix have reduced seasonal fluctuations in revenue over the past few years The costs of the Company s products are subject to inflationary pressures and commodity price fluctuations The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases
For additional discussion of risks that could affect the Company and its business see Forward Looking Statements above as well as Item 1A Risk Factors and Item 7A Quantitative and Qualitative Disclosures About Market Risk
Management has chosen accounting policies that are necessary to give reasonable assurance that the Company s operational results and financial position are accurately and fairly reported The significant accounting policies of the Company are disclosed in Note A to the Consolidated Financial Statements included in this annual report The following discussion addresses the accounting policies that management believes have the greatest potential impact on the presentation of the financial condition and operating results of the Company for the periods being reported and that require the most judgment
The Company utilizes signed sales agreements that provide for transfer of title to the customer at the time of shipment or upon delivery based on the contractual terms The Company must estimate the amount of sales that have been transferred to third party carriers but not delivered to customers as the carriers are not able to report real time what has been delivered and thus there is a delay in reporting to the Company The estimate is calculated using a lag factor determined by analyzing the actual difference between shipment date and delivery date of orders over the past 12 months Revenue is recognized on those shipments which the Company believes have been delivered to the customer
The Company recognizes revenue based on the invoice price less allowances for sales returns cash discounts and other deductions as required under GAAP Collection is reasonably assured as determined through an analysis of accounts receivable data including historical product returns historical collections and the evaluation of each customer s ability to pay as well as any relevant economic conditions Allowances for sales returns are based on the historical relationship between shipments and returns The Company believes that its historical experience is an accurate reflection of future returns
Goodwill represents the excess of purchase price over the fair value of net assets acquired The Company does not amortize goodwill but evaluates for impairment annually or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount
In accordance with the accounting standards an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired If after such assessment an entity concludes that the asset is not impaired then the entity is not required to take further action However if an entity concludes otherwise then it is required to determine the fair value of the asset using a quantitative impairment test and if impaired the associated assets must be written down to fair value There were no impairment charges related to goodwill for the fiscal years 2024 2023 and 2022
The costs of the Company s products are subject to inflationary pressures and commodity price fluctuations The Company has generally been able over time to recover the effects of inflation and commodity price fluctuations through sales price increases although there may be a lag in the recovery
The A R Credit Agreement includes a variable interest rate component As a result we are subject to interest rate risk with respect to such floating rate debt A 100 basis point increase in the variable interest rate component of our borrowings as of April 30 2024 would increase our annual interest expense by approximately 1 7 million See Note F
The Company enters into foreign exchange forward contracts principally to offset currency fluctuations in transactions denominated in certain foreign currencies thereby limiting our exposure to risk that would otherwise result from changes in exchange rates The periods of the foreign exchange forward contracts correspond to the periods of the transactions denominated in foreign currencies
American Woodmark Corporation American Woodmark the Company we our or us manufactures and distributes kitchen bath and home organization products for the remodeling and new home construction markets Its products are sold on a national basis directly to home centers builders and through a network of independent dealers and distributors The Company operates within a single reportable segment primarily within the U S long lived assets and sales outside the U S are not significant
Our principal performance obligations are the sale of kitchen bath and home organization products The Company recognizes revenue as control of our products is transferred to our customers which is at the time of shipment or upon delivery based on the contractual terms with our customers We also derive revenue from installations and our revenue related to installations is recognized upon delivery of cabinets to the customer as installation is typically completed in one day Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers Payment terms on our product sales normally range from 30 to 90 days Taxes assessed by a governmental authority that we collect are excluded from revenue The expected costs associated with our contractual warranties are recognized as expense when the products are sold See Note L
For products where title transfer occurs upon delivery to the customer s location we must estimate the amount of sales that have been transferred to third party carriers but not delivered to customers as the carriers are not able to report real time what has been delivered and thus there is a delay in reporting to the Company The estimate is calculated using a lag factor determined by analyzing the actual difference between shipment date and delivery date of orders over a representative period of time which as of April 30 2024 was the past 12 months Revenue is recognized on those shipments which we believe have been delivered to the customer
When revenue is recognized we record estimates to reduce revenue for customer programs and incentives in order to determine the amount of consideration the Company will ultimately be entitled to receive Customer programs and incentives are considered variable consideration and include price discounts volume based incentives promotions and cooperative advertising The Company includes variable consideration in revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved This determination is made based upon known customer programs and incentive offerings at the time of sale and expected sales volume forecasts as it relates to our volume based incentives This determination is updated each reporting period In addition for certain customer program incentives we receive an identifiable benefit goods or services in exchange for the consideration given and record the associated expenditure in selling general and administrative expenses
We account for shipping and handling costs that occur before the customer has obtained control of a product as a fulfillment activity rather than as a promised service These costs are classified within costs of sales and distribution
Cash in excess of operating requirements is invested in money market accounts which are carried at cost which approximates fair value The Company considers all highly liquid short term investments with an original maturity of three months or less when purchased to be cash equivalents
Inventory costs are determined on a first in first out FIFO basis Costs include materials labor and production overhead at normal production capacity Costs do not exceed net realizable values See Note C
Property plant and equipment is stated on the basis of cost less accumulated depreciation Depreciation is calculated using the straight line method over the estimated useful lives of the related assets which range from 15 to 30 years for buildings and improvements 3 to 12 years for machinery and equipment and 3 to 10 years for software Assets under financing leases are amortized over the shorter of their estimated useful lives or the term of the related lease
The Company reviews its long lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable During fiscal years 2024 2023 and 2022 the Company concluded no impairment existed
Goodwill represents the excess of purchase price over the fair value of net assets acquired The Company does not amortize goodwill but evaluates for impairment annually on February 1st or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount In accordance with the accounting standards an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired If after such assessment an entity concludes that the asset is not more likely than not impaired the entity is not required to take further action However if an entity concludes otherwise it is required to determine the fair value of the asset using a quantitative impairment test and if impaired the associated assets must be written down by the amount that the carrying value exceeds the fair value of the reporting unit During fiscal years 2024 2023 and 2022 the Company concluded no impairment existed based on a qualitative analysis
Intangible assets consist of customer relationship intangibles The Company amortizes the cost of intangible assets over their estimated useful lives six years unless such lives are deemed indefinite The Company reviews its intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable During fiscal years 2024 2023 and 2022 the Company concluded no impairment existed
The Company invests in promotional displays in retail stores to demonstrate product features product and quality specifications and to serve as a training tool for retail kitchen designers The Company invests in these long lived productive assets to provide the aforementioned benefits The Company s investment in promotional displays is carried at cost less applicable amortization Amortization is calculated using the straight line method on an individual display basis over periods of 24 to 60 months the estimated period of benefit Promotional display amortization expense for fiscal years 2024 2023 and 2022 was 4 9 million 8 0 million and 10 0 million respectively and is included in selling and marketing expenses
The Company accounts for deferred income taxes utilizing the asset and liability method whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statement amounts and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which these items are expected to reverse At each reporting date the Company evaluates the need for a valuation allowance to adjust deferred tax assets to an amount that more likely than not will be realized
The Company recognizes stock based compensation expense based on the grant date fair value over the requisite service period The Company records the expense for stock based compensation awards subject to performance based criteria vesting over the remaining service period when the Company determines that achievement of the performance criteria is probable The Company evaluates when the achievement of performance based criteria is probable based on the expected satisfaction of the performance criteria at each reporting date
The Company is self insured for certain costs related to employee medical coverage workers compensation liability general liability auto liability and property insurance The Company maintains stop loss coverage with third party insurers to limit total exposure The Company establishes a liability at each balance sheet date based on estimates for a variety of factors that influence the Company s ultimate cost In the event that actual experience is substantially different from the estimates the financial results for the period could be adversely affected The Company believes that the methodologies used to estimate insurance liabilities are an accurate reflection of the liabilities as of the date of the consolidated balance sheets
The Company uses derivatives as part of the normal business operations to manage its exposure to fluctuations in interest rates associated with variable interest rate debt and foreign exchange rates The Company has established policies and procedures that govern the risk management of these exposures The primary objective in managing these exposures is to add stability to interest expense manage the Company s exposure to interest rate movements and manage the risk from adverse fluctuations in foreign exchange rates
The Company uses interest rate swap contracts to manage interest rate exposures The Company records outstanding swap contracts in the consolidated balance sheets at fair value Changes in the fair value of interest rate swap contracts designated as
cash flow hedges are recorded in accumulated other comprehensive income loss and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings If a derivative is deemed to be ineffective the change in fair value of the derivative is recognized directly in earnings
The Company also manages risks through the use of foreign exchange forward contracts The Company recognizes its outstanding forward contracts in the consolidated balance sheets at their fair values The Company does not designate the forward contracts as accounting hedges The changes in the fair value of the forward contracts are recorded in other income expense net in the consolidated statements of operations
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during each reporting period Actual results could differ from those estimates
In December 2023 the Financial Accounting Standards Board the FASB issued Accounting Standards Update ASU No 2023 09 Improvements to Income Tax Disclosures The amendments in this ASU are intended to increase transparency through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information This standard is effective for annual periods beginning after December 15 2024 with early adoption permitted The Company is currently evaluating the disclosure impacts of ASU 2023 09 on its consolidated financial statements and related disclosures
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures to improve the disclosures about reportable segments and include more detailed information about a reportable segment s expenses This ASU also requires that a public entity with a single reportable segment like the Company provide all of the disclosures required as part of the amendments and all existing disclosures required by Topic 280 The ASU should be applied retrospectively to all prior periods presented in the financial statements and is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 Early adoption is permitted The Company is currently evaluating the impact on the related disclosures however it does not expect this update to have an impact on its financial condition or results of operations
Amortization and depreciation expense on property plant and equipment amounted to 41 2 million 37 9 million and 38 0 million in fiscal years 2024 2023 and 2022 respectively Accumulated amortization on financing leases included in the above table amounted to 31 7 million and 31 9 million as of April 30 2024 and 2023 respectively
Customer relationships intangibles are amortized over the estimated useful lives on a straight line basis over six years Amortization expense on customer relationships intangibles amounted to 30 4 million 45 7 million and 45 7 million in fiscal years 2024 2023 and 2022 respectively
On December 29 2017 the Company entered into a credit agreement the Prior Credit Agreement with a syndicate of lenders and Wells Fargo Bank National Association as administrative agent The Prior Credit Agreement provided for a 100 million revolving loan facility with a 25 million sub facility for the issuance of letters of credit a 250 million initial term loan facility and a 250 million delayed draw term loan facility The Company borrowed the entire 250 million under the initial term loan facility the entire 250 million under the delayed draw term loan facility and approximately 50 million under the revolving loan facility in connection with the acquisition of RSI Home Products Inc RSI and the refinancing of certain senior notes assumed from RSI the RSI Notes The facilities under the Prior Credit Agreement were scheduled to mature on December 29 2022
On April 22 2021 the Company amended and restated the Prior Credit Agreement and on January 17 2023 the Company entered into an amendment of such agreement to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate SOFR effective January 31 2023 The amended and restated credit agreement the A R Credit Agreement provides for a 500 million revolving loan facility with a 50 million sub facility for the issuance of letters of credit the Revolving Facility and a 250 million term loan facility the Term Loan Facility Also on April 22 2021 the Company borrowed the entire 250 million under the Term Loan Facility and approximately 264 million under the Revolving Facility to fund in part the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of 350 million in aggregate principal amount of 4 875 Senior Notes due 2026 the Senior Notes The Company is required to repay the Term Loan Facility in specified quarterly installments which have been prepaid through April 30 2025 The Revolving Facility and Term Loan Facility mature on April 22 2026
As of April 30 2024 and 2023 206 3 million was outstanding on the Term Loan Facility As of April 30 2024 and 2023 163 8 million was outstanding under the Revolving Facility Outstanding letters of credit under the Revolving Facility were
13 3 million as of April 30 2024 leaving approximately 322 9 million in available capacity under the Revolving Facility as of April 30 2024 Outstanding letters of credit under the Revolving Facility were 13 0 million as of April 30 2023 leaving approximately 323 2 million in available capacity under the Revolving Facility as of April 30 2023 The outstanding balances noted above approximate fair value as the facilities have a floating interest rate
Amounts outstanding under the Term Loan Facility and the Revolving Facility bear interest based on a fluctuating rate measured by reference to either at the Company s option a base rate plus an applicable margin or SOFR plus 10 basis points plus an applicable margin with the applicable margin being determined by reference to the Company s then current Secured Net Leverage Ratio The Company also incurs a quarterly commitment fee on the average daily unused portion of the Revolving Facility during the applicable quarter at a rate per annum also determined by reference to the Company s then current Secured Net Leverage Ratio In addition a letter of credit fee accrues on the face amount of any outstanding letters of credit at a per annum rate equal to the applicable margin on SOFR loans payable quarterly in arrears As of April 30 2024 the applicable margin with respect to base rate loans and SOFR loans was 0 00 and 1 00 respectively and the commitment fee was 0 10
The A R Credit Agreement includes certain financial covenants that require the Company to maintain i a Consolidated Interest Coverage Ratio of no less than 2 00 to 1 00 and ii a Total Net Leverage Ratio of no greater than 4 00 to 1 00 subject in each case to certain limited exceptions
The A R Credit Agreement includes certain additional covenants including negative covenants that restrict the ability of the Company and certain of its subsidiaries to incur additional indebtedness create additional liens on its assets make certain investments dispose of its assets or engage in a merger or other similar transaction or engage in transactions with affiliates subject in each case to the various exceptions and conditions described in the A R Credit Agreement The negative covenants further restrict the ability of the Company and certain of its subsidiaries to make certain restricted payments including in the case of the Company the payment of dividends and the repurchase of common stock in certain limited circumstances
The Company s obligations under the A R Credit Agreement are guaranteed by the Company s domestic subsidiaries and the obligations of the Company and its domestic subsidiaries under the A R Credit Agreement and their guarantees respectively are secured by a pledge of substantially all of their respective personal property
The Company has various financing leases with interest rates between 2 0 and 6 9 The leases require monthly payments and expire by September 30 2028 The outstanding amounts owed as of April 30 2024 and 2023 were 5 6 million and 3 7 million respectively
On January 25 2016 the Company entered into a New Markets Tax Credit NMTC financing agreement to finance working capital and capital improvements at its Monticello Kentucky facility This agreement was structured with unrelated third party financial institutions the Investors their wholly owned investment funds Investment Funds and certain community development entities CDEs in connection with our participation in qualified transactions under the NMTC program In exchange for substantially all of the benefits derived from the tax credits the Investors made a contribution of 2 3 million net of syndication fees to the Investment Funds Simultaneously a wholly owned subsidiary of the Company made a 4 3 million loan to the Investment Funds The Investment Funds used the proceeds of such equity and debt investments to acquire equity interests in the CDEs which the CDEs in turn used to make loans to the Company aggregating 6 6 million for the project These loans have a term of 30 years with an aggregate interest rate of approximately 1 2 The original terms of the transaction included Investor put options exercisable after seven years which if exercised by the Investors would require the Company to purchase the Investors interests in the Investment Funds The Investors exercised such put options in February 2023 and the Company repurchased their interests in the Investment Funds in February 2023 As a result of the exercised put option the Company recognized a reduction of long term debt of 6 6 million a reduction of loan receivable of 4 3 million and a gain on debt modification of 2 1 million net of unamortized debt issuance costs of 0 2 million
On March 8 2022 the Company entered into a 0 4 million loan agreement with the West Virginia Water Development Authority acting on behalf of the West Virginia Infrastructure and Jobs Development Council and the Hardy County Rural Development Authority as part of the Company s capital improvements at the South Branch Primewood facility located in Hardy County West Virginia The loan agreement expires on March 8 2025 and bears no interest rate The loan agreement is
secured by a sole first lien on the real property and fixtures associated with the facility It defers principal and interest during the term of the obligation and forgives any outstanding balance at March 8 2025 if the Company complies with certain employment levels at the facility
Certain of the Company s loan agreements limit the amount and type of indebtedness the Company can incur and require the Company to maintain specified financial ratios measured on a quarterly basis In addition to the assets previously discussed certain of the Company s property plant and equipment are pledged as collateral under certain loan agreements and the capital lease arrangements The Company was in compliance with all covenants contained in its loan agreements and financing leases at April 30 2024
There were no anti dilutive securities for the fiscal years ended April 30 2024 and 2023 which were excluded from the calculation of net earnings per share Potentially dilutive securities of 48 379 for the fiscal year ended April 30 2022 have not been considered in the calculation of net earnings loss per share as the effect would be anti dilutive
On November 29 2023 the Board of Directors authorized a stock repurchase program of up to 125 million of the Company s outstanding common shares In conjunction with this authorization the Board of Directors cancelled the remaining 22 9 million that had yet to be repurchased under the 100 million existing authorization from May 25 2021 The Company repurchased a total of 1 108 715 common shares for an aggregate purchase price of 87 7 million of its common shares during fiscal 2024 During the first half of fiscal 2024 the Company repurchased 52 2 million under the May 25 2021 authorization while the remaining 35 5 million of stock was repurchased under the November 25 2023 authorization The Company did not repurchase any of its shares during fiscal 2023 but purchased a total of 299 781 common shares for an aggregate purchase price of 25 0 million under the plan approved on May 25 2021 during fiscal 2022 The Company funded share repurchases using available cash and cash generated from operations Repurchased shares became authorized but unissued common shares At April 30 2024 89 5 million remained authorized by the Board to repurchase the Company s common shares
The Company has various stock based compensation plans The Company issues restricted stock units RSUs and stock options to key employees and non employee directors The Company recognizes stock based compensation costs for those shares expected to vest on a straight line basis over the requisite service period of the award The Company records forfeitures as they occur
At April 30 2024 the Company had stock option and RSU awards outstanding under three different plans 1 2023 stock incentive plan 2 2016 employee stock incentive plan and 3 2015 non employee directors equity ownership plan As of April 30 2024 there were 749 850 shares of common stock available for future stock based compensation awards under the Company s stock incentive plans
For purposes of valuing stock option grants the Company uses the Black Scholes option pricing model to value the Company s stock options For purposes of determining the fair value of RSUs the Company uses the closing stock price of its common stock as reported on the NASDAQ Global Select Market on the date of grant The fair value of the Company s stock options and RSU awards is expensed on a straight line basis over the vesting period of the stock options and RSUs to the extent the Company believes it is probable the related performance criteria if any will be met The expected volatility assumption is based on the historical volatility of the Company s stock over a term equal to the expected term of the option granted The expected term of stock option awards granted is derived from the Company s historical exercise experience and represents the period of time that stock option awards granted are expected to be outstanding The expected term assumption incorporates the contractual term of an option grant which is generally ten years for employees as well as the vesting period of an award which is typically three years The risk free interest rate is based on the implied yield on a U S Treasury constant maturity with a remaining term equal to the expected term of the option granted
Performance based stock options Performance Based Options granted and outstanding under the Company s 2023 stock incentive plan cliff vest at the end of three years and have contractual terms of ten years The Performance Based Options are subject to performance conditions and continued employment through the vest date The exercise price of all stock options granted is equal to the fair market value of the Company s common stock on the option grant date
As of April 30 2024 there was 3 1 million of total unrecognized compensation expense related to unvested stock options granted under the Company s stock based compensation plans This expense is expected to be recognized over a weighted average period of 2 3 years
Prior to June 2023 the Company s RSUs granted to employees cliff vest over a three year period from date of grant while RSUs granted to non employee directors vest daily over a two year period from date of grant Directors were granted service based RSUs only while employees were awarded both service based and performance based RSUs PBRSUs Beginning in June 2023 service based RSUs granted to employees vest one third on each of the first second and third anniversaries of the grant date and service based restricted stock units granted to non employee directors vest daily through the end of the one year vesting period as long as i the recipient continuously remains a member of the Board and ii entitle the recipient to receive one share of the Company s common stock per unit vested Directors were granted service based RSUs only while employees were awarded both service based and performance based RSUs PBRSUs in fiscal years 2024 2023 and 2022 The PBRSUs granted in fiscal 2024 2023 and 2022 are earned based on achievement of a number of goals pertaining to the Company s financial performance during three one year performance periods and the achievement of certain cultural goals for the three year period Employees who satisfy the vesting criteria will receive a proportional amount of PBRSUs based upon the Compensation Committee s assessment of the Company s achievement of the performance criteria
As of April 30 2024 there was 17 7 million of total unrecognized compensation expense related to unvested RSUs granted under the Company s stock based compensation plans This expense is expected to be recognized over a weighted average period of 1 7 years
Under the American Woodmark Corporation Retirement Savings Plan the Plan essentially all employees are immediately eligible to participate in the Plan Participants are eligible for 401 k matching contributions based upon the employee s contribution to the Plan All participants employed at the end of the fiscal year and hired prior to November 2 of the fiscal year are eligible for a discretionary profit sharing contribution
Prior to February 1 2024 discretionary profit sharing contributions ranging from 0 5 of net income based on predetermined net income levels of the Company may be made annually in the form of Company stock Effective February 1 2024 the profit sharing contributions are limited to 3 of net income The Company contributed 5 of net income for the first nine months of fiscal 2024 and 3 of net income for the last three months of fiscal 2024 The Company recognized expenses for profit sharing contributions of 5 3 million 4 7 million and 0 8 million in fiscal years 2024 2023 and 2022 respectively
For the first eight months of fiscal 2024 the Company matched 100 of an employee s annual 401 k contributions to the Plan up to 4 of annual compensation Effective January 1 2024 the matching contribution was increased to the first 4 of annual compensation plus an additional 50 of the next 2 of annual compensation thus providing a 5 match The expense for 401 k matching contributions for the plan was 12 9 million 12 4 million and 11 7 million in fiscal years 2024 2023 and 2022 respectively
The Company enters into interest rate swap contracts to manage variability in the amount of known or expected cash payments related to portions of its variable rate debt On May 28 2021 the Company entered into four interest rate swaps with an aggregate notional amount of 200 million to hedge part of the variable rate interest payments under the Term Loan Facility The interest rate swaps became effective on May 28 2021 and will terminate on May 30 2025 The interest rate swaps economically convert a portion of the variable rate debt to fixed rate debt The Company receives floating interest payments monthly based on one month SOFR and pays a fixed rate of 0 53 to the counterparty
The interest rate swaps are designated as cash flow hedges Changes in fair value are recorded to other comprehensive income The risk management objective in using interest rate swaps is to add stability to interest expense and to manage the Company s exposure to interest rate movements Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the contract agreements without exchange of the underlying notional amount Realized gains or losses in connection with required interest payments on interest rate swaps are recorded in earnings as a component of interest expense net to offset variability in interest expense associated with the underlying debt s cash flows
For the year ended April 30 2024 unrealized gains net of deferred taxes of 4 3 million were recorded in other comprehensive income and 7 4 million of realized gains were reclassified out of accumulated other comprehensive loss to interest expense net due to interest received from and payments made to the swap counterparties For the year ended April 30 2023 unrealized gains net of deferred taxes of 3 9 million were recorded in other comprehensive income and 3 8 million of realized losses were reclassified out of accumulated other comprehensive loss to interest expense due to payments made to the swap counterparties
As of April 30 2024 the Company anticipates reclassifying approximately 6 8 million of hedging gains net of tax benefit from accumulated other comprehensive income into earnings during the next 12 months to offset the variability of the hedged items during this period
At April 30 2024 the Company held a target accrual redemption forward agreement to purchase Mexican Pesos across 48 defined fixings These fixings allow for U S dollars to be converted into Pesos at a rate of 18 25 Pesos to one U S Dollar Cumulative profit is capped at an aggregate of approximately 1 8 million over the shorter of the life of the contract fixings or the utilization of the cap If the spot rate is between 18 25 and 19 00 for a defined fixing then the Company purchases at the spot rate and the profit cap is not impacted As of April 30 2024 a liability of 1 5 million is recorded in other accrued expenses on the consolidated balance sheets At April 30 2023 the Company held no forward contracts
We have not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations Undistributed earnings that are indefinitely reinvested in foreign operations are not significant as of April 30 2024
The Company recorded a valuation allowance related to deferred tax assets for certain state investment tax credit ITC carryforwards and foreign tax credit FTC carryforwards Deferred tax assets are reduced by a valuation allowance when after considering all positive and negative evidence it is determined that it is more likely than not that some portion or all of the deferred tax asset will not be realized The Company determined that there will not be sufficient foreign source income to fully utilize the current year and carry forward FTCs Therefore the Company updated the valuation allowance for the current year activity of 0 2 million related to FTCs
The gross amount of state tax credit carryforwards related to state ITCs as of April 30 2024 and 2023 was 3 7 million and 3 6 million respectively These credits expire in various years beginning in fiscal 2028 Net of the federal impact and related valuation allowance the Company recorded 0 2 million and 0 3 million of deferred tax assets related to these credits as of April 30 2024 and 2023 respectively The Company accounts for ITCs under the deferral method under which the tax benefit from the ITC is deferred and amortized into income tax expense over the book life of the related property As of April 30 2024 and 2023 a deferred credit balance of 0 2 million and 0 3 million respectively is included in other long term liabilities on the consolidated balance sheets
The Company operates in multiple tax jurisdictions and in the normal course of business its tax returns are subject to examination by various taxing authorities Such examinations may result in future assessments by these taxing authorities and the Company will accrue a liability when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with accounting standards An estimate of the range of the amounts of unrecognized tax benefits that will increase or decrease income tax expense in the next 12 months cannot be made As of April 30 2024 federal tax years 2020 through 2023 remain subject to examination The Company believes that adequate provisions have been made for all tax returns subject to examination The Company is currently not under federal audit If the liability for uncertain tax positions is released the entire amount would impact the Company s effective tax rate
The Company is involved in suits and claims in the normal course of business including without limitation product liability and general liability claims and claims pending before the Equal Employment Opportunity Commission On at least a quarterly basis the Company consults with its legal counsel to ascertain the reasonable likelihood that such claims may result in a loss As required by FASB Accounting Standards Codification Topic 450 Contingencies the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss those that are probable those that are reasonably possible and those that are deemed to be remote Where losses are deemed to be probable and estimable accruals are made Where losses are deemed to be reasonably possible a range of loss estimates is determined and considered for disclosure In determining these loss range estimates the Company considers known values of similar claims and consultation with independent counsel
The Company believes that the aggregate range of losses stemming from the various suits and asserted and unasserted claims which were deemed to be either probable or reasonably possible are not material as of April 30 2024 with the exception of the Antidumping and Countervailing Duties Investigation discussed below
In February 2020 a conglomeration of domestic manufacturers filed a scope and circumvention petition seeking the imposition of antidumping AD and countervailing duties CVD with the United States Department of Commerce DOC and the United States International Trade Commission ITC against imports of hardwood plywood assembled in Vietnam using cores sourced from China In July 2022 the DOC issued a Preliminary Scope Determination and Affirmative Preliminary Determination of Circumvention of the Antidumping and Countervailing Duty Orders Preliminary Determination In July 2023 the DOC issued a Final Scope Determination and Affirmative Final Determination of Circumvention of the Antidumping and Countervailing Duty Orders Final Determination
Included in the Final Determination is a list of Vietnamese suppliers not eligible for certification AD and CVD cash deposits of 206 are required for imports from the Vietnamese suppliers not eligible for certification Many of the Vietnamese suppliers appealed their inclusion on the ineligible for certification list in the Preliminary Determination Because two of the Company s primary Vietnamese plywood vendors remained on the ineligible for certification list in the Final Determination the Company recorded a loss on unliquidated customs entries as of Final Determination in July 2023 The loss recorded in fiscal 2024 was 4 9 million or 3 7 million net of tax Based on the evidence provided from the Vietnamese suppliers the specific characteristics of the product imported and other relevant matters the Company intends to vigorously appeal the Final Determination that it is subject to these duties and disputes the findings of the Final Determination with regards to the Company In fiscal 2024 the Company filed an administrative review request on the AD CVD orders and the Company filed a complaint with the Court of International Trade As of April 30 2024 both of these proceedings are pending Our last order was placed with these vendors in June 2022
The Company estimates outstanding warranty costs based on the historical relationship between warranty claims and revenues The warranty accrual is reviewed monthly to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period Adjustments are made when actual warranty claim experience differs from estimates Warranty claims are generally made within two months of the original shipment date
The Company disaggregates revenue from contracts with customers into major sales distribution channels as these categories depict the nature amount timing and uncertainty of revenues and cash flows that are affected by economic factors The following table disaggregates our consolidated revenue by major sales distribution channels for the years ended April 30 2024 2023 and 2022
Financial instruments that potentially subject the Company to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable The Company maintains its cash and cash equivalents with major financial institutions and such balances may at times exceed Federal Deposit Insurance Corporation insurance limits The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash and cash equivalents
Credit is extended to customers based on an evaluation of each customer s financial condition and generally collateral is not required The Company s customers to whom credit is extended operate in the new home construction and home remodeling markets
The Company maintains an allowance for credit losses based upon management s evaluation and judgment of potential net loss The allowance is estimated based upon historical experience the effects of current developments and economic conditions and of each customer s current and anticipated financial condition Estimates and assumptions are periodically reviewed and updated Any resulting adjustments to the allowance are reflected in current operating results
At April 30 2024 the Company s two largest customers Customers A and B represented 33 2 and 17 7 of the Company s gross customer receivables respectively At April 30 2023 Customers A and B represented 40 4 and 18 4 of the Company s gross customer receivables respectively
right of use ROU assets related to operating leases are presented as Operating lease right of use assets on the consolidated balance sheet Lease liabilities related to operating leases with lease terms greater than twelve months are presented in Short term lease liability operating and Long term lease liability operating on the consolidated balance sheet
Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term The discount rate used to determine the present value of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined in which case the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment Operating lease ROU assets may also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term The ROU assets and lease liabilities may also include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option The ROU asset includes any lease payments made and lease incentives received prior to the commencement date The Company has lease arrangements with lease and non lease components which are accounted for separately Non lease components of the lease payments are expensed as incurred and are not included in determining the present value
ROU assets related to finance leases are presented in Property plant and equipment net on the consolidated balance sheet Lease liabilities related to finance leases are presented in Current maturities of long term debt and Long term debt less current maturities on the consolidated balance sheet
Finance lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term The discount rate used to determine the present value of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined in which case the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment
The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities and the related ROU assets presented on the consolidated balance sheet as of April 30 2024
In the third quarter of fiscal 2023 the Company implemented nationwide reductions in force which were substantially completed in the fourth quarter of fiscal 2023 The Company recognized pre tax restructuring charges net of 0 2 million for the year ended April 30 2024 related to these reductions in force which were primarily severance and separation costs
Level 1 Investments with quoted prices in active markets for identical assets or liabilities The Company s cash equivalents are invested in money market funds mutual funds and certificates of deposit The Company s mutual fund investment assets represent contributions made and invested on behalf of the Company s named executive officers in a supplementary employee retirement plan
Level 2 Investments with observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 Investments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities The Company has no Level 3 assets or liabilities measured on a recurring basis
The Company s financial instruments include cash and equivalents marketable securities and other investments accounts receivable and accounts payable interest rate swap contracts and short and long term debt The carrying values of cash and equivalents accounts receivable and payable and short term debt on the consolidated balance sheets approximate their fair value due to the short maturities of these items The interest rate swap and foreign exchange forward contracts were marked to market and therefore represent fair value The fair values of these contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets The following table summarizes the fair value of assets and liabilities that are recorded in the Company s consolidated financial statements as of April 30 2024 and 2023 at fair value on a recurring basis in thousands
We have audited the accompanying consolidated balance sheets of American Woodmark Corporation the Company as of April 30 2024 and 2023 the related consolidated statements of operations comprehensive income shareholders equity and cash flows for each of the two years in the period ended April 30 2024 and the related notes and financial statement schedule included under Item 15 a 2 collectively referred to as the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Company at April 30 2024 and 2023 and the results of its operations and its cash flows for each of the two years in the period ended April 30 2024 in conformity with U S generally accepted accounting principles
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of April 30 2024 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework and our report dated June 26 2024 expressed an unmodified opinion thereon
These financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on the Company s financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that 1 relates to accounts or disclosures that are material to the financial statements and 2 involved our especially challenging subjective or complex judgments The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As discussed at Note A of the consolidated financial statements the Company recognizes revenue when control is transferred to the customer which is at the time of shipment or delivery based on contractual terms with customers For products where title transfer occurs upon delivery to the customer s location the Company must estimate the amount of sales for products that have been shipped but not yet delivered The estimate of sales shipped but not delivered is calculated using a lag factor which is determined by analyzing the actual difference between shipment date and delivery date of orders over a representative period of time
Auditing management s lag factor estimate was complex due to the significant judgments management made in determining the length of time to be used in arriving at the estimated days between shipment and delivery date Management s selected time period as opposed to a longer shorter or more recent period of time could have a significant effect on the amount of sales recorded as of period end
We obtained an understanding evaluated the design and tested the operating effectiveness of controls over the Company s process for determining the timing of transfer of control including controls over management s review of the lag factor calculation and management s controls over validating the completeness and accuracy of the third party carrier data used in the calculation
To test the Company s lag estimate we tested the completeness and accuracy of third party carrier data used by the Company in its calculation and recalculated the estimated amount of sales shipped but not yet delivered We performed an independent calculation of the lag estimate utilizing delivery data for differing periods of time We evaluated the reasonableness of the selected time period utilized by the Company in determining the lag by comparing it against the results of our independent calculation
We have audited the accompanying consolidated statements of operations comprehensive income shareholders equity and cash flows of American Woodmark Corporation and subsidiaries the Company for the year ended April 30 2022 and the related notes and financial statement schedule II collectively the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the results of operations of the Company and its cash flows for the year ended April 30 2022 in conformity with U S generally accepted accounting principles
These consolidated financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on these consolidated financial statements based on our audit We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audit also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements We believe that our audit provides a reasonable basis for our opinion
Management has responsibility for establishing and maintaining adequate internal control over financial reporting Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U S generally accepted accounting principles Because of its inherent limitations a system of internal control over financial reporting may not prevent or detect misstatements Management has assessed the effectiveness of the Company s internal control over financial reporting as of April 30 2024 In making its assessment Management has utilized the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework 2013 the COSO 2013 Framework Management concluded that based on its assessment American Woodmark Corporation s internal control over financial reporting was effective as of April 30 2024 The Company s internal control over financial reporting as of April 30 2024 has been audited by Enrst Young LLP an independent registered public accounting firm as stated in their report which appears in this Annual Report on Form 10 K
We have audited American Woodmark Corporation s internal control over financial reporting as of April 30 2024 based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework the COSO criteria In our opinion American Woodmark Corporation the Company maintained in all material respects effective internal control over financial reporting as of April 30 2024 based on the COSO criteria
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated balance sheets of the Company as of April 30 2024 and 2023 the related consolidated statements of operations comprehensive income shareholders equity and cash flows for each of the two years in the period ended April 30 2024 and the related notes and financial statement schedule included under Item 15 a 2 and our report dated June 26 2024 expressed an unqualified opinion thereon
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Annual Report on Internal Control Over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects
Our audit included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The Company s management evaluated with the participation of the Company s principal executive officer and principal financial officer the effectiveness of the Company s disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Securities Exchange Act of 1934 as amended the Exchange Act as of April 30 2024 Based on this evaluation Company management including the principal executive officer and principal financial officer concluded that the Company s disclosure controls and procedures were effective
Management had conducted an assessment of the Company s internal control over financial reporting as of April 30 2024 Management s report regarding that assessment is included with the Consolidated Financial Statements included in this report under Item 8 Financial Statements and Supplementary Data and is incorporated in this item by reference
The Company s independent registered public accounting firm Ernst Young LLP EY has issued an audit report on the effectiveness of the Company s internal control over financial reporting EY s report on the effectiveness of the Company s internal control over financial reporting is included with the Consolidated Financial Statements included in this report under Item 8 Financial Statements and Supplementary Data and is incorporated in this item by reference
There has been no change in the Company s internal control over financial reporting during the fiscal quarter ended April 30 2024 that has materially affected or is reasonably likely to materially affect the Company s internal control over financial reporting
During the fiscal quarter ended April 30 2024 none of the Company s directors or executive officers adopted terminated or modified a Rule 10b5 1 trading agreement or a non Rule 10b5 1 trading arrangement as each term is defined in Item 408 a of Regulation S K
the information concerning the Company s directors is set forth under the caption Item 1 Election of Directors Information Regarding Nominees in the Company s Proxy Statement for its Annual Meeting of Shareholders to be held on August 22 2024 Proxy Statement and is incorporated in this Item by reference
the information concerning compliance with Section 16 a of the Exchange Act is set forth under the caption Delinquent Section 16 a Reports in the Proxy Statement and is incorporated in this Item by reference
the information concerning the Code of Business Conduct and Ethics governing the Company s Chief Executive Officer Chief Financial Officer Controller and Treasurer is set forth under the caption Corporate Governance Codes of Business Conduct and Ethics in the Proxy Statement and is incorporated in this Item by reference
the information concerning material changes if any in the procedures by which security holders may recommend nominees to the Company s Board of Directors is set forth under the caption Corporate Governance Procedures for Shareholder Nominations of Directors in the Proxy Statement and is incorporated in this Item by reference
the information concerning the Audit Committee of the Company s Board of Directors including the members of the Audit Committee and the Board s determination concerning whether certain members of the Audit Committee are audit committee financial experts as that term is defined under Item 407 d 5 of Regulation S K is set forth under the captions Corporate Governance Board of Directors and Committees Audit Committee in the Proxy Statement and is incorporated in this Item by reference and
the information about our Insider Trading Policy is set forth under the caption Corporate Governance Insider Trading Arrangements and Policies in the Proxy Statement is incorporated in this Item by reference
In response to this Item and in accordance with General Instruction G 3 of Form 10 K the information set forth under the captions Executive Compensation Compensation Committee Report Compensation Committee Interlocks and Insider Participation Company s Compensation Policies and Practices Relating to Risk Management and Non Management Directors Compensation in the Proxy Statement is incorporated in this Item by reference
In response to this Item and in accordance with General Instruction G 3 of Form 10 K the information set forth under the caption Security Ownership in the Proxy Statement is incorporated in this Item by reference
At April 30 2024 the Company had restricted stock unit awards outstanding under three different plans 2023 Stock Incentive Plan 2016 Employee Stock Incentive Plan and 2015 Non Employee Directors Restricted Stock Unit Plan
Excludes exercise price for restricted stock units issued under the 2016 Employee Stock Incentive Plan and 2015 Non Employee Directors Restricted Stock Unit Plan because they are converted into common stock on a one for one basis at no additional cost
In response to this Item and in accordance with General Instruction G 3 of Form 10 K the information set forth under the captions Certain Related Party Transactions and Corporate Governance Director Independence in the Proxy Statement is incorporated in this Item by reference
In response to this Item and in accordance with General Instruction G 3 of Form 10 K the information concerning fees and services of the Company s principal accounting firm set forth under the captions Report of the Audit Committee Independent Auditor Fee Information and Report of the Audit Committee Pre Approval Policies and Procedures in the Proxy Statement is incorporated in this Item by reference
Articles of Amendment to the Articles of Incorporation effective September 10 2004 incorporated by reference to Exhibit 3 1 to the Registrant s Form 8 K as filed on August 31 2004 Commission File No 000 14798
Pursuant to Regulation S K Item 601 b 4 iii instruments that define the rights of holders of the Registrant s long term debt securities where the long term debt securities authorized under each such instrument do not exceed 10 of the Registrant s total assets have been omitted and will be furnished to the Securities and Exchange Commission upon request
Amendment and Restatement Agreement dated as of April 22 2021 by and among American Woodmark Corporation each Subsidiary of American Woodmark Corporation party thereto the Lenders party thereto and Wells Fargo Bank National Association as Administrative Agent incorporated by reference to Exhibit 10 1 to the Registrant s Form 8 K as filed on April 26 2021 Commission File No 000 14798
Amended and Restated Credit Agreement dated as of April 22 2021 by and among American Woodmark Corporation as Borrower the Lenders referred to therein as Lenders and Wells Fargo Bank National Association as Administrative Agent Swingline Lender and Issuing Lender incorporated by reference to Exhibit 10 2 to the Registrant s Form 8 K as filed on April 26 2021 Commission File No 000 14798
Amendment Agreement dated as of January 17 2023 to the Amended and Restated Credit Agreement dated as of April 22 2021 among American Woodmark Corporation as Borrower the lenders from time to time party thereto and Wells Fargo Bank National Association as Administrative Agent incorporated by reference to Exhibit 10 2 to the Registrant s Quarterly Report on Form 10 Q for the quarter ended January 31 2023 Commission File No 000 14798
2015 Non Employee Directors Restricted Stock Unit Plan incorporated by reference to Appendix A to the Registrant s Definitive Proxy Statement on Schedule 14A as filed on June 30 2015 Commission File No 000 14798
Equipment Lease dated as of June 30 2004 between the Company and the West Virginia Economic Development Authority incorporated by reference to Exhibit 10 1 l to the Registrant s Form 10 Q for the quarter ended July 31 2004 Commission File No 000 14798
West Virginia Facility Lease dated as of July 30 2004 between the Company and the West Virginia Economic Development Authority incorporated by reference to Exhibit 10 1 m to the Registrant s Form 10 Q for the quarter ended July 31 2004 Commission File No 000 14798
Form of Grant Letter used in connection with awards of service based restricted stock units granted under the Company s 2016 Employee Stock Incentive Plan incorporated by reference to Exhibit 10 1 a to the Registrant s Form 10 Q for the quarter ended July 31 2017 Commission File No 000 14798
Form of Grant Letter used in connection with awards of performance based restricted stock units granted under the Company s 2016 Employee Stock Incentive Plan incorporated by reference to Exhibit 10 1 b to the Registrant s Form 10 Q for the quarter ended July 31 2017 Commission File No 000 14798
Form of Grant Letter used in connection with awards of cultural based restricted stock units granted under the Company s 2016 Employee Stock Incentive Plan incorporated by reference to Exhibit 10 1 c to the Registrant s Form 10 Q for the quarter ended July 31 2017 Commission File No 000 14798
American Woodmark Corporation 2023 Stock Incentive Plan incorporated by reference to Appendix A to the Registrant s Definitive Proxy Statement filed with the Commission on June 27 2023 Commission File No 000 14798
Form of Grant Letter used in connection with the grant of a supplemental long term incentive award effective September 5 2023 under the American Woodmark Corporation 2023 Stock Incentive Plan incorporated by reference to Exhibit 10 1 to the Registrant s Current Report on Form 8 K filed with the Commission on September 6 2023 Commission File No 000 14798
Letter of KPMG LLP dated as of May 27 2022 to the Securities and Exchange Commission incorporated by reference to the Registrant s Current Report on Form 8 K filed May 27 2022 Commission File No 000 14798
Letter of KPMG LLP dated as of June 29 2022 to the Securities and Exchange Commission incorporated by reference to Amendment No 1 to the Registrant s Current Report on Form 8 K filed July 1 2022 Commission File No 000 14798
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a 14 b of the Exchange Act and 18 U S C Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 Filed Herewith
Interactive Data File for the Registrant s Annual Report on Form 10 K for the year ended April 30 2024 formatted in Inline XBRL Inline eXtensible Business Reporting Language i Consolidated Balance Sheets ii Consolidated Statements of Operations iii Consolidated Statements of Comprehensive Income Loss iv Consolidated Statements of Shareholders Equity v Consolidated Statements of Cash Flows and vi Notes to Consolidated Financial Statements Filed Herewith
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated
In accordance with Securities and Exchange Commission requirements the Company will furnish copies of all exhibits to its Form 10 K not contained herein upon receipt of a written request and payment of 0 10 per page to

Company Name	AMERICAN WOODMARK CORP Vist SEC web-site
Category	MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS
Trading Symbol	AMWD