561 Shady Elm Road Winchester, Virginia 22602(540) 665-9100americanwoodmark.com2021Annual Reportamericanwoodmark.com Directors and Executive OfficersRobert J. Adams, Jr.Senior Vice President, Manufacturing and Technical Operations Andrew B. CoganDirector Chair of the Audit CommitteeChairman and Chief Executive Officer of Knoll, Inc M. Scott Culbreth DirectorPresident and Chief Executive Officer James G. Davis, Jr. Director Chair of the Governance, Sustainability and Nominating Committee and Member of the Audit CommitteePresident and Chief Executive Officer of James G. Davis Construction Corporation Martha M. Hayes Director Chair of the Compensation and Social Principles Committee and Member of the Governance, Sustainability and Nominating CommitteeRetired Vice President Customer Development at Sara Lee Corporation Daniel T. HendrixDirector Member of the Audit CommitteeChairman, Chief Executive Officer and President of Interface, Inc. Paul JoachimczykVice President and Chief Financial OfficerCorporate Secretary Teresa M. MaySenior Vice President and Chief Marketing Officer Carol B. MoerdykDirector Member of the Governance, Sustainability and Nominating Committee and Member of the Audit CommitteeRetired Senior Vice President, International, OfficeMax Incorporated David A. Rodriguez Director Member of the Compensation and Social Principles Committee and Member of the Goverance, Sustainability and Nominating Committee Executive Vice President and Global Chief Human Resources Officer at Marriott InternationalVance W. TangNon-Executive Chair Member of the Compensation and Social Principles Committee and Member of the Governance, Sustainability and Nominating CommitteeRetired President and Chief Executive Officer of KONE Inc. Emily C. Videtto Director Member of the Audit Committee Vice President and Chief Marketing Officer at Pella Corporation Corporate InformationAnnual MeetingThe 2021 Annual Meeting of Shareholders will be held on Thursday, August 26, 2021 at 9:00 a.m. at American Woodmark Corporation, 561 Shady Elm Road in Winchester, Virginia.Annual Report on Form 10-KA copy of the Company’s Annual Report on Form 10-K for the fiscal year ending on April 30, 2021, may be obtained free of charge on the Company’s website at americanwoodmark.com or by writing:Kevin DunniganTreasury Director American Woodmark CorporationPO Box 1980Winchester, VA 22604-8090Corporate HeadquartersAmerican Woodmark Corporation 561 Shady Elm RoadWinchester, VA 22602(540) 665-9100Mailing AddressPO Box 1980Winchester, VA 22604-8090Transfer AgentComputershare Shareholder ServicesInvestor Relations(800) 942-5909Shareholder InquiriesInvestor Relations American Woodmark Corporation561 Shady Elm RoadWinchester, VA 22602(540) 665-9100americanwoodmark.comAt American Woodmark, we do more than make cabinets. We champion your unique style. We inspire fresh designs and bold possibilities, and celebrate the perfect union of creativity, reliable function, and value. At our core is a shared goal - a commitment to help customers build beautiful, comfortable spaces that reflect their idea of home. With our portfolio of brands, we can meet your ambition and bring your vision to life. Our purpose may seem simple, but the rewards it brings are immeasurable. We’re over 10,000 strong, with a proud heritage, a thriving culture, and sustainable growth. Our employees are like family to us, and our products bring joy and peace of mind to homes across the country. American Woodmark stands for more than making cabinets - we make brighter futures. Our Values Our CITE principles help create the culture that sets us apart. Customer Satisfaction Provide the best quality, service, and value to the greatest number of people by doing whatever is reasonable and sometimes unreasonable.Integrity Do what is right: act fairly and responsibly, care about the dignity of each person and be a good citizen within the community. Teamwork Understand that we must all work together in order to succeed. Realize that each person must contrib-ute to the team to be part of the team. Excellence Strive to perform every job or action in a superior way. Be innovative, always helping others become the best they can be. To Our
Shareholders
Dear Fellow Shareholders,
Fiscal 2021 brought about a year of unprecedented demand and supply challenges for the company. Our teams
have been increasing capacity and managing a stretched supply network and I am proud of their ability to focus,
adapt and innovate. As a result, we grew our business by $94 million, and are positioned to continue to win and
grow in the marketplace, while improving our margins.
Safety is our number one priority as an organization and our teams worked tirelessly to provide a safe work environ-
ment as the COVID-19 pandemic impacted how we all go about our day. Our teams delivered a world-class OSHA
safety rate of 1.44 and now we are focused on vaccination efforts through education and onsite clinics.
We have begun our digital transformation journey with an ERP cloud solution provider in the finance and procure-
ment functions which will allow us to operate as one company and become more efficient. Also, we will be improv-
ing the efficiencies of our sales and customer care organizations through a customer relationship management
implementation in CY22.
You may have also noticed a refreshed brand within this report to better reflect American Woodmark in the market-
place. Our promise is that we ignite your imagination and inspire you to create a home that’s uniquely you.
FY2021 Financial Highlights
Net sales grew $94 million to $1.74 billion and Adjusted EBITDA finished at $223 million or 12.8%. Our teams actively
managed demand growth and supply shortages. Despite our best efforts to offset inflation with productivity, we
experienced sudden increases in material and freight in our fiscal third and fourth quarters that we were not able to
fully offset. Pricing actions have been announced in all channels and we will begin to realize the additional revenue
during the first half of fiscal 2022.
Our new construction business was able to deliver net sales growth of 0.7% for the fiscal year by overcoming COVID
related shutdowns and a subsequent slowdown in home sales and home building in the first half of our fiscal year.
Our remodel business delivered 9.1% net sales growth with our home center channel at 10.5% and our dealer/distrib-
utor channel at 3.9% as consumers began to reinvest back in their homes.
Our cash balance was $91.1M at the end of the fiscal year and the company has access to an additional $236 million
under its new revolving credit facility. This restructured debt provides increased flexibility and delivers a significant
reduction in interest expense. Free cash flow generation allowed us to pay down $80 million of our term loan and
repurchase $20 million of stock in the fiscal year.
Looking Forward
Shortly after taking the role in July, I communicated that culture, connection and focus would be key elements of
how I would lead. Our 2025 Vision had been communicated, but additional work was needed to finalize the strat-
egy to deliver on our vision. This work has been finalized by our teams and we firmly believe we can accelerate
growth with incremental investment and resourcing in the following areas:
• Digital/online capabilities to expand our online offering, adding “a+” content, building our digital marketing
team and simplifying the buying experience.
• Launch a high value opening price point cabinet line, Waypoint Simple Trends, for our dealer network regionally
and then expanding nationally across channels.
• Growing our frameless business in Southern California and Phoenix.
• Continuing to grow our Origins by Timberlake line in new construction.
We have also identified several key enablers that will be our focus over the next 5 years to support our 2025
Vision. The enablers include: Customer Experience; Platform Design; Talent; and ESG.
• Customer Experience is a key differentiator and we must exceed our customer expectations with respect to the
product experience, including packaging, damages, response time and overall star ratings. Consistent lead
times are also required, and we believe we can leverage all of these attributes to gain share, including growing
our presence with Pro Customers.
• Our Platform Design must meet the needs of our commercial programs which include capacity, improving our
supply chain resiliency and lowering our overall costs.
• Talent needs will require us to hire additional resources as we grow, develop the right skillsets to meet our growth
needs and remain competitive with pay and benefits.
• The company’s ESG efforts will continue our commitment to our employees, communities and other stakeholders
with additional focus, commitment, and investments to build a stronger company for the future. Our Foundation
made over 265 grants totaling $0.7 million in the prior fiscal year and continues to do great work supporting
the communities where we live and work.
In closing, I would like to thank each and every one of our teammates for making it happen this past fiscal year.
On behalf of our Chair, the Board of Directors, the leadership team, and the entire Company, we thank you for your
continued support.
Please reference the reconciliation of generally accepted accounting principles (“GAAP”) to non-GAAP financial
measures used in this letter beginning on page 20 of the Company’s Form 10-K.
M. Scott Culbreth
President & Chief Executive Officer
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number: 000-14798
American Woodmark Corporation
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of incorporation or organization)
54-1138147
(I.R.S. Employer Identification No.)
561 Shady Elm Road, Winchester, Virginia
(Address of principal executive offices)
22602
(Zip Code)
(540) 665-9100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbol(s)
Name of each exchange on which registered
AMWD
NASDAQ
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Non-accelerated filer ☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
The aggregate market value of the registrant's Common Stock, no par value, held by non-affiliates of the registrant as of
October 30, 2020, the last business day of the Company's most recent second quarter was $1,394,021,693.
As of June 18, 2021, 16,608,781 shares of the Registrant's Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on August 26, 2021
("Proxy Statement") are incorporated by reference into Part III of this Form 10-K.
American Woodmark Corporation
2020 Annual Report on Form 10-K
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures Executive
Officers of the Registrant
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
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6
13
13
14
14
14
15
16
17
28
29
59
59
59
59
60
60
60
60
61
64
65
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PART I
Item 1.
BUSINESS
Our Company
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 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.
Our Business
American Woodmark celebrates the creativity in all of us. With over 10,000 employees and more than a dozen brands, we're
one of the nation's largest cabinet manufacturers. From inspiration to installation, we help people find their unique style and
turn their home into a space for self-expression. By partnering with major home centers, builders, and dealers, 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.
Our Products
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.
We offer products in the following categories: made-to-order and stock. Made-to-order products typically utilize higher grade
materials with more options as compared to stock and are all special ordered and shipped directly to the home from the factory.
Our home organization products are exclusively stock products. Our kitchen cabinetry and bath cabinetry are offered across all
product categories (made-to-order and stock) and our office cabinetry is offered as stock. Our stock products represent cash and
carry products and are sold through home centers, while our made-to-order products are sold through home centers, builders,
and independent dealers and distributors.
Our Market
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.
Our Customers
We serve three main categories of customers: home center customers, builders, and independent dealers and distributors.
Home Center 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,
2
2021 ("fiscal 2021"), Home Depot and Lowe's combined accounted for approximately 48.7% 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.
Builders
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 the majority of the top 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 this business and enable us to deliver exceptional service to our
builder partners. During fiscal 2021, builders accounted for approximately 38.6% of net sales of the Company.
Independent Dealers & Distributors
In 2010, we expanded our business into the dealer channel with the launch of the Waypoint Living Spaces® brand. Today, we
sell this brand to over 1,800 regional and local dealers across the country. The dealer channel of the market 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 and will continue
to be a strong growth and market share opportunity for us. Within our distributor channel we also sell our Timberlake® 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. During fiscal 2021, independent dealers and distributors accounted
for approximately 12.7% of net sales of the Company.
Manufacturing, Distribution and Service
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 17 facilities located in Maryland,
Indiana, West Virginia, Georgia, Arizona, Kentucky, Virginia, California, Texas, North Carolina, and Tijuana, Mexico. 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 dealers. 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 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 three Tijuana, 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 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. 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.
Raw Materials and Suppliers
The primary raw materials used in our products include hard maple, cherry, and beech lumber and plywood. Additional raw
materials include paint, particleboard, medium density fiberboard, high density fiberboard, 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. The distances involved in
these arrangements, together with the differences in business practices, shipping and delivery requirements, and laws and
3
regulations add complexity to our supply chain logistics and increase the potential for interruptions in our production
scheduling. In addition, prices and availability of these components may be affected by world market conditions and
government policies and tariffs.
Competition
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.
Environmental Matters and Regulatory Matters
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.
Intellectual Property
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.
Seasonality
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.
Employees
Human Capital Resources
As of April 30, 2021, we employed over 10,000 full-time employees, with approximately 230 unionized employees in
Anaheim, California. We believe that our employee relations and relationship with the union representing the employees in
Anaheim are good.
Culture and Core Values
At American Woodmark, 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
4
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:
•
Engage with our key stakeholders, including employees, to ensure their needs and concerns are heard and addressed,
and if appropriate, incorporated into our strategy;
• Maintain a safe and enriching working environment where all employees are treated with respect and are able to
achieve their full potential;
Encourage employees to volunteer in our communities through internally or externally organized events;
Fund the American Woodmark Foundation, which serves as a vehicle for our employees to serve the community; and
Provide scholarship opportunities to family members for our employees.
•
•
•
Training
Training is an important part of attracting and retaining a qualified workforce. Through our training programs, we seek to
ensure that each employee is treated equitably, is engaged, and has opportunities to succeed and advance his or her career. We
invest a significant number of hours annually in onboarding, cultural, safety, supervisory, and managerial training activities.
Through these activities, as well as our tuition reimbursement programs, executive development opportunities, formal and
informal cross-training activities, and other operational training offerings, we strive to establish American Woodmark as an
organization dedicated to providing the training and development opportunities necessary to maintain a well-qualified
workforce connected to and invested in our continued operational success.
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 in order to foster engagement, relationship
building, networking, and shared learning experiences. Depending on the course, our training and development opportunities
are offered on an on-demand, semi-annual, annual, or biannual basis.
Safety
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 1.44 during fiscal 2021.
In response to the COVID-19 pandemic, we enforced social distancing and enhanced health, safety and sanitation measures,
and implemented necessary procedures and support to enable a significant portion of our office personnel to work remotely.
We also imposed travel restrictions, transitioned meetings from in-person to virtual formats where possible, and made other
operational adjustments in furtherance of the continued safety of our workforce.
Diversity and Inclusion
We are an equal opportunity employer and strive to create an environment free from discrimination and harassment and in
which each employee is valued, treated with dignity and respect, and managed in an inclusive manner. We believe that a
workplace that encourages the interaction of different perspectives and backgrounds creates superior solutions, approaches, and
innovations. In 2017, we commissioned a team to investigate inclusion and diversity at American Woodmark that led to
increased management training and learning opportunities. We also established Right Environment Councils in each of our
locations in an attempt to more effectively engage and connect with employees of all levels. In 2019, we revised our employee
engagement survey process to include an inclusion and diversity index and increase the frequency of formal employee
feedback. In 2020, we partnered with an inclusion and diversity consultant and established an Inclusion, Diversity, Equity, and
Awareness team to establish and refine an enterprise-wide inclusion and diversity strategy and propose specific initiatives to
accelerate our efforts in this area. Going forward, we intend to implement this strategy with the goal of enhancing our inclusive
culture and increasing the diversity of people, thought, and perspectives represented throughout our company.
Market Leader with Nationwide Manufacturing and Distribution Network
Our Competitive Strengths
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 seventeen 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, dealer, and home center customers on a national basis, and we offer a broad set of
products to serve our customers across a variety of price points. Our facilities are primarily located in or near major
5
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.
Comprehensive Product Offering with Diversified End-Markets
We believe that the diversity of our product portfolio across categories, channels, and end-markets benefits 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.
Deep Relationships with Leading Retailers
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 national
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.
Best-in-Class Manufacturing Capabilities
We operate 17 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.
Experienced Management Team
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, and marketing.
Item 1A.
RISK FACTORS
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 2022" and Item 7A. "Quantitative and Qualitative Disclosures about Market Risk."
Risks related to our business and industry
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
6
for approximately 48.7% of total net sales during the fiscal year 2021. 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 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. 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:
causing consumers to delay or decrease homeownership;
•
• making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes;
• making consumers more reluctant to make investments in their existing homes, including kitchen and bath repair and
remodel projects; or
• making it more difficult to secure loans for major renovations.
Prolonged economic downturns may adversely impact our sales, earnings, and liquidity. 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.
COVID-19 has adversely affected our business, financial performance, and operating results and its continuing and future
impacts as well as the impacts from other future pandemics could adversely affect our business, financial performance, and
operating results. COVID-19 has negatively impacted the global and U.S. economy, disrupted consumer spending and global
supply chains, and created significant volatility and disruption in financial markets. We have experienced some disruptions to
our business operations and this pandemic could have additional or continuing material adverse effects on our business,
financial performance, employees, suppliers, and customers. The extent of the impact of the COVID-19 pandemic on our
business and financial performance will depend on future developments, many of which are outside of our control.
We have been negatively impacted by the COVID-19 pandemic as demand for our products significantly decreased at the initial
height of the pandemic in the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, "stay at home" orders and other work
disruptions created disruptions to our business operations and our supply chain has been negatively impacted by rising materials
and logistics costs. In addition to these past and current dynamics, the COVID-19 pandemic or future pandemics may create or
exacerbate risks related to our operations and regulatory matters, including, but not limited to:
•
•
Supply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and
significant changes in production levels by our suppliers or other restrictions affecting our business could adversely
impact our planning and forecasting, our revenues, and our operations.
Disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing
and supply elements such as raw materials or other product components, transportation, work force, force majeure
7
•
•
•
•
•
events, or other manufacturing and distribution capabilities, like the temporary suspension of our Mexican operations
in April 2020, could result in our inability to meet our customer needs and achieve cost targets.
Significant changes in the conditions of markets in which we manufacture, sell or distribute our products, including
from governmental guidance or requirements such as additional or expanded quarantines or "stay at home" orders,
closures, or other restrictions that further limit or close our operating and manufacturing facilities, restrict our
employees' ability to travel or perform necessary business functions, restrict or prevent consumers from having access
to our products, or otherwise prevent our suppliers or customers from sufficiently staffing operations, could adversely
impact operations necessary for the production, distribution, sale, and support of our products.
Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of the
impact of COVID-19. If any of our customers suffer significant financial difficulties, they may be unable to pay
amounts due to us timely or at all. If we are unable to collect our accounts receivable as they come due, there may be a
material adverse effect on our financial condition, results of operations, and cash flows.
Disruptions to our operations related to COVID-19 as a result of absenteeism by infected or ill employees, or
absenteeism by employees who elect not to come to work due to the illness affecting others at our facilities, or due to
quarantines, or as a result of the tight labor market we are currently experiencing worsening or lasting into the future.
The COVID-19 pandemic has led to and could continue to lead to severe disruption and volatility in the United States
and global capital markets, which could increase our cost of capital and adversely affect our ability to access the
capital markets in the future. In addition, trading prices in the public equity markets, including prices of our common
stock, have been highly volatile as a result of the COVID-19 pandemic.
Sustained adverse impacts to the Company, certain suppliers, and customers may also affect the Company's future
valuation of certain assets and therefore may increase the likelihood of an impairment charge, write-off, or reserve
associated with such assets, including goodwill, long-lived intangible assets, property and equipment, inventories,
accounts receivable, tax assets, and other assets.
The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and cash flows
remains highly uncertain and cannot be predicted, including but not limited to, the duration and spread of the outbreak, its
severity, the actions to contain the virus or treat its impact, including the availability and efficacy of vaccines, and how quickly
and to what extent normal economic and operating conditions can resume. The continued impact on our business as a result of
the COVID-19 pandemic (directly or indirectly) could materially adversely affect our results of operations, financial condition,
cash flows, prospects, and the trading prices of our common stock.
The U.S. cabinetry industry is highly competitive, and market share losses could occur. 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 and Malaysia. These competitors may also benefit from certain local
government subsidies or other incentives that are not available to us.
We may not ultimately succeed in competing with other manufacturers and distributors in our market, which may have a
material adverse effect on our business, financial condition, or results of operations.
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.
8
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.
We may fail to fully realize the anticipated benefits of our growth strategy within the home center, dealer and homebuilder
channels. Part of our growth strategy depends on expanding our business in the dealer and homebuilder channels. We may fail
to compete successfully against other companies that are already established providers within the dealer and homebuilder
channels. Demand for our products within the home center, homebuilder and dealer 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.
Manufacturing expansion to add capacity, manufacturing realignments, and other cost savings programs could result in a
decrease in our near-term earnings. We continually review our manufacturing operations. These reviews could result in the
expansion of capacity, manufacturing realignments, and various cost savings programs, such as our closure of the Humboldt,
Tennessee manufacturing plant in fiscal 2021. 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 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 assure you 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 internationally and are exposed to risks associated with doing business globally. 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 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
9
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:
•
•
•
•
•
•
•
introduction of non-native invasive organisms into new environments;
recessionary trends in international markets;
legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including export
controls, import and customs trade restrictions, tariffs and other regulations including those related to the COVID-19
pandemic such as the temporary suspension of our operations in Mexico in April 2020;
increases in transportation costs or transportation delays;
work stoppages and labor strikes;
fluctuations in exchange rates, particularly the value of the U.S. dollar relative to other currencies; and
political unrest, terrorism, and economic instability.
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.
Fluctuating raw material and energy costs could have a material adverse effect on our business and results of operations.
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 as we experienced in fiscal 2021 and are continuing to
experience. 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. 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 costs for the coming
year.
The inability to obtain raw materials from suppliers in a timely manner would adversely affect our ability to manufacture
and market our products. 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. As an example, in fiscal 2020, we experienced several of the adverse impacts set forth above related to a
particleboard supplier as more fully described in Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - "Particleboard Supply" herein.
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
10
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.
Risks related to indebtedness
Our level and terms of indebtedness could adversely affect our business and liquidity position. 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. If we are forced to refinance these borrowings on less favorable
terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.
Other general risks applicable to us and our business
We may incur future goodwill impairment charges or other asset impairment charges which could negatively impact our
future results of operations and financial condition. We recorded significant goodwill as a result of the acquisition of RSI
Home Products, Inc. (the "RSI Acquisition" or "RSI") in fiscal year 2018. Goodwill and other acquired intangible assets
represent 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, other intangible assets, 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.
11
Our operations may be adversely affected by information systems interruptions or intrusions. 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. Additionally, in fiscal 2021 the Company began the
implementation of a new cloud-based ERP system and may not be successful in this implementation.
Increased compliance costs or liabilities associated with environmental regulations could have a material adverse effect on
our business, financial condition, or results of operations. 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
contamination or a release of hazardous materials may be joint and several, so that we may be held responsible for more than
our share of the contamination or other damages, or even for the entire share.
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.
Unauthorized disclosure of confidential information provided to us by customers, employees or third parties could harm our
business. 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.
Changes in government and industry regulatory standards could have a material adverse effect on our business, financial
condition, or results of operations. Government regulations pertaining to health and safety and environmental concerns
continue to emerge, domestically as well as internationally, including regulations due to the COVID-19 pandemic. 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. For example, our manufacturing locations enhanced cleaning processes, established
health screening procedures, modified work centers and material flows with established social distancing practices in response
to the COVID-19 pandemic in accordance with guidelines provided by the U.S. Centers for Disease Control and Prevention, as
well as local and state health departments. 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 continue to 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 continue
to pursue opportunities for growth through either acquisitions, mergers, or internally developed projects as part of our growth
strategy. We cannot assure you 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
12
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.
Our ability to operate and our growth potential could be materially and adversely affected if we cannot employ, train, and
retain qualified personnel at a competitive cost. 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. The COVID-19 pandemic has put significant pressure on our ability to employ, train, and retain qualified
personnel at a competitive cost. Further, a significant increase in the wages paid by competing employers could result in a
reduction of our qualified labor force, increases in the wage rates that we must pay, or both. 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.
Our failure to maintain acceptable quality standards could result in significant unexpected costs. 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.
Natural disasters 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.
Item 1B.
UNRESOLVED STAFF COMMENTS
None.
Item 2.
PROPERTIES
We own our corporate office located in Winchester, Virginia. In addition, we lease eight manufacturing facilities, one
manufacturing facility/service center, and one distribution center in the United States and Mexico and 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.
13
Item 3.
LEGAL PROCEEDINGS
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, 2021.
Item 4.
MINE SAFETY DISCLOSURES
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
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:
Name
M. Scott Culbreth
Paul Joachimczyk
Robert J. Adams, Jr.
Teresa M. May
Age
50
49
55
56
Position(s) Held During Past Five Years
Company President and Chief Executive Officer from July 2020 to present;
Company Senior Vice President and Chief Financial Officer from February 2014 to
July 2020.
Company Vice President and Chief Financial Officer from July 2020 to present;
Vice President, Financial Planning and Analysis, from February 2019 to July 2020;
Vice President of Finance and Corporate Controller at TopBuild Corp. from October
2016 to June 2018; CFO - Functional Transformation at Stanley Black & Decker,
Inc. from May 2014 to July 2016.
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 and Chief Marketing Officer from April 2020 to
present; Senior Vice President and Chief Marketing Officer of Asurion from May
2018 to April 2020; Vice President of Owens Corning from March 2012 to March
2018.
14
PART II
Item 5.
AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
Market Information
American Woodmark Corporation common stock is listed on The NASDAQ Global Select Market under the "AMWD" symbol.
As of June 18, 2021 there were approximately 16,500 total shareholders of the Company's common stock, including 6,200
shareholders of record and 10,300 beneficial owners whose shares are held in "street" name by securities broker-dealers or
other ,nominees. The Company's shareholders also include approximately 55% 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
Purchase of Equity Securities by the Issuer
The following table details share repurchases by the Company during the fourth quarter of fiscal 2021:
Share Repurchases
Total Number of
Shares Purchased
(1)
Average Price Paid
Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced
Programs
Approximate Dollar
Value of Shares That
May Yet Be
Purchased Under the
Programs (000)
(1)
February 1 - 28, 2021
March 1 - 31, 2021
April 1 - 30, 2021
Quarter ended April 30,
2021
—
55,084 $
144,962 $
200,046 $
N/A
95.31
101.77
99.98
— $
55,084 $
144,962 $
200,046 $
50,000
44,750
30,000
30,000
(1) Under a stock repurchase authorization approved by its Board on August 22, 2019, the Company was authorized to
purchase up to $50 million of the Company's common shares. Management funded share repurchases using available
cash and cash generated from operations. Repurchased shares became authorized but unissued common shares. At April
30, 2021, $30.0 million of funds remained from the amounts authorized by the Board to repurchase the Company's
common shares. The Company purchased a total of 200,046 common shares, for an aggregate purchase price of $20.0
million, during the fourth quarter of fiscal 2021 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. On May
25, 2021, the Board authorized a stock repurchase program of up to $100 million of the Company's outstanding common
shares. In conjunction with this authorization the Board cancelled the remaining portion of the $50 million existing
authorization.
15
Stock Performance Graph
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 April 30, 2016 through April 30, 2021. 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.
Performance Graph
(Total Return)
s
r
a
l
l
o
D
225
200
175
150
125
100
75
50
2016
2017
2018
2019
2020
2021
Years ended April 30
American Woodmark Corporation
S&P Household Durables Index
Russell 2000 Index
American Woodmark Corporation
Russell 2000 Index
S&P Household Durables Index
2016
$100.00
$100.00
$100.00
2017
$126.20
$125.60
$114.80
2018
$112.90
$140.10
$106.60
2019
$123.50
$146.60
$98.00
2020
$70.60
$122.60
$91.90
2021
$136.50
$214.40
$180.80
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.
Item 6.
SELECTED FINANCIAL DATA
Part II, Item 6 is no longer required as the Company has adopted certain provisions within the amendments to Regulation S-K
that eliminate Item 301.
16
Item 7.
OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
Results of Operations
The following table sets forth certain income and expense items as a percentage of net sales:
Net sales
Cost of sales and distribution
Gross profit
Selling and marketing expenses
General and administrative expenses
Restructuring charges, net
Operating income
Interest expense, net/other (income) expense, net
Income before income taxes
Income tax expense
Net income
PERCENTAGE OF NET SALES
Fiscal Years Ended April 30
2021
2020
2019
100.0 %
100.0 %
100.0 %
81.7
18.3
5.1
6.4
0.3
6.5
2.0
4.5
1.1
3.4
80.1
19.9
5.1
6.8
—
8.0
1.9
6.1
1.6
4.5
78.9
21.1
5.5
6.9
0.1
8.6
1.9
6.7
1.6
5.1
The following discussion should be read in conjunction with the Selected Financial Data and the Consolidated Financial
Statements and the related notes contained elsewhere in this report.
Forward-Looking Statements
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:
•
•
•
•
•
•
•
•
•
•
the loss of or a reduction in business from one or more of our key customers;
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;
competition from other manufacturers and the impact of such competition on pricing and promotional levels;
the impact of COVID-19 on our business, the global and U.S. economy, and our employees, customers, and suppliers;
an inability to develop new products or respond to changing consumer preferences and purchasing practices;
a failure to effectively manage manufacturing operations, alignment, and capacity or an inability to maintain the quality
of our products;
the impairment of goodwill, other intangible assets, or our long-lived assets;
an inability to obtain raw materials in a timely manner or fluctuations in raw material, transportation, and energy costs;
information systems interruptions or intrusions or the unauthorized release of confidential information concerning
customers, employees, or other third parties;
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;
17
•
•
•
•
•
•
•
•
•
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;
risks associated with the implementation of our growth strategy;
risks related to sourcing and selling products internationally and doing business globally, including the imposition of
tariffs or duties on those products;
unexpected costs resulting from a failure to maintain acceptable quality standards;
changes in tax laws or the interpretations of existing tax laws;
the occurrence of significant natural disasters, including earthquakes, fires, floods, hurricanes, or tropical storms;
the unavailability of adequate capital for our business to grow and compete;
increased buying power of large customers and the impact on our ability to maintain or raise prices; and
limitations on operating our business as a result of covenant restrictions under our indebtedness, and our ability to pay
amounts due under our credit facilities and our other indebtedness.
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.
Overview
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, 2021, the Company operated 17 manufacturing
facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the
United States.
COVID-19
The COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020
and continued to impact us in fiscal 2021. All of our manufacturing facilities qualified as essential operations (or the equivalent)
under applicable federal and state orders and were able to continue operating. We were negatively impacted by the COVID-19
pandemic as demand for our products significantly decreased during the fourth quarter of fiscal 2020 and first quarter of fiscal
2021, "stay at home" orders and other work disruptions created disruptions to our business operations and our supply chain has
been negatively impacted. Additionally, COVID-19 continues to impact our overall business, including hiring and retaining
employees and through challenges caused by material availability and transportation delays. Refer to Item 1A. "Risk Factors"
for a disclosure of risk factors related to COVID-19.
Particleboard Supply
Due to a catastrophic fire at a key Southeast supplier plant in May 2019 (fiscal 2020) and the supplier's subsequent decision to
shutter operations over the next 90-days at two additional plants, the Company experienced a temporary disruption in supply of
particleboard, a key input component of our cabinetry. This disruption resulted in net expense of $4.2 million during fiscal
2020. Management was successful in containing the situation as to not impact our customers in fiscal 2021.
Financial Overview
A number of general market factors impacted the Company's business in fiscal 2021, including:
• The unemployment rate decreased by 59% compared to April 2020, to 6.1% as of April 2021 according to data provided by
the U.S. Department of Labor; however, the unemployment rate remained well above levels prior to the COVID-19
pandemic;
18
• Increase in single family housing starts during the Company's fiscal 2021 of 11%, as compared to the Company's fiscal 2020,
according to the U.S. Department of Commerce;
• Mortgage interest rates decreased with a 30-year fixed mortgage rate of 3.06% in April 2021, a decrease of approximately 25
basis points compared to April 2020;
• The median price of existing homes sold in the U.S. rose by 12.2% during the Company's fiscal 2021, according to data
provided by the National Association of Realtors;
• Consumer sentiment, as reported by the University of Michigan, averaged 15.6% lower during the Company's fiscal 2021
than in its prior fiscal year; and
• Cabinet sales, as reported by members of the Kitchen Cabinet Manufacturers Association (KCMA), increased by 8.7% during
fiscal 2021 versus the prior fiscal year.
The Company's largest remodeling customers and competitors continued to utilize sales promotions in the Company's product
category during fiscal 2021 to boost sales. The Company strives to maintain its promotional levels in line with market activity,
with a goal of remaining competitive. The Company experienced lower promotional levels during fiscal 2021 than those
experienced in its prior fiscal year. Sales in the remodel channel increased 22% during the fiscal year.
Sales in the new construction channel increased 0.7% during fiscal 2021 due to a rise in new housing starts and a shift to the
opening price point cabinets in our Origins by Timberlake brand.
The Company increased its net sales by 5.7% during fiscal 2021, which management believes was driven by growth in the
home center, builder and independent dealers and distributors channels.
Gross margin for fiscal 2021 was 18.3%, a decrease from 19.9% in fiscal 2020. The decrease in gross margin was primarily
due to higher material and logistics costs, investments made to establish our distribution center in Texas, and increases related
to wage and retention programs. This was partially offset by the increase in sales creating leverage of our fixed expenses in our
operating platforms.
The Company regularly considers the need for a valuation allowance against its deferred tax assets. The Company has been
profitable for the last 9 years. As of April 30, 2021 and 2020, the Company had total deferred tax assets of $45.9 million net of
valuation allowance. 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 9 consecutive years of profitability that the Company will more likely
than not realize all other remaining deferred tax assets.
The Company also regularly assesses its long-lived assets to determine if any impairment has occurred. The Company has
concluded that none of its long-lived assets were impaired as of April 30, 2021.
Results of Operations
FISCAL YEARS ENDED APRIL 30
(Dollars in thousands)
2021
2020
2019
2021 vs.
2020
PERCENT
CHANGE
2020 vs.
2019
PERCENT
CHANGE
Net sales
Gross profit
Selling and marketing expenses
General and administrative expenses
Interest expense, net
$ 1,744,014 $ 1,650,333 $ 1,645,319
346,473
329,186
319,275
89,875
83,608
89,464
112,283
23,128
113,334
29,027
112,917
35,652
5.7 %
(3.0) %
7.0 %
(0.9) %
(20.3) %
0.3 %
(5.0) %
(7.0) %
0.4 %
(18.6) %
19
Net Sales
Net sales for fiscal 2021 increased 5.7% to $1,744.0 million from the prior fiscal year. The Company experienced growth in
the home center, builder and independent dealers and distributors channels.
Net sales for fiscal 2020 increased 0.3% to $1,650.3 million from the prior fiscal year. The Company experienced growth in
the builder channel which was partially offset by declines in the home center and independent dealers and distributors channels.
Gross Profit
Gross profit as a percentage of sales decreased to 18.3% in fiscal 2021 as compared with 19.9% in fiscal 2020. The decrease in
gross profit margin was primarily due to higher material and logistics costs, investments made to establish our distribution
center in Texas, and increases related to wage and retention programs. This was partially offset by the increase in sales creating
leverage of our fixed expenses in our operating platforms.
Gross profit as a percentage of sales decreased to 19.9% in fiscal 2020 as compared with 21.1% in fiscal 2019. The decrease in
gross profit margin was primarily due to tariffs of $6.4 million, net cost impacts related to our particleboard supply disruption
of $4.2 million, duplicate rent/move costs related to our California facility move of $2.4 million, and expenses related to the
temporary suspension of operations in our component plants in Mexico in April 2020.
Selling and Marketing Expenses
Selling and marketing costs increased by $5.9 million or 7% during fiscal 2021 versus the prior year. Selling and marketing
expenses in fiscal 2021 and fiscal 2020 were both 5.1% of net sales.
Selling and marketing expenses in fiscal 2020 were 5.1% of net sales, compared with 5.5% of net sales in fiscal 2019. Selling
and marketing costs decreased by 7% despite a 0.3% increase in net sales in fiscal 2020. The improvement in the percentage of
selling and marketing costs in relation to net sales was due to lower displays and incentive costs.
General and Administrative Expenses
General and administrative expenses decreased by $1.1 million or 0.9% during fiscal 2021 versus the prior fiscal year. General
and administrative costs decreased to 6.4% of net sales in fiscal 2021 compared with 6.8% of net sales in fiscal 2020.
General and administrative expenses increased by $0.4 million or 0.4% during fiscal 2020 versus the prior fiscal year. General
and administrative costs decreased to 6.8% of net sales in fiscal 2020 compared with 6.9% of net sales in fiscal 2019.
Effective Income Tax Rates
The Company generated pre-tax income of $77.4 million during fiscal 2021. The Company's effective tax rate decreased from
25.5% in fiscal 2020 to 24.1% in fiscal 2021 primarily due to the benefit from federal income tax credits. The Company's
effective tax rate increased from 24.5% in fiscal 2019 to 25.5% in fiscal 2020. The higher effective tax rate was primarily due to
lower federal income tax credits.
Non-GAAP Financial Measures
We have reported our financial results in accordance with generally accepted accounting principles ("GAAP"). In addition, we
have presented in this report the non-GAAP measures described below.
A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and
presented in accordance with GAAP is set forth below.
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.
20
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
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 adjusted to exclude (1) income tax expense, (2) interest expense, net, (3) depreciation and
amortization expense, and (4) amortization of customer relationship intangibles and trademarks. 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, and (6) change in fair value of foreign
exchange forward contracts. 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 define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales.
Adjusted EPS per diluted share
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 and trademarks, (4) net gain/loss on debt
forgiveness and modification, and (5) 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 and trademarks. 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 and we have also received similar feedback from some of our investors
regarding the same.
Free cash flow
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.
A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in
accordance with GAAP are set forth in the following tables:
21
Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
(Dollars in thousands)
Net income (GAAP)
Add back:
Income tax expense
Interest expense, net
Depreciation and amortization expense
Amortization of customer relationship intangibles and trademarks
EBITDA (Non-GAAP)
Add back:
Acquisition and restructuring related expenses (1)
Non-recurring restructuring charges, net (2)
Change in fair value of foreign exchange forward contracts (3)
Net loss (gain) on debt forgiveness and modification (4)
Stock-based compensation expense
Loss on asset disposal
Adjusted EBITDA (Non-GAAP)
FISCAL YEARS ENDED APRIL 30,
2021
2020
2019
$
58,763
$
74,861
$
83,688
18,672
23,128
51,100
47,889
25,687
29,027
49,513
49,000
27,200
35,652
45,446
49,000
$
199,552
$
228,088
$
240,986
174
5,848
(1,102)
13,792
4,598
384
221
—
1,102
—
3,989
2,629
4,118
—
—
(5,266)
3,040
1,973
$
223,246
$
236,029
$
244,851
Net Sales
$ 1,744,014
$ 1,650,333
$ 1,645,319
Net income margin (GAAP)
Adjusted EBITDA margin (Non-GAAP)
3.4 %
12.8 %
4.5 %
14.3 %
5.1 %
14.9 %
(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI Acquisition and the subsequent
restructuring charges that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the permanent layoffs due to COVID-19
and the closure of the manufacturing plant in Humboldt, Tennessee. Fiscal year 2021 includes accelerated depreciation expense
of $1.3 million and gain on asset disposal of $2.2 million related to Humboldt.
(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 (income) expense, net in the operating results.
(4) The Company recognized net loss on debt modification totaling $13.8 million for fiscal year 2021 related to the
restructuring of its debt. The Company had loans and interest forgiven relating to four separate economic development loans
totaling $5.5 million for fiscal year 2019 and the Company incurred $0.3 million in loan modification expense with an
amendment to the credit agreement during fiscal year 2019.
A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2022 is not provided
because we do not forecast net income as we cannot, without unreasonable effort, estimate or predict with certainty various
components of net income.
22
Adjusted EPS per diluted share
(Dollars in thousands, except share and per share data)
2021
2020
2019
FISCAL YEARS ENDED APRIL 30,
Net income (GAAP)
Add back:
$
58,763
$
74,861
$
83,688
Acquisition and restructuring related expenses
Non-recurring restructuring charges, net
Amortization of customer relationship intangibles and trademarks
Net loss (gain) on debt forgiveness and modification
Tax benefit of add backs
Adjusted net income (Non-GAAP)
174
5,848
47,889
13,792
(17,467)
221
—
49,000
—
(12,305)
$
108,999
$
111,777
$
4,118
—
49,000
(5,266)
(11,824)
119,716
Weighted average diluted shares
EPS per diluted share (GAAP)
Adjusted EPS per diluted share (Non-GAAP)
Free cash flow
(Dollars in thousands)
Cash provided by operating activities
Less: Capital expenditures (1)
Free cash flow
17,036,730
16,952,480
17,330,419
3.45
6.40
$
$
4.42
6.59
$
$
4.83
6.91
FISCAL YEARS ENDED APRIL 30,
2021
2020
2019
151,763
$
177,542
$
46,318
40,739
105,445
$
136,803
$
190,845
39,385
151,460
$
$
$
$
(1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in
displays.
Outlook for Fiscal 2022
While we are optimistic about fiscal 2022, the impact on our financial results from the COVID-19 pandemic as well as material
constraints and labor impacts continue to be uncertain. While the Company's net sales were up 18.6% during the fourth quarter
of fiscal 2021 compared to the same period in the prior year, we expect net sales for the first quarter of fiscal 2022 to be up in
the mid to upper teens compared with the same period in the prior year. For the first quarter of fiscal 2022 we expect margins
to improve sequentially as the pricing actions take effect. This trend could continue as we still do not know the full impact of
the pandemic and are waiting for macro-economic factors to stabilize. The Company has taken actions to improve our cash
position and as of April 30, 2021 had $91.1 million of cash on hand and access to $236.0 million of additional availability
under our revolver. In fiscal 2022, the Company may intentionally reduce our cash position to historical norms through debt
repayments and share repurchases. We plan to continue our investment back into the business by increasing our capital
investment rate to approximately 4.0% of net sales for the full fiscal year.
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."
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $91.1 million at April 30, 2021, representing a $6.0 million decrease from its
April 30, 2020 levels. At April 30, 2021, total long-term debt (including current maturities) was $521.8 million, a decrease of
$75.4 million from the balance at April 30, 2020. The Company's ratio of long-term debt to total capital was 40.9% at April 30,
2021, compared with 45.9% at April 30, 2020. The Company's main source of liquidity is its cash and cash equivalents on
hand and cash generated from its operating activities. The Company can also borrow up to $500 million under the Revolving
23
Facility. Approximately $236.0 million was available under this facility as of April 30, 2021. See Note F — Loans Payable
and Long-Term Debt for further discussion on our indebtedness.
The Company added significant indebtedness with the RSI Acquisition in fiscal 2018. Under the Prior Credit Agreement, the
Company borrowed $250 million under the Initial Term Loan on December 29, 2017 in connection with the closing of the RSI
Acquisition and borrowed an additional $250 million under the Delayed Draw Term Loan on February 12, 2018 in connection
with the refinancing of the RSI Notes. Amounts outstanding under the Prior Credit Agreement incurred interest based on a
fluctuating rate measured by reference to either, at the Company's option, a base rate plus an applicable margin or LIBOR plus
an applicable margin, with the applicable margin being determined by reference to the Company's then-current "Total Funded
Debt to EBITDA Ratio."
On February 12, 2018, the Company issued $350 million in aggregate principal amount of the Senior Notes and utilized the
proceeds of such issuance, together with the borrowings under the Delayed Draw Term Loan as discussed above and cash on
hand, to fund the refinancing of the RSI Notes, which were acquired as part of the RSI Acquisition.
On April 22, 2021, the Company amended and restated the Prior Credit Agreement. 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 Company is required to repay the Term Loan Facility in
specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026.
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 — Loans Payable and Long-Term Debt for a discussion of interest rates under the new A&R Credit Agreement and our
compliance with the covenants in the credit agreement.
OPERATING ACTIVITIES
Cash provided by operating activities in fiscal 2021 was $151.8 million, compared with $177.5 million in fiscal 2020. The
decrease in the Company's cash from operating activities was driven primarily by a decrease in net income and decreased cash
flows from customer receivables and inventories, which were partially offset by an increase in cash flows from accounts
payable and accrued marketing expenses.
Cash provided by operating activities in fiscal 2020 was $177.5 million, compared with $190.8 million in fiscal 2019. The
decrease in the Company's cash from operating activities was driven primarily by a decrease in net income and decreased cash
flows from income taxes receivable and accrued compensation and related expenses, which was partially offset by an increase
in cash flows from customer receivables and accrued marketing expenses.
On November 28, 2018, the Board approved up to $5.0 million of discretionary funding to reduce its defined benefit pension
liabilities. The Company made aggregate contributions of $7.3 million to its pension plans during fiscal 2019, including $5.0
million of discretionary funding. The Company made no contributions to its pension plan in fiscal 2021 and made contributions
of $0.5 million to its pension plans during fiscal 2020.
INVESTING ACTIVITIES
The Company's investing activities primarily consist of capital expenditures and investments in promotional displays. Net cash
used by investing activities in fiscal 2021 was $42.4 million, compared with $38.9 million in fiscal 2020 and $37.9 million in
fiscal 2019. Investments in property, plant and equipment for fiscal 2021 were $35.7 million, compared with $31.7 million in
24
fiscal 2020 and $32.1 million in fiscal 2019. Investments in promotional displays were $10.6 million in fiscal 2021, compared
with $9.1 million in fiscal 2020 and $7.3 million in fiscal 2019.
FINANCING ACTIVITIES
The Company realized a net outflow of $115.3 million from financing activities in fiscal 2021 compared with a net outflow of
$99.2 million in fiscal 2020, and a net outflow of $173.7 million in fiscal 2019. During fiscal 2021, $82.5 million, net, was
used to repay long-term debt, compared with approximately $98.5 million in fiscal 2020 and $122.2 million in fiscal 2019.
Under a stock repurchase authorization approved by its Board on November 30, 2016, the Company was authorized to purchase
up to $50 million of the Company's common shares. On November 28, 2018, the Board authorized an additional stock
repurchase program of up to $14 million of the Company's common shares. This authorization is in addition to the stock
repurchase program authorized on November 30, 2016. The Company funded share repurchases using available cash and cash
generated from operations. Repurchased shares became authorized but unissued common shares. At April 30, 2019, no funds
remained from the amounts authorized by the Board to repurchase the Company's common shares. On August 22, 2019, the
Board authorized a stock repurchase program of up to $50 million of the Company's common shares. The Company
repurchased $20.0 million during fiscal 2021 and $50.0 million during fiscal 2019. The Company did not repurchase any of its
shares during the fiscal year ended April 30, 2020. On May 25, 2021, the Board authorized a stock repurchase program of up to
$100 million of the Company's outstanding common shares. In conjunction with this authorization the Board cancelled the
remaining portion of the $50 million existing authorization, of which the Company had repurchased $20 million in the fourth
quarter of fiscal 2021.
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 2022.
The timing of the Company's contractual obligations (excluding interest) as of April 30, 2021 is summarized in the table below:
(in thousands)
Term Loans
Revolving credit
Capital lease obligations
Other long-term debt
Operating lease obligations
FISCAL YEARS ENDED APRIL 30
Total Amounts
2022
2023-2024
2025-2026
$
250,000 $
6,250 $
18,750 $
225,000 $
264,000
5,494
6,659
144,308
—
2,072
—
23,761
—
2,982
299
43,756
264,000
440
515
35,910
2027 and
Thereafter
—
—
—
5,845
40,881
Total
$
670,461 $
32,083 $
65,787 $
525,865 $
46,726
SEASONALITY
Our business has been subject to seasonal influences, with higher sales typically realized in our first and fourth fiscal quarters,
however sales were down in the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021 due to the COVID-19
pandemic. 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."
OFF-BALANCE SHEET ARRANGEMENTS
As of April 30, 2021 and 2020, the Company had no off-balance sheet arrangements.
25
CRITICAL ACCOUNTING POLICIES
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.
Management regularly reviews these critical accounting policies and estimates with the Audit Committee of the Board.
Revenue Recognition. 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 and the evaluation of each customer's ability to pay. 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.
Pensions. Prior to April 30, 2020, the Company had two non-contributory defined benefit pension plans covering many of the
Company's employees hired prior to April 30, 2012. Effective April 30, 2012, the Company froze all future benefit accruals
under the Company's hourly and salaried defined benefit pension plans. Effective April 30, 2020, these plans were merged into
one plan.
On November 16, 2020 the Company filed an application with the Internal Revenue Service to terminate the Pension Plan with
an effective date of December 31, 2020 (the "Plan Termination Date"), in a standard termination and the Company expects to
incur approximately $1.6 million to terminate the Pension Plan, $0.4 million of which was incurred in fiscal 2021. In
connection with the Pension Plan termination and in addition to the Pension Plan termination costs, the Company may be
required to make an additional funding contribution to the Pension Plan in order to ensure the Pension Plan is fully funded on a
termination basis as of the Benefit Distribution Date, with the amount of such contribution still to be determined. The Benefit
Distribution Date will be determined once the Company receives approval from certain regulatory agencies. The additional
funding contribution is expected to be funded from cash on hand and the amount will vary depending on the lump sum
distribution take rate and the interest rate on the Benefit Distribution Date.
The estimated expense, benefits and pension obligations of the pension plan is determined using various assumptions. The most
significant assumptions are the long-term expected rate of return on plan assets and the discount rate used to determine the
present value of the pension obligations. The long-term expected rate of return on plan assets reflects the current mix of the plan
assets invested in equities and bonds.
The following is a summary of the potential impact of a hypothetical 1% change in actuarial assumptions for the discount rate,
expected return on plan assets and consumer price index:
(in millions)
(decrease) increase
IMPACT OF 1%
INCREASE
IMPACT OF 1%
DECREASE
Effect on annual pension expense
$
(1.7) $
1.5
Pension expense for fiscal 2021 and the assumptions used in that calculation are presented in Note I of the Consolidated
Financial Statements. At April 30, 2021, the weighted average discount rate was 2.80% compared with 3.16% at April 30,
2020. The expected return on plan assets was 3.25% for the year ended April 30, 2021 and 5.0% for the year ended April 30,
2020. The rate of compensation increase is not applicable for periods beyond April 30, 2012 because the Company froze its
pension plans as of that date.
26
The projected performance of the Company's pension plan is largely dependent on the assumptions used to measure the
obligations of the plan and to estimate future performance of the plan's invested assets. Over the past two measurement periods,
the most material deviations between results based on assumptions and the actual plan performance have resulted from changes
to the discount rate used to measure the plan's benefit obligations and the actual return on plan assets. Accounting guidelines
require the discount rate to be set to a current market rate at each annual measurement date.
The Company strives to balance expected long-term returns and short-term volatility of pension plan assets. Favorable and
unfavorable differences between the assumed and actual returns on plan assets are generally amortized over a period no longer
than the average life expectancy of the plans' active participants. The actual rates of return on plan assets realized, net of
investment manager fees, were 3.2%, 15.6% and 7.0% for fiscal 2021, 2020, and 2019, respectively.
The fair value of plan assets at April 30, 2021 was $193.6 million compared with $190.7 million at April 30, 2020. The
Company's projected benefit obligation exceeded plan assets by $3.0 million in fiscal 2021 and $0.4 million in fiscal 2020. The
$2.6 million increase in the Company's unfunded position during fiscal 2021 was primarily driven by the decrease in the
discount rate from 3.16% to 2.80%.
Goodwill. 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 or changes in circumstances indicate that the
carrying value may not be recoverable.
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
2021 and 2020.
Other Intangible Assets. Other intangible assets consist of customer relationship intangibles and trademarks. The Company
amortizes the cost of other intangible assets over their estimated useful lives, which range from three to 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. There were no impairment charges related
to other intangible assets for the fiscal years 2021 and 2020.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2016, the Financial Accounting Standards Board (the "FASB") issued a new standard for leases, ASC 842, which
requires lessees to recognize almost all leases on their balance sheet as a right-of-use ("ROU") asset and lease liability. The
standard is effective for annual periods beginning after December 15, 2018. The standard provides for the option to elect a
package of practical expedients upon adoption. The Company adopted the standard on May 1, 2019 using the modified
retrospective transition approach and elected the package of practical expedients that allows it to forgo reassessment of lease
classification for leases that have already commenced. The Company also elected the practical expedients to the new standard
without restating comparative prior period financial information and to not recognize ROU assets and liabilities for operating
leases with shorter than 12-month terms. On May 1, 2019, the Company recognized operating lease assets and operating lease
liabilities of $80.4 million. The new standard did not have a material impact on the Company's results of operations, cash flows
or opening retained earnings, or on its debt covenant calculations. ASC 842 also requires entities to disclose certain qualitative
and quantitative information regarding the amount, timing, and uncertainty of cash flows arising from leases. Such disclosures
are included in Note N — Leases.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes," which simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for
investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The amendments also
improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing
guidance. ASU 2019-12 is effective for the Company beginning May 1, 2021. The Company has reviewed the provisions of this
new pronouncement and the adoption of this guidance is not expected to have an impact on financial position or results of
operations.
In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential
burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally
accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that
27
reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global
market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December
31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12,
2020. The Company has identified loans and other financial instruments that are directly or indirectly influenced by LIBOR and
does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
Our revolving credit facility, initial term loan facility and delayed draw term loan facility, include 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, 2021 would increase our annual interest expense by
approximately $5.1 million.
The Company has historically not used commodity or interest rate derivatives or similar financial instruments to manage
commodity price or interest rate risks and had no such arrangements outstanding at the end of fiscal 2021. However, in April
2021 (fiscal 2021), we redeemed our fixed rate Senior Notes and entered into the A&R Credit Agreement which increased our
exposure to variable interest rates. See Note F — Loans Payable and Long-Term Debt for further discussion. Due in part to
this, in May 2021 (fiscal 2022), we entered into interest rate swaps to hedge approximately $200 million of our variable interest
rate debt.
28
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
ASSETS
Current Assets
Cash and cash equivalents
Customer receivables, net
Inventories
Prepaid expenses and other
Total Current Assets
Property, plant and equipment, net
Operating lease right-of-use assets
Customer relationships intangibles, net
Trademarks, net
Goodwill, net
Promotional displays, net
Deferred income taxes
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable
Current maturities of long-term debt
Short-term lease liability - operating
Accrued compensation and related expenses
Accrued marketing expenses
Other accrued expenses
Total Current Liabilities
Long-term debt, less current maturities
Deferred income taxes
Long-term lease liability - operating
Other long-term liabilities
Shareholders' Equity
Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued
Common stock, no par value; 40,000,000 shares authorized; issued and outstanding
shares: at April 30, 2021: 16,801,101, at April 30, 2020: 16,926,537
Retained earnings
Accumulated other comprehensive loss - Defined benefit pension plans
Total Shareholders' Equity
APRIL 30
2021
2020
$
91,071 $
97,059
146,866
140,282
13,861
392,080
204,002
123,118
121,778
—
767,612
14,554
1,118
12,252
106,344
111,836
9,933
325,172
203,824
127,668
167,444
2,222
767,612
13,966
915
13,983
$ 1,636,514 $ 1,622,806
$
91,622 $
8,322
19,994
58,577
20,019
21,913
56,342
2,216
18,896
49,064
12,361
16,727
220,447
155,606
513,450
38,348
109,628
11,745
594,921
52,935
112,454
6,352
—
—
362,524
434,940
(54,568)
742,896
359,430
392,281
(51,173)
700,538
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 1,636,514 $ 1,622,806
See notes to consolidated financial statements.
29
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Net sales
Cost of sales and distribution
Gross Profit
Selling and marketing expenses
General and administrative expenses
Restructuring charges, net
Operating Income
Interest expense, net
Other (income) expense, net
Income Before Income Taxes
Income tax expense
Net Income
SHARE INFORMATION
Earnings per share
Basic
Diluted
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
$ 1,744,014 $ 1,650,333 $ 1,645,319
1,424,739
1,321,147
1,298,846
319,275
329,186
346,473
89,464
112,283
5,848
111,680
23,128
11,117
77,435
83,608
113,334
(18)
132,262
89,875
112,917
1,987
141,694
29,027
2,687
35,652
(4,846)
100,548
110,888
18,672
25,687
27,200
$
58,763 $
74,861 $
83,688
$
$
3.46 $
3.45 $
4.43 $
4.42 $
4.84
4.83
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive (loss) net of tax:
Change in pension benefits, net of deferred taxes
of $(1,156), $(573), and $190 respectively
FISCAL YEARS ENDED APRIL 30
2019
2020
2021
$
58,763 $
74,861 $
83,688
(3,395)
(1,682)
(422)
Total Comprehensive Income
$
55,368 $
73,179 $
83,266
See notes to consolidated financial statements.
30
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ACCUMULATED
OTHER
TOTAL
(in thousands, except share data)
SHARES
AMOUNT
EARNINGS
LOSS
EQUITY
Balance, April 30, 2018
17,503,922 $
361,158 $
269,576 $
(49,069) $
581,665
COMMON STOCK
RETAINED
COMPREHENSIVE
SHAREHOLDERS'
Net income
Other comprehensive income, net of
tax
Stock-based compensation
Exercise of stock-based compensation
awards, net of amounts withheld for
taxes
—
—
—
—
—
3,040
48,928
(1,241)
83,688
—
—
—
Stock repurchases
(745,232)
(14,156)
(35,844)
Employee benefit plan contributions
41,408
3,623
—
—
(422)
—
—
—
—
Balance, April 30, 2019
16,849,026 $
352,424 $
317,420 $
(49,491) $
Net income
Other comprehensive loss, net of tax
Stock-based compensation
Exercise of stock-based compensation
awards, net of amounts withheld for
taxes
Employee benefit plan contributions
—
—
—
—
—
3,989
31,790
45,721
(755)
3,772
74,861
—
—
—
—
—
(1,682)
—
—
—
83,688
(422)
3,040
(1,241)
(50,000)
3,623
620,353
74,861
(1,682)
3,989
(755)
3,772
Balance, April 30, 2020
16,926,537 $
359,430 $
392,281 $
(51,173) $
700,538
Net income
Other comprehensive loss, net of tax
Stock-based compensation
Exercise of stock-based compensation
awards, net of amounts withheld for
taxes
Stock repurchases
Employee benefit plan contributions
—
—
—
29,019
(200,046)
45,591
—
—
4,598
(1,351)
(3,896)
3,743
58,763
—
—
—
(16,104)
—
—
(3,395)
—
—
—
—
Balance, April 30, 2021
16,801,101 $
362,524 $
434,940 $
(54,568) $
58,763
(3,395)
4,598
(1,351)
(20,000)
3,743
742,896
See notes to consolidated financial statements.
31
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash and
cash equivalents provided by operating activities:
Depreciation and amortization
Net (gain) loss on disposal of property, plant and equipment
Reduction in carrying amount of operating lease right-of-use assets
Amortization of debt issuance costs
Unrealized (gain) loss on foreign exchange forward contracts
Loss on extinguishment of debt
Gain on insurance recoveries
Stock-based compensation expense
Deferred income taxes
Pension contributions in excess of expense
Net gain on debt forgiveness and modification
Contributions of employer stock to employee benefit plan
Other non-cash items
Changes in operating assets and liabilities (net of acquired assets and liabilities):
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
$
58,763
$
74,861
$
83,688
100,289
(1,859)
27,192
2,501
(1,102)
13,792
—
4,598
(13,668)
(2,007)
—
3,743
4,140
(42,829)
(31,196)
488
(6,456)
32,752
1,226
(24,371)
25,767
151,763
(35,734)
3,889
—
—
—
(10,584)
(42,429)
98,513
2,629
25,405
2,603
1,102
—
—
3,989
(11,499)
(1,130)
—
3,772
672
21,018
(4,486)
1,162
(3,165)
(6,237)
(5,843)
(22,595)
(3,229)
177,542
94,446
1,973
—
2,724
—
—
(580)
3,040
(7,805)
(7,875)
(5,266)
3,623
916
9,719
(4,852)
26,357
(5,172)
(4,775)
6,225
—
(5,541)
190,845
(31,670)
(32,128)
323
—
—
1,500
(9,069)
(38,916)
64
580
(7,182)
8,000
(7,257)
(37,923)
(432,508)
350,000
—
(20,000)
(98,468)
(122,205)
—
295
—
—
500
(50,000)
32
Customer receivables
Inventories
Income taxes receivable
Prepaid expenses and other assets
Accounts payable
Accrued compensation and related expenses
Operating lease liabilities
Marketing and other accrued expenses
Net Cash Provided by Operating Activities
INVESTING ACTIVITIES
Payments to acquire property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from insurance recoveries
Acquisition of business, net of cash acquired
Maturities of certificates of deposit
Investment in promotional displays
Net Cash Used by Investing Activities
FINANCING ACTIVITIES
Payments of long-term debt
Proceeds from long-term debt
Proceeds from issuance of common stock and other
Repurchase of common stock
(in thousands)
Withholding of employee taxes related to stock-based compensation
Debt issuance cost
Premium paid on debt extinguishment
Net Cash Used by Financing Activities
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
(1,351)
(2,930)
(8,533)
(1,050)
—
—
(1,739)
(232)
—
(115,322)
(99,223)
(173,676)
Net (Decrease) Increase in Cash and Cash Equivalents
(5,988)
39,403
(20,754)
Cash and Cash Equivalents, Beginning of Year
97,059
57,656
78,410
Cash and Cash Equivalents, End of Year
$
91,071
$
97,059
$
57,656
Supplemental cash flow information:
Non-cash investing and financing activities:
Property, plant and equipment
Cash paid during the period for:
Interest
Income taxes
See notes to consolidated financial statements.
$
2,527
$
1,303
$
1,331
$
$
22,981
33,055
$
$
27,654
36,154
$
$
35,908
22,035
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A — Summary of Significant Accounting Policies
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.
The following is a description of the Company's significant accounting policies:
Principles of Consolidation and Basis of Presentation: The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Revenue Recognition: 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. 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 K — Commitments
and Contingencies for further discussion.
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.
Cost of Sales and Distribution: Cost of sales and distribution includes all costs associated with the manufacture and distribution
of the Company's products including the costs of shipping and handling.
Advertising Costs: Advertising costs are expensed as incurred. Advertising expenses for fiscal years 2021, 2020, and 2019
were $34.1 million, $33.9 million, and $38.9 million, respectively.
Cash and Cash Equivalents: 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.
Inventories: Inventories are stated at lower of cost or market. Inventory costs are determined by the last-in, first-out ("LIFO")
method and for certain subsidiaries by the first-in, first-out ("FIFO") method.
The LIFO cost reserve is determined in the aggregate for inventory and is applied as a reduction to inventories determined on
the FIFO method. FIFO inventory cost approximates replacement cost.
Property, Plant and Equipment: 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 and 3 to 12 years for machinery and equipment. Assets under financing leases
are amortized over the shorter of their estimated useful lives or the term of the related lease.
34
Impairment of Long-Lived Assets: 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 2021, 2020, and 2019,
the Company concluded no impairment existed.
Goodwill: 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 or changes in circumstances indicate that the
carrying value may not be recoverable.
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 to fair value. During fiscal years 2021, 2020, and 2019, the Company
concluded no impairment existed.
Other Intangible Assets: Intangible assets consist of customer relationship intangibles and trademarks. The Company amortizes
the cost of other intangible assets over their estimated useful lives, which range from three to 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 2021, 2020, and 2019, the Company
concluded no impairment existed.
Promotional Displays: 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 2021,
2020, and 2019 was $10.0 million, $8.2 million, and $6.4 million, respectively, and is included in selling and marketing
expenses.
Income Taxes: 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 and
liabilities to an amount that more likely than not will be realized.
Pensions: Prior to April 30, 2020, the Company had two non-contributory defined benefit pension plans covering many of the
Company's employees hired prior to April 30, 2012. Effective April 30, 2012, the Company froze all future benefit accruals
under the Company's hourly and salaried defined benefit pension plans. Effective April 30, 2020, these plans were merged into
one plan. The Company recognizes the overfunded or underfunded status of its defined benefit pension plans, measured as the
difference between the fair value of plan assets and the benefit obligation, in its consolidated balance sheets. The Company also
recognizes the actuarial gains and losses and the prior service costs, credits and transition costs as a component of other
comprehensive loss, net of tax. On November 16, 2020 the Company filed an application with the Internal Revenue Service to
terminate the pension plan with an effective date of December 31, 2020.
Stock-Based Compensation: 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.
Self Insurance: 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.
Foreign Exchange Forward Contracts: 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
35
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 income.
At April 30, 2021, the Company held no forward contracts.
Use of Estimates: 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.
Recent Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board (the "FASB") issued a new
standard for leases, ASC 842, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use
("ROU") asset and lease liability. The standard is effective for annual periods beginning after December 15, 2018. The
standard provides for the option to elect a package of practical expedients upon adoption. The Company adopted the standard
on May 1, 2019 using the modified retrospective transition approach and elected the package of practical expedients that allows
it to forgo reassessment of lease classification for leases that have already commenced. The Company also elected the practical
expedients to the new standard without restating comparative prior period financial information and to not recognize ROU
assets and liabilities for operating leases with shorter than 12-month terms. On May 1, 2019, the Company recognized
operating lease assets and operating lease liabilities of $80.4 million. The new standard did not have a material impact on the
Company's results of operations, cash flows or opening retained earnings, or on its debt covenant calculations. ASC 842 also
requires entities to disclose certain qualitative and quantitative information regarding the amount, timing, and uncertainty of
cash flows arising from leases. Such disclosures are included in Note N — Leases.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes," which simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for
investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The amendments also
improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing
guidance. ASU 2019-12 is effective for the Company beginning May 1, 2021. The Company has reviewed the provisions of this
new pronouncement and the adoption of this guidance is not expected to have an impact on financial position or results of
operations.
In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential
burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally
accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that
reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global
market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December
31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12,
2020. The Company has identified loans and other financial instruments that are directly or indirectly influenced by LIBOR and
does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.
Note B — Customer Receivables
The components of customer receivables were:
(in thousands)
Gross customer receivables
Less:
Allowance for doubtful accounts
Allowance for returns and discounts
Net customer receivables
APRIL 30
2021
2020
156,187 $
112,528
(331)
(8,990)
(472)
(5,712)
146,866 $
106,344
$
$
36
Note C — Inventories
The components of inventories were:
(in thousands)
Raw materials
Work-in-process
Finished goods
Total FIFO inventories
Reserve to adjust inventories to LIFO value
APRIL 30
2021
2020
$
63,384 $
51,176
43,526
158,086
(17,804)
51,460
42,381
32,572
126,413
(14,577)
Total inventories
$
140,282 $
111,836
Of the total inventory of $140.3 million, $80.3 million is carried under the FIFO method and $60.0 million is carried under the
LIFO method of accounting as of April 30, 2021. Of the total inventory of $111.8 million, $66.0 million is carried under the
FIFO method and $45.8 million is carried under the LIFO method of accounting as of April 30, 2020.
Note D — Property, Plant and Equipment
The components of property, plant and equipment were:
(in thousands)
Land
Buildings and improvements
Buildings and improvements - financing leases
Machinery and equipment
Machinery and equipment - financing leases
Construction in progress
Less accumulated amortization and depreciation
APRIL 30
2021
2020
$
4,431 $
116,103
11,636
315,371
31,386
22,669
501,596
(297,594)
4,431
120,819
11,636
312,806
30,911
8,164
488,767
(284,943)
Total
$
204,002 $
203,824
Amortization and depreciation expense on property, plant and equipment amounted to $38.3 million, $36.9 million, and $36.2
million in fiscal years 2021, 2020, and 2019, respectively. Accumulated amortization on financing leases included in the above
table amounted to $33.0 million and $32.3 million as of April 30, 2021 and 2020, respectively.
Note E — Intangible Assets and Trademarks
The components of customer relationships intangibles were:
(in thousands)
Customer relationship intangibles
Less accumulated amortization
Total
APRIL 30
2021
2020
274,000 $
(152,222)
274,000
(106,556)
121,778 $
167,444
$
$
37
The components of trademarks were:
(in thousands)
Trademarks
Less accumulated amortization
Total
APRIL 30
2021
2020
10,000 $
(10,000)
10,000
(7,778)
— $
2,222
$
$
Customer relationship intangibles and trademarks are amortized over the estimated useful lives on a straight-line basis over six
and three years, respectively. Amortization expense on customer relationship intangibles and trademarks amounted to $47.9
million and $49.0 million for each of the years ended April 30, 2021 and 2020, respectively.
Note F — Loans Payable and Long-Term Debt
Maturities of long-term debt are as follows:
FISCAL YEARS ENDING APRIL 30
(in thousands)
2022
2023
2024
2025
2026
2027
AND
THERE-
AFTER
TOTAL
OUTSTANDING
AS OF APRIL
30, 2021
TOTAL
OUTSTANDING
AS OF APRIL
30, 2020
Term loans
$ 6,250 $ 6,250 $ 12,500 $ 18,750 $ 206,250 $
— $
250,000 $
244,000
Revolving credit
—
—
—
—
264,000
—
264,000
—
The Senior
Notes
Finance lease
obligations
Other long-term
debt
—
—
—
—
—
—
—
350,000
2,072
1,660
1,322
332
108
—
5,494
5,687
—
46
253
256
259
5,845
6,659
6,659
Total
$ 8,322 $ 7,956 $ 14,075 $ 19,338 $ 470,617 $ 5,845 $
526,153 $
606,346
Debt issuance
costs
Current
maturities
Total long-term
debt
$
$
$
(4,381) $
(9,209)
(8,322) $
(2,216)
513,450 $
594,921
Term Loans and Revolving Credit Facility
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
38
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. 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 (as defined below). The Company is required to repay the Term
Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026.
As of April 30, 2021, $250 million was outstanding on the Term Loan Facility as compared to a total of $244 million
outstanding on the term loans under the Prior Credit Agreement as of April 30, 2020. As of April 30, 2021, $264 million was
outstanding under the Revolving Facility as compared to no amounts outstanding under the revolving credit facility under the
Prior Credit Agreement as of April 30, 2020. Outstanding letters of credit under the Revolving Facility were $8.3 million as of
April 30, 2021, leaving approximately $227.7 million in available capacity under the Revolving Facility as of April 30, 2021.
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 LIBOR 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 LIBOR loans, payable quarterly in arrears. As of April 30, 2021, the applicable margin
with respect to base rate loans and LIBOR loans was 0.25% and 1.25%, respectively, and the commitment fee was 0.125%.
The A&R Credit Agreement includes provisions providing for the transition from LIBOR to a replacement benchmark upon the
occurrence of certain events. The Company does not currently expect any such transition to materially impact its financing
costs.
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.
As of April 30, 2021, the Company was in compliance with all covenants included in the A&R Credit Agreement.
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 Senior Notes
On February 12, 2018, the Company issued $350 million in aggregate principal amount of 4.875% Senior Notes due 2026 (the
"Senior Notes") and utilized the proceeds, together with the proceeds from the delayed draw term loan under the Prior Credit
Agreement, to refinance the RSI Notes. The Senior Notes were guaranteed by the Company's domestic subsidiaries and were
scheduled to mature on March 15, 2026.
On April 26, 2021, the Company redeemed in full the Senior Notes at a redemption price equal to 102.438% of the principal
amount of the Senior Notes, plus accrued and unpaid interest to the redemption date.
39
The Company recognized a net loss on debt modification related to the A&R Credit Agreement and the redemption of the
Senior Notes of $13.8 million, which is included in other (income) expense, net in the consolidated statements of income.
Financing Lease Obligations
The Company has various financing leases with interest rates between 2.0% and 4.5%. The leases require monthly payments
and expire by March 15, 2026. The outstanding amounts owed as of April 30, 2021 and 2020 were $5.5 million and $5.7
million, respectively.
Other Long-term Debt
On January 25, 2016, the Company entered into a New Markets Tax Credit ("NMTC") financing agreement, pursuant to section
45D of the Internal Revenue Code of 1986, as amended, and Kentucky Revised Statutes Sections 141.432 through 141.434, to
take advantage of a tax credit related to working capital and capital improvements at its Monticello, Kentucky facility. This
financing agreement was structured with unrelated third party financial institutions (the "Investors"), their wholly-owned
investment funds ("Investment Funds") and their wholly-owned 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 project. Upon closing the
transaction, a wholly owned subsidiary of the Company provided a $4.3 million loan receivable to the Investment Funds, which
is included in other long term assets in the accompanying consolidated balance sheets. The Company also entered into loan
agreements aggregating $6.6 million payable to the CDEs sponsoring the project. The loans have a term of 30 years with an
aggregate interest rate of approximately 1.2%. As of April 30, 2021 and 2020, the Company had drawn $6.7 million of the loan
proceeds, which is included in long-term debt in the accompanying consolidated balance sheets. The NMTC is subject to
recapture for a period of seven years, the compliance period. During the compliance period, the Company is required to
comply with various regulations and contractual provisions that apply to the NMTC arrangement. We do not anticipate any
credit recaptures will be required in connection with this arrangement. This transaction also includes a put/call feature which
becomes enforceable at the end of the compliance period whereby we may be obligated or entitled to repurchase the Investors'
interest in the Investment Funds. The value attributable to the put/call is nominal. Direct costs of $0.3 million incurred in
structuring the financing arrangement are deferred and will be recognized as expense over the term of the loans (30 years).
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, 2021.
Note G — Earnings Per Share
The following table summarizes the computations of basic and diluted earnings per share:
(in thousands, except per share amounts)
Numerator used in basic and diluted earnings per common share:
Net income
Denominator:
Denominator for basic earnings per common share -
weighted-average shares
Effect of dilutive securities:
Stock options and restricted stock units
Denominator for diluted earnings per common share -
weighted-average shares and assumed conversions
Net earnings per share
Basic
Diluted
40
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
$
58,763 $
74,861 $
83,688
16,970
16,908
17,289
67
44
41
17,037
16,952
17,330
$
$
3.46 $
3.45 $
4.43 $
4.42 $
4.84
4.83
An immaterial amount of anti-dilutive securities for the fiscal year ended April 30, 2019 were excluded from the calculation of
net earnings per share. There were no anti-dilutive securities for the fiscal years ended April 30, 2021 and 2020, which were
excluded from the calculation of net earnings per share.
Under a stock repurchase authorization approved by its Board of Directors (the "Board") on November 30, 2016, the Company
was authorized to purchase up to $50 million of the Company's common shares. On August 23, 2018, the Board reinstated the
program. On November 28, 2018, the Board authorized an additional stock repurchase program of up to $14 million of the
Company's common shares. This authorization was in addition to the stock repurchase program authorized on November 30,
2016. No funds remained from the amount authorized by the Board to repurchase the Company's common shares. On August
22, 2019, the Board authorized an additional stock repurchase program of up to $50 million of the Company's common shares.
$30.0 million remained from the amount authorized by the Board to repurchase the Company's common shares. The Company
funded share repurchases using available cash and cash generated from operations. Repurchased shares became authorized but
unissued common shares. The Company did not repurchase any of its shares during fiscal 2020. The Company purchased a total
of 200,046 common shares, for an aggregate purchase price of $20.0 million and a total of 745,232 common shares, for an
aggregate purchase price of $50.0 million during fiscal 2021 and 2019, respectively, under the authorizations 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. On May 25, 2021, the Board authorized a stock repurchase program of up to $100 million of the
Company's outstanding common shares. In conjunction with this authorization the Board cancelled the $30 million remaining
from the August 2019 authorization.
Note H — Stock-Based Compensation
The Company has had two types of stock-based compensation awards in effect for its employees and directors. The Company
issued stock options until fiscal 2015 and has issued restricted stock units ("RSUs") since fiscal 2010. Total compensation
expense related to stock-based awards for the fiscal years ended April 30, 2021, 2020, and 2019 was $4.6 million, $4.0 million,
and $3.0 million, respectively. The Company recognizes stock-based compensation costs net of an estimated forfeiture rate for
those shares expected to vest on a straight-line basis over the requisite service period of the award. The Company estimates the
forfeiture rates based upon its historical experience.
Stock Incentive Plans
At April 30, 2021, the Company had RSU awards outstanding under two different plans: (1) 2016 employee stock incentive
plan; and (2) 2015 non-employee directors equity ownership plan. As of April 30, 2021, there were 632,666 shares of common
stock available for future stock-based compensation awards under the Company's stock incentive plans.
Methodology Assumptions
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 RSU awards is expensed on a
straight-line basis over the vesting period of the RSUs to the extent the Company believes it is probable the related performance
criteria, if any, will be met.
Stock Option Activity
Stock options granted and outstanding under each of the Company's plans vest evenly over a three-year period and have
contractual terms of ten years. 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.
The Company did not grant stock options during the fiscal years ended April 30, 2021, 2020, and 2019. There were no stock
options outstanding at April 30, 2021.
41
The following table presents a summary of the Company's stock option activity for the fiscal years ended April 30, 2021, 2020,
and 2019 (remaining contractual term in years and exercise prices are weighted-averages):
Outstanding at April 30, 2018
Exercised
Outstanding at April 30, 2019
Exercised
Outstanding at April 30, 2020
Exercised
Outstanding at April 30, 2021
Vested and expected to vest in the
future at April 30, 2021
Exercisable at April 30, 2021
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
TERM
WEIGHTED
AVERAGE
EXERCISE
PRICE
AGGREGATE
INTRINSIC
VALUE
(in thousands)
NUMBER OF
OPTIONS
17,968
(12,801)
5,167
(5,167)
—
—
—
—
—
4.5
0
6.1
0
0
0
0
0
0
$44.23
39.04
$57.11
57.11
$—
—
$—
$—
$—
$
$
$
$
$
$
682
651
170
—
—
—
—
—
—
Cash received from option exercises for the fiscal years ended April 30, 2021, 2020, and 2019, was an aggregate of $0.0
million, $0.3 million, and $0.5 million, respectively. The actual tax benefit realized for the tax deduction from option exercises
of stock option awards was immaterial for the fiscal years ended April 30, 2021, 2020, and 2019, respectively.
Restricted Stock Unit Activity:
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") in fiscal years 2021, 2020, and
2019. The PBRSUs granted in fiscal 2021, 2020, and 2019 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.
42
The following table contains a summary of the Company's RSU activity for the fiscal years ended April 30, 2021, 2020, and
2019:
PERFORMANCE-
BASED RSUs
SERVICE-
BASED RSUs
TOTAL RSUs
WEIGHTED
AVERAGE
GRANT
DATE FAIR
VALUE
Issued and outstanding, April 30, 2018
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2019
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2020
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2021
97,651
45,615
(10,352)
(34,475)
(9,257)
89,182
55,059
152,710
$73.34
30,335
75,950
$104.10
—
(18,778)
(5,347)
61,269
(10,352)
(53,253)
(14,604)
150,451
$80.26
$60.50
$79.49
$76.91
61,379
42,691
104,070
$53.95
(11,305)
(18,628)
(2,941)
117,687
—
(21,521)
(3,229)
79,210
(11,305)
(40,149)
(6,170)
196,897
$85.13
$67.03
$86.68
$66.68
124,374
76,846
201,220
$66.00
(17,461)
(19,058)
(73,858)
131,684
—
(27,208)
(37,377)
91,471
(17,461)
(46,266)
(111,235)
223,155
$89.31
$88.57
$71.63
$64.81
As of April 30, 2021, there was $11.1 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 1.8 years.
For the fiscal years ended April 30, 2021, 2020, and 2019 stock-based compensation expense was allocated as follows:
(in thousands)
Cost of sales and distribution
Selling and marketing expenses
General and administrative expenses
Stock-based compensation expense, before income taxes
Restricted Stock Tracking Units:
2021
2020
2019
$
$
1,461 $
982
2,155
4,598 $
809 $
1,006
2,174
3,989 $
691
649
1,700
3,040
During fiscal 2021, the Board approved grants of 11,456 cash-settled performance-based restricted stock tracking units
("RSTUs") and 6,229 cash-settled service-based RSTUs for more junior level employees. Each performance-based RSTU
entitles the recipient to receive a payment in cash equal to the fair market value of a share of the Company's common stock as
of the payment date if applicable performance and cultural conditions are met and the recipient remains continuously employed
with the Company until the units vest. The service-based RSTUs entitle the recipients to receive a payment in cash equal to the
fair market value of a share of our common stock as of the payment date if they remain continuously employed with the
Company until the units vest. All of the RSTUs cliff-vest three years from the grant date. The fair value of each cash-settled
RSTU award is remeasured at the end of each reporting period and the liability is adjusted, and related expense recorded, based
on the new fair value. The Company recognized expense of $0.9 million, $0.0 million, and $0.5 million related to RSTUs for
the fiscal years ended April 30, 2021, 2020, and 2019, respectively. A liability for payment of the RSTUs is included in the
Company's balance sheets in the amount of $1.0 million and $0.4 million as of April 30, 2021 and 2020, respectively.
43
Note I — Employee Benefit and Retirement Plans
Retirement Savings Plans
Under the American Woodmark Corporation Retirement Savings Plan (the "Plan"), all employees who are at least 18 years old
and have been employed by the Company for at least six consecutive months are eligible to receive Company stock through a
discretionary profit-sharing contribution and a 401(k) matching contribution based upon the employee's contribution to the
Plan.
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. The Company recognized expenses for profit-sharing
contributions of $2.9 million, $3.7 million, and $3.8 million in fiscal years 2021, 2020, and 2019, respectively.
The Company matches 100% of an employee's annual 401(k) contributions to the Plan up to 4% of annual compensation.
On January 1, 2019, the Plan merged with the RSI Plan to transfer all assets of the RSI Plan into the Plan.
The expense for 401(k) matching contributions for both plans was $11.9 million, $10.1 million, and $9.9 million, in fiscal years
2021, 2020, and 2019, respectively.
Pension Benefits
Prior to April 30, 2020, the Company had two defined benefit pension plans covering many of the Company's employees hired
prior to April 30, 2012. Effective April 30, 2012, the Company froze all future benefit accruals under the Company's defined
benefit pension plans.
Effective April 30, 2020, these plans were merged into one plan and the plan name was changed to the American Woodmark
Corporation Employee Pension Plan (the "Pension Plan"). The Pension Plan provides defined benefits based on years of service
and final average earnings (for salaried employees) or benefit rate (for hourly employees).
On November 16, 2020 the Company filed an application with the Internal Revenue Service to terminate the Pension Plan with
an effective date of December 31, 2020 (the "Plan Termination Date"), in a standard termination and the Company expects to
incur approximately $1.6 million to terminate the Pension Plan, $0.4 million of which was incurred in fiscal 2021. In
connection with the Pension Plan termination and in addition to the Pension Plan termination costs, the Company may be
required to make an additional funding contribution to the Pension Plan in order to ensure the Pension Plan is fully funded on a
termination basis as of the Benefit Distribution Date, with the amount of such contribution still to be determined. The Benefit
Distribution Date will be determined once the Company receives approval from certain regulatory agencies. The additional
funding contribution is expected to be funded from cash on hand and the amount will vary depending on the lump sum
distribution take rate and the interest rate on the Benefit Distribution Date.
Included in accumulated other comprehensive loss at April 30, 2021 is $73.1 million ($54.6 million net of tax) related to net
unrecognized actuarial losses that have not yet been recognized in net periodic pension benefit costs. The Company expects to
recognize $1.2 million ($0.9 million net of tax) in net actuarial losses in net periodic pension benefit costs during fiscal 2022.
The Company uses an April 30 measurement date for its Pension Plan.
44
The following provides a reconciliation of benefit obligations, plan assets and funded status of the Company's non-contributory
Pension Plan as of April 30:
(in thousands)
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at beginning of year
Interest cost
Actuarial gains
Benefits paid
Projected benefit obligation at end of year
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Fair value of plan assets at end of year
Funded status of the plan
APRIL 30
2021
2020
$
$
$
$
$
191,184 $
4,662
6,759
(6,068)
196,537 $
190,743 $
8,877
—
(6,068)
193,552 $
168,788
5,974
22,293
(5,871)
191,184
169,471
26,674
469
(5,871)
190,743
(2,985) $
(441)
The accumulated benefit obligation for the Pension Plan was $196.5 million and $191.2 million at April 30, 2021 and 2020,
respectively.
(in thousands)
2021
APRIL 30
2020
2019
COMPONENTS OF NET PERIODIC PENSION BENEFIT COST
Interest cost
Expected return on plan assets
Recognized net actuarial loss
Pension benefit cost
$
$
4,662 $
(8,430)
1,761
(2,007) $
5,974 $
(8,327)
1,692
(661) $
6,269
(8,509)
1,648
(592)
The components of net periodic pension benefit cost do not include service costs or prior service costs due to the Pension Plan
being frozen.
Actuarial Assumptions: The discount rate at April 30 was used to measure the year-end benefit obligations and the earnings
effects for the subsequent year. Actuarial assumptions used to determine benefit obligations and earnings effects for the Pension
Plan follows:
WEIGHTED-AVERAGE ASSUMPTIONS TO DETERMINE BENEFIT
OBLIGATIONS
Discount rate
FISCAL YEARS ENDED APRIL 30
2021
2020
2.80 %
3.16 %
FISCAL YEARS ENDED APRIL 30
2019
2020
2021
WEIGHTED-AVERAGE ASSUMPTIONS TO DETERMINE NET
PERIODIC PENSION BENEFIT COST
Discount rate
Expected return on plan assets
3.16 %
3.25 %
4.02 %
5.0 %
4.18%
5.5 %
45
The Company bases the discount rate on a current yield curve developed from a portfolio of high-quality fixed-income
investments with maturities consistent with the projected benefit payout period. The long-term rate of return on assets is
determined based on consideration of historical and forward-looking returns and the current and expected asset allocation
strategy.
The method used to determine the service and interest costs is known as the spot rate approach, under which individual spot
rates along the yield curve that correspond with the timing of each benefit payment are used.
In developing the expected long-term rate of return assumption for the assets of the Pension Plan, the Company evaluated input
from its third party pension plan asset managers, including their review of asset class return expectations and long-term
inflation assumptions.
The Company amortizes experience gains and losses, as well as the effects of changes in actuarial assumptions and plan
provisions, over the average remaining lifetime of employees expected to receive benefits under the Pension Plan.
Contributions: The Company funds the Pension Plan in amounts sufficient to meet minimum funding requirements under
applicable employee benefit and tax laws plus additional amounts the Company deems appropriate.
The Company expects to contribute $2.5 million to its Pension Plan in fiscal 2022. The Company made no contributions to its
Pension Plan in fiscal 2021 and made contributions of $0.5 million in fiscal 2020.
Estimated Future Benefit Payments: The following benefit payments are expected to be paid:
FISCAL YEAR
2022
BENEFIT
PAYMENTS
(in thousands)
$
199,685
Plan Assets: Pension assets by major category and the type of fair value measurement as of April 30, 2021 and 2020 are
presented in the following tables:
FAIR VALUE MEASUREMENTS AT APRIL 30, 2021
QUOTED PRICES
IN ACTIVE
MARKETS
(LEVEL 1)
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
SIGNIFICANT
UNOBSERVABL
E INPUTS
(LEVEL 3)
TOTAL
$
80,524
$
80,524
$
Investment Grade Fixed Income
Total plan assets
113,028
193,552
113,028
193,552
$
FAIR VALUE MEASUREMENTS AT APRIL 30, 2020
QUOTED PRICES
IN ACTIVE
MARKETS
(LEVEL 1)
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
SIGNIFICANT
UNOBSERVABL
E INPUTS
(LEVEL 3)
TOTAL
$
490
$
490
$
—
$
37,569
24,578
37,569
24,578
—
$
—
—
$
—
—
—
—
—
—
—
—
—
—
—
$
(in thousands)
Cash Equivalents
Fixed Income Funds:
(in thousands)
Cash Equivalents
Equity Funds:
US Equity
International Equity
Fixed Income Funds:
Investment Grade Fixed Income
128,106
128,106
Total plan assets
$
190,743
$
190,743
$
46
Investment Strategy: The Company has established formal investment policies for the assets associated with its Pension
Plan. The objectives of the investment strategies include preservation of capital and long-term growth of capital while avoiding
excessive risk. Target allocation percentages are established at an asset class level by the Company's Pension
Committee. Target allocation ranges are guidelines, not limitations, and the Pension Committee may approve allocations above
or below a target range.
During a period of uncertainty in the equity and fixed income markets, the Pension Committee may suspend the Target Asset
Allocation and manage the investment mix as it sees reasonable, prudent and in the best interest of the plans to better protect the
value of the plan assets.
The Company's Pension Plan's weighted-average asset allocations at April 30, 2021 and 2020, by asset category, were as
follows:
APRIL 30
Cash Equivalents
Equity Funds
Fixed Income Funds
Total
Note J — Income Taxes
PLAN ASSET ALLOCATION
2021
2021
2020
TARGET
ACTUAL
ACTUAL
— %
— %
100.0 %
100.0 %
42.0 %
— %
58.0 %
100.0 %
— %
33.0 %
67.0 %
100.0 %
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was
signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs
Act of 2017 (the "2017 Tax Act"). Among other provisions, the CARES Act makes qualified improvement property generally
eligible for 15-year cost-recovery and 100% bonus depreciation. In addition, the Consolidated Appropriations Act (the "2021
Tax Act") enacted a temporary exception to the limitation for meals and entertainment paid or incurred after December 31,
2020. This and the CARES Act provisions applicable to the Company have been applied to the current year ending April 30,
2021.
Additionally, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the "2020 Tax Act") was signed into law December
27, 2020 and provides a temporary exception to the 50% business deduction for certain business meals. The tax effects of the
2020 Tax Act to business meals are not significant and have been recognized in the current period.
47
Income tax expense was comprised of the following:
(in thousands)
CURRENT
Federal
State
Foreign
Total current expense
DEFERRED
Federal
State
Foreign
Total deferred benefit
Total expense
Other comprehensive income (loss)
Total comprehensive income tax expense
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
$
25,683 $
29,072 $
25,649
5,639
1,018
32,340
7,581
533
37,186
8,231
1,125
35,005
(11,426)
(7,167)
(2,039)
(4,190)
(203)
(142)
(4,498)
(3,266)
(41)
(13,668)
(11,499)
(7,805)
18,672
25,687
(1,156)
(573)
27,200
190
$
17,516 $
25,114 $
27,390
The Company's effective income tax rate varied from the federal statutory rate as follows:
FISCAL YEARS ENDED APRIL 30
2020
2021
2019
Federal statutory rate
Effect of:
Federal income tax credits
Stock compensation
Effect of 2017 Tax Act
Meals and entertainment
Valuation allowance for deferred taxes
Foreign
Other
Total
Effective federal income tax rate
State income taxes, net of federal tax effect
Effective income tax rate
21.0 %
21.0 %
21.0 %
(1.2) %
0.2
—
0.1
—
0.6
0.2
(0.1) %
20.9 %
3.2
24.1 %
(0.9) %
(0.1)
—
0.3
0.7
0.4
0.7
1.1 %
22.1 %
3.4
25.5 %
(1.4) %
(0.5)
(1.1)
0.3
0.6
0.8
1.2
(0.1) %
20.9 %
3.6
24.5 %
48
The significant components of deferred tax assets and liabilities were as follows:
(in thousands)
Deferred tax assets:
Accounts receivable
Pension benefits
Inventory
Product liability
Employee benefits
Tax credit carryforwards
Operating leases
Other
Gross deferred tax assets, before valuation allowance
Valuation allowance
Gross deferred tax assets, after valuation allowance
Deferred tax liabilities:
Inventory
Depreciation
Intangibles
Operating leases
Other
Gross deferred tax liabilities
APRIL 30
2021
2020
$
1,781 $
815
692
1,321
5,746
5,433
32,975
2,086
50,849
(4,914)
45,935
—
22,116
29,123
31,320
606
83,165
1,730
—
—
862
5,189
4,995
33,258
4,330
50,364
(4,415)
45,949
125
24,147
40,677
32,325
695
97,969
Net deferred tax liability
$
37,230 $
52,020
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, 2021.
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 $0.5 million related to FTCs.
The gross amount of state tax credit carryforwards related to state ITCs as of April 30, 2021 and 2020 was $3.8 million and
$3.9 million, respectively. These credits expire in various years beginning in fiscal 2028. Net of the federal impact and related
valuation allowance, the Company recorded $0.5 million and $0.6 million of deferred tax assets related to these credits as of
April 30, 2021 and 2020, 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, 2021
and 2020, a deferred credit balance of $0.5 million and $0.8 million, respectively, is included in other liabilities on the
consolidated balance sheets.
The gross amount of foreign tax credit carryforwards as of April 30, 2021 and 2020 is $1.7 million and $1.2 million,
respectively, which begin to expire in fiscal 2029.
49
The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax
deductions:
(in thousands)
Change in Unrecognized Tax Benefits
Balance at beginning of year
Additions based on tax positions related to the current year
Reductions for tax positions of prior years settlements
Balance at end of year
APRIL 30
2021
2020
$
$
2,305 $
115
(929)
1,491 $
2,240
65
—
2,305
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 has accrued 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. As of April 30, 2021, federal tax years 2017 through 2020 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.
Note K — Commitments and Contingencies
Legal Matters
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. 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 loss stemming from the various suits and asserted and unasserted claims
which were deemed to be either probable or reasonably possible is not material as of April 30, 2021.
Product Warranty
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 following is a reconciliation of the Company's warranty liability:
(in thousands)
PRODUCT WARRANTY RESERVE
Beginning balance
Accrual for warranties
Settlements
Ending balance at fiscal year end
APRIL 30
2021
2020
$
$
3,753 $
21,247
(19,751)
5,249 $
4,616
21,886
(22,749)
3,753
50
Note L — Revenue Recognition
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, 2021,
2020, and 2019:
(in thousands)
Home center retailers
Builders
Independent dealers and distributors
Net Sales
Note M — Credit Concentration
FISCAL YEARS ENDED APRIL 30
2021
2020
2019
$
848,898 $
768,043 $
788,803
673,307
221,809
668,765
213,525
631,474
225,042
$ 1,744,014 $ 1,650,333 $ 1,645,319
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.
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 operate in the new home construction and home remodeling markets.
The Company maintains an allowance for bad debt 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, 2021, the Company's two largest customers, Customers A and B, represented 34.3% and 22.1% of the Company's
gross customer receivables, respectively. At April 30, 2020, Customers A and B represented 26.4% and 22.9% of the
Company's gross customer receivables, respectively.
The following table summarizes the percentage of net sales to the Company's two largest customers for the last three fiscal
years:
Customer A
Customer B
Note N — Leases
PERCENT OF ANNUAL NET SALES
2021
30.8%
17.9%
2020
29.3%
17.2%
2019
29.3%
18.6%
Operating Leases - 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
51
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.
Finance Leases - 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 components of lease costs were as follows:
(in thousands)
Finance lease cost:
FISCAL YEAR ENDED APRIL 30,
2021
2020
Reduction in the carrying value of right-of-use assets
$
635 $
Interest on lease liabilities
Operating lease cost
Additional information related to leases was as follows:
73
27,192
2,582
205
25,405
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases
Operating cash flows for operating leases
Financing cash flows for financing leases
Right-of-use assets obtained in exchange for new finance lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities
Weighted average remaining lease term (years)
Weighted average remaining lease term - finance leases
Weighted average remaining lease term - operating leases
Weighted average discount rate
Weighted average discount rate - finance leases
Weighted average discount rate - operating leases
FISCAL YEAR ENDED APRIL 30,
2021
2020
$
73
$
24,371
608
2,222
8,914
205
22,595
2,512
1,650
72,703
2.95
6.62
3.36
7.41
2.95 %
3.23 %
3.19 %
4.27 %
52
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, 2021:
FISCAL YEAR
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less imputed interest
Total lease liability
Current maturities
Lease liability - long-term
Lease assets
OPERATING
(in thousands)
FINANCING
(in thousands)
$
23,761 $
22,875
20,881
18,058
17,852
40,881
144,308
(14,686)
129,622 $
(19,994)
109,628 $
123,118 $
$
$
$
2,199
1,732
1,352
339
109
—
5,731
(237)
5,494
(2,072)
3,422
10,037
NOTE O — Restructuring Charges
During June 2020, the Company's Board approved the closure and eventual disposal of its manufacturing plant located in
Humboldt, Tennessee. Operations ceased at the Humboldt plant in July 2020. During the third quarter of fiscal 2021, the
Company sold the Humboldt plant and recognized a gain of $2.3 million on the sale. During fiscal 2021, the Company
recognized pre-tax restructuring charges, net of $4.4 million related to the closure of the plant. Included in the $4.4 million of
restructuring charges for fiscal 2021 were $0.9 million of severance and separation costs and $3.5 million for equipment,
inventory and facilities-related expenses.
In the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021, the Company implemented nationwide reductions in
force, which were substantially completed in the fourth quarter of fiscal 2020 and first quarter of fiscal 2021. During fiscal
2021 and 2020, the Company recognized pre-tax restructuring charges, net of $1.4 million and $0.2 million, respectively,
related to these reductions in force, which were primarily severance and separation costs.
In the first quarter of fiscal 2019, the Company implemented a nationwide reduction in force. Severance and outplacement
charges relating to the reduction in force totaled approximately $1.8 million and the reduction in force was substantially
completed during fiscal 2019.
During fiscal years 2021, 2020, and 2019, the Company recognized total pre-tax restructuring charges of $5.8 million, $18,000,
and $2.0 million, respectively.
A reserve for restructuring charges is included in accrued compensation and related expenses in the consolidated balance sheets
as of April 30, 2021 and 2020 which relates to employee termination costs accrued but not yet paid as follows:
(in thousands)
Restructuring reserve balance at May 1
Expense
Payments and adjustments
Restructuring reserve balance at April 30
APRIL 30
2021
2020
$
$
189 $
1,739
(1,789)
139 $
387
(18)
(180)
189
53
Note P — Fair Value Measurements
The Company utilizes the hierarchy of fair value measurements to classify certain of its assets and liabilities based upon the
following definitions:
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 fair value measurement of assets held by the Company's defined benefit pension plans is discussed in Note I.
The Company's financial instruments include cash and equivalents, marketable securities and other investments; accounts
receivable and accounts payable; 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 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, 2021 and 2020 at fair value on a recurring basis:
(in thousands)
ASSETS:
Mutual funds
(in thousands)
ASSETS:
Mutual funds
LIABILITIES:
Foreign exchange forward contracts
FAIR VALUE MEASUREMENTS AS OF APRIL 30, 2021
LEVEL 1
LEVEL 2
LEVEL 3
642 $
— $
—
FAIR VALUE MEASUREMENTS AS OF APRIL 30, 2020
LEVEL 1
LEVEL 2
LEVEL 3
773 $
— $
— $
(1,102) $
—
—
$
$
$
54
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
American Woodmark Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of American Woodmark Corporation and subsidiaries (the
Company) as of April 30, 2021 and 2020, the related consolidated statements of income, comprehensive income, shareholders’
equity, and cash flows for each of the years in the three-year period ended April 30, 2021, 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 financial position of the Company as of April 30, 2021 and 2020, and the results of its
operations and its cash flows for each of the years in the three-year period ended April 30, 2021, 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, 2021, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated June 29, 2021 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Change in Accounting Principle
As discussed in Note A to the consolidated financial statements, the Company has elected to change its method of accounting
for leases as of May 1, 2019 due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards
Codification Topic 842, Leases.
Basis for Opinion
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 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 consolidated 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
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 audits 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 audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated 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 consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a 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.
Assessment of goodwill recoverability
As discussed in Note A to the consolidated financial statements and disclosed in the consolidated balance sheet, the
carrying amount of goodwill as of April 30, 2021 was $767.6 million. The Company evaluates its goodwill for
impairment annually on February 1, or whenever events or changes in circumstances indicate that it is more likely than
not the carrying value of goodwill may not be recoverable. The Company performed a qualitative impairment test for
goodwill which resulted in no impairment.
55
We identified the assessment of events or changes in circumstances that may indicate that the fair value of the
reporting unit is below its carrying value as a critical audit matter. A higher degree of auditor judgement was required
to evaluate these events or changes in circumstances as a result of uncertainty in the economy, including raw material
costs. These events or changes in circumstances could have a significant effect on the Company’s qualitative
impairment assessment and the determination of whether further quantitative analysis of goodwill impairment was
required.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain controls related to the goodwill process. This included a control
related to the Company’s assessment of events or changes in circumstances, including raw material costs, that may
indicate the fair value of the reporting unit is below its carrying value. We evaluated the Company’s assessment of
events or changes in circumstances that may indicate the fair value of the reporting unit is below its carrying value
through comparison to the Company’s market capitalization and macroeconomic information contained in third party
analyst reports on the Company and other third party information.
/s/ KPMG LLP
We have served as the Company's auditor since 2004.
Richmond, Virginia
June 29, 2021
56
Management's Annual Report on Internal Control over Financial Reporting
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, 2021. 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, 2021. The Company's internal control over financial reporting as of April 30, 2021 has
been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which appears in this
Annual Report on Form 10-K.
/s/ M. SCOTT CULBRETH
M. Scott Culbreth
President and Chief Executive Officer
/s/ PAUL JOACHIMCZYK
Paul Joachimczyk
Vice President and Chief Financial Officer
57
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
American Woodmark Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited American Woodmark Corporation and subsidiaries' (the Company) internal control over financial reporting as
of April 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of April 30, 2021, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
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, 2021 and 2020, the related consolidated statements
of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended
April 30, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements),
and our report dated June 29, 2021 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
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 of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
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.
/s/ KPMG LLP
Richmond, Virginia
June 29, 2021
58
Item 9.
FINANCIAL DISCLOSURE
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
None.
Item 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Senior Management, including the Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures
as of April 30, 2021. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures are effective.
Management's Annual Report on Internal Control over Financial Reporting. Management had conducted an assessment of the
Company's internal control over financial reporting as of April 30, 2021. 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.
Report of Registered Public Accounting Firm. The Company's independent registered public accounting firm, KPMG LLP
(KPMG), has issued an audit report on the effectiveness of the Company's internal control over financial reporting. KPMG'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.
Changes in Internal Control over Financial Reporting. There has been no change in the Company's internal control over
financial reporting during the fiscal quarter ended April 30, 2021, that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
Item 9B.
OTHER INFORMATION
None.
PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
In response to this Item, and in accordance with General Instruction G(3) of Form 10-K:
(1)
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 26, 2021 ("Proxy Statement") and is incorporated in this Item by reference;
(2)
Registrant" in Part I of this report and is incorporated in this Item by reference;
the information concerning the Company's executive officers is set forth under the caption "Executive Officers of the
(3)
"Delinquent Section 16(a) Reports" in the 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
(4)
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;
(5)
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; and
(6)
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
59
"Corporate Governance – Board of Directors and Committees – Audit Committee" in the Proxy Statement and is incorporated
in this Item by reference.
Item 11.
EXECUTIVE COMPENSATION
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.
Item 12.
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
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.
The following table summarizes information about the Company's equity compensation plans as of April 30, 2021:
Equity Compensation Plan Information
Equity Compensation Plans
Plan Category
Equity compensation plans approved by security holders(1)
Options
Performance-based restricted stock units
Service-based restricted stock units
Equity compensation plans not approved by security
holders(3)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(a)
(b)
(c)
— $
— $
131,684
91,471
— $
223,155 $
—
—
N/A (2)
N/A (2)
—
—
632,666
—
632,666
Total
(1)
(2)
(3)
At April 30, 2021, the Company had restricted stock unit awards outstanding under two different plans: 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.
The Company does not have equity compensation plans that have not been approved by the Company's security
holders.
Item 13.
INDEPENDENCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
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.
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
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
60
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.
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)1.
Financial Statements
PART IV
The following consolidated financial statements of American Woodmark Corporation are incorporated
by reference to Item 8 of this report:
Consolidated Balance Sheets as of April 30, 2021 and 2020.
Consolidated Statements of Income – for each year of the three-year period ended April 30, 2021.
Consolidated Statements of Comprehensive Income – for each year of the three-year period ended
April 30, 2021.
Consolidated Statements of Shareholders' Equity – for each year of the three-year period ended April
30, 2021.
Consolidated Statements of Cash Flows – for each year of the three-year period ended April 30,
2021.
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm.
Management's Annual Report on Internal Control over Financial Reporting.
Report of Independent Registered Public Accounting Firm – Internal Control over Financial
Reporting.
(a)2.
Financial Statement Schedules
The following financial statement schedule is filed as a part of this Form 10-K:
Schedule II – Valuation and Qualifying Accounts for each year of the three-year period ended April
30, 2021.
Schedules other than the one listed above are omitted either because they are not required or are
inapplicable.
(a)3.
Exhibits
3.1
3.1(b)
3.2
4.1
4.2
4.3
Articles of Incorporation as amended effective August 12, 1987 (incorporated by reference to Exhibit 3.1 to
the Registrant's Form 10-Q for the quarter ended January 31, 2003; Commission File No. 000-14798).
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).
Bylaws - as amended and restated effective February 22, 2021 (incorporated by reference to Exhibit 3.1 to the
Registrant’s Form 8-K as filed on February 23, 2021; Commission File No. 000-14798).
The Articles of Incorporation and Bylaws of the Registrant as currently in effect (incorporated by reference to
Exhibits 3.1 and 3.2).
Indenture, dated as of February 12, 2018, among American Woodmark Corporation, the guarantors from time
to time party thereto and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.1 to the Registrant's Form 8-K as filed on February 14, 2018; Commission File No. 000-14798).
Description of Capital Stock (incorporated by reference to Exhibit 4.4 to the Registrant's Form 10-K for the
fiscal year ended April 30, 2019; 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.
61
10.1(a)
10.1(b)
10.1 (c)
10.1 (d)
10.2(a)
10.3(a)
10.3(b)
10.3(c)
10.3(d)
10.3(e)
10.4(a)
10.4(b)
10.5
10.5(a)
10.5(b)
10.5(c)
21
23.1
31.1
31.2
Collateral Agreement, dated as of December 29, 2017, by American Woodmark Corporation and certain of its
subsidiaries, as Grantors, in favor of Wells Fargo Bank, National Association, as Administrative Agent
(incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K as filed on January 5, 2018;
Commission File No. 000-14798).
Joinder Agreement, dated as of February 12, 2018, by American Woodmark Corporation and each of its
subsidiary named therein in favor of Wells Fargo Bank, National Association, as Administrative Agent, for
the benefit of the Secured Parties (incorporated by reference to Exhibit 10.3 to the Registrant's Form 10-Q for
the quarter ended January 31, 2018; Commission File No. 000-14798).
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).
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).
Employment Agreement for Mr. M. Scott Culbreth (incorporated by reference to Exhibit 10.1 to the
Registrant's Form 8-K/A as filed on August 25, 2020; Commission File No. 000-14798).*
Employment Agreement for Mr. Robert J. Adams, Jr. (incorporated by reference to Exhibit 10.3 to the
Registrant's Form 8-K as filed on August 31, 2015; Commission File No. 000-14798).*
Amendment to Employment Agreement for Mr. Robert J. Adams, Jr. (incorporated by reference to Exhibit
10.4 to the Registrant's Form 8-K as filed on May 29, 2019; Commission File No. 000-14798).*
Employment Agreement for Mr. Paul Joachimczyk (incorporated by reference to Exhibit 10.2 to the
Registrant's Form 8-K/A filed on August 25, 2020; Commission File No. 000-14798).
Employment Agreement for Ms. Teresa M. May (incorporated by reference to Exhibit 10.8(c) to the
Registrant's Form 10-Q filed on August 26, 2020; 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).
2016 Employee Stock Incentive Plan (incorporated by reference to Exhibit A to the Registrant's Definitive
Proxy Statement on Schedule 14A as filed on June 29, 2016; 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).*
Subsidiaries of the Company (Filed Herewith).
Consent of KPMG LLP, Independent Registered Public Accounting Firm (Filed Herewith).
Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).
62
32.1
101
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 (Furnished Herewith).
Interactive Data File for the Registrant's Annual Report on Form 10-K for the year ended April 30, 2021
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).
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).
*Management contract or compensatory plan or arrangement.
63
Schedule II - Valuation and Qualifying Accounts
AMERICAN WOODMARK CORPORATION
(In Thousands)
Description (a)
Year ended April 30, 2021:
Allowance for doubtful accounts
Reserve for cash discounts
Balance at
Beginning of
Year
Additions
(Reductions)
Charged to
Cost and
Expenses
Other
Deductions
Balance at
End of
Year
$
$
472 $
182
$ — $
(323) (b) $
331
1,171 $
19,109 (c) $ — $
(18,444) (d) $
1,836
Reserve for sales returns and allowances
$
4,541 $
22,298 (c) $ — $
(19,685)
$
7,154
Year ended April 30, 2020:
Allowance for doubtful accounts
Reserve for cash discounts
$
$
249 $
323
$ — $
(100) (b) $
472
1,451 $
16,810 (c) $ — $
(17,090) (d) $
1,171
Reserve for sales returns and allowances
$
4,545 $
17,049 (c) $ — $
(17,053)
$
4,541
Year ended April 30, 2019:
Allowance for doubtful accounts
Reserve for cash discounts
$
$
259 $
72
$ — $
(82) (b) $
249
1,627 $
16,994 (c) $ — $
(17,170) (d) $
1,451
Reserve for sales returns and allowances
$
4,381 $
11,867 (c) $ — $
(11,703)
$
4,545
(a)
(b)
(c)
(d)
All reserves relate to accounts receivable.
Principally write-offs, net of collections.
Reduction of gross sales.
Cash discounts granted.
Item 16. Form 10-K Summary
None.
64
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.
SIGNATURES
June 29, 2021
American Woodmark Corporation
(Registrant)
/s/ M. SCOTT CULBRETH
M. Scott Culbreth
President and Chief Executive Officer
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.
June 29, 2021
June 29, 2021
June 29, 2021
June 29, 2021
June 29, 2021
June 29, 2021
/s/ M. SCOTT CULBRETH
M. Scott Culbreth
President and Chief Executive
Officer
(Principal Executive Officer)
Director
/s/ PAUL JOACHIMCZYK
Paul Joachimczyk
Vice President and Chief
Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
/s/ ANDREW B. COGAN
Andrew B. Cogan
Director
/s/ MARTHA M. HAYES
Martha M. Hayes
Director
/s/ CAROL B. MOERDYK
Carol B. Moerdyk
Director
/s/ VANCE W. TANG
Vance W. Tang
Director
June 29, 2021
June 29, 2021
June 29, 2021
June 29, 2021
/s/ JAMES G. DAVIS, JR.
James G. Davis, Jr.
Director
/s/ DANIEL T. HENDRIX
Daniel T. Hendrix
Director
/s/ DAVID A. RODRIGUEZ
David A. Rodriguez
Director
/s/ EMILY C. VIDETTO
Emily C. Videtto
Director
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:
Mr. Kevin Dunnigan
Treasury Director
American Woodmark Corporation
P.O. Box 1980
Winchester, Virginia 22604-8090
65
Directors and Executive OfficersRobert J. Adams, Jr.Senior Vice President, Manufacturing and Technical Operations Andrew B. CoganDirector Chair of the Audit CommitteeChairman and Chief Executive Officer of Knoll, Inc M. Scott Culbreth DirectorPresident and Chief Executive Officer James G. Davis, Jr. Director Chair of the Governance, Sustainability and Nominating Committee and Member of the Audit CommitteePresident and Chief Executive Officer of James G. Davis Construction Corporation Martha M. Hayes Director Chair of the Compensation and Social Principles Committee and Member of the Governance, Sustainability and Nominating CommitteeRetired Vice President Customer Development at Sara Lee Corporation Daniel T. HendrixDirector Member of the Audit CommitteeChairman, Chief Executive Officer and President of Interface, Inc. Paul JoachimczykVice President and Chief Financial OfficerCorporate Secretary Teresa M. MaySenior Vice President and Chief Marketing Officer Carol B. MoerdykDirector Member of the Governance, Sustainability and Nominating Committee and Member of the Audit CommitteeRetired Senior Vice President, International, OfficeMax Incorporated David A. Rodriguez Director Member of the Compensation and Social Principles Committee and Member of the Goverance, Sustainability and Nominating Committee Executive Vice President and Global Chief Human Resources Officer at Marriott InternationalVance W. TangNon-Executive Chair Member of the Compensation and Social Principles Committee and Member of the Governance, Sustainability and Nominating CommitteeRetired President and Chief Executive Officer of KONE Inc. Emily C. Videtto Director Member of the Audit Committee Vice President and Chief Marketing Officer at Pella Corporation Corporate InformationAnnual MeetingThe 2021 Annual Meeting of Shareholders will be held on Thursday, August 26, 2021 at 9:00 a.m. at American Woodmark Corporation, 561 Shady Elm Road in Winchester, Virginia.Annual Report on Form 10-KA copy of the Company’s Annual Report on Form 10-K for the fiscal year ending on April 30, 2021, may be obtained free of charge on the Company’s website at americanwoodmark.com or by writing:Kevin DunniganTreasury Director American Woodmark CorporationPO Box 1980Winchester, VA 22604-8090Corporate HeadquartersAmerican Woodmark Corporation 561 Shady Elm RoadWinchester, VA 22602(540) 665-9100Mailing AddressPO Box 1980Winchester, VA 22604-8090Transfer AgentComputershare Shareholder ServicesInvestor Relations(800) 942-5909Shareholder InquiriesInvestor Relations American Woodmark Corporation561 Shady Elm RoadWinchester, VA 22602(540) 665-9100americanwoodmark.comAt American Woodmark, we do more than make cabinets. We champion your unique style. We inspire fresh designs and bold possibilities, and celebrate the perfect union of creativity, reliable function, and value. At our core is a shared goal - a commitment to help customers build beautiful, comfortable spaces that reflect their idea of home. With our portfolio of brands, we can meet your ambition and bring your vision to life. Our purpose may seem simple, but the rewards it brings are immeasurable. We’re over 10,000 strong, with a proud heritage, a thriving culture, and sustainable growth. Our employees are like family to us, and our products bring joy and peace of mind to homes across the country. American Woodmark stands for more than making cabinets - we make brighter futures. Our Values Our CITE principles help create the culture that sets us apart. Customer Satisfaction Provide the best quality, service, and value to the greatest number of people by doing whatever is reasonable and sometimes unreasonable.Integrity Do what is right: act fairly and responsibly, care about the dignity of each person and be a good citizen within the community. Teamwork Understand that we must all work together in order to succeed. Realize that each person must contrib-ute to the team to be part of the team. Excellence Strive to perform every job or action in a superior way. Be innovative, always helping others become the best they can be. 561 Shady Elm Road Winchester, Virginia 22602(540) 665-9100americanwoodmark.com2021Annual Reportamericanwoodmark.com