American Woodmark561 Shady Elm RoadWinchester, Virginia 22602(540) 665-9100americanwoodmark.comAnnual Report 2023 Robert J. Adams, Jr.Senior Vice President, Manufacturing and Technical OperationsLatasha M. AkomaDirectorMember of the Audit CommitteeOperating Partner at GenNx360Andrew B. CoganDirectorMember of the CSPCDirector and Chief Executive Officer of Sonneman - A Way of LightM. Scott CulbrethDirectorPresident and Chief Executive OfficerDirectors and Executive OfficersCorporate InformationAnnual MeetingThe 2023 Annual Meeting of Shareholders will be held on Thursday, August 24, 2023 at 9:00 a.m. at American Woodmark Corporation, 561 Shady Elm Road in Winchester, VirginiaAnnual Report of Form 10-KA copy of the Company’s Annual Report on Form 10-K for the fiscal year ending on April 30, 2023, may be obtained free of charge on the Company’s website at Americanwoodmark.com or by writing:Kevin DunniganVice President - TreasurerAmerican Woodmark CorporationPO Box 1980Winchester, VA 22604-9100Corporate HeadquartersAmerican Woodmark Corporation561 Shady Elm Road Winchester, VA 22602(540) 665-9100Mailing AddressPO Box 1980, Winchester, VA 22604-8090Transfer AgentComputershare Shareholder ServicesInvestor Relations(800) 942-5909Shareholder InquiriesInvestor RelationsAmerican Woodmark Corporation561 Shady Elm Road, Winchester, VA 22602(540) 665-9100americanwoodmark.comJames G. Davis, Jr. DirectorChair of the GSNC and Member of the Audit CommitteeChief Executive Officer at James G. Davis Construction CorporationDaniel T. HendrixDirectorChair of the Audit CommitteeChairman of Interface, Inc.Paul JoachimczykSenior Vice President and Chief Financial OfficerCorporate SecretaryDavid A. RodriguezDirectorChair of the CSPC andMember of the GSNC Retired Executive Vice President and Global Chief Human Resources Officer at Marriot InternationalVance W. TangNon-Executive ChairMember of the CSPC andMember of the GSNC Retired President and Chief Executive Officer of KONE Inc.Emily C. VidettoDirectorMember of the Audit Committee and GSNCExecutive Vice President, Sales and Marketing at Pella CorporationCSPC:Compensation and Social Principles CommitteeGSNC:Governance, Sustainability, and Nominating CommitteeAmerican Woodmark stands for more than making cabinets - we make brighter futures.Our CITE principles help create the culture that sets us apart. At American Woodmark, we do more than make cabinets.We champion your unique style. We inspire fresh designs andbold 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. 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 in the community.Excellence Strive to perform every job or action in a superior way. Be innovative, always helping others become the best they can be. Teamwork Understand that we must all work together in order to succeed. Realize that each person must contribute to the team to be a part of the team. Creating Value Through People Dear Fellow Shareholders,
Our commitment in fiscal 2023 was to improve profitability and our team delivered. Net Sales grew 11.3%
to $2,066 million and Adjusted EBITDA grew 74.2% to $240 million. The improvement in performance is
due to pricing better matching inflationary impacts, mix and improved efficiencies in the manufacturing
platforms. Stability in our labor and supply chain enabled higher platform efficiencies and our teams
continue to drive excellence throughout the business.
We remain committed to executing our strategy in fiscal year 2024 which is built on three pillars –
Growth, Digital Transformation and Platform Design or “GDP”. We are delivering the strategy by
leveraging American Woodmark’s culture and connection with our employees, customers, suppliers,
and communities.
Growth for our business will be realized via product and channel expansion as we continue to evolve our
offerings to meet customer needs while ensuring we maintain a relevant and lean product line.
Our upcoming summer launch, the expansion of brands and availability of existing product into
additional channels will help enable our Growth. Despite a near-term slowdown in demand we believe
a 4-5% CAGR in net sales is an appropriate long-term target and that we will grow Adjusted EBITDA to
over $350 million in fiscal 2028. The tailwinds from demographic shifts and undersupplied housing
support higher levels of future residential investment in new construction while remodel will benefit with
the median age of a U.S. home at approximately 40 years old, up from a median age of 31 years in 2005.
Digital Transformation will bring our company together driving efficiency gains across the enterprise
via an ERP cloud solution provider and customer relationship management (“CRM”) tool. Our teams are
working through the global design phase for ERP and we will be piloting the use of the ERP when our
newest location in Monterrey, Mexico goes live later this calendar year. Our CRM tool goes live this
summer across all channels. We continue to invest in our online capabilities driving traffic and
conversion through our remodel partners.
Platform Design includes our overall manufacturing and distribution footprint, operational excellence
and automation efforts with an emphasis to improve margins and positively impact our customer’s
overall experience. As previously announced, we are investing in our stock kitchen and bath business
by adding a facility in Monterrey, Mexico and expanding our operations in Hamlet, NC. Both locations
will go live in late fiscal 2024. Automation efforts will continue, we have targeted $75 million in spending
over the next five years with near term projects focused on material handling, loading, unloading,
inspection, and process automation.
Our commitment to ESG continues and our teams made several new disclosures available on our
website that highlights our path to sustainability, environmental management system, sources of
electricity, energy efficiency investments, conflict minerals policy and climate risks and opportunities.
These efforts will enhance our commitment to employees, communities, and key stakeholders.
In addition, the American Woodmark Foundation made over 240 grants totaling over $400,000 in the
prior fiscal year and continues to do impactful work supporting the communities where we live and work.
In closing, I would like to thank each and every one of our teammates for their commitment and
dedication to the success of our business. On behalf of our Chair, the Board of Directors, the leadership
team, and the entire Company, we thank you for your continued support.
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, 2023
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive
based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to
Section 240.10D-1(b). ☐
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 31, 2022, the last business day of the Company's most recent second quarter was $745,881,155.
As of June 20, 2023, 16,376,579 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 24, 2023
("Proxy Statement") are incorporated by reference into Part III of this Form 10-K.
American Woodmark Corporation
2023 Annual Report on Form 10-K
TABLE OF CONTENTS
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.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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27
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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 many homeowners, builders,
designers, dealers, distributors, and retailers across the country. Our customer base is expanding as we build our portfolio of
brands and reach new markets beyond kitchen and bath. Aspirational yet grounded, we've embraced an ambitious, strategic
vision that will advance us boldly into the future.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and all
amendments to those reports are available free of charge on our website, americanwoodmark.com, as soon as reasonably
practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The
contents of our website are not, however, part of, or incorporated by reference into, this report.
Our Business
American Woodmark celebrates the creativity in all of us. With over 8,800 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 and distributors, we
spark the imagination of homeowners and designers and bring their vision to life. Across our service and distribution centers,
our corporate office and manufacturing facilities, you'll always find the same commitment to customer satisfaction, integrity,
teamwork, and excellence.
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). 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,
4
2023 ("fiscal 2023"), Home Depot and Lowe's combined accounted for approximately 43.2% 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 19 of the top 20 U.S. builders with a high degree of geographic concentration around major metro
areas where single family starts are most robust. We also serve multi-family builders, primarily in the Southwest Region of the
U.S. Our various service center locations are close to these builders and enable us to deliver exceptional service to our builder
partners. During fiscal 2023, builders accounted for approximately 42.9% 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 1,500 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 this channel
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 2023, independent dealers and
distributors accounted for approximately 13.9% 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. We are
building a new manufacturing facility in Monterrey, Mexico that will increase our stock kitchen and bath capacity for east coast
markets. This facility is expected to open in the third quarter of fiscal 2024. 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
5
our suppliers or sourcing partners. We source a portion of our components from third parties in Asia and Europe. The distances
involved in these arrangements, together with the differences in business practices, shipping and delivery requirements, and
laws and regulations add complexity to our supply chain logistics and increase the potential for interruptions in our production
scheduling. In addition, prices and availability of these components may be affected by world market conditions and
government policies and tariffs that impacted fiscal 2023 and may continue into fiscal 2024.
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, 2023, we employed over 8,800 full-time employees, with approximately 277 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, our mission to create value through people remains unchanged. The way we conduct our business and
interact with our customers, vendors, and the communities in which we operate is driven by our core principles of Customer
Satisfaction, Integrity, Teamwork, and Excellence. These principles also guide our interactions with employees and serve as a
6
basis for setting goals for and evaluating our employees. By living out these principles, we believe we will be best positioned to
attract, develop, and promote a broad range of talent and to conduct our business in a responsible, ethical, and professional
manner. To that end, we have, among other things, established policies under which we strive to:
•
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 and the AWCares Fund, which serves as vehicles for our employees to
serve the community and receive financial assistance for unforeseen personal disaster or tragedy; 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 engaged, and has opportunities to succeed and advance his or her career. We invest a significant
number of hours annually in onboarding, culture, safety, supervisory, and leadership 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 a continuous learning
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 to foster engagement, relationship building,
connection, and shared learning experiences. Depending on the course, our training and development opportunities are offered
through a variety of platforms and frequencies, such as on an on-demand, semi-annual, annual, or biannual basis.
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 1.56 during fiscal 2023.
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 engaged in an inclusive manner. We believe that a
workplace that encourages the interaction of different perspectives and backgrounds creates superior solutions, approaches, and
innovations. Five years ago, we commissioned the first formal team to better understand and evaluate inclusion and diversity at
American Woodmark. Since that time, we have taken deliberate steps to educate our leaders and increase internal awareness
within our workforce. Among these actions were the following: establishment of Right Environment Councils in each of our
locations in an attempt to more effectively engage and connect with employees of all levels as well as the communities in which
we serve; enhancing our employee engagement survey process to include measures specific to inclusion and diversity;
participation in an external consultant partnership; establishment of our Inclusion, Diversity, Equity, and Alignment (IDEA)
team; launching an enterprise-wide social strategic roadmap, and most recently the inclusion of representation metrics as part of
our organizational scorecard and long-term incentive pay components. Going forward, we intend to continue our strategy with
the goal of enhancing our culture of inclusion while 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 17 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 metropolitan markets to
7
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 and finance.
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 2024" and Item 7A. "Quantitative and Qualitative Disclosures about Market Risk."
8
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
for approximately 43.2% of total net sales during the fiscal year 2023. We do not typically enter into long-term sales contracts
with Home Depot or Lowe's and our sales usually occur on a "purchase order" basis. Our customers can make significant
changes in their purchase volumes and can seek to significantly affect the prices we receive for our products and services and
the other terms and conditions on which we do business. They have in the past discontinued, and may in the future choose to
discontinue, purchasing some or all of our products with little or no notice. In the past, purchase volumes from our customers,
including Home Depot and Lowe's, have fluctuated substantially, and we expect such fluctuations to occur from time to time in
the future. Any reduction in, or termination of, our sales to either Home Depot or Lowe's could have a material adverse effect
on our business, financial condition, or results of operations.
In addition, the potential for orders from these large retail customers to increase significantly from time to time requires us to
have sufficient manufacturing capacity. These large retailers also impose strict logistics and performance criteria and fines.
Failure to comply with these obligations may result in these customers reducing or stopping their purchase of our products.
We could also experience delays or defaults in payment from Home Depot or Lowe's, which could adversely affect our
business, financial condition or results of operations. The loss of a substantial portion of our order volumes or revenue from
either Home Depot or Lowe's for any reason would have a material adverse effect on our business, financial condition, or
results of operations.
Our business primarily relies on U.S. home improvement, repair and remodel and new home construction activity levels, all
of which are impacted by risks associated with fluctuations in the housing market. Downward changes in the general
economy, the housing market, or other business conditions could adversely affect our results of operations, cash flows, and
financial condition. Our business primarily relies on home improvement, repair and remodel and new home construction
activity levels in the United States. The housing market is sensitive to changes in economic conditions and other factors, such as
the level of employment, access to labor, consumer confidence, consumer income, availability of financing and interest rate
levels, and recent concerns with the housing market. 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;
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• 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.
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. Further, increases in energy costs increase our production
costs and also the cost to transport our products, each of which could have a material adverse effect on our business and results
of operations. In addition, some of our suppliers have consolidated and other suppliers may do so in the future. Combined with
increased demand, such consolidation could increase the price of our supplies and raw materials.
We also may be unwilling or unable to pass on to customers commensurate cost increases. Competitive considerations and
customer resistance to price increases may delay or make us unable to adjust selling prices. To the extent we are unable to either
re-engineer or otherwise offset increased costs or are unwilling or unable to build price increases into our sales prices, our
margins will be negatively affected. Even if we are able to increase our selling prices, sustained price increases for our products
may lead to sales declines and loss of market share, particularly if our competitors do not increase their prices, and there is
usually a six to nine month lag before we are able to see the results of our pricing actions. Conversely, when raw materials or
energy prices decline, we may receive customer pressure to reduce our sales prices.
These prices are market-based and fluctuate based on factors beyond our control. We do not have long-term fixed supply
agreements and do not hedge against price fluctuations. We, therefore, cannot predict our raw materials or energy costs for the
coming year.
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
9
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.
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, Thailand, 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.
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, distributor and
homebuilder channels. Part of our growth strategy depends on expanding our business in the home center, dealer, distributor
and homebuilder channels. We may fail to compete successfully against other companies that are already established providers
within the home center, dealer, distributor and homebuilder channels. Demand for our products within the home center,
homebuilder, dealer and distributor channels may not grow, or might even decline. In addition, we may not accurately gauge
consumer preferences and successfully develop, manufacture, and market our products at a national level. Further, the
implementation of our growth strategy may place additional demands on our administrative, operational, and financial resources
and may divert management's attention away from our existing business and increase the demands on our financial systems and
controls. If our management is unable to effectively manage growth, our business, financial condition, or results of operations
could be adversely affected. If our growth strategy is not successful then our revenue and earnings may not grow as anticipated
or may decline, we may not be profitable, or our reputation and brand may be damaged. In addition, we may change our
financial strategy or other components of our overall business strategy if we believe our current strategy is not effective, if our
business or markets change, or for other reasons, which may cause fluctuations in our financial results.
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. Effects of manufacturing expansion,
realignments, or cost savings programs could result in a decrease in our short-term earnings until the additional capacity is in
place, cost reductions are achieved, and/or production volumes stabilize, such as our expansion of stock kitchen and bath
10
capacity in North Carolina and Mexico, which is currently underway. 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 continue to hedge certain foreign currency transactions in the future; however, a change in the value of the currencies
may impact our financial statements when translated into U.S. dollars. In addition, fluctuations in currency can adversely
impact the cost position in local currency of our products, making it more difficult for us to compete. Our success will depend,
in part, on our ability to effectively manage our business through the impact of these potential changes.
In addition, we source raw materials and components from Asia where we have recently experienced higher manufacturing
costs and longer lead times due to currency fluctuations, higher wage rates, labor shortages, and higher raw material costs, and
we have also experienced higher shipping costs and shipping delays. Our international operations and sourcing of materials
(including from Asia and Mexico) could be harmed by a variety of factors including, but not limited to:
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increases in transportation costs or transportation delays;
work stoppages and labor strikes;
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;
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.
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
11
sourcing interruptions, delays, and inefficiencies, and prevent us from manufacturing enough products to meet customer
demands.
Certain of our customers have been expanding and may continue to expand through consolidation and internal growth,
which may increase their buying power, which could materially and adversely affect our sales, results of operations, and
financial position. Certain of our customers are large companies with significant buying power. In addition, potential further
consolidation in the distribution channels could enhance the ability of certain of our customers to seek more favorable terms,
including pricing, for the products that they purchase from us. Accordingly, our ability to maintain or raise prices in the future
may be limited, including during periods of raw material and other cost increases. If we are forced to reduce prices or to
maintain prices during periods of increased costs, or if we lose customers because of pricing or other methods of competition,
our sales, operating results, and financial position may be materially and adversely affected.
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.
12
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.
The implementation of our Enterprise Resource Planning system could disrupt our business. We are in the process of
implementing a common Enterprise Resource Planning (ERP) system across the Company and went live with the first wave of
the system, including procurement, general ledger, accounts payable, and projects and fixed assets, in the second half of fiscal
2022. A Global Design project is in process to design the manufacturing processes that will be converted to the ERP system.
We also will be piloting the ERP system in our new Monterrey, Mexico manufacturing location. Although we currently expect
the ERP implementation to increase efficiencies by leveraging a common, cloud-based system throughout the Company and
standardizing processes and reporting, our ERP system implementation may not result in improvements that outweigh its costs
and may disrupt our operations. Our inability to mitigate existing and future disruptions could adversely affect our sales,
earnings, financial condition and liquidity. The ERP system implementation subjects us to substantial costs and inherent risks
associated with migrating from our legacy systems. These costs and risks could include, but are not limited to:
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significant capital and operating expenditures;
disruptions to our domestic and international supply chains;
inability to fill customer orders accurately and on a timely basis, or at all;
inability to process payments to suppliers, vendors and associates accurately and in a timely manner;
disruption to our system of internal controls;
inability to fulfill our SEC or other governmental reporting requirements in a timely or accurate manner;
inability to fulfill federal, state, or local tax filing requirements in a timely or accurate manner; and
increased demands on management and staff time to the detriment of other corporate initiatives.
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.
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
13
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. These regulations include the Occupational Safety and Health
Administration and other worker safety regulations for the protection of employees, as well as regulations for the protection of
consumers. It is necessary for us to comply with current requirements (including requirements that do not become effective
until a future date), and even more stringent requirements could be imposed on our products or processes. Compliance with
these regulations may require us to alter our manufacturing and installation processes and our sourcing. Such actions could
increase our capital expenditures and adversely impact our business, financial condition or results of operations, and our
inability to effectively and timely meet such regulations could adversely impact our competitive position.
We could 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
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. 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
14
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.
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, 2023.
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.
Age
52
51
57
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 Senior Vice President and Chief Financial Officer from August 2022 to
present; Company Vice President and Chief Financial Officer from July 2020 to
August 2022; Vice President, Financial Planning and Analysis, from February 2019
to July 2020; Vice President of Finance and Corporate Controller at TopBuild Corp.
from October 2016 to June 2018.
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.
15
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 20, 2023 there were approximately 18,600 total shareholders of the Company's common stock, including 6,400
shareholders of record and 12,200 beneficial owners whose shares are held in "street" name by securities broker-dealers or other
nominees. The Company's shareholders also include approximately 70% of the Company's employees who are eligible to
participate in the American Woodmark Corporation Retirement Savings Plan. The Company does not currently pay cash
dividends and has no current intention to do so in the near future. The determination as to the payment of future dividends will
be made by the Board of Directors (the "Board") from time to time and will depend on the Company's then current financial
condition, capital requirements, and results of operations, as well as any other factors then deemed relevant by the Board, and
will be subject to applicable restrictions in the credit agreement governing the Company's credit facility
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 May 1, 2018 through April 30, 2023. 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
250
225
200
175
150
125
100
75
50
2018
2019
2020
2021
2022
2023
Years ended April 30,
American Woodmark Corporation
S&P Household Durables Index
Russell 2000 Index
16
American Woodmark Corporation
Russell 2000 Index
S&P Household Durables Index
2018
$100.00
$100.00
$100.00
2019
$109.40
$104.60
$91.90
2020
$62.50
$87.50
$86.20
2021
$121.00
$153.00
$169.60
2022
$57.00
$127.20
$129.30
2023
$61.50
$122.50
$159.20
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.
[Reserved.]
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
Pension settlement, net
Interest expense/other (income) expense, net
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
PERCENTAGE OF NET SALES
FISCAL YEARS ENDED APRIL 30,
2023
2022
100.0 %
100.0 %
82.7
17.3
4.6
6.1
0.1
6.5
—
0.7
5.8
1.4
4.4
87.8
12.2
5.0
5.3
—
1.9
3.7
0.5
(2.3)
(0.7)
(1.6)
2021
100.0 %
81.5
18.5
5.1
6.5
0.3
6.6
—
2.0
4.6
1.1
3.5
The following discussion should be read in conjunction with 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;
17
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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;
an inability to obtain raw materials in a timely manner or fluctuations in raw material, transportation, and energy costs
due to inflation or otherwise;
a failure to attract and retain certain members of management or other key employees or other negative labor
developments, including increases in the cost of labor; competition from other manufacturers and the impact of such
competition on pricing and promotional levels;
an inability to develop new products or respond to changing consumer preferences and purchasing practices;
increased buying power of large customers and the impact on our ability to maintain or raise prices;
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;
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;
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 impact of COVID-19 or another pandemic on our business, the global and U.S. economy, and our employees,
customers, and suppliers;
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; and
limitations on operating our business as a result of covenant restrictions under our indebtedness, our ability to pay
amounts due under our credit facilities and our other indebtedness, and interest rate increases.
Additional information concerning the factors that could cause actual results to differ materially from those in forward-looking
statements is contained in this annual report, including elsewhere in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and under Item 1A. "Risk Factors," and Item 7A. "Quantitative and Qualitative
Disclosures about Market Risk." While the Company believes that these risks are manageable and will not adversely impact the
long-term performance of the Company, these risks could, under certain circumstances, have a material adverse impact on its
operating results and financial condition.
Any forward-looking statement that the Company makes speaks only as of the date of this annual report. The Company
undertakes no obligation to publicly update or revise any forward-looking statements or cautionary factors, as a result of new
information, future events or otherwise, except as required by law.
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, 2023, 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.
Financial Overview
A number of general market factors impacted the Company's business in fiscal 2023, some positive and some negative,
including:
• The unemployment rate decreased by 6% compared to April 2022, to 3.4% as of April 2023 according to data provided by
the U.S. Department of Labor;
• There was a decrease in single family housing starts during the Company's fiscal 2023 of 17%, as compared to the Company's
fiscal 2022, according to the U.S. Department of Commerce;
18
• Mortgage interest rates increased with a 30-year fixed mortgage rate of 6.4% in April 2023, an increase of approximately 133
basis points compared to April 2022;
• The median price of existing homes sold in the U.S. rose by 7.1% during the Company's fiscal 2023, according to data
provided by the National Association of Realtors; and
• Consumer sentiment, as reported by the University of Michigan, averaged 2.6% lower during the Company's fiscal 2023 than
in its prior fiscal year.
The Company's largest remodeling customers and competitors continued to utilize sales promotions in the Company's product
category during fiscal 2023. The Company strives to maintain its promotional levels in line with market activity, with a goal of
remaining competitive.
Sales in the remodel channel increased 4.8% during the fiscal year.
Sales in the new construction channel increased 21.1% during fiscal 2023 due to stabilized building trends and increased
completions, which grew 4.8% year over year according to data provided by the U.S. Department of Commerce.
The Company increased its net sales by 11.3% during fiscal 2023, which was driven by growth in all sales channels.
Gross margin for fiscal 2023 was 17.3%, an increase from 12.2% in fiscal 2022. The increase in gross margin was primarily
due to pricing actions and operational improvements related to increased manufacturing efficiencies and supply chain, partially
offset by increased costs in our labor and domestic logistics expenses.
The Company had net income of $93.7 million in fiscal 2023, net loss of $29.7 million in fiscal 2022, and net income of $61.2
million in fiscal 2021. The net loss in fiscal 2022 is primarily due to onetime pension settlement charges of $68.5 million
related to the termination of the Company's pension plan.
The Company regularly considers the need for a valuation allowance against its deferred tax assets. The Company has had
operating profits for the past 10 years. As of April 30, 2023, the Company had total deferred tax assets of $47.9 million net of
valuation allowance, up from $40.8 million of deferred tax assets net of valuation allowance at April 30, 2022. 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, 2023.
Fiscal Year Ended April 30, 2022 Compared to the Fiscal Year Ended April 30, 2021
For a comparison of our performance and financial metrics for the fiscal years ended April 30, 2022 and April 30 2021, see
“Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual
Report on Form 10-K for the fiscal year ended April 30, 2022, filed with the SEC on June 29, 2022.
19
Results of Operations
FISCAL YEARS ENDED APRIL 30,
(Dollars in thousands)
2023
2022
2021
Net sales
Gross profit
Selling and marketing expenses
$ 2,066,200 $ 1,857,186 $ 1,744,014
357,524
226,444
322,118
94,602
92,555
89,011
General and administrative expenses
125,045
97,547
112,521
Interest expense, net
15,994
10,189
23,128
Net Sales
2023 vs.
2022
PERCENT
CHANGE
2022 vs.
2021
PERCENT
CHANGE
11.3 %
57.9 %
2.2 %
28.2 %
57.0 %
6.5 %
(29.7) %
4.0 %
(13.3) %
(55.9) %
Net sales for fiscal 2023 increased 11.3% to $2,066.2 million from the prior fiscal year. The Company experienced growth of
21.1% in the builder channel and 22.2% in the dealer distributor channel primarily due to the impact of price increases, while
the home center channel was largely flat during fiscal 2023.
Gross Profit
Gross profit as a percentage of sales increased to 17.3% in fiscal 2023 as compared with 12.2% in fiscal 2022, representing a
510 basis point improvement The increase in gross profit margin was primarily due to pricing actions and operational
improvements related to increased manufacturing efficiencies and supply chain, partially offset by increased costs in our labor
and domestic logistics expenses.
Selling and Marketing Expenses
Selling and marketing costs increased by $2.0 million or 2.2% during fiscal 2023 versus the prior year. Selling and marketing
expenses in fiscal 2023 were 4.6% of net sales, compared with 5.0% of net sales in fiscal 2022. The increase in selling and
marketing expenses was due to increased digital spend partially offset by reduced spending across the selling and marketing
function and leverage created from higher sales.
General and Administrative Expenses
General and administrative expenses increased by $27.5 million or 28.2% during fiscal 2023 versus the prior fiscal year.
General and administrative costs increased to 6.1% of net sales in fiscal 2023 compared with 5.3% of net sales in fiscal 2022.
The increase in general and administrative expenses was primarily due to increased incentive and profit sharing costs and
digital spend, partially offset by controlled spending and leverage created from higher sales.
Effective Income Tax Rates
The Company generated pre-tax income of $122.7 million during fiscal 2023. The Company's effective tax rate decreased from
30.8% in fiscal 2022 to 23.6% in fiscal 2023 primarily due to the benefit from higher federal income tax credits.
Non-GAAP Financial Measures
We have reported our financial results in accordance with U.S. 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
20
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.
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 (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3)
depreciation and amortization expense, and (4) amortization of customer relationship intangibles 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, (6) change in fair value of
foreign exchange forward contracts, and (7) pension settlement charges. We believe Adjusted EBITDA, when presented in
conjunction with comparable GAAP measures, is useful for investors because management uses Adjusted EBITDA in
evaluating the performance of our business.
We 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, (5) pension settlement charges, and (6) the tax benefit of RSI Acquisition expenses and
subsequent restructuring charges, the net gain/loss on debt forgiveness and modification, and the amortization of customer
relationship intangibles 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 (loss) (GAAP)
Add back:
Income tax expense (benefit)
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)
Pension settlement, net
Change in fair value of foreign exchange forward contracts (3)
Net (gain) loss on debt forgiveness and modification (4)
Stock-based compensation expense
Loss on asset disposal
Adjusted EBITDA (Non-GAAP)
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
$
93,723
$
(29,722)
$
61,193
28,963
15,994
48,077
45,667
$
232,424
$
80
1,525
(7)
—
(2,089)
7,396
1,050
(13,257)
10,189
50,939
45,667
63,816
80
183
68,473
—
—
4,708
697
19,500
23,128
51,100
47,889
$
202,810
174
5,848
—
(1,102)
13,792
4,598
384
$
240,379
$
137,957
$
226,504
Net Sales
$ 2,066,200
$ 1,857,186
$ 1,744,014
Net income (loss) margin (GAAP)
Adjusted EBITDA margin (Non-GAAP)
4.5 %
11.6 %
(1.6) %
7.4 %
3.5 %
13.0 %
(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 nationwide reduction-in-force
implemented in fiscal 2023 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 gain on debt forgiveness totaling $2.1 million in fiscal 2023 related to the New Market Tax
Credits more fully described in Note F — Loans Payable and Long-Term Debt in the Notes to the Consolidated Financial
Statements herein. The Company recognized net loss on debt modification totaling $13.8 million for fiscal year 2021 related to
the restructuring of its debt.
A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2024 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)
2023
2022
2021
FISCAL YEARS ENDED APRIL 30,
Net income (loss) (GAAP)
Add back:
Acquisition and restructuring related expenses
Non-recurring restructuring charges, net
Pension settlement, net
Amortization of customer relationship intangibles and trademarks
Net (gain) loss on debt forgiveness and modification
Tax benefit of add backs
Adjusted net income (Non-GAAP)
$
93,723
$
(29,722) $
61,193
80
1,525
(7)
45,667
(2,089)
(11,791)
80
183
68,473
45,667
—
(29,859)
$
127,108
$
54,822
$
174
5,848
—
47,889
13,792
(17,467)
111,429
Weighted average diluted shares (GAAP)
Add back: potentially anti-dilutive shares (1)
Weighted average diluted shares (Non-GAAP)
16,685,359
—
16,685,359
16,592,358
48,379
16,640,737
17,036,730
—
17,036,730
EPS per diluted share (GAAP)
Adjusted EPS per diluted share (Non-GAAP)
$
$
5.62
7.62
$
$
(1.79) $
3.29
$
3.59
6.54
(1) Potentially dilutive securities for the twelve-month period ended April 30, 2022 have not been considered in the GAAP
calculation of net loss per shares as effect would be anti-dilutive.
Free cash flow
(Dollars in thousands)
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
Cash provided by operating activities
Less: Capital expenditures (1)
Free cash flow
$
$
198,837
$
24,445
$
45,380
51,582
153,457
$
(27,137) $
151,763
46,318
105,445
(1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in
displays.
Outlook for Fiscal 2024
We expect low double-digit declines in net sales for fiscal 2024 versus fiscal 2023. Our outlook for adjusted EBITDA for fiscal
2024 will range from $205 million to $225 million. The change in net sales and adjusted EBITDA is highly dependent upon
overall industry, economic growth trends, material constraints, labor impacts, interest rates and consumer behaviors. Adjusted
EBITDA will also be impacted by one-time start up costs for our plant expansions in Monterrey, Mexico and Hamlet, NC.
We will continue our investment back into the business with investments focusing on the plant expansions in Monterrey,
Mexico and Hamlet, NC, continuing our path for our digital transformation with investments in Oracle and Salesforce and
investing in automation. We are choosing to make these additional investments into our core business which will help improve
sales and enhance our margins in the future. We will be opportunistic in our share repurchasing and lastly, we have our debt
position at a leverage ratio we wanted to achieve and will be deprioritizing paying down debt in fiscal 2024.
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."
23
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $41.7 million at April 30, 2023, representing a $19.4 million increase from its
April 30, 2022 levels. At April 30, 2023, total long-term debt (including current maturities) was $371.7 million, a decrease of
$137.3 million from the balance at April 30, 2022. The Company's ratio of long-term debt to total capital was 29.7%
at April 30, 2023, compared with 39.6% at April 30, 2022. The Company's main source of liquidity is its cash and cash
equivalents on hand and cash generated from its operating activities, which we expect to continue into fiscal 2024. See Note F
— Loans Payable and Long-Term Debt for further discussion on our indebtedness.
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. Approximately $323.2 million
was available under this facility as of April 30, 2023.
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. We expect to remain in compliance with each of the covenants under
the A&R Credit Agreement during fiscal 2024.
As of April 30, 2023 and 2022, the Company had no off-balance sheet arrangements.
OPERATING ACTIVITIES
Cash provided by operating activities in fiscal 2023 was $198.8 million, compared with $24.4 million in fiscal 2022. The
increase in the Company's cash from operating activities was driven primarily by an increase in net income and increased cash
flows from inventories, customer receivables, and accrued compensation and related expenses, which were partially offset by a
decrease in cash flows from accounts payable.
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 2023 was $45.3 million, compared with $51.6 million in fiscal 2022 Investments in
property, plant and equipment for fiscal 2023 were $42.6 million, compared with $44.1 million in fiscal 2022. Investments in
promotional displays were $2.8 million in fiscal 2023, compared with $7.5 million in fiscal 2022.
FINANCING ACTIVITIES
The Company realized a net outflow of $134.1 million from financing activities in fiscal 2023 compared with a net outflow of
$41.6 million in fiscal 2022. During fiscal 2023, $132.9 million, net, was used to repay long-term debt, compared with
approximately $15.5 million in fiscal 2022.
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. The Company
repurchased $25.0 million during fiscal 2022 and $20.0 million during fiscal 2021. The Company did not repurchase any of its
24
shares during the fiscal year ended April 30, 2023, and the current stock repurchase program has a remaining authorization of
$75.0 million as of such date.
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 2024.
Future minimum annual commitments for contractual obligations under term loans, the Revolving Facility, capital and
operating lease obligations, and other long-term debt amount to $30.2 million in fiscal 2024, $416.9 million in fiscal 2025-26,
$31.4 million in fiscal 2027-28, and $10.6 million in fiscal 2029 and thereafter. Estimated required interest payments based on
rates as of April 30, 2023 would be $17.5 million in fiscal 2024, $18.3 million in fiscal 2025-26, $15.5 million in fiscal
2027-28, and $0.2 million in fiscal 2029 and thereafter.
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. 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."
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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.
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 occur or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying amount.
In accordance with the accounting standards, an entity has the option first to assess qualitative factors to determine whether
events and circumstances indicate that it is more likely than not that goodwill is impaired. If after such assessment an entity
concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes
otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the
associated assets must be written down to fair value. There were no impairment charges related to goodwill for the fiscal years
2023, 2022, and 2021.
25
Intangible Assets. Intangible assets consist of customer relationship intangibles. The Company amortizes the cost of intangible
assets over their estimated useful lives, six years, unless such lives are deemed indefinite. The Company reviews its intangible
assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. There were no impairment charges related to other intangible assets for the fiscal years 2023, 2022, and 2021.
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
although there may be a lag in the recovery.
The A&R Credit Agreement includes a variable interest rate component. As a result, we are subject to interest rate risk with
respect to such floating-rate debt. A 100 basis point increase in the variable interest rate component of our borrowings as of
April 30, 2023 would increase our annual interest expense by approximately $1.7 million. See Note F — Loans Payable and
Long-Term Debt Financial Instruments for further discussion.
In May 2021, we entered into interest rate swaps to hedge approximately $200 million of our variable interest rate debt. See
Note J — Derivative Financial Instruments for further discussion.
The Company enters into foreign exchange forward contracts principally to offset currency fluctuations in transactions
denominated in certain foreign currencies, thereby limiting our exposure to risk that would otherwise result from changes in
exchange rates. The periods of the foreign exchange forward contracts correspond to the periods of the transactions
denominated in foreign currencies.
The Company does not currently use commodity or similar financial instruments to manage its commodity price risks.
26
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
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, 2023: 16,635,295, at April 30, 2022: 16,570,619
Retained earnings
Accumulated other comprehensive income
Total Shareholders' Equity
APRIL 30,
2023
2022
$
41,732 $
22,325
119,163
190,699
16,661
368,255
219,415
99,526
30,444
767,612
6,970
1,469
25,107
156,961
228,259
21,112
428,657
213,808
108,055
76,111
767,612
12,565
1,469
24,219
$ 1,518,798 $ 1,632,496
$
63,915 $
111,422
2,263
24,778
49,953
12,528
24,687
2,264
21,985
44,436
15,881
20,240
178,124
216,228
369,396
506,732
11,930
81,370
4,190
38,340
95,084
3,229
—
—
370,259
493,157
10,372
873,788
363,224
399,434
10,225
772,883
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 1,518,798 $ 1,632,496
See notes to consolidated financial statements.
27
CONSOLIDATED STATEMENTS OF OPERATIONS
(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
Pension settlement, net
Net gain on debt modification
Other (income) expense, net
Income (Loss) Before Income Taxes
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
$ 2,066,200 $ 1,857,186 $ 1,744,014
1,708,676
1,630,742
1,421,896
357,524
226,444
322,118
94,602
125,045
1,525
136,352
15,994
(7)
(2,089)
(232)
122,686
92,555
97,547
183
36,159
10,189
68,473
—
89,011
112,521
5,848
114,738
23,128
—
—
476
(42,979)
10,917
80,693
Income tax expense (benefit)
28,963
(13,257)
19,500
Net Income (Loss)
$
93,723 $
(29,722) $
61,193
SHARE INFORMATION
Earnings (loss) per share
Basic
Diluted
See notes to consolidated financial statements.
$
$
5.64 $
5.62 $
(1.79) $
(1.79) $
3.61
3.59
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income (loss)
FISCAL YEARS ENDED APRIL 30,
2021
2022
2023
$
93,723 $
(29,722) $
61,193
Other comprehensive income (loss), net of tax:
Change in pension benefits, net of taxes (benefit) of $0, $18,481 and
$(1,156), respectively
Change in cash flow hedges (swap), net of taxes of $50, $3,463, and $0,
respectively
—
147
54,568
(3,395)
10,225
—
Total Comprehensive Income
$
93,870 $
35,071 $
57,798
See notes to consolidated financial statements.
28
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ACCUMULATED
OTHER
TOTAL
(in thousands, except share data)
SHARES
AMOUNT
EARNINGS
LOSS
EQUITY
Balance, April 30, 2020
16,926,537 $
359,430 $
403,193 $
(51,173) $
711,450
COMMON STOCK
RETAINED
COMPREHENSIVE
SHAREHOLDERS'
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
61,193
—
—
—
(16,104)
—
—
(3,395)
—
—
—
—
Balance, April 30, 2021
16,801,101 $
362,524 $
448,282 $
(54,568) $
Net loss
Other comprehensive income, net of
tax
Stock-based compensation
Exercise of stock-based compensation
awards, net of amounts withheld for
taxes
Stock repurchases
Employee benefit plan contributions
—
—
—
29,808
(299,781)
39,491
—
(29,722)
—
4,708
(1,072)
(5,874)
2,938
—
—
—
(19,126)
—
—
64,793
—
—
—
—
Balance, April 30, 2022
16,570,619 $
363,224 $
399,434 $
10,225 $
Net income
Other comprehensive income, net of
tax
Stock-based compensation
Exercise of stock-based compensation
awards, net of amounts withheld for
taxes
Employee benefit plan contributions
Balance, April 30, 2023
—
—
—
—
93,723
—
7,396
—
—
—
147
—
47,576
17,100
16,635,295 $
(1,199)
838
370,259 $
—
493,157 $
—
—
10,372 $
61,193
(3,395)
4,598
(1,351)
(20,000)
3,743
756,238
(29,722)
64,793
4,708
(1,072)
(25,000)
2,938
772,883
93,723
147
7,396
(1,199)
838
873,788
See notes to consolidated financial statements.
29
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) 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 on foreign exchange forward contracts
Net (gain) loss on debt forgiveness and modification
Stock-based compensation expense
Deferred income taxes
Pension contributions in excess of (less than) expense
Pension settlement, net
Contributions of employer stock to employee benefit plan
Other non-cash items
Changes in operating assets and liabilities (net of acquired assets and liabilities):
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
Investment in promotional displays
Net Cash Used by Investing Activities
FINANCING ACTIVITIES
Payments of long-term debt
Proceeds from long-term debt
Repurchase of common stock
Withholding of employee taxes related to stock-based compensation
Debt issuance cost
Premium paid on debt extinguishment
Net Cash Used by Financing Activities
30
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
$
93,723
$
(29,722)
$
61,193
93,744
1,050
26,592
861
—
(2,089)
7,396
(24,152)
—
(7)
838
7,522
35,011
30,937
3,055
(5,309)
(50,191)
5,060
(26,906)
1,702
198,837
96,606
697
27,610
867
—
—
4,708
(25,717)
710
68,473
2,938
489
(11,366)
(70,386)
(6,206)
(3,542)
16,386
(15,518)
(25,100)
(7,482)
24,445
(42,600)
(44,122)
43
(2,780)
(45,337)
(132,894)
—
—
(1,199)
—
—
10
(7,460)
(51,572)
(50,891)
35,430
(25,000)
(1,116)
(42)
—
100,289
(1,859)
27,192
2,501
(1,102)
13,792
4,598
(12,840)
(2,007)
—
3,743
4,140
(42,829)
(34,454)
488
(6,456)
32,752
1,226
(24,371)
25,767
151,763
(35,734)
3,889
(10,584)
(42,429)
(432,508)
350,000
(20,000)
(1,351)
(2,930)
(8,533)
(134,093)
(41,619)
(115,322)
(in thousands)
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
Net Increase (Decrease) in Cash and Cash Equivalents
19,407
(68,746)
(5,988)
Cash and Cash Equivalents, Beginning of Year
22,325
91,071
97,059
Cash and Cash Equivalents, End of Year
$
41,732
$
22,325
$
91,071
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.
$
2,684
$
1,050
$
2,527
$
$
17,347
49,593
$
$
9,904
18,761
$
$
22,981
33,055
31
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 and 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. We also derive revenue from installations and our revenue
related to installations is recognized upon delivery of cabinets to the customer as installation is typically completed in one day.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers.
Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we
collect are excluded from revenue. The expected costs associated with our contractual warranties are recognized as expense
when the products are sold. See Note L — 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 2023, 2022, and 2021 were
$34.6 million, $32.6 million, and $34.1 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: Inventory costs are determined on a first-in, first-out ("FIFO") basis. Costs include materials, labor, and production
overhead at normal production capacity. Costs do not exceed net realizable values. See Note C — Inventories for additional
information.
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.
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 2023, 2022, and 2021,
the Company concluded no impairment existed.
32
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 occur or circumstances change that would more
likely than not reduce the fair value of a reporting unit below its carrying amount. In accordance with the accounting standards,
an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more
likely than not that goodwill is impaired. If after such assessment an entity concludes that the asset is not more likely than not
impaired, the entity is not required to take further action. However, if an entity concludes otherwise, it is required to determine
the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down by
the amount that the carrying value exceeds the fair value of the reporting unit. During fiscal years 2023, 2022, and 2021, the
Company concluded no impairment existed based on a qualitative analysis.
Intangible Assets: Intangible assets consist of customer relationship intangibles. The Company amortizes the cost of intangible
assets over their estimated useful lives, six years, unless such lives are deemed indefinite. The Company reviews its intangible
assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. During fiscal years 2023, 2022, and 2021, 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 2023,
2022, and 2021 was $8.0 million, $10.0 million, and $10.0 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 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 American Woodmark Corporation Employee Pension Plan (the "Pension Plan"). The Company recognizes the
overfunded or underfunded status of its defined benefit pension plan, 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. Effective
December 31, 2020 (the "Plan Termination Date"), the Pension Plan was terminated in a standard termination and benefits were
distributed on December 2, 2021.
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.
Derivative Financial Instruments: The Company uses derivatives as part of the normal business operations to manage its
exposure to fluctuations in interest rates associated with variable interest rate debt and foreign exchange rates. The Company
has established policies and procedures that govern the risk management of these exposures. The primary objective in managing
these exposures is to add stability to interest expense, manage the Company's exposure to interest rate movements, and manage
the risk from adverse fluctuations in foreign exchange rates.
33
The Company uses interest rate swap contracts to manage interest rate exposures. The Company records derivatives in the
consolidated balance sheets at fair value. Changes in the fair value of derivatives designated as cash flow hedges are recorded in
accumulated other comprehensive income (loss), and subsequently reclassified into earnings in the period the hedged forecasted
transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized
directly in earnings.
The Company also manages risks through the use of foreign exchange forward contracts. The Company recognizes its
outstanding forward contracts in the consolidated balance sheets at their fair values. The Company does not designate the
forward contracts as accounting hedges. The changes in the fair value of the forward contracts are recorded in other (income)
expense, net in the consolidated statements of income.
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 December 2022, the Financial Accounting Standards Board (the "FASB") issued
Accounting Standards Update ("ASU") No. 2022-06 "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic
848." The amendments in this update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after
which entities will no longer be permitted to apply the relief in Topic 848. In March 2020, the FASB issued ASU 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. ASU
2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract
modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate
("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, 2024
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 adopted the standard as of January 31, 2023 when it amended all debt and financial instruments that used to have a
LIBOR reference rate. The amendments did not have a material impact on the Company's consolidated financial statements.
Reclassifications: Certain reclassifications have been made to prior period balances to conform to the current year presentation.
Note B — Customer Receivables
The components of customer receivables were:
(in thousands)
Gross customer receivables
Less:
Allowance for credit losses
Allowance for returns and discounts
Net customer receivables
APRIL 30,
2023
2022
130,655 $
168,699
(449)
(11,043)
(226)
(11,512)
119,163 $
156,961
$
$
34
Note C — Inventories
The components of inventories were:
(in thousands)
Raw materials
Work-in-process
Finished goods
Total inventories
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
Software
Construction in progress
Total property, plant and equipment
Less accumulated amortization and depreciation
APRIL 30,
2023
2022
80,953 $
49,064
60,682
90,451
59,180
78,628
190,699 $
228,259
$
$
APRIL 30,
2023
2022
$
4,475 $
121,903
11,164
331,146
29,869
29,322
45,710
573,589
(354,174)
4,431
119,066
11,164
324,417
31,341
28,115
22,794
541,328
(327,520)
Property, plant and equipment, net
$
219,415 $
213,808
Amortization and depreciation expense on property, plant and equipment amounted to $37.9 million, $38.0 million, and $38.3
million in fiscal years 2023, 2022, and 2021, respectively. Accumulated amortization on financing leases included in the above
table amounted to $31.9 million and $32.8 million as of April 30, 2023 and 2022, respectively.
Note E — Customer Relationships Intangibles
The components of customer relationships intangibles were:
(in thousands)
Customer relationship intangibles
Less accumulated amortization
Total
APRIL 30,
2023
2022
274,000 $
(243,556)
274,000
(197,889)
30,444 $
76,111
$
$
Customer relationships intangibles are amortized over the estimated useful lives on a straight-line basis over six years.
Amortization expense on customer relationships intangibles amounted to $45.7 million and $45.7 million for the years ended
April 30, 2023 and 2022, respectively.
35
Note F — Loans Payable and Long-Term Debt
Maturities of long-term debt are as follows:
FISCAL YEARS ENDING APRIL 30,
(in thousands)
2024
2025
2026
2027
2028
2029
AND
THERE-
AFTER
TOTAL
OUTSTANDING
AS OF APRIL
30, 2023
TOTAL
OUTSTANDING
AS OF APRIL
30, 2022
Term loans
$ — $ — $ 206,250 $ — $ — $
— $
206,250 $
237,500
Revolving credit
—
—
163,750
—
—
—
163,750
263,000
Finance lease
obligations
Other long-term
debt
2,263
970
348
74
47
—
3,702
4,963
—
430
—
—
—
—
430
7,089
Total
$ 2,263 $ 1,400 $ 370,348 $
74 $
47 $
— $
374,132 $
512,552
Debt issuance
costs
Current
maturities
Total long-term
debt
$
$
$
(2,473) $
(3,556)
(2,263) $
(2,264)
369,396 $
506,732
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
initial term loan facility, the entire $250 million under the delayed draw term loan facility and approximately $50 million under
the revolving loan facility in connection with the acquisition of RSI Home Products, Inc. ("RSI") and the refinancing of certain
senior notes assumed from RSI (the "RSI Notes"). The facilities under the Prior Credit Agreement were scheduled to mature on
December 29, 2022.
On April 22, 2021, the Company amended and restated the Prior Credit Agreement and on January 17, 2023 the Company
entered into an amendment of such agreement to transition the applicable interest rate from LIBOR to Secured Overnight
Financing Rate ("SOFR"), effective January 31, 2023. The amended and restated credit agreement (the "A&R Credit
Agreement") provides for a $500 million revolving loan facility with a $50 million sub-facility for the issuance of letters of
credit (the "Revolving Facility") and a $250 million term loan facility (the "Term Loan Facility"). Also on April 22, 2021, the
Company borrowed the entire $250 million under the Term Loan Facility and approximately $264 million under the Revolving
Facility to fund, in part, the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the
redemption of $350 million in aggregate principal amount of 4.875% Senior Notes due 2026 (the Senior Notes). The Company
is required to repay the Term Loan Facility in specified quarterly installments, which have been prepaid through April 30, 2025.
The Revolving Facility and Term Loan Facility mature on April 22, 2026.
As of April 30, 2023, and 2022, $206.3 million and $237.5 million, respectively, was outstanding on the Term Loan Facility.
As of April 30, 2023, and 2022, $163.8 million and $263.0 million, respectively, was outstanding under the Revolving Facility.
36
Outstanding letters of credit under the Revolving Facility were $13.0 million as of April 30, 2023, leaving approximately
$323.2 million in available capacity under the Revolving Facility as of April 30, 2023. Outstanding letters of credit under the
Revolving Facility were $11.7 million, as of April 30, 2022, leaving approximately $225.3 million in available capacity under
the Revolving Facility as of April 30, 2022. The outstanding balances noted above approximate fair value as the facilities have
a floating interest rate.
Amounts outstanding under the Term Loan Facility and the Revolving Facility bear interest based on a fluctuating rate
measured by reference to either, at the Company's option, a base rate plus an applicable margin or SOFR plus 10 basis points
plus an applicable margin, with the applicable margin being determined by reference to the Company's then-current "Secured
Net Leverage Ratio." The Company also incurs a quarterly commitment fee on the average daily unused portion of the
Revolving Facility during the applicable quarter at a rate per annum also determined by reference to the Company's then-current
"Secured Net Leverage Ratio." In addition, a letter of credit fee accrues on the face amount of any outstanding letters of credit
at a per annum rate equal to the applicable margin on SOFR loans, payable quarterly in arrears. As of April 30, 2023, the
applicable margin with respect to base rate loans and SOFR loans was 0.25% and 1.25%, respectively, and the commitment fee
was 0.13%.
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, 2023, 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.
Financing Lease Obligations
The Company has various financing leases with interest rates between 2.0% and 6.1%. The leases require monthly payments
and expire by December 31, 2027. The outstanding amounts owed as of April 30, 2023, and 2022, were $3.7 million and $5.0
million, respectively.
Other Long-term Debt
On January 25, 2016, the Company entered into a New Markets Tax Credit ("NMTC") financing agreement to finance working
capital and capital improvements at its Monticello, Kentucky facility. This agreement was structured with unrelated third party
financial institutions (the "Investors"), their wholly-owned investment funds ("Investment Funds") and certain community
development entities ("CDEs") in connection with our participation in qualified transactions under the NMTC program. In
exchange for substantially all of the benefits derived from the tax credits, the Investors made a contribution of $2.3 million, net
of syndication fees, to the Investment Funds. Simultaneously, a wholly owned subsidiary of the Company made a $4.3 million
loan to the Investment Funds. The Investment Funds used the proceeds of such equity and debt investments to acquire equity
interests in the CDEs, which the CDEs in turn used to make loans to the Company aggregating $6.6 million for the project.
These loans have a term of 30 years with an aggregate interest rate of approximately 1.2%. The original terms of the transaction
included Investor put options, exercisable after seven years, which, if exercised by the Investors, would require the Company to
purchase the Investors’ interests in the Investment Funds. The Investors’ exercised such put options in February 2023 and the
Company repurchased their interests in the Investment Funds in February 2023. As a result of the exercised put option, the
Company recognized a reduction of long-term debt of $6.6 million, a reduction of loan receivable of $4.3 million and a gain on
debt modification of $2.1 million, net of unamortized debt issuance costs of $0.2 million.
On March 8, 2022, the Company entered into a $0.4 million loan agreement with the West Virginia Water Development
Authority acting on behalf of the West Virginia Infrastructure and Jobs Development Council and the Hardy County Rural
Development Authority as part of the Company's capital improvements at the South Branch Primewood facility located in
37
Hardy County, West Virginia. The loan agreement expires on March 8, 2025 and bears no interest rate. The loan agreement is
secured by a sole first lien on the real property and fixtures associated with the facility. It defers principal and interest during the
term of the obligation and forgives any outstanding balance at March 8, 2025, if the Company complies with certain
employment levels at the facility.
Certain of the Company's loan agreements limit the amount and type of indebtedness the Company can incur and require the
Company to maintain specified financial ratios measured on a quarterly basis. In addition to the assets previously discussed,
certain of the Company's property, plant and equipment are pledged as collateral under certain loan agreements and the capital
lease arrangements. The Company was in compliance with all covenants contained in its loan agreements and financing leases
at April 30, 2023.
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 (loss)
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 (loss) per share
Basic
Diluted
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
$
93,723 $
(29,722) $
61,193
16,614
16,592
16,970
71
—
67
16,685
16,592
17,037
$
$
5.64 $
5.62 $
(1.79) $
(1.79) $
3.61
3.59
There were no anti-dilutive securities for the fiscal years ended April 30, 2023 and 2021, which were excluded from the
calculation of net earnings per share. Potentially dilutive securities of 48,379 for the fiscal year ended April 30, 2022, have not
been considered in the calculation of net loss per share as the effect would be anti-dilutive.
On May 25, 2021, the Company's Board of Directors (the "Board") authorized a stock repurchase program of up to
$100 million of the Company's common shares. The Company did not repurchase any of its shares during fiscal 2023. The
Company purchased a total of 299,781 common shares, for an aggregate purchase price of $25.0 million under the plan
approved on May 25, 2021 during fiscal 2022. The Company also repurchased a total of 200,046 common shares, for an
aggregate purchase price of $20.0 million under the prior authorization, during fiscal 2021. The Company funded share
repurchases using available cash and cash generated from operations. Repurchased shares became authorized but unissued
common shares. At April 30, 2023, $75.0 million remained authorized by the Board to repurchase the Company’s common
shares.
Note H — Stock-Based Compensation
The Company has various stock-based compensation plans. The Company issues restricted stock units ("RSUs") to key
employees and non-employee directors. Total compensation expense related to stock-based awards for the fiscal years ended
April 30, 2023, 2022, and 2021 was $7.4 million, $4.7 million, and $4.6 million, respectively. The Company recognizes stock-
based compensation costs for those shares expected to vest on a straight-line basis over the requisite service period of the
award. The Company records forfeitures as they occur.
38
Stock Incentive Plans
At April 30, 2023, 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, 2023, there were 370,816 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.
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 2023, 2022, and
2021. The PBRSUs granted in fiscal 2023, 2022, and 2021 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.
The following table contains a summary of the Company's RSU activity for the fiscal years ended April 30, 2023, 2022, and
2021:
PERFORMANCE-
BASED RSUs
SERVICE-
BASED RSUs
TOTAL RSUs
WEIGHTED
AVERAGE
GRANT
DATE FAIR
VALUE
Issued and outstanding, April 30, 2020
117,687
79,210
196,897
$66.68
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2021
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2022
Granted
Cancelled due to non-achievement of performance
goals
Settled in common stock
Forfeited
Issued and outstanding, April 30, 2023
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
57,392
85,568
142,960
$76.97
(1,975)
(19,930)
(12,561)
154,610
—
(23,242)
(6,563)
147,234
(1,975)
(43,172)
(19,124)
301,844
$104.10
$71.47
$72.79
$69.10
119,772
82,848
202,620
$51.77
(38,454)
(19,478)
(16,620)
199,830
—
(49,916)
(9,986)
170,180
(38,454)
(69,394)
(26,606)
370,010
$73.85
$63.12
$63.15
$61.77
As of April 30, 2023, there was $14.1 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 1.7 years.
39
For the fiscal years ended April 30, 2023, 2022, and 2021 stock-based compensation expense was allocated as follows:
(in thousands)
Cost of sales and distribution
Selling and marketing expenses
General and administrative expenses
2023
2022
2021
$
2,154 $
1,299 $
1,461
1,941
3,301
1,266
2,143
982
2,155
4,598
Stock-based compensation expense, before income taxes
$
7,396 $
4,708 $
Restricted Stock Tracking Units:
During fiscal 2023, the Board approved grants of 11,945 cash-settled performance-based restricted stock tracking units
("RSTUs") and 6,490 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 expense recognized in fiscal years 2023, 2022, and 2021, and the liability as of April 30, 2023 and
2022, related to RSTUs is not significant.
Note I — Employee Benefit and Retirement Plans
Retirement Savings Plan
Under the American Woodmark Corporation Retirement Savings Plan (the "Plan"), essentially all employees are immediately
eligible to participate in the Plan. Participants are eligible for 401(k) matching contributions based upon the employee’s
contribution to the Plan. All participants employed at the end of the fiscal year and hired prior to November 2 of the fiscal year
are eligible for a discretionary profit-sharing contribution.
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 $4.7 million, $0.8 million, and $2.9 million in fiscal years 2023, 2022, and 2021, respectively.
The Company matches 100% of an employee's annual 401(k) contributions to the Plan up to 4% of annual compensation.
The expense for 401(k) matching contributions for the plan was $12.4 million, $11.7 million, and $11.9 million, in fiscal years
2023, 2022, and 2021, 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 (the "Pension Plan"). The Pension Plan provided defined
benefits based on years of service and final average earnings (for salaried employees) or benefit rate (for hourly employees).
Effective December 31, 2020 (the "Plan Termination Date"), the Pension Plan was terminated in a standard termination and
benefits were distributed on December 2, 2021.
40
The following provides a reconciliation of benefit obligations, plan assets and funded status of the Company's non-contributory
Pension Plan as of:
(in thousands)
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at beginning of year
Interest cost
Actuarial gains (losses)
Benefits paid
Settlements
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
Benefits paid
Settlements
Transfer to defined contribution plan
Fair value of plan assets at end of year
Funded status of the plan
(in thousands)
COMPONENTS OF NET PERIODIC PENSION BENEFIT COST
Interest cost
Expected return on plan assets
Recognized net actuarial loss
Amortization of net loss from prior years
Settlement charge
Pension benefit cost
$
$
$
$
$
APRIL 30,
2023
2022
— $
—
—
—
—
— $
979 $
27
—
—
(1,006)
— $
— $
196,537
3,147
(3,738)
(4,214)
(191,732)
—
193,552
3,373
(4,214)
(191,732)
—
979
979
APRIL 30,
2022
2021
$
$
3,147 $
(3,601)
—
1,164
68,473
69,183 $
4,662
(8,430)
1,761
—
—
(2,007)
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 NET
PERIODIC PENSION BENEFIT COST
Discount rate
Expected return on plan assets
FISCAL YEARS ENDED
APRIL 30,
2022
2021
2.80 %
— %
3.16%
3.3 %
The Company based 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 was
determined based on consideration of historical and forward-looking returns and the current and expected asset allocation
strategy.
41
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 amortized 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 funded the Pension Plan in amounts sufficient to meet minimum funding requirements under
applicable employee benefit and tax laws plus additional amounts the Company deemed appropriate.
The Company made no contributions to its Pension Plan in fiscal 2022.
Plan Assets: Pension assets by major category and the type of fair value measurement as of April 30, 2022 are presented in the
following table:
FAIR VALUE MEASUREMENTS AT APRIL 30, 2022
QUOTED PRICES
IN ACTIVE
MARKETS
(LEVEL 1)
SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
TOTAL
$
$
979
979
$
$
979
979
$
$
—
—
$
$
—
—
(in thousands)
Cash Equivalents
Total plan assets
Note J--Derivative Financial Instruments
Interest Rate Swap Contracts
The Company enters into interest rate swap contracts to manage variability in the amount of known or expected cash payments
related to portions of its variable rate debt. On May 28, 2021, the Company entered into four interest rate swaps with an
aggregate notional amount of $200 million to hedge part of the variable rate interest payments under the Term Loan Facility.
The interest rate swaps became effective on May 28, 2021 and will terminate on May 30, 2025. The interest rate swaps
economically convert a portion of the variable rate debt to fixed rate debt. The Company receives floating interest payments
monthly based on one-month SOFR and pays a fixed rate of 0.53% to the counterparty.
The interest rate swaps are designated as cash flow hedges. Changes in fair value are recorded to other comprehensive income.
The risk management objective in using interest rate swaps is to add stability to interest expense and to manage the Company's
exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts
from a counterparty in exchange for the Company making fixed-rate payments over the life of the contract agreements without
exchange of the underlying notional amount. Realized gains or losses in connection with required interest payments on interest
rate swaps are recorded in earnings, as a component of interest expense, net to offset variability in interest expense associated
with the underlying debt's cash flows.
For the year ended April 30, 2023, unrealized gains, net of deferred taxes, of $3.9 million, were recorded in other
comprehensive income, and $3.8 million of realized gains were reclassified out of accumulated other comprehensive loss to
interest expense, net due to interest received from and payments made to the swap counterparties. For the year ended April 30,
2022, unrealized gains, net of deferred taxes, of $10.2 million, were recorded in other comprehensive income, and $0.9 million
of realized losses were reclassified out of accumulated other comprehensive loss to interest expense due to payments made to
the swap counterparties.
As of April 30, 2023, the Company anticipates reclassifying approximately $8.4 million of net hedging gains from accumulated
other comprehensive income into earnings during the next 12 months to offset the variability of the hedged items during this
period.
42
The fair value of the derivative instruments are included in other assets on the consolidated balance sheets.
Foreign Exchange Forward Contracts
At April 30, 2023, the Company held no forward contracts.
Note K — Income Taxes
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 (benefit)
Other comprehensive income (loss)
Total comprehensive income tax expense
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
$
39,180 $
8,748 $
25,683
12,937
998
53,115
3,295
417
12,460
5,639
1,018
32,340
(20,195)
(21,316)
(10,741)
(3,869)
(88)
(4,049)
(352)
(1,896)
(203)
(24,152)
(25,717)
(12,840)
28,963
(13,257)
19,500
(50)
21,944
(1,156)
$
28,913 $
8,687 $
18,344
The Company's effective income tax rate varied from the federal statutory rate as follows:
FISCAL YEARS ENDED APRIL 30,
2022
2023
2021
Federal statutory rate
Effect of:
Federal income tax credits
Stock compensation
Uncertain tax positions
Meals and entertainment
Valuation allowance for deferred taxes
Foreign
Other
State income taxes, net of federal tax effect
Effective income tax rate
21.0 %
21.0 %
21.0 %
(2.7)
0.2
(0.2)
0.2
—
0.3
(0.4)
5.2
23.6 %
5.4
(0.3)
1.7
(0.4)
—
0.6
(0.6)
3.4
30.8 %
(1.2)
0.2
—
0.1
—
0.6
0.2
3.2
24.1 %
43
The significant components of deferred tax assets and liabilities were as follows:
(in thousands)
Deferred tax assets:
Accounts receivable
Inventory
Product liability
Employee benefits
Tax credit carryforwards
Operating leases liabilities
Section 174 research and development
Section 263A costs
Other
Gross deferred tax assets, before valuation allowance
Valuation allowance
Gross deferred tax assets, after valuation allowance
Deferred tax liabilities:
Pension benefits
Inventory
Depreciation
Intangibles
Operating leases right-of-use assets
Interest rate swaps
Other
Gross deferred tax liabilities
APRIL 30,
2023
2022
$
2,755 $
900
2,031
6,824
5,920
26,884
5,258
1,002
1,892
53,466
(5,573)
47,893
227
—
22,464
6,830
24,681
3,518
634
58,354
1,941
—
1,739
5,604
5,542
29,255
—
386
1,476
45,943
(5,122)
40,821
194
1,095
27,178
18,085
26,980
3,457
703
77,692
Net deferred tax liability
$
10,461 $
36,871
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, 2023.
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 $0.3 million related to FTCs.
The gross amount of state tax credit carryforwards related to state ITCs as of April 30, 2023 and 2022 was $3.6 million and
$3.7 million, respectively. These credits expire in various years beginning in fiscal 2028. Net of the federal impact and related
valuation allowance, the Company recorded $0.3 million and $0.4 million of deferred tax assets related to these credits as of
April 30, 2023 and 2022, 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, 2023
and 2022, a deferred credit balance of $0.3 million and $0.4 million, respectively, is included in other liabilities on the
consolidated balance sheets.
The gross amount of FTC carryforwards as of April 30, 2023 and 2022 is $2.2 million and $1.9 million, respectively, which
begin to expire in fiscal 2029.
44
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
Additions based on tax positions of prior years
Statute of limitations lapses
Reductions for tax positions of prior years settlements
Balance at end of year
APRIL 30,
2023
2022
$
$
2,070 $
—
1,568
—
(746)
2,892 $
1,491
49
1,286
(756)
—
2,070
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, 2023, federal tax years 2019 through 2022 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 L — 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 FASB Accounting Standards Codification Topic 450, "Contingencies", the Company categorizes the various
suits and claims into three categories according to their likelihood for resulting in potential loss: those that are probable, those
that are reasonably possible and those that are deemed to be remote. Where losses are deemed to be probable and estimable,
accruals are made. Where losses are deemed to be reasonably possible, a range of loss estimates is determined and considered
for disclosure. In determining these loss range estimates, the Company considers known values of similar claims and
consultation with independent counsel.
The Company believes that the aggregate range of 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, 2023.
Antidumping and Countervailing Duties Investigation
In February 2020, a conglomeration of domestic manufacturers filed a scope and circumvention petition seeking the imposition
of antidumping (“AD”) and countervailing duties (“CVD”) with the United States Department of Commerce (“DOC”) and the
United States International Trade Commission (“ITC”) against imports of hardwood plywood assembled in Vietnam using
cores sourced from China. In July 2022, the DOC issued a Preliminary Scope Determination and Affirmative Preliminary
Determination of Circumvention of the Antidumping and Countervailing Duty Orders (“Preliminary Determination”). Included
in the Determination is a list of Vietnamese suppliers not eligible for certification.
AD and CVD cash deposits of 206% are required for imports from the Vietnamese suppliers not eligible for certification.
Many of the Vietnamese suppliers have appealed their inclusion on the ineligible for certification list. Because two of the
Company’s primary Vietnamese plywood vendors are included on the ineligible for certification list, the Company has
determined that it is reasonably possible that it may experience a loss due to these matters and estimates that the maximum total
potential loss for prior purchases to be approximately $4.0 million, net of tax. As of April 30, 2023, the Company has remitted
deposits of $3.9 million pursuant to the Preliminary Determination. The deposits remitted are included in other assets on the
Company’s consolidated balance sheet. The final determination remains outstanding as of the date of this filing. Based on the
evidence provided from the Vietnamese suppliers, the specific characteristics of the product imported and other relevant
matters, the Company intends to vigorously appeal any determination that it is subject to these duties and believes that any
deposits made will ultimately be refunded upon settlement of the appeals.
45
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. In May 2023, the
Company issued a recall in cooperation with the U.S. Consumer Product Safety Commission for certain cabinets manufactured
between February 2022 and September 2022. An immaterial reserve has been recorded as of April 30, 2023 for this recall and
is not included in the table below.
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
Note M — Revenue Recognition
APRIL 30,
2023
2022
$
$
6,878 $
34,620
(33,484)
8,014 $
5,249
26,580
(24,951)
6,878
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, 2023,
2022, and 2021:
(in thousands)
Home center retailers
Builders
Independent dealers and distributors
Net Sales
Note N — Credit Concentration
FISCAL YEARS ENDED APRIL 30,
2021
2022
2023
$
892,721 $
890,554 $
848,898
885,650
287,829
731,048
235,584
673,307
221,809
$ 2,066,200 $ 1,857,186 $ 1,744,014
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 to whom credit is extended operate in the new home construction and home remodeling
markets.
The Company maintains an allowance for credit losses based upon management's evaluation and judgment of potential net loss.
The allowance is estimated based upon historical experience, the effects of current developments and economic conditions and
of each customer's current and anticipated financial condition. Estimates and assumptions are periodically reviewed and
updated. Any resulting adjustments to the allowance are reflected in current operating results.
At April 30, 2023, the Company's two largest customers, Customers A and B, represented 40.4% and 18.4% of the Company's
gross customer receivables, respectively. At April 30, 2022, Customers A and B represented 33.8% and 19.9% of the
Company's gross customer receivables, respectively.
46
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 O — Leases
PERCENT OF ANNUAL NET SALES
2023
29.6%
13.6%
2022
31.9%
16.1%
2021
30.8%
17.9%
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
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.
FISCAL YEARS ENDED APRIL 30,
2023
2022
2021
1,720 $
105 $
$
635
73
$
$ 26,592 $ 27,610 $ 27,192
1,404 $
106 $
The components of lease costs were as follows:
(in thousands)
Finance lease cost:
Reduction in the carrying value of right-of-use assets
Interest on lease liabilities
Operating lease cost
47
Additional information related to leases was as follows:
(dollars 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 YEARS ENDED APRIL 30,
2023
2022
2021
$
105
$
106
$
73
$ 26,906
$ 25,100
$ 24,371
$ 1,714
$ 1,138
$ 11,109
$ 1,379
$ 1,862
$ 7,482
$
608
$ 2,222
$ 8,914
1.99
4.84
2.32
5.77
2.95
6.62
3.69 %
3.35 %
2.91 %
3.2 %
2.95 %
3.23 %
The Company has signed a lease in Monterrey, Mexico and a lease for the expansion in Hamlet, North Carolina. These leases
are expected to commence once construction of the facilities is complete, which is anticipated in the third quarter of fiscal 2024.
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, 2023:
FISCAL YEAR
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less imputed interest
Total lease liability
Current maturities
Long-term lease liability
Lease right-of-use assets
OPERATING
(in thousands)
FINANCING
(in thousands)
$
27,907 $
24,014
21,181
16,647
14,604
10,615
114,968
(8,820)
106,148 $
(24,778)
81,370 $
99,526 $
$
$
$
2,359
1,009
361
78
48
—
3,855
(153)
3,702
(2,263)
1,439
9,101
NOTE P — Restructuring Charges
In the third quarter of fiscal 2023, the Company implemented nationwide reductions in force, which were substantially
completed in the fourth quarter of fiscal 2023. The Company recognized pre-tax restructuring charges, net of $1.5 million for
the year ended April 30, 2023, related to these reductions in force, which were primarily severance and separation costs. A
reserve of $0.8 million for restructuring charges is included in accrued compensation and related expenses in the consolidated
balance sheet as of April 30, 2023 which relates to employee termination costs accrued but not yet paid.
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 2022 and 2021, the
48
Company recognized pre-tax restructuring charges, net of $0.3 million and $4.4 million, respectively, related to the closure of
the plant.
During fiscal years 2023, 2022, and 2021, the Company recognized total pre-tax restructuring charges, net of $1.5 million, $0.2
million, and $5.8 million, respectively.
Note Q — 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 — Employee
Benefit and Retirement Plans.
The Company's financial instruments include cash and equivalents, marketable securities, and other investments; accounts
receivable and accounts payable; interest rate swap contracts; and short- and long-term debt. The carrying values of cash and
equivalents, accounts receivable and payable, and short-term debt on the consolidated balance sheets approximate their fair
value due to the short maturities of these items. The interest rate swap 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, 2023 and 2022 at fair value on a
recurring basis (in thousands):
ASSETS:
Mutual funds
Interest rate swap contracts
Total assets at fair value
ASSETS:
Mutual funds
Interest rate swap contracts
Total assets at fair value
$
$
$
$
FAIR VALUE MEASUREMENTS AS OF APRIL 30, 2023
LEVEL 1
LEVEL 2
LEVEL 3
191 $
—
191 $
— $
13,885
13,885 $
FAIR VALUE MEASUREMENTS AS OF APRIL 30, 2022
LEVEL 2
LEVEL 1
LEVEL 3
404 $
—
404 $
— $
13,687
13,687 $
49
—
—
—
—
—
—
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of American Woodmark Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of American Woodmark Corporation (the Company) as of April
30, 2023, the related consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for the
year ended April 30, 2023, and the related notes and financial statement schedule included under Item 15(a)2 (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company at April 30, 2023, and the results of its operations and its cash flows for
the year ended April 30, 2023, 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, 2023, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework), and our report dated June 27, 2023 expressed an unmodified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our 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 the financial statements are free of material misstatement, whether due to
error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides 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 financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
Goodwill Impairment Assessment
Description of
the Matter
At April 30, 2023, the Company’s Goodwill totaled $767.6 million. As discussed in Note A of the
consolidated financial statements, the Company evaluates its goodwill for impairment annually during the
fourth quarter and when events or changes in circumstances indicate the carrying value of goodwill may
not be recoverable. The Company performed a qualitative annual goodwill impairment test as of February
1, 2023, which resulted in no impairment.
Auditing management’s annual goodwill impairment test was complex due to the significant judgments
management made in assessing and weighting the relevant qualitative factors in determining whether it
was more likely than not that the fair value of its reporting unit was less than its carrying amount. Those
factors include (i) macroeconomic conditions, (ii) industry and market considerations, (iii) cost factors,
(iv) overall financial performance of the reporting unit, (v) other relevant entity-specific events, (vi)
consideration of whether there was a sustained decrease in the stock price of the Company, and (vii)
analysis of market capitalization versus carrying value, including the consideration of a reasonable control
premium. Management’s assessment and weighting of these qualitative factors could have a significant
effect on the Company’s qualitative impairment assessment and the need to perform a quantitative test of
goodwill impairment
50
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s goodwill impairment process, including controls over management’s review of the
assessment of qualitative factors described above and the completeness and accuracy of the underlying
data.
To test the Company’s assessment and weighting of the relevant qualitative factors that may indicate the
fair value of the reporting unit is below its carrying value, we performed audit procedures that included,
among others, testing the underlying data used by the Company in its analysis. We evaluated the
Company's assessment of cost factors, financial performance, and other entity-specific events by
considering evidence obtained through other procedures, including overall analytical review of current
operating results and inquiries of the Company’s executives. We evaluated macroeconomic and
construction industry third-party information and compared them to considerations used by the Company.
We compared the Company’s carrying value to its market capitalization. We also independently evaluated
a reasonable range of control premiums using market information for comparable transactions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2022.
Richmond, Virginia
June 27, 2023
51
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 sheet of American Woodmark Corporation and subsidiaries (the
Company) as of April 30, 2022, the related consolidated statements of operations, comprehensive income, shareholders’ equity,
and cash flows for each of the years in the two-year period ended April 30, 2022, and the related notes and financial statement
schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of April 30, 2022, and the results of its operations and
its cash flows for each of the years in the two-year period ended April 30, 2022, in conformity with U.S. generally accepted
accounting principles.
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
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our 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.
/s/ KPMG LLP
We served as the Company’s auditor from 2004 to 2022.
Richmond, Virginia
June 29, 2022
52
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, 2023. 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, 2023. The Company's internal control over financial reporting as of April 30, 2023 has
been audited by Enrst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears
in this Annual Report on Form 10-K.
/s/ M. SCOTT CULBRETH
M. Scott Culbreth
President and Chief Executive Officer
/s/ PAUL JOACHIMCZYK
Paul Joachimczyk
Senior Vice President and Chief Financial Officer
53
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of American Woodmark Corporation
Opinion on Internal Control Over Financial Reporting
We have audited American Woodmark Corporation’s internal control over financial reporting as of April 30, 2023, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, American Woodmark Corporation (the
Company) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2023, based on
the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheet of the Company as of April 30, 2023, the related consolidated statements of
operations, comprehensive income, shareholders’ equity, and cash flows for the year ended April 30, 2023, and the related
notes and financial statement schedule included under Item 15(a)2 and our report dated June 27, 2023 expressed an unqualified
opinion thereon.
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 included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
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/ Ernst & Young LLP
Richmond, Virginia
June 27, 2023
54
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. The Company’s management evaluated, with the participation of the
Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) as of April 30, 2023. Based on this evaluation, and due to the remediation of the previously disclosed material
weakness in our internal control over financial reporting as discussed below, Company management, including the principal
executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures were
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, 2023. 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, Ernst & Young
LLP (EY), has issued an audit report on the effectiveness of the Company's internal control over financial reporting. EY's report
on the effectiveness of the Company's internal control over financial reporting is included with the Consolidated Financial
Statements included in this report under Item 8, "Financial Statements and Supplementary Data," and is incorporated in this
item by reference.
Remediation of Previously Disclosed Material Weaknesses. We previously disclosed in Part II, Item 9A of our Annual Report
on Form 10-K for the fiscal year ended April 30, 2022 (our “2022 Annual Report”) material weaknesses in our internal control
over financial reporting involving ineffective general information technology controls related to information technology change
management and the enterprise resource planning system implementation. During the fiscal quarter ended April 30, 2023, we
completed the implementation of our remediation plan described in Part II, Item 9A of our 2022 Annual Report, as well as
sufficient testing to conclude that the applicable controls are operating effectively. Accordingly, management has concluded
that the previously disclosed material weaknesses were fully remediated as of April 30, 2023.
Changes in Internal Control over Financial Reporting. Except as described above, there has been no change in the Company's
internal control over financial reporting during the fiscal quarter ended April 30, 2023, 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 24, 2023 ("Proxy Statement") 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
(2)
Registrant" in Part I of this report and is incorporated in this Item by reference;
(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
55
(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
"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" and "Equity Compensation Plan Information" in the Proxy Statement is incorporated in this Item
by reference.
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
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, 2023 and 2022.
Consolidated Statements of Income – for each year of the three-year period ended April 30, 2023.
Consolidated Statements of Comprehensive Income – for each year of the three-year period ended
April 30, 2023.
Consolidated Statements of Shareholders' Equity – for each year of the three-year period ended
April 30, 2023.
Consolidated Statements of Cash Flows – for each year of the three-year period ended April 30,
2023.
56
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm.(Ernst & Young LLP, Richmond, VA,
Auditor Firm ID: 42)
Report of Independent Registered Public Accounting Firm.(KPMG LLP, Richmond, VA, Auditor
Firm ID: 185)
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, 2023.
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
10.1 (a)
10.1 (b)
10.1 (c)
10.2(a)
10.3(a)
10.3(b)
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 effective May 24, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant's
Form 8-K as filed on May 25, 2023; 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).
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.
Amendment and Restatement Agreement, dated as of April 22, 2021, by and among American Woodmark
Corporation, each Subsidiary of American Woodmark Corporation party thereto, the Lenders party thereto
and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit
10.1 to the Registrant's Form 8-K as filed on April 26, 2021; Commission File No. 000-14798).
Amended and Restated Credit Agreement, dated as of April 22, 2021, by and among American Woodmark
Corporation, as Borrower, the Lenders referred to therein as Lenders and Wells Fargo Bank, National
Association, as Administrative Agent, Swingline Lender and Issuing Lender (incorporated by reference to
Exhibit 10.2 to the Registrant's Form 8-K as filed on April 26, 2021; Commission File No. 000-14798).
Amendment Agreement, dated as of January 17, 2023, to the Amended and Restated Credit Agreement dated
as of April 22, 2021, among American Woodmark Corporation, as Borrower, the lenders from time to time
party thereto and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by
reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31,
2023; Commission File No. 000-14798).
2015 Non-Employee Directors Restricted Stock Unit Plan (incorporated by reference to Appendix A to the
Registrant's Definitive Proxy Statement on Schedule 14A as filed on June 30, 2015; Commission File No.
000-14798).
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).*
57
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)
16.1(a)
16.1(b)
21
23.1
23.2
31.1
31.2
32.1
101
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).
Separation Agreement and Release, effective January 12, 2023, between American Woodmark Corporation
and Teresa M. May (incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K as filed on January
19, 2023; 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).*
Letter of KPMG, LLP, dated as of May 27, 2022, to the Securities and Exchange Commission (incorporated
by reference to the Registrant's Current Report on Form 8-K filed May 27, 2022; Commission File No.
000-14798).*
Letter of KPMG, LLP, dated as of June 29, 2022, to the Securities and Exchange Commission (incorporated
by reference to Amendment No. 1 to the Registrant’s Current Report on Form 8-K filed July 1, 2022;
Commission File No. 000-14798).
Subsidiaries of the Company (Filed Herewith).
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (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).
Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) of the
Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Filed Herewith).
Interactive Data File for the Registrant's Annual Report on Form 10-K for the year ended April 30, 2023
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.
58
Schedule II - Valuation and Qualifying Accounts
AMERICAN WOODMARK CORPORATION
(In Thousands)
Description (a)
Year ended April 30, 2023:
Allowance for credit losses
Reserve for cash discounts
Balance at
Beginning of
Year
Additions
(Reductions)
Charged to
Cost and
Expenses
Other
Deductions
Balance at
End of
Year
$
$
226 $
420
$ — $
(197) (b) $
449
1,973 $
21,540 (c) $ — $
(21,760) (d) $
1,753
Reserve for sales returns and allowances
$
9,539 $
26,043 (c) $ — $
(26,292)
$
9,290
Year ended April 30, 2022:
Allowance for credit losses
Reserve for cash discounts
$
$
331 $
78
$ — $
(183) (b) $
226
1,836 $
21,486 (c) $ — $
(21,349) (d) $
1,973
Reserve for sales returns and allowances
$
7,154 $
30,088 (c) $ — $
(27,703)
$
9,539
Year ended April 30, 2021:
Allowance for credit losses
Reserve for cash discounts
$
$
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
(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.
59
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 27, 2023
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 27, 2023
June 27, 2023
June 27, 2023
June 27, 2023
June 27, 2023
June 27, 2023
/s/ M. SCOTT CULBRETH
M. Scott Culbreth
President and Chief Executive
Officer
(Principal Executive Officer)
Director
/s/ PAUL JOACHIMCZYK
Paul Joachimczyk
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
June 27, 2023
June 27, 2023
June 27, 2023
/s/ LATASHA M. AKOMA
Latasha M. Akoma
Director
/s/ JAMES G. DAVIS, JR.
James G. Davis, Jr.
Director
/s/ DAVID A. RODRIGUEZ
David A. Rodriguez
Director
/s/ EMILY C. VIDETTO
Emily C. Videtto
Director
/s/ ANDREW B. COGAN
Andrew B. Cogan
Director
/s/ DANIEL T. HENDRIX
Daniel T. Hendrix
Director
/s/ VANCE W. TANG
Vance W. Tang
Director, Non-Executive Chair
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
VP, Treasurer
American Woodmark Corporation
P.O. Box 1980
Winchester, Virginia 22604-8090
60
Robert J. Adams, Jr.Senior Vice President, Manufacturing and Technical OperationsLatasha M. AkomaDirectorMember of the Audit CommitteeOperating Partner at GenNx360Andrew B. CoganDirectorMember of the CSPCDirector and Chief Executive Officer of Sonneman - A Way of LightM. Scott CulbrethDirectorPresident and Chief Executive OfficerDirectors and Executive OfficersCorporate InformationAnnual MeetingThe 2023 Annual Meeting of Shareholders will be held on Thursday, August 24, 2023 at 9:00 a.m. at American Woodmark Corporation, 561 Shady Elm Road in Winchester, VirginiaAnnual Report of Form 10-KA copy of the Company’s Annual Report on Form 10-K for the fiscal year ending on April 30, 2023, may be obtained free of charge on the Company’s website at Americanwoodmark.com or by writing:Kevin DunniganVice President - TreasurerAmerican Woodmark CorporationPO Box 1980Winchester, VA 22604-9100Corporate HeadquartersAmerican Woodmark Corporation561 Shady Elm Road Winchester, VA 22602(540) 665-9100Mailing AddressPO Box 1980, Winchester, VA 22604-8090Transfer AgentComputershare Shareholder ServicesInvestor Relations(800) 942-5909Shareholder InquiriesInvestor RelationsAmerican Woodmark Corporation561 Shady Elm Road, Winchester, VA 22602(540) 665-9100americanwoodmark.comJames G. Davis, Jr. DirectorChair of the GSNC and Member of the Audit CommitteeChief Executive Officer at James G. Davis Construction CorporationDaniel T. HendrixDirectorChair of the Audit CommitteeChairman of Interface, Inc.Paul JoachimczykSenior Vice President and Chief Financial OfficerCorporate SecretaryDavid A. RodriguezDirectorChair of the CSPC andMember of the GSNC Retired Executive Vice President and Global Chief Human Resources Officer at Marriot InternationalVance W. TangNon-Executive ChairMember of the CSPC andMember of the GSNC Retired President and Chief Executive Officer of KONE Inc.Emily C. VidettoDirectorMember of the Audit Committee and GSNCExecutive Vice President, Sales and Marketing at Pella CorporationCSPC:Compensation and Social Principles CommitteeGSNC:Governance, Sustainability, and Nominating CommitteeAmerican Woodmark stands for more than making cabinets - we make brighter futures.Our CITE principles help create the culture that sets us apart. At American Woodmark, we do more than make cabinets.We champion your unique style. We inspire fresh designs andbold 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. 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 in the community.Excellence Strive to perform every job or action in a superior way. Be innovative, always helping others become the best they can be. Teamwork Understand that we must all work together in order to succeed. Realize that each person must contribute to the team to be a part of the team. Creating Value Through People American Woodmark561 Shady Elm RoadWinchester, Virginia 22602(540) 665-9100americanwoodmark.comAnnual Report 2023