WINCHESTER, Va., Feb. 22 - American Woodmark Corporation (Nasdaq: AMWD) today announced results for the third quarter ended January 31, 2006.
Net sales increased 4% from the prior year to $191,143,000. Sales of core products grew at a rate of 6%, as compared with the Company's previous forward guidance of 4% to 8%. During the third quarter, the Company commenced its previously announced transition out of certain low margin products. The Company had previously issued forward guidance that anticipated overall net sales growth, inclusive of the transition impact, of 0% to 4%.
Net income for the quarter was $6,069,000, or $0.37 per diluted share, compared with net income of $7,083,000, or $0.42 per diluted share, in the prior year. Net income was above the Company's previous forward guidance of $0.20 to $0.30 per diluted share.
Gross profit was 17.5% of sales, down from 18.8% in the previous year. The reduced gross profit margin was driven primarily by higher manufacturing overhead in relation to sales, as two new plants that opened in fiscal 2005 were not yet fully utilized. Transportation expense also rose due to higher fuel costs, inflation in rate structures and additional cost from switching selected carriers to improve customer service.
Gross margins improved sequentially from 15.7% in the second quarter that ended in October 2005, as improved operations and efficiencies from previously announced initiatives to improve productivity and reduce spending were realized.
Selling, general and administrative costs declined from 12.5% in the previous year to 12.4% of net sales, due to the impact of cost management efforts and lower costs related to the Company's pay-for-performance employee incentive plans.
Looking forward to the fourth fiscal quarter of 2006, the Company expects a continued positive environment for remodeling orders and less robust, but still healthy, new construction order rates. The Company expects sales of core products to grow by mid-single-digits, offset by the impact of its continued transition out of low-end products. Inclusive of the transition, the Company expects that total sales will be roughly flat, ranging from a 2% decline to a 2% increase. The Company further expects that gross margin will continue to increase sequentially and exceed that of the prior year, driven by seasonally higher sales volumes, favorable impact from operational improvements and pricing actions, and relatively stable material and fuel costs. Overall, the Company expects that net income will be in the range of $0.45 to $0.50 per diluted share, as compared with $0.44 in the fourth quarter of last year.
American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, major builders and through a network of independent distributors. The Company presently operates fifteen manufacturing facilities and ten service centers across the country.
Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors that may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission and the Annual Report to Shareholders. The Company does not undertake to publicly update or revise its forward looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
AMERICAN WOODMARK CORPORATION
Unaudited Financial Highlights
(in thousands, except share data)
Operating Results
Three Months Ended Nine Months Ended
January 31 January 31
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net Sales $191,143 $183,175 $621,242 $569,858
Cost of Sales &
Distribution 157,788 148,794 517,270 453,937
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Gross Profit 33,355 34,381 103,972 115,921
Sales & Marketing
Expense 17,877 16,623 53,805 49,154
G&A Expense 5,833 6,215 18,468 20,724
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Operating Income 9,645 11,543 31,699 46,043
Interest & Other
(Income) Expense (144) (68) (205) (86)
Income Tax Expense 3,720 4,528 12,208 17,990
---------- ---------- ---------- ----------
Net Income $6,069 $7,083 $19,696 $28,139
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Earnings Per Share:
Weighted Average
Shares Outstanding -
Diluted 16,464,508 16,989,909 16,657,573 16,896,086
Earnings Per Diluted
Share $0.37 $0.42 $1.18 $1.67
Balance Sheet
January 31 April 30
2006 2005
---------- ----------
Cash & Cash Equivalents $32,727 $24,406
Customer Receivables 37,827 52,877
Inventories 66,837 65,213
Other Current Assets 15,812 14,158
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Total Current Assets 153,203 156,654
Property, Plant & Equipment 179,469 185,513
Other Assets 18,798 19,001
---------- ----------
Total Assets $351,470 $361,168
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Current Portion - Long-Term Debt $1,317 $1,046
Accounts Payable & Accrued Expenses 65,066 81,496
---------- ----------
Total Current Liabilities 66,383 82,542
Long-Term Debt 28,294 29,217
Other Liabilities 32,457 34,218
---------- ----------
Total Liabilities 127,134 145,977
Stockholders' Equity 224,336 215,191
---------- ----------
Total Liabilities & Stockholders' Equity $351,470 $361,168
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