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What changed in AMERICAN WOODMARK CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AMERICAN WOODMARK CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+123 added−154 removedSource: 10-K (2023-06-27) vs 10-K (2022-06-29)

Top changes in AMERICAN WOODMARK CORP's 2023 10-K

123 paragraphs added · 154 removed · 112 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDepending on the course, our training and development opportunities are offered on an on-demand, semi-annual, annual, or biannual basis. Safety We have established comprehensive safety programs throughout our operations to provide our employees with the tools they need to comply with the safety standards established under federal, state, and local laws and regulations or independently by us.
Biggest changeSafety 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 operating footprint provides us an 6 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 facilitate efficient product distribution to our customers.
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 6 facilitate efficient product distribution to our customers.
From inspiration to installation, we help people find their unique style and turn their home into a space for self-expression. By partnering with major home centers, builders, and dealers, we spark the imagination of homeowners and designers and bring their vision to life.
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.
Culbreth's career in the manufacturing industry has been highlighted with multiple leadership roles in finance. Our other senior executives all have over twenty plus years of experience working for multi-national companies, with individual backgrounds in manufacturing, finance, and marketing.
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.
The distances involved in these arrangements, together with the differences in business practices, shipping and delivery requirements, and laws and 4 regulations add complexity to our supply chain logistics and increase the potential for interruptions in our production scheduling.
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.
By living out these principles, we believe we will be best positioned to attract, develop, and promote a broad range of talent and 5 to conduct our business in a responsible, ethical, and professional manner.
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.
Diversity and Inclusion We are an equal opportunity employer and strive to create an environment free from discrimination and harassment and in which each employee is valued, treated with dignity and respect, and managed in an inclusive manner. We believe that a workplace that encourages the interaction of different perspectives and backgrounds creates superior solutions, approaches, and innovations.
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.
In addition, prices and availability of these components may be affected by world market conditions and government policies and tariffs that impacted fiscal 2022 and may continue into fiscal 2023. Competition We operate in a highly fragmented industry that is composed of several thousand local, regional, and national manufacturers.
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.
Today, we sell this brand to over 1,800 regional and local dealers across the country. The dealer channel of the market is the largest by volume, characterized by a high degree of entrepreneurship and one that rewards suppliers that deliver great service.
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 training is designed and developed at the corporate and local level in order to further our goals of enterprise alignment and local integration. We prefer a leader-led approach to training whenever possible in order to foster engagement, relationship building, networking, and shared learning experiences.
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.
We rely on outside suppliers for some of our key components and do not typically enter into long-term contracts with our suppliers or sourcing partners. We source a portion of our components from third parties in Asia.
We rely on outside suppliers for some of our key components and do not typically enter into long-term contracts with 4 our suppliers or sourcing partners. We source a portion of our components from third parties in Asia and Europe.
Through these activities, as well as our tuition reimbursement programs, executive development opportunities, formal and informal cross-training activities, and other operational training offerings, we strive to establish American Woodmark as an organization dedicated to providing the training and development opportunities necessary to maintain a well-qualified workforce connected to and invested in our continued operational success.
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.
We serve the majority of the top U.S. builders with a high degree of geographic concentration around major metro areas where single family starts are most robust. We also serve multi-family builders, primarily in the Southwest Region of the U.S.
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.
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, cultural, safety, supervisory, and managerial training activities.
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.
Our home organization products are exclusively stock products. Our kitchen cabinetry and bath cabinetry are offered across all product categories (made-to-order and stock) and our office cabinetry is offered as stock. Our stock products represent cash and carry products and are sold through home centers, while our made-to-order products are sold through home centers, builders, and independent dealers and distributors.
Our 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.
The contents of our website are not, however, part of, or incorporated by reference into, this report. Our Business American Woodmark celebrates the creativity in all of us. With over 10,000 employees and more than a dozen brands, we're one of the nation's largest cabinet manufacturers.
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.
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; creation of an external consultant partnership; establishment of our Inclusion, Diversity, Equity, and Alignment (IDEA) team; launching an enterprise-wide inclusion and diversity strategy, and most recently the inclusion of representation metrics as part of our organizational scorecard and incentive pay components.
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.
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, 3 2022 ("fiscal 2022"), Home Depot and Lowe's combined accounted for approximately 48.0% of net sales of the Company.
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, 3 2023 ("fiscal 2023"), Home Depot and Lowe's combined accounted for approximately 43.2% of net sales of the Company.
Our various service center locations are close to these builders and enable us to deliver exceptional service to our builder partners. During fiscal 2022, builders accounted for approximately 39.3% 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.
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.
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 2022, independent dealers and distributors accounted for approximately 12.7% of net sales of the Company.
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.
To that end, we have, among other things, established policies under which we strive to: • Engage with our key stakeholders, including employees, to ensure their needs and concerns are heard and addressed, and if appropriate, incorporated into our strategy; • Maintain a safe and enriching working environment where all employees are treated with respect and are able to achieve their full potential; • Encourage employees to volunteer in our communities through internally or externally organized events; • Fund the American Woodmark Foundation, which serves as a vehicle for our employees to serve the community; and • Provide scholarship opportunities to family members for our employees.
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.
Culture and Core Values At American Woodmark, the way we conduct our business and interact with our customers, vendors, and the communities in which we operate is driven by our core principles of Customer Satisfaction, Integrity, Teamwork, and Excellence. These principles also guide our interactions with employees and serve as a basis for setting goals for and evaluating our employees.
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 5 basis for setting goals for and evaluating our employees.
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 1.40 during fiscal 2022.
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.
The Company has generally been able, over time, to recover the effects of inflation and commodity price fluctuations through sales price increases, although, as we experienced in fiscal 2022 and continue to experience, there usually is a 6-9 month lag before our sales price increases catch up to such fluctuations.
The Company has generally been able, over time, to recover the effects of inflation and commodity price fluctuations through sales price increases. Human Capital Resources Employees As of April 30, 2023, we employed over 8,800 full-time employees, with approximately 277 unionized employees in Anaheim, California.
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Human Capital Resources Employees As of April 30, 2022, we employed over 10,000 full-time employees, with approximately 271 unionized employees in Anaheim, California. We believe that our employee relations and relationship with the union representing the employees in Anaheim are good.
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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.
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In the early stages of the COVID-19 pandemic, we enforced social distancing and enhanced health, safety and sanitation measures, and implemented necessary procedures and support to enable a significant portion of our office personnel to work remotely.
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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.
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We also imposed travel restrictions, transitioned meetings from in-person to virtual formats where possible, and made other operational adjustments in furtherance of the continued safety of our workforce.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther 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.
Biggest changeWe 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 believe that our industry is significantly influenced by 8 economic conditions generally and particularly by housing activity, consumer confidence, the level of personal discretionary spending, demographics, and credit availability. These factors may affect not only the ultimate consumer of our products, but also may impact home centers, builders, and our other primary customers.
We believe that our industry is significantly influenced by economic conditions generally and particularly by housing activity, consumer confidence, the level of personal discretionary 8 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.
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 month lag before we are able to see the results of our pricing actions.
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.
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 9 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.
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.
We may hedge certain foreign currency transactions in the future; however, a change in the value of the currencies may impact our financial statements when translated into U.S. dollars. In addition, fluctuations in currency can adversely impact the cost position in local currency of our products, making it more difficult for us to compete.
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.
Changes in environmental laws and regulations or the discovery of previously unknown contamination or other liabilities relating to our properties and operations could result in significant environmental liabilities that could impact our business, financial condition, or results of operation. In addition, we may incur capital and other costs to comply with increasingly stringent environmental laws and enforcement policies.
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 12 stringent environmental laws and enforcement policies.
Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, end-user customers in that region may delay or forego purchases of our products, which may materially and adversely impact our operating results for a particular period. Item 1B. UNRESOLVED STAFF COMMENTS None.
Further, if a natural disaster occurs in a region from which we derive a significant portion of 13 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.
We also face competition with respect to some of our products from competitors in countries with lower regulatory, safety, environmental, and other costs, such as China, Vietnam and Malaysia. These competitors may also benefit from certain local government subsidies or other incentives that are not available to us.
We 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 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 13 operations depends in part on our ability to increase our skilled labor force as the housing market continues to recover in the United States.
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.
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 12 planning may be ineffective or inadequate.
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.
Financial, operating, or other difficulties encountered by our suppliers or sourcing partners, or changes in our relationships with them could result in manufacturing or sourcing interruptions, delays, and inefficiencies, and prevent us from manufacturing enough products to meet customer demands.
Financial, operating, or other difficulties encountered by our suppliers or sourcing partners, or changes in our relationships with them could result in manufacturing or 10 sourcing interruptions, delays, and inefficiencies, and prevent us from manufacturing enough products to meet customer demands.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" under the headings "Forward-Looking Statements," "Seasonality," and "Outlook for Fiscal 2023" and Item 7A.
"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.
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: • increases in transportation costs or transportation delays; • work stoppages and labor strikes; 10 • introduction of non-native invasive organisms into new environments; • recessionary trends in international markets; • legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including export controls, import and customs trade restrictions, tariffs and other regulations including those related to the COVID-19 pandemic such as the temporary suspension of our operations in Mexico in April 2020; • fluctuations in exchange rates, particularly the value of the U.S. dollar relative to other currencies; and • political unrest, terrorism, and economic instability.
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: • 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.
Home Depot and Lowe's collectively accounted for approximately 48.0% of total net sales during the fiscal year 2022. 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.
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.
Changes in government and industry regulatory standards could have a material adverse effect on our business, financial condition, or results of operations. Government regulations pertaining to health and safety and environmental concerns continue to emerge, domestically as well as internationally, including regulations due to the COVID-19 pandemic.
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.
Fluctuating raw material and energy costs could have a material adverse effect on our business and results of operations. We purchase various raw materials, including, among others, wood, wood-based, and resin products, which are subject to price fluctuations that could materially increase our manufacturing costs as we experienced in fiscal 2022 and are continuing to experience.
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.
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.
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.
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, with other processes following thereafter.
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.
Manufacturing expansion to add capacity, manufacturing realignments, and other cost savings programs could result in a decrease in our near-term earnings. We continually review our manufacturing operations. These reviews could result in the expansion of capacity, manufacturing realignments, and various cost savings programs, such as our closure of the Humboldt, Tennessee manufacturing plant in fiscal 2021.
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.
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 9 capacity in North Carolina and Mexico, which is currently underway.
We may fail to fully realize the anticipated benefits of our growth strategy within the home center, dealer and homebuilder channels. Part of our growth strategy depends on expanding our business in the dealer and homebuilder channels. We may fail to compete successfully against other companies that are already established providers within the dealer and homebuilder channels.
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 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.
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.
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. 11 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 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.
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.
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.
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.
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. 11 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.
The credit agreement that governs our credit facility imposes operating and financial restrictions on us.
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.
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.
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.
Demand for our products within the home center, homebuilder and dealer channels may not grow, or might even decline. In addition, we may not accurately gauge consumer preferences and successfully develop, manufacture, and market our products at a national level.
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.
As a result, a worsening of economic conditions could adversely affect our sales and earnings as well as our cash flow and liquidity. COVID-19 has adversely affected our business, financial performance, and operating results and its continuing and future impacts as well as the impacts from other future pandemics could adversely affect our business, financial performance, and operating results.
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.
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COVID-19 has negatively impacted the global and U.S. economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption in financial markets.
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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.
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In the initial stages of the COVID-19 pandemic, we were negatively impacted as demand for our products significantly decreased at the initial height of the pandemic in the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, "stay at home" orders and other work disruptions created disruptions to our business operations and our supply chain has been negatively impacted by rising materials and logistics costs.
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More recently we have experienced s upply chain and shipping interruptions and constraints, volatility in demand for our products caused by sudden and significant changes in production levels by our suppliers, disruptions in our manufacturing and supply arrangements caused by the loss or disruption of essential manufacturing and supply elements such as raw materials or other product components, transportation, work force, force majeure events, and other manufacturing and distribution capabilities, like the temporary suspension of our Mexican operations in April 2020.
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We've also experienced d isruptions to our operations related to COVID-19 as a result of absenteeism by infected or ill employees, or absenteeism by employees who elect not to come to work due to the illness affecting others at our facilities, or due to quarantines, or as a result of the tight labor market we are currently experiencing.
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The ultimate impact of the COVID-19 pandemic, or future pandemics, on our business, results of operations, financial condition, and cash flows remains uncertain and cannot be predicted .
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The continued impact on our business as a result of the COVID-19 pandemic, or other future pandemics, (directly or indirectly) could materially adversely affect our results of operations, financial condition, cash flows, prospects, and the trading prices of our common stock. The U.S. cabinetry industry is highly competitive, and market share losses could occur.
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The implementation of our Enterprise Resource Planning system could disrupt our business.
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For example, our manufacturing locations enhanced cleaning processes, established health screening procedures, modified work centers and material flows with established social distancing practices in response to the COVID-19 pandemic in accordance with guidelines provided by the U.S. Centers for Disease Control and Prevention, as well as local and state health departments.
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The COVID-19 pandemic has put significant pressure on our ability to employ, train, and retain qualified personnel at a competitive cost. Further, a significant increase in the wages paid by competing employers could result in a reduction of our qualified labor force, increases in the wage rates that we must pay, or both.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe 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, 2022. 14
Biggest changeThe 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

Mine Safety Disclosures — required of mining issuers

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Biggest changePaul Joachimczyk 50 Company Vice President and Chief Financial Officer from July 2020 to present; Vice President, Financial Planning and Analysis, from February 2019 to July 2020; Vice President of Finance and Corporate Controller at TopBuild Corp. from October 2016 to June 2018; CFO - Functional Transformation at Stanley Black & Decker, Inc. from May 2014 to July 2016.
Biggest changePaul Joachimczyk 51 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. Robert J.
Scott Culbreth 51 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.
Scott Culbreth 52 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.
Robert J. Adams, Jr. 56 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. Teresa M.
Adams, Jr. 57 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. 14 PART II
Removed
May 57 Company Senior Vice President and Chief Marketing Officer from April 2020 to present; Senior Vice President and Chief Marketing Officer of Asurion from May 2018 to April 2020; Vice President of Owens Corning from March 2012 to March 2018. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph is based on historical data and is not intended to be a forecast or indication of future performance of American Woodmark common stock. 15 2017 2018 2019 2020 2021 2022 American Woodmark Corporation $100.00 $89.40 $97.90 $55.90 $108.20 $51.00 Russell 2000 Index $100.00 $111.50 $116.70 $97.60 $170.60 $141.90 S&P Household Durables Index $100.00 $92.80 $85.30 $80.10 $157.50 $120.10 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.
Biggest changeThe graph is based on historical data and is not intended to be a forecast or indication of future performance of American Woodmark common stock. 15 2018 2019 2020 2021 2022 2023 American Woodmark Corporation $100.00 $109.40 $62.50 $121.00 $57.00 $61.50 Russell 2000 Index $100.00 $104.60 $87.50 $153.00 $127.20 $122.50 S&P Household Durables Index $100.00 $91.90 $86.20 $169.60 $129.30 $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.
The Company's shareholders also include approximately 58% 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 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 April 30, 2017 through April 30, 2022.
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.
As of June 17, 2022 there were approximately 18,200 total shareholders of the Company's common stock, including 6,200 shareholders of record and 12,000 beneficial owners whose shares are held in "street" name by securities broker-dealers or other nominees.
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations FISCAL YEARS ENDED APRIL 30 (Dollars in thousands) 2022 2021 2020 2022 vs. 2021 PERCENT CHANGE 2021 vs. 2020 PERCENT CHANGE Net sales $ 1,857,186 $ 1,744,014 $ 1,650,333 6.5 % 5.7 % Gross profit 226,444 322,118 326,562 (29.7) % (1.4) % Selling and marketing expenses 92,555 89,011 83,092 4.0 % 7.1 % General and administrative expenses 97,547 112,521 113,353 (13.3) % (0.7) % Interest expense, net 10,189 23,128 29,027 (55.9) % (20.3) % Net Sales Net sales for fiscal 2022 increased 6.5% to $1,857.2 million from the prior fiscal year.
Biggest changeManagement’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. 18 Results of Operations FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2023 2022 2021 2023 vs. 2022 PERCENT CHANGE 2022 vs. 2021 PERCENT CHANGE Net sales $ 2,066,200 $ 1,857,186 $ 1,744,014 11.3 % 6.5 % Gross profit 357,524 226,444 322,118 57.9 % (29.7) % Selling and marketing expenses 94,602 92,555 89,011 2.2 % 4.0 % General and administrative expenses 125,045 97,547 112,521 28.2 % (13.3) % Interest expense, net 15,994 10,189 23,128 57.0 % (55.9) % Net Sales Net sales for fiscal 2023 increased 11.3% to $2,066.2 million from the prior fiscal year.
Factors that could cause actual results to differ materially from those in forward-looking statements made in this report include but are not limited to: • the loss of or a reduction in business from one or more of our key customers; • negative developments in the macro-economic factors that impact our performance such as the U.S. housing market, general economy, unemployment rates, and consumer sentiment and the impact of such developments on our and our customers' business, operations, and access to financing; • an inability to obtain raw materials in a timely manner or fluctuations in raw material, transportation, and energy costs due to inflation; • 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; 17 • 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 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.
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; 16 • 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.
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. 20 We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales.
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.
Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Our non-GAAP financial 19 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.
(4) The Company recognized net loss on debt modification totaling $13.8 million for fiscal year 2021 related to the restructuring of its debt.
The Company recognized net loss on debt modification totaling $13.8 million for fiscal year 2021 related to the restructuring of its debt.
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 2023.
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.
At April 30, 2022, 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.
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.
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 2022, 2021, and 2020..
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. 24 Intangible Assets.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth certain income and expense items as a percentage of net sales: PERCENTAGE OF NET SALES Fiscal Years Ended April 30 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of sales and distribution 87.8 81.5 80.2 Gross profit 12.2 18.5 19.8 Selling and marketing expenses 5.0 5.1 5.0 General and administrative expenses 5.3 6.5 6.9 Restructuring charges, net — 0.3 — Operating income 1.9 6.6 7.9 Pension settlement, net 3.7 — — Interest expense/other (income) expense, net 0.5 2.0 1.9 Income before income taxes (2.3) 4.6 6.0 Income tax expense (0.7) 1.1 1.5 Net income (1.6) 3.5 4.5 The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes contained elsewhere in this report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth certain income and expense items as a percentage of net sales: PERCENTAGE OF NET SALES FISCAL YEARS ENDED APRIL 30, 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales and distribution 82.7 87.8 81.5 Gross profit 17.3 12.2 18.5 Selling and marketing expenses 4.6 5.0 5.1 General and administrative expenses 6.1 5.3 6.5 Restructuring charges, net 0.1 — 0.3 Operating income 6.5 1.9 6.6 Pension settlement, net — 3.7 — Interest expense/other (income) expense, net 0.7 0.5 2.0 Income (loss) before income taxes 5.8 (2.3) 4.6 Income tax expense (benefit) 1.4 (0.7) 1.1 Net income (loss) 4.4 (1.6) 3.5 The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes contained elsewhere in this report.
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.
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 2022, 2021, and 2020.
There were no impairment charges related to other intangible assets for the fiscal years 2023, 2022, and 2021.
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.
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.
The decrease in the Company's cash from operating activities was driven primarily by a decrease in net income and decreased cash flows from customer receivables and inventories, which were partially offset by an increase in cash flows from accounts payable and accrued marketing expenses.
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.
The Company incurred a net loss of $29.7 million in fiscal 2022, net income of $61.2 million in fiscal 2021, and net income of $73.7 in fiscal 2020. 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 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.
A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2023 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 FISCAL YEARS ENDED APRIL 30, (Dollars in thousands, except share and per share data) 2022 2021 2020 Net income (loss) (GAAP) $ (29,722) $ 61,193 $ 73,653 Add back: Acquisition and restructuring related expenses 80 174 221 Non-recurring restructuring charges, net 183 5,848 — Pension settlement, net 68,473 — — Amortization of customer relationship intangibles and trademarks 45,667 47,889 49,000 Net loss on debt forgiveness and modification — 13,792 — Tax benefit of add backs (29,859) (17,467) (12,305) Adjusted net income (Non-GAAP) $ 54,822 $ 111,429 $ 110,569 Weighted average diluted shares (GAAP) 16,592,358 17,036,730 16,952,480 Add back: potentially anti-dilutive shares (1) 48,379 — — Weighted average diluted shares (Non-GAAP) 16,640,737 17,036,730 16,952,480 EPS per diluted share (GAAP) $ (1.79) $ 3.59 $ 4.34 Adjusted EPS per diluted share (Non-GAAP) $ 3.29 $ 6.54 $ 6.52 (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.
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. 21 Adjusted EPS per diluted share FISCAL YEARS ENDED APRIL 30, (Dollars in thousands, except share and per share data) 2023 2022 2021 Net income (loss) (GAAP) $ 93,723 $ (29,722) $ 61,193 Add back: Acquisition and restructuring related expenses 80 80 174 Non-recurring restructuring charges, net 1,525 183 5,848 Pension settlement, net (7) 68,473 — Amortization of customer relationship intangibles and trademarks 45,667 45,667 47,889 Net (gain) loss on debt forgiveness and modification (2,089) — 13,792 Tax benefit of add backs (11,791) (29,859) (17,467) Adjusted net income (Non-GAAP) $ 127,108 $ 54,822 $ 111,429 Weighted average diluted shares (GAAP) 16,685,359 16,592,358 17,036,730 Add back: potentially anti-dilutive shares (1) — 48,379 — Weighted average diluted shares (Non-GAAP) 16,685,359 16,640,737 17,036,730 EPS per diluted share (GAAP) $ 5.62 $ (1.79) $ 3.59 Adjusted EPS per diluted share (Non-GAAP) $ 7.62 $ 3.29 $ 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.
Financial Overview A number of general market factors impacted the Company's business in fiscal 2022, including: • The unemployment rate decreased by 41% compared to April 2021, to 3.6% as of April 2022 according to data provided by the U.S.
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.
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").
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").
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the permanent layoffs due to COVID-19 and the closure of the manufacturing plant in Humboldt, Tennessee. Fiscal year 2021 includes accelerated depreciation expense of $1.3 million and gain on asset disposal of $2.2 million related to Humboldt.
(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.
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 FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2022 2021 2020 Net income (loss) (GAAP) $ (29,722) $ 61,193 $ 73,653 Add back: Income tax expense (benefit) (13,257) 19,500 25,275 Interest expense, net 10,189 23,128 29,027 Depreciation and amortization expense 50,939 51,100 49,513 Amortization of customer relationship intangibles and trademarks 45,667 47,889 49,000 EBITDA (Non-GAAP) $ 63,816 $ 202,810 $ 226,468 Add back: Acquisition and restructuring related expenses (1) 80 174 221 Non-recurring restructuring charges, net (2) 183 5,848 — Pension settlement, net 68,473 — — Change in fair value of foreign exchange forward contracts (3) — (1,102) 1,102 Net loss on debt forgiveness and modification (4) — 13,792 — Stock-based compensation expense 4,708 4,598 3,989 Loss on asset disposal 697 384 2,629 Adjusted EBITDA (Non-GAAP) $ 137,957 $ 226,504 $ 234,409 Net Sales $ 1,857,186 $ 1,744,014 $ 1,650,333 Net income margin (GAAP) (1.6) % 3.5 % 4.5 % Adjusted EBITDA margin (Non-GAAP) 7.4 % 13.0 % 14.2 % (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.
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: 20 Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2023 2022 2021 Net income (loss) (GAAP) $ 93,723 $ (29,722) $ 61,193 Add back: Income tax expense (benefit) 28,963 (13,257) 19,500 Interest expense, net 15,994 10,189 23,128 Depreciation and amortization expense 48,077 50,939 51,100 Amortization of customer relationship intangibles and trademarks 45,667 45,667 47,889 EBITDA (Non-GAAP) $ 232,424 $ 63,816 $ 202,810 Add back: Acquisition and restructuring related expenses (1) 80 80 174 Non-recurring restructuring charges, net (2) 1,525 183 5,848 Pension settlement, net (7) 68,473 — Change in fair value of foreign exchange forward contracts (3) — — (1,102) Net (gain) loss on debt forgiveness and modification (4) (2,089) — 13,792 Stock-based compensation expense 7,396 4,708 4,598 Loss on asset disposal 1,050 697 384 Adjusted EBITDA (Non-GAAP) $ 240,379 $ 137,957 $ 226,504 Net Sales $ 2,066,200 $ 1,857,186 $ 1,744,014 Net income (loss) margin (GAAP) 4.5 % (1.6) % 3.5 % Adjusted EBITDA margin (Non-GAAP) 11.6 % 7.4 % 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.
Selling and Marketing Expenses Selling and marketing costs increased by $3.5 million or 4.0% during fiscal 2022 versus the prior year. Selling and marketing expenses in fiscal 2022 were 5.0% of net sales, compared with 5.1% of net sales in fiscal 2021 Selling and marketing expenses in fiscal 2021 and fiscal 2020 were both 5.1% of net sales.
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.
Department of Commerce; • Mortgage interest rates increased with a 30-year fixed mortgage rate of 5.1% in April 2022, an increase of approximately 204 basis points compared to April 2021; • The median price of existing homes sold in the U.S. rose by 16.4% during the Company's fiscal 2022, according to data provided by the National Association of Realtors; • Consumer sentiment, as reported by the University of Michigan, averaged 26.2% lower during the Company's fiscal 2022 than in its prior fiscal year; and • Cabinet sales, as reported by members of the Kitchen Cabinet Manufacturers Association (KCMA), increased by 14.4% during fiscal 2022 versus the prior fiscal year.
Department of Commerce; 17 • 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.
Free cash flow FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2022 2021 2020 Cash provided by operating activities $ 24,445 $ 151,763 $ 177,542 Less: Capital expenditures (1) 51,582 46,318 40,739 Free cash flow $ (27,137) $ 105,445 $ 136,803 (1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.
Free cash flow FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2023 2022 2021 Cash provided by operating activities $ 198,837 $ 24,445 $ 151,763 Less: Capital expenditures (1) 45,380 51,582 46,318 Free cash flow $ 153,457 $ (27,137) $ 105,445 (1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.
The Company's largest remodeling customers and competitors continued to utilize sales promotions in the Company's product category during fiscal 2022. The Company strives to maintain its promotional levels in line with market activity, with a goal of 18 remaining competitive. The Company experienced lower promotional levels during fiscal 2022 than those experienced 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.
"Risk Factors" and Item 7A. "Quantitative and Qualitative Disclosures about Market Risk." Liquidity and Capital Resources The Company's cash and cash equivalents totaled $22.3 million at April 30, 2022, representing a $68.7 million decrease from its April 30, 2021 levels.
"Quantitative and Qualitative Disclosures about Market Risk." 22 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.
During fiscal 2022, $15.5 million, net, was used to repay long-term debt, compared with approximately $82.5 million in fiscal 2021 and $98.5 million in fiscal 2020. On August 22, 2019, the Board authorized a stock repurchase program of up to $50 million of the Company's common shares.
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.
Department of Labor; • Increase in single family housing starts during the Company's fiscal 2022 of 13%, as compared to the Company's fiscal 2021, according to 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.
At April 30, 2022, total long-term debt (including current maturities) was $508.9 million, a decrease of $12.8 million from the balance at April 30, 2021. The Company's ratio of long-term debt to total capital was 39.6% at April 30, 2022, compared with 40.4% at April 30, 2021.
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 2023. Approximately $237.0 million was available under this facility as of April 30, 2022. See Note F — Loans Payable and Long-Term Debt for further discussion on our indebtedness.
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 Company is required to repay the Term Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026.
The 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.
Outlook for Fiscal 2023 We expect mid-teens to high-teens growth rate in net sales for fiscal 2023 versus fiscal 2022. The growth rate is highly dependent upon overall industry, economic growth trends, material constraints, labor impacts, interest rates and consumer behaviors.
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.
We are choosing to make these additional investments into our core business which will help improve sales and enhance our margins in the future. 23 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.
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.
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 $27.6 million in fiscal 2023, $77.6 million in fiscal 2024-25, $505.3 million in fiscal 2026-27, and $30.5 million in fiscal 2028 and thereafter.
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.
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.
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.
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. As of April 30, 2022 and 2021, the Company had no off-balance sheet arrangements.
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.
Net cash used by investing activities in fiscal 2022 was $51.6 million, compared with $42.4 million in fiscal 2021 and $38.9 million in fiscal 2020. Investments in property, plant and equipment for fiscal 2022 were $44.1 million, compared with $35.7 million in 24 fiscal 2021 and $31.7 million in fiscal 2020.
INVESTING ACTIVITIES The Company's investing activities primarily consist of capital expenditures and investments in promotional displays. Net cash used by investing activities in fiscal 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.
FINANCING ACTIVITIES The Company realized a net outflow of $41.6 million from financing activities in fiscal 2022 compared with a net outflow of $115.3 million in fiscal 2021, and a net outflow of $99.2 million in fiscal 2020.
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.
The lower effective tax rate was primarily due to the benefit from 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.
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").
The Company regularly considers the need for a valuation allowance against its deferred tax assets. The Company has been profitable for the past 9 years. As of April 30, 2022, the Company had total deferred tax assets of $40.8 million net of valuation allowance, down from $45.2 million of deferred tax assets net of valuation allowance at April 30, 2021.
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.
The Company repurchased $25.0 million during fiscal 2022 and $20.0 million during fiscal 2021. The Company did not repurchase any of its shares during the fiscal year ended April 30, 2020.
The Company did not repurchase any of its 23 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.
General and administrative costs decreased to 5.3% of net sales in fiscal 2022 compared with 6.5% of net sales in fiscal 2021. The decrease in general and administrative expenses was primarily due to controlled spending and reduced incentive costs. General and administrative expenses decreased by $0.8 million or 0.7% during fiscal 2021 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.
OPERATING ACTIVITIES Cash provided by operating activities in fiscal 2022 was $24.4 million, compared with $151.8 million in fiscal 2021.
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 Company has concluded that none of its long-lived assets were impaired as of April 30, 2022.
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.
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. 25 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.
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.
Goodwill represents the excess of purchase price over the fair value of net assets acquired. The Company does not amortize goodwill but evaluates for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
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.
Gross Profit Gross profit as a percentage of sales decreased to 12.2% in fiscal 2022 as compared with 18.5% in fiscal 2021. The decrease in gross profit margin was primarily due to higher material and logistics costs, and increases related to wage and retention programs.
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.
The decrease in gross margin was primarily due to higher material and logistics costs, supply chain disruptions, and increases related to wage and retention programs. This was partially offset by the increase in sales creating leverage of our fixed expenses in our operating platforms.
Gross 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.
SEASONALITY Our business has been subject to seasonal influences, with higher sales typically realized in our first and fourth fiscal quarters, however sales were down in the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021 due to the COVID-19 pandemic.
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.
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Sales in the remodel channel increased 5.2% during the fiscal year. Sales in the new construction channel increased 8.6% during fiscal 2022 due to a rise in new housing starts and an increase in sales in the opening price point cabinets in our Origins by Timberlake brand.
Added
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.
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The Company increased its net sales by 6.5% during fiscal 2022, which was driven by growth in the home center, builder and independent dealers and distributors channels. Gross margin for fiscal 2022 was 12.2%, a decrease from 18.5% in fiscal 2021.
Added
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.
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The Company experienced growth in the home center, builder and independent dealers and distributors channels. Net sales for fiscal 2021 increased 5.7% to $1,744.0 million from the prior fiscal year. The Company experienced growth in the home center, builder and independent dealers and distributors channels.
Added
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.
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This was partially offset by the increase in sales creating leverage of our fixed expenses in our operating platforms. 19 Gross profit as a percentage of sales decreased to 18.5% in fiscal 2021 as compared with 19.8% in fiscal 2020.
Added
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.
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The decrease in gross profit margin was primarily due to higher material and logistics costs, investments made to establish our distribution center in Texas, and increases related to wage and retention programs. This was partially offset by the increase in sales creating leverage of our fixed expenses in our operating platforms.
Added
(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.
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Selling and marketing costs increased by $5.9 million or 7% during fiscal 2021 versus the prior year. General and Administrative Expenses General and administrative expenses decreased by $15.0 million or 13.3% during fiscal 2022 versus the prior fiscal year.
Added
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.
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General and administrative costs decreased to 6.5% of net sales in fiscal 2021 compared with 6.9% of net sales in fiscal 2020. Effective Income Tax Rates The Company generated pre-tax loss of $43.0 million during fiscal 2022.
Added
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.
Removed
The Company's effective tax rate increased from 24.1% in fiscal 2021 to 30.8% in fiscal 2022 primarily due to the pre-tax loss and benefit from higher federal income tax credits. The Company's effective tax rate decreased from 25.5% in fiscal 2020 to 24.1% in fiscal 2021.
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Our previously announced price increases will continue to take effect at various stages throughout fiscal 2023, with pricing being realized first in our new construction channel, followed by dealer distributor and then home centers. Our outlook for adjusted EBITDA margin percent for fiscal 2023 will range from high single digit to low double-digit EBITDA.
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Inflationary pressures for raw materials, fuel and logistics will continue at least through the first half of fiscal 2023, and we expect margins will expand sequentially throughout the second quarter of fiscal 2023 through the fourth quarter of fiscal 2023 as our price realization grows and efficiencies with manufacturing operations improve.
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We will continue our investment back into the business by increasing our capital investment rate to a range of 3.0 to 3.5% of net sales.
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These investments will range from the continuation of our ERP journey to get on the cloud, digital investments in our customer experience and reinvesting in our manufacturing facilities to help reduce labor dependencies, improve quality and increase capacity.
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The decrease in the Company's cash from operating activities was driven primarily by a decrease in net income and decreased cash flows from inventories, accrued marketing expenses, other accrued expenses, and accounts payable, which were partially offset by an increase in cash flows from customer receivables.
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Cash provided by operating activities in fiscal 2021 was $151.8 million, compared with $177.5 million in fiscal 2020.
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The Company made no contributions to its pension plan in fiscal 2022, 2021, and made contributions of $0.5 million to its pension plans during fiscal 2020.The Company recognized a pension settlement charge of $68.3 million in fiscal 2022. INVESTING ACTIVITIES The Company's investing activities primarily consist of capital expenditures and investments in promotional displays.
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Investments in promotional displays were $7.5 million in fiscal 2022, compared with $10.6 million in fiscal 2021 and $9.1 million in fiscal 2020.
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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. Effective December 31, 2020 the Plan was terminated in a standard termination and benefits were distributed on December 2, 2021. Goodwill.
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The on-going COVID-19 pandemic, Russia's military actions in Ukraine, related global supply chain constraints, and higher raw material costs have created volatility, uncertainty and economic disruption for the Company, our customers and vendors, and the markets in which we do business.
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We have experienced production delays, disruptions in component availability, increased pricing both for labor and parts, lower levels of factory utilization and higher logistics, transportation, energy, and operational costs. Such business conditions are expected to continue into fiscal 2023. In addition, as of April 30, 2022, our stock price has declined to $46.85.
Removed
It is possible that, during the fiscal 2023 or beyond, business conditions could deteriorate from the current state, our current or prospective customers could materially postpone, reduce or even forgo purchases of our products and services to a greater extent than we currently anticipate, or our common stock price could fluctuate.
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Such fluctuation could be caused by uncertainty about the severity and length of the COVID-19 pandemic, and its impact on global activity.
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A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during fiscal 2023 or beyond.
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If assumed net sales and cash flow projections are not achieved in future periods or our common stock price declines from its fiscal 2022 year end price, our goodwill could be at risk of failing the quantitative assessment and goodwill and intangibles could be impaired. Intangible Assets. Intangible assets consist of customer relationship intangibles.
Removed
RECENT ACCOUNTING PRONOUNCEMENTS In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim periods .
Removed
The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 became effective for the Company beginning May 1, 2021. The Company has reviewed the provisions of this new pronouncement and the adoption of this guidance did not have an impact on the Company's consolidated financial statements.
Removed
In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur revolving credit facility, initial term loan facility and delayed draw term loan facility, include a variable interest rate component. As a result, we are subject to interest rate risk with respect to such floating-rate debt.
Biggest changeThe 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.
The Company does not currently use commodity or similar financial instruments to manage its commodity price risks. 27
The Company does not currently use commodity or similar financial instruments to manage its commodity price risks. 25
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.
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.
A 100 basis point increase in the variable interest rate component of our borrowings as of April 30, 2022 would increase our annual interest expense by approximately $3.1 million. 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.
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.

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