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What changed in AMERICAN WOODMARK CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMERICAN WOODMARK CORP's 2023 and 2024 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 2024 report.

+149 added−144 removedSource: 10-K (2024-06-26) vs 10-K (2023-06-27)

Top changes in AMERICAN WOODMARK CORP's 2024 10-K

149 paragraphs added · 144 removed · 123 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur cabinetry products are available in a variety of designs, finishes and finish colors and door styles. We offer products in the following categories: made-to-order and stock. Made-to-order products typically utilize higher grade materials with more options as compared to stock and are all special ordered and shipped directly to the home from the factory.
Biggest changeMade-to-order products are typically constructed with higher grade materials and more options compared to our stock products; and are special ordered from all channels and shipped directly to the home from our factory. Stock products typically have limited SKUs and high volumes; and are primarily sold point-of-sale as “cash and carry products” through home centers.
Our 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.
Training 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.
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.
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 serve 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.
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.
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.
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.
From inspiration to installation, we help people find their unique style and turn their home into a space for self-expression. By partnering with major home centers, builders, and independent dealers and distributors, we spark the imagination of homeowners and designers and bring their vision to life.
Our ability to provide superior value delivered with exceptional service has helped drive our expansion into this channel and this channel will continue to be a strong growth and market share opportunity for us.
Our ability to provide superior value delivered with exceptional service has helped drive our expansion into this channel which will continue to be a strong growth and market share opportunity for us.
We distribute our products through one stand-alone distribution center, distribution centers located in some of our manufacturing facilities, and other third party locations to maximize efficiency. Our vertically-integrated production and assembly lines, standardized product construction, and investments in automation have allowed us to continuously improve productivity, and develop an expertise in wood processing and yield-maximizing technologies.
We distribute our products through one stand-alone distribution center, distribution centers located in some of our manufacturing facilities, and other third party locations to maximize efficiency. Our vertically-integrated production and assembly lines, standardized product construction, and investments in automation have allowed us to continuously improve productivity, and develop an expertise in wood processing, alternate materials, and yield-maximizing technologies.
We believe the scale and breadth of our operations differentiate us and result in a competitive advantage providing superior customer service, low-cost distribution, and on-time delivery. Comprehensive Product Offering with Diversified End-Markets We believe that the diversity of our product portfolio across categories, channels, and end-markets benefits our financial performance, both in periods of growth and cyclicality.
We believe the scale and breadth of our operations differentiate us and result in a competitive advantage providing superior customer service, low-cost distribution, and on-time delivery. Comprehensive Product Offering with Diversified End-Markets We believe that the diversity of our product portfolio across categories, channels, and end-markets enables our financial performance, both in periods of growth and cyclicality.
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.
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 8,600 employees and more than a dozen brands, we're one of the nation's largest cabinet manufacturers.
Best-in-Class Manufacturing Capabilities We operate 17 manufacturing facilities across the United States and Mexico. Our vertically-integrated production and assembly lines, standardized product construction, and investments in automation, have allowed us to continuously improve productivity and efficiency.
Best-in-Class Manufacturing Capabilities We operate 18 manufacturing facilities across the United States and Mexico. Our vertically-integrated production and assembly lines, standardized product construction, and investments in automation, have allowed us to continuously improve productivity and efficiency.
The scale and strategic locations of our manufacturing facilities help us to meet these demands of the home center customers, as well as provide a logistics platform that we can leverage for builders and dealers.
The scale and strategic locations of our manufacturing facilities help us to meet these demands of the home center customers, as well as provide a logistics platform that we can leverage for builders and independent dealers and distributors.
We are one of a select number of market participants with a national manufacturing and distribution footprint, which includes 17 manufacturing facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the United States.
We are one of a select number of market participants with a national manufacturing and distribution footprint, which includes 18 manufacturing facilities in the United States and Mexico, and eight primary service centers and one distribution center located throughout the United States.
We believe our customers value our national manufacturing and distribution footprint, which allows us to meet demanding logistics and performance criteria. We believe our focus on providing exceptional customer service and a quality product at a competitive price have enabled us to establish ourselves as a vendor of choice.
We believe our customers value our North American manufacturing and distribution footprint, which allows us to meet demanding logistics and performance criteria. We believe our focus on providing exceptional customer service and a quality product at a competitive price have enabled us to establish ourselves as a vendor of choice.
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.
Today, we sell this brand to over 1,500 regional and local dealers across the country. The independent dealer and distributor channel is the largest by volume, characterized by a high degree of entrepreneurship and one that rewards suppliers that deliver great service.
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.
Culbreth's career in the manufacturing industry has been highlighted with multiple leadership roles in finance. Our other senior executives all have over twenty plus years of experience working for multi-national companies, with individual backgrounds in manufacturing, finance, sales and human resources.
Our Customers We serve three main categories of customers: home center customers, builders, and independent dealers and distributors. Home Center Customers Contractors, builders, remodelers, and do-it-yourself homeowners use our products primarily for repair and remodel ("R&R") projects. Products for R&R projects are predominately purchased through home centers such as Home Depot and Lowe's.
Our Customers We serve three main categories of customers: home centers, builders, and independent dealers and distributors. 3 Home Centers Pro business customers, contractors, builders, remodelers, and do-it-yourself homeowners use our products primarily for repair and remodel ("R&R") projects. Products for R&R projects are predominately purchased through home centers such as Home Depot and Lowe's.
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.
Our various service center locations are close to these builders and enable us to deliver exceptional service to our builder partners. During fiscal 2024, builders accounted for approximately 42.4% of net sales of the Company. Independent Dealers & Distributors In 2010, we expanded our business into the independent dealers channel with the launch of the Waypoint Living Spaces® brand.
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.
Due to the market presence, store network and customer reach of these large home centers, our strategy has been to develop long-term strategic relationships with both Home Depot and Lowe's to distribute our products. During the fiscal year ended April 30, 2024 ("fiscal 2024"), Home Depot and Lowe's combined accounted for approximately 41.6% of net sales of the Company.
The 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.
The Company has generally been able, over time, to recover the effects of inflation and commodity price fluctuations through sales price increases. 5 Human Capital Resources Employees As of April 30, 2024, we employed over 8,600 full-time employees, with approximately 228 unionized employees in Anaheim, California.
Our Market Our products are sold on a national basis across the United States to the remodeling and new home construction markets. We service these markets through three primary channels: home centers, builders, and independent dealers and distributors. We distribute our products to each market channel directly from our assembly plants and through a third party logistics network.
We service these markets through three primary channels: home centers, builders, and independent dealers and distributors. We distribute our products to each market channel directly from our assembly plants and through a third party logistics network.
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.
We purchase these, and other raw materials, from more than one source and generally believe them to be readily available. We rely on outside suppliers for some of our key components and do not typically enter into long-term contracts with our suppliers or sourcing partners. We source a portion of our components from third parties in Asia and Europe.
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.
Our operating footprint provides us an ability to service our builder, independent dealers and distributors, and home centers customers nationwide, offering them a broad set of products across a variety of price points. Our facilities are strategically located in or near major metropolitan markets to facilitate efficient product distribution to our customers.
Our Competitive Strengths Market Leader with Nationwide Manufacturing and Distribution Network We believe our company holds the number two or three market position in the United States cabinet market with an estimated 10% market share based on publicly available information.
Our dedication to diversity and inclusion is not only rooted in our values but also vital to our organization's success. 6 Our Competitive Strengths Market Leader with North American Manufacturing and Distribution Network We believe our company holds the number two or three market position in the United States cabinet market with an estimated 10% market share based on publicly available information.
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.
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. Competition We operate in a highly fragmented industry that is composed of several thousand local, regional, and national manufacturers.
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.
Our rate of incidents recordable under the standards of the Occupational Safety and Health Administration (“OSHA”) per one hundred employees per year, also known as the OSHA recordable rate, was 1.42 during fiscal 2024, which is 57% better than the industry average of 3.3 according to the U.S. Department of Labor.
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.
Within our distributor channel we also sell our newly launched 1951 Cabinetry TM brand through a network of regional distributors who are focused on selling a complete variety of building materials to small and midsized builders and contractors within their local markets. 1951 Cabinetry will be sold directly to distributors with a wide range of product offerings.
Our home organization products are exclusively stock products. Our kitchen cabinetry and bath cabinetry are offered across all product categories (made-to-order and stock). Our stock products represent cash and carry products and are sold through home centers, while our made-to-order products are sold through home centers, builders, and independent dealers and distributors.
Our kitchen cabinetry and bath cabinetry products are offered across all product categories (made-to-order and stock) while our home organization products are exclusively stock products. Our Market Our products are sold on a national basis across the United States to the remodeling and new home construction markets.
In addition, our production of labor-intensive manufacturing and fabrication processes in our three Tijuana, Mexico facilities has enabled us to keep overall labor costs low while maintaining higher quality, greater speed-to-market and transportation cost advantage over Asian based manufacturers.
In addition, our production of labor-intensive manufacturing and fabrication processes in our four Mexico facilities has enabled us to keep overall labor costs low while maintaining higher quality, greater speed-to-market and transportation cost advantage over Asian based manufacturers. 4 We also provide complete turnkey installation services to our direct builder customers via our network of eight primary service centers that are strategically located throughout the United States in Virginia, Texas, North Carolina, Georgia, Florida, Arizona and California.
We strive to improve quality, speed and flexibility to meet changing and uncertain market conditions, as well as manage cost inflation, including wages and employee medical costs. Raw Materials and Suppliers The primary raw materials used in our products include hard maple, cherry, and beech lumber and plywood.
We regularly evaluate our organizational productivity and supply chains and assess opportunities to reduce costs and enhance quality. Through operational excellence, we strive to improve quality, speed and flexibility to meet changing and uncertain market conditions, as well as manage cost inflation, including wages and employee medical costs.
Across our service and distribution centers, our corporate office and manufacturing facilities, you'll always find the same commitment to customer satisfaction, integrity, teamwork, and excellence. Our Products We offer a wide variety of products that fall into product lines including kitchen cabinetry, bath cabinetry, office cabinetry, home organization and hardware.
Our Products We offer a wide variety of products that fall into product lines including kitchen cabinetry, bath cabinetry, office cabinetry, home organization and hardware. Our cabinetry products are available in a variety of designs, finishes and finish colors and door styles.
Manufacturing, Distribution and Service Our manufacturing facilities are strategically located to serve our customers, which enhances our ability to provide high quality, value priced products with low production costs. We manufacture our products across 17 facilities located in Maryland, Indiana, West Virginia, Georgia, Arizona, Kentucky, Virginia, California, Texas, North Carolina, and Tijuana, Mexico.
During fiscal 2024, independent dealers and distributors accounted for approximately 16.0% of net sales of the Company. Manufacturing, Distribution and Service Our manufacturing facilities are strategically located to serve our customers, which enhances our ability to provide high quality, value priced products with low production costs.
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.
Diversity and Inclusion American Woodmark is an equal opportunity employer, and we strive to create an opportunity that is free from discrimination and harassment. That commitment extends to cultivating an inclusive environment where every individual is respected, valued, appreciated, and empowered to contribute their unique perspectives.
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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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Across our service and distribution centers, our corporate office and manufacturing facilities, you'll always find the same commitment to customer satisfaction, integrity, teamwork, and excellence. We believe the strength of our culture and connections will deliver profitability through Growth, Digital Transformation, and Platform Design ("GDP").
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We provide complete turnkey installation services to our direct builder customers via our network of eight primary service centers that are strategically located throughout the United States in Virginia, Texas, North Carolina, Georgia, Florida, Arizona and California. We regularly evaluate our organizational productivity and supply chains and assess opportunities to reduce costs and enhance quality.
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Our GDP strategy is the lens we use to view our long-term decision-making, enabling growth and profitability through the cycle. Growth will maximize our market opportunity through key initiatives. Digital Transformation will strengthen our goal of becoming "One American Woodmark." Lastly, Platform Design will leverage complexity reduction and operational excellence to drive margin improvement.
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Additional raw materials include paint, particleboard, medium density fiberboard, high density fiberboard, manufactured components, and hardware. We purchase these and other raw materials from more than one source and generally believe them to be readily available.
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Their styles and finishes will blend both timeless and on-trend designs that are curated to favor individual preferences for a traditional or contemporary feel. The brand maintains a commitment to longevity without compromising the excitement surrounding modern flair.
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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.
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Alongside the launch of 1951 Cabinetry comes 1951 Foundations and 1951 Progressions. 1951 Foundations and 1951 Progressions utilize American Woodmark’s Made-to-Stock options to address the market demand for high-quality craftsmanship at an affordable price point with their focused selections of the most popular styles and finishes.
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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.
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We manufacture our products across 18 facilities located in Maryland, Indiana, West Virginia, Georgia, Arizona, Kentucky, Virginia, California, Texas, and North Carolina in the United States, and Tijuana and Monterrey, Mexico. We built a new manufacturing facility in Monterrey, Mexico, which began operations in the third quarter of fiscal 2024, and expanded our Hamlet, North Carolina facility.
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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.
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This investment established a component operation in eastern Mexico, and a stock kitchen and bath center of excellence delivering additional capacity for our east coast markets.
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Five years ago, we commissioned the first formal team to better understand and evaluate inclusion and diversity at American Woodmark. Since that time, we have taken deliberate steps to educate our leaders and increase internal awareness within our workforce.
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Raw Materials and Suppliers The primary raw materials used in our products include various wood species, including hard maple, cherry, and beech, particle board, medium density fiberboard, high density fiberboard, and plywood. Additional raw materials include paint, manufactured components, and hardware.
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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.
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We believe that embracing inclusion, not only results in increased diversity but also contributes to more robust solutions through learning and innovation. In recent years, we have made significant progress in promoting diversity and inclusion throughout our organization.
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Going forward, we intend to continue our strategy with the goal of enhancing our culture of inclusion while increasing the diversity of people, thought, and perspectives represented throughout our company.
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We have implemented Right Environment Councils across all our locations, ensuring meaningful engagement with employees at all levels and within the communities we serve.
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Moreover, we have placed a strong emphasis on educating our leaders and staff through comprehensive training on diversity and inclusion topics across our hourly and salaried employees, bolstering awareness and actionable insights through initiatives like our employee engagement survey, which now includes categorized diversity and inclusion questions, developed a Women in Operations mentorship program, and launched a quarterly series podcast committed to discussing topics around inclusion to the organization.
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We have elevated our efforts and continue pursuing strategic initiatives led by our Inclusion, Diversity, Equity, and Alignment (IDEA) team. Our enterprise-wide social strategic roadmap guides our ongoing endeavors, incorporating representation metrics into our organizational scorecards. Looking ahead, we are unwavering in our commitment to deepen our culture of inclusion and leverage the voices and perspectives within our company.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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 2018.
Conversely, when raw materials or energy prices decline, we may receive customer pressure to reduce our sales prices. These prices are market-based and fluctuate based on factors beyond our control. We do not have long-term fixed supply agreements and do not hedge against price fluctuations. We, therefore, cannot predict our raw materials or energy costs for the coming year.
Conversely, when raw materials or energy prices decline, we may receive customer pressure to reduce our sales prices. 8 These prices are market-based and fluctuate based on factors beyond our control. We do not have long-term fixed supply agreements and do not hedge against price fluctuations. We, therefore, cannot predict our raw materials or energy costs for the coming year.
Additionally, failure by our suppliers to provide us with quality products on commercially reasonable terms, and to comply with legal requirements for business practices, could have a material adverse effect on our business, financial condition, or results of operations. Furthermore, we rely heavily or, in certain cases, exclusively, on outside suppliers for some of our key components.
Additionally, failure by our suppliers to provide us with quality products on 10 commercially reasonable terms, and to comply with legal requirements for business practices, could have a material adverse effect on our business, financial condition, or results of operations. Furthermore, we rely heavily or, in certain cases, exclusively, on outside suppliers for some of our key components.
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.
We believe that our industry is significantly influenced by economic conditions generally and particularly by housing activity, consumer confidence, the level of personal discretionary spending, demographics, and credit availability. These factors may affect not only the ultimate consumer of our products, but also may impact home centers, builders, and our other primary customers.
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.
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.
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.
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.
Additional risks and uncertainties not presently known to the Company or currently believed to be immaterial also may adversely impact the Company's business. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the Company's business, financial condition, and results of operations.
Additional risks and uncertainties not presently known to the Company or currently believed to be immaterial also may adversely impact the Company's business. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the Company's business, financial condition, and results of 7 operations.
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 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 9 may be damaged.
"Quantitative and Qualitative Disclosures about Market Risk." 7 Risks related to our business and industry Because of the concentration of our sales to our two largest customers, the loss of either customer or a significant reduction in orders from either customer could adversely affect our financial results.
"Quantitative and Qualitative Disclosures about Market Risk." Risks related to our business and industry Because of the concentration of our sales to our two largest customers, the loss of either customer or a significant reduction in orders from either customer could adversely affect our financial results.
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.
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.
Liability for environmental contamination or a release of hazardous materials may be joint and several, so that we may be held responsible for more than our share of the contamination or other damages, or even for the entire share.
Liability for environmental 12 contamination or a release of hazardous materials may be joint and several, so that we may be held responsible for more than our share of the contamination or other damages, or even for the entire share.
We could continue to pursue growth opportunities through either acquisitions, mergers or internally developed projects, which may be unsuccessful or may adversely affect our future financial condition and operating results. We could continue to pursue opportunities for growth through either acquisitions, mergers, or internally developed projects as part of our growth strategy.
We could pursue growth opportunities through either acquisitions, mergers or internally developed projects, which may be unsuccessful or may adversely affect our future financial condition and operating results. We could pursue opportunities for growth through either acquisitions, mergers, or internally developed projects as part of our growth strategy.
We cannot assure you that we will be successful in integrating an acquired business or that an internally developed project will perform at the levels we anticipate. We may pay for future acquisitions using cash, stock, the assumption of debt, or a combination of these. Future acquisitions could result in dilution to existing shareholders and to earnings per share.
We cannot provide assurance that we will be successful in integrating an acquired business or that an internally developed project will perform at the levels we anticipate. We may pay for future acquisitions using cash, stock, the assumption of debt, or a combination of these. Future acquisitions could result in dilution to existing shareholders and to earnings per share.
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.
We may fail to compete successfully against other companies that are already established providers within the home center, independent dealer and distributor and builder channels. Demand for our products within the home center, builder, and independent dealer and distributor channels may not grow, or might even decline.
"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.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" under the headings "Forward-Looking Statements," "Seasonality," and "Outlook for Fiscal 2025" and Item 7A.
Such manufacturing expansions, realignments, and programs involve substantial planning, often require capital investments, and may result in charges for fixed asset impairments or obsolescence and substantial severance costs. We also cannot assure you that we will achieve all of the intended cost savings.
Such manufacturing expansions, realignments, and programs involve substantial planning, often require capital investments, and may result in charges for fixed asset impairments or obsolescence and substantial severance costs. We also cannot provide assurance that we will achieve all of the intended cost savings.
We may fail to fully realize the anticipated benefits of our growth strategy within the home center, dealer, distributor and homebuilder channels. Part of our growth strategy depends on expanding our business in the home center, dealer, distributor and homebuilder channels.
We may fail to fully realize the anticipated benefits of our growth strategy within the home center, independent dealer and distributor and builder channels. Part of our growth strategy depends on expanding our business in the home center, independent dealer and distributor and builder channels.
Our business primarily relies on home improvement, repair and remodel and new home construction activity levels in the United States. The housing market is sensitive to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income, availability of financing and interest rate levels, and recent concerns with the housing market.
Our business primarily relies on home improvement, repair and remodel and new home construction activity levels in the United States. The housing market is sensitive to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income, availability of financing and interest rate levels, and available inventory.
Adverse changes in any of these conditions generally, or in any of the markets where we operate, could decrease demand and could adversely impact our businesses by: • causing consumers to delay or decrease homeownership; • making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes; • making consumers more reluctant to make investments in their existing homes, including kitchen and bath repair and remodel projects; or • making it more difficult to secure loans for major renovations.
Consistent with our fiscal 2024 net sales volume decrease, adverse changes in any of these conditions generally, or in any of the markets where we operate, could decrease demand and could adversely impact our businesses by: • causing consumers to delay or decrease homeownership; • making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes; • making consumers more reluctant to make investments in their existing homes, including kitchen and bath repair and remodel projects; or • making it more difficult to secure loans for major renovations.
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.
Goodwill represents a substantial portion of our assets. We also have long-lived assets consisting of property and equipment and other identifiable intangible assets which we review both on an annual basis as well as when events or circumstances indicate that the carrying amount of an asset may not be recoverable.
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.
Home Depot and Lowe's collectively accounted for approximately 41.6% of total net sales during the fiscal year 2024. We do not typically enter into long-term sales contracts with Home Depot or Lowe's and our sales usually occur on a "purchase order" basis.
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.
Effects of manufacturing expansion, realignments, or cost savings programs could result in a decrease in our short-term earnings until the additional capacity is in place, cost reductions are achieved, and/or production volumes stabilize, such as our expansion of stock kitchen and bath capacity in North Carolina and Mexico, which was completed during the fiscal year.
If a determination is made that a significant impairment in value of goodwill, other intangible assets, or long-lived assets has occurred, such determination could require us to impair a substantial portion of our assets. Asset impairments could have a material adverse effect on our financial condition and results of operations.
If a determination is made that a significant impairment in value of goodwill or long-lived assets has occurred, such determination could require us to impair a substantial portion of our assets. Asset impairments could have a material adverse effect on our financial condition and results of operations. The implementation of our Enterprise Resource Planning system could disrupt our business.
Natural disasters could have a material adverse effect on our business, financial condition, or results of operations.
Natural disasters, terrorist acts or other catastrophic events could have a material adverse effect on our business, financial condition, or results of operations.
Our failure to comply with the restrictive covenants described above as well as other terms of our indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date.
We cannot assure you that we will be able to maintain compliance with these existing covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants. 11 Our failure to comply with the restrictive covenants described above as well as other terms of our indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in us being required to repay these borrowings before their due date.
In addition, the continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause further disruptions to the economies of the United States and other countries. Our redundant, multiple site capacity may not be sufficient in the event of a natural disaster, terrorist act or other catastrophic event.
In addition, the continued threat of terrorism and heightened security 13 and military action in response to this threat, or any future acts of terrorism, may cause further disruptions to the economies of the United States and other countries.
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.
We are in the process of implementing a common Enterprise Resource Planning (ERP) platform over several fiscal years. The first wave (including the procurement, general ledger, accounts payable, projects, and fixed asset modules) went live in the second half of fiscal 2022. During fiscal 2024, our new Monterrey, Mexico facility went live.
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.
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.
The ERP system implementation subjects us to substantial costs and inherent risks associated with migrating from our legacy systems.
Our inability to mitigate existing and future disruptions could adversely affect our sales, earnings, financial condition and liquidity. The ERP system implementation subjects us to substantial costs and inherent risks associated with migrating from our legacy systems.
Although we currently expect the ERP implementation to increase efficiencies by leveraging a common, cloud-based system throughout the Company and standardizing processes and reporting, our ERP system implementation may not result in improvements that outweigh its costs and may disrupt our operations. Our inability to mitigate existing and future disruptions could adversely affect our sales, earnings, financial condition and liquidity.
We have begun planning for the next implementation in our Anaheim and Riverside, California facilities in fiscal 2025. Although we currently expect the ERP implementation to increase efficiencies by leveraging a common, cloud-based system throughout the Company and standardizing processes and reporting, our ERP system implementation may not result in improvements that outweigh its costs and may disrupt our operations.
The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these existing covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.
The terms of any future indebtedness we may incur could include more restrictive covenants.
Removed
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.
Added
Our redundant, multiple site capacity may not be sufficient in the event of a natural disaster, terrorist act or other catastrophic event.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES We own our corporate office located in Winchester, Virginia. In addition, we lease eight manufacturing facilities, one manufacturing facility/service center, and one distribution center in the United States and Mexico and own eight manufacturing facilities located primarily in the eastern and southern United States.
Biggest changeItem 2. PROPERTIES We own our corporate office located in Winchester, Virginia. In addition, we lease five manufacturing facilities, one manufacturing facility/service center, and one distribution center in the United States and we lease four manufacturing facilities in Mexico. We own eight manufacturing facilities located primarily in the eastern and southern United States.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+1 added−1 removed1 unchanged
Biggest changeAs required by ASC Topic 450, "Contingencies" ("ASC 450"), the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss: those that are probable, those that are reasonably possible, and those that are deemed to be remote. The Company accounts for these loss contingencies in accordance with ASC 450.
Biggest changeOn at least a quarterly basis, the Company consults with its legal counsel to ascertain the reasonable likelihood that such claims may result in a loss. 15 As required by ASC Topic 450, "Contingencies" ("ASC 450"), the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss: those that are probable, those that are reasonably possible, and those that are deemed to be remote.
Where losses are deemed to be probable and estimable, accruals are made. Where losses are deemed to be reasonably possible, a range of loss estimate is determined and considered for disclosure. In determining these loss range estimates, the Company considers known values of similar claims and consults with independent counsel.
The Company accounts for these loss contingencies in accordance with ASC 450. Where losses are deemed to be probable and estimable, accruals are made. Where losses are deemed to be reasonably possible, a range of loss estimate is determined and considered for disclosure.
The Company believes that the aggregate range of estimated loss stemming from the various suits and asserted and unasserted claims which were deemed to be either probable or reasonably possible was not material as of April 30, 2023.
The Company believes that the aggregate range of estimated loss stemming from the various suits and asserted and unasserted claims which were deemed to be either probable or reasonably possible was not material as of April 30, 2024, with the exception of the Antidumping and Countervailing Duties Investigation discussed in Note L — Commitments and Contingencies in the Notes to the Consolidated Financial Statements herein.
Removed
On at least a quarterly basis, the Company consults with its legal counsel to ascertain the reasonable likelihood that such claims may result in a loss.
Added
In determining these loss range estimates, the Company considers known values of similar claims and consults with independent counsel.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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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.
Biggest changePaul Joachimczyk 52 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. Robert J.
There are no family relationships between any executive officer and any other officer or director of the Company or any arrangement or understanding between any executive officer and any other person pursuant to which such officer was elected. The executive officers of the Company are as follows: Name Age Position(s) Held During Past Five Years M.
There are no family relationships between any executive officer and any other officer or director of the Company or any arrangement or understanding between any executive officer and any other person pursuant to which such officer was elected. The executive officers of the Company are as follows: Name Age Position(s) Held During Past Five Years and at the Company M.
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.
Scott Culbreth 53 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.
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
Adams, Jr. 58 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. Dwayne L.
Added
Medlin 56 Company Senior Vice President, Remodel Sales from August 2023 to present; Company Vice President, Remodel Sales from May 2021 to August 2023; Company Vice President Home Center Sales from June 2018 to May 2021. Kimberly G.
Added
Coldiron 45 Company Senior Vice President, Chief Human Resources Officer from August 2023 to present; Company Vice President, Chief Human Resources Officer from February 2021 to August 2023; Executive Vice President, Chief Human Resources Officer at OmniMax, International from 2019 to February 2021. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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.
Biggest changeThe 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 16 condition, capital requirements, and results of operations, as well as any other factors then deemed relevant by the Board, and will be subject to applicable restrictions in the credit agreement governing the Company's credit facility Purchase of Equity Securities by the Issuer The following table details share repurchases by the Company during the fourth quarter of fiscal 2024: Share Repurchases Total Number of Shares Purchased Average Price Paid Total Number of Shares Purchased as Part of Publicly Announced Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (000) (1) Per Share Programs (1) February 1 - 29, 2024 77,542 $ 92.59 77,542 $ 98,206 March 1 - 31, 2024 — N/A — $ — April 1 - 30, 2024 93,029 $ 94.64 93,029 $ 89,476 Quarter ended April 30, 2024 170,571 $ 93.74 170,571 $ 89,476 (1) Under a stock repurchase authorization approved by its Board on November 29, 2023, the Company was authorized to purchase up to $125 million of the Company's common shares.
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.
As of June 17, 2024 there were approximately 27,500 total shareholders of the Company's common stock, including 6,300 shareholders of record and 21,100 beneficial owners whose shares are held in "street" name by securities broker-dealers or other nominees.
The 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 graph is based on historical data and is not intended to be a forecast or indication of future performance of American Woodmark common stock. 2019 2020 2021 2022 2023 2024 American Woodmark Corporation $100.00 $57.17 $110.60 $52.10 $56.18 $102.39 Russell 2000 Index $100.00 $83.61 $146.25 $121.57 $117.14 $132.75 S&P Household Durables Index $100.00 $93.86 $184.57 $140.73 $173.24 $230.33 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.
Added
Management funded these share repurchases using available cash and cash generated from operations. Repurchased shares became authorized but unissued common shares. At April 30, 2024, $89.5 million of funds remained from the amounts authorized by the Board to repurchase the Company's common shares.
Added
The Company purchased a total of 170,571 common shares, for an aggregate purchase price of $15.9 million, during the fourth quarter of fiscal 2024 under the authorization pursuant to a repurchase plan intended to comply with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. 17 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, 2019 through April 30, 2024.

Item 7. Management's Discussion & Analysis

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

47 edited+9 added−10 removed33 unchanged
Biggest changeA 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.
Biggest changeAdjusted EPS per diluted share FISCAL YEARS ENDED APRIL 30, (Dollars in thousands, except share and per share data) 2024 2023 2022 Net income (loss) (GAAP) $ 116,216 $ 93,723 $ (29,722) Add back: Acquisition and restructuring related expenses 47 80 80 Non-recurring restructuring charges, net (198) 1,525 183 Pension settlement, net — (7) 68,473 Amortization of customer relationship intangibles 30,444 45,667 45,667 Net gain on debt modification — (2,089) — Tax benefit of add backs (7,785) (11,791) (29,859) Adjusted net income (Non-GAAP) $ 138,724 $ 127,108 $ 54,822 Weighted average diluted shares (GAAP) 16,260,222 16,685,359 16,592,358 Add back: potentially anti-dilutive shares (1) — — 48,379 Weighted average diluted shares (Non-GAAP) 16,260,222 16,685,359 16,640,737 EPS per diluted share (GAAP) $ 7.15 $ 5.62 $ (1.79) Adjusted EPS per diluted share (Non-GAAP) $ 8.53 $ 7.62 $ 3.29 (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.
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.
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 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 or our long-lived assets; 19 • 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 another pandemic on our business, the global and U.S. economy, and our employees, customers, suppliers, and logistics system; • 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.
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.
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. 26 Goodwill. Goodwill represents the excess of purchase price over the fair value of net assets acquired.
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.
Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
We define EBITDA as net income (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3) depreciation and amortization expense, and (4) amortization of customer relationship intangibles and trademarks.
We define EBITDA as net income (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3) depreciation and amortization expense, and (4) amortization of customer relationship intangibles.
We define Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of (1) expenses related to the RSI Acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles and trademarks, (4) net gain/loss on debt forgiveness and modification, (5) pension settlement charges, and (6) the tax benefit of RSI Acquisition expenses and subsequent restructuring charges, the net gain/loss on debt forgiveness and modification, and the amortization of customer relationship intangibles and trademarks.
We define 22 Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of (1) expenses related to the RSI Acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles, (4) net gain/loss on debt forgiveness and modification, (5) pension settlement charges, and (6) the tax benefit of RSI Acquisition expenses and subsequent restructuring charges, the net gain/loss on debt forgiveness and modification, and the amortization of customer relationship intangibles.
The 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.
The Company has concluded that none of its long-lived assets were impaired as of April 30, 2024. Fiscal Year Ended April 30, 2023 Compared to the Fiscal Year Ended April 30, 2022 For a comparison of our performance and financial metrics for the fiscal years ended April 30, 2023 and April 30 2022, see “Part II, Item 7.
(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.
(4) The Company recognized net gain on debt modification 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.
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.
Cash flow from operations combined with accumulated cash and cash equivalents on hand are expected to be more than sufficient to support forecasted working capital requirements, service existing debt obligations, and fund capital expenditures for fiscal 2025.
The Company believes based on positive evidence of the housing industry improvement along with 9 consecutive years of profitability that the Company will more likely than not realize all other remaining deferred tax assets. The Company also regularly assesses its long-lived assets to determine if any impairment has occurred.
The Company believes based on positive evidence of the housing industry improvement, along with 12 consecutive years of operating profitability, that the Company will more likely than not realize all other remaining deferred tax assets. The Company also regularly assesses its long-lived assets to determine if any impairment has occurred.
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.
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, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales and distribution 79.6 82.7 87.8 Gross profit 20.4 17.3 12.2 Selling and marketing expenses 5.0 4.6 5.0 General and administrative expenses 6.7 6.1 5.3 Restructuring charges, net — 0.1 — Operating income 8.7 6.5 1.9 Pension settlement, net — — 3.7 Interest expense/other (income) expense, net 0.4 0.7 0.5 Income (loss) before income taxes 8.3 5.8 (2.3) Income tax expense (benefit) 1.9 1.4 (0.7) Net income (loss) 6.4 4.4 (1.6) The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes contained elsewhere in this report.
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.
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 were in compliance with each of the covenants under the A&R Credit Agreement during fiscal 2024 and expect to remain in compliance throughout fiscal 2025.
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.
However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down to fair value. There were no impairment charges related to goodwill for the fiscal years 2024, 2023, and 2022.
The Company recognizes revenue based on the invoice price less allowances for sales returns, cash discounts, and other deductions as required under GAAP. Collection is reasonably assured as determined through an analysis of accounts receivable data, including historical product returns and the evaluation of each customer's ability to pay.
The Company recognizes revenue based on the invoice price less allowances for sales returns, cash discounts, and other deductions as required under GAAP. Collection is reasonably assured as determined through an analysis of accounts receivable data, including historical product returns, historical collections, and the evaluation of each customer's ability to pay, as well as any relevant economic conditions.
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.
Department of Commerce; • Mortgage interest rates increased with a 30-year fixed mortgage rate of 7.17% in April 2024, an increase of approximately 74 basis points compared to April 2023; • The median price of existing homes sold in the U.S. rose by 2.2% during the Company's fiscal 2024, according to data provided by the National Association of Realtors; and • Consumer sentiment, as reported by the University of Michigan, averaged 21.6% higher during the Company's fiscal 2024 than in its prior fiscal year.
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.
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.
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.
At April 30, 2024, the Company operated 18 manufacturing facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the United States.
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.
As of April 30, 2024 and 2023, the Company had no off-balance sheet arrangements. OPERATING ACTIVITIES Cash provided by operating activities in fiscal 2024 was $230.8 million, compared with $198.8 million in fiscal 2023.
The Company is required to repay the Term Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026. Approximately $323.2 million was available under this facility as of April 30, 2023.
The 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 $322.9 million was available under this facility as of April 30, 2024.
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 increase in the Company's cash from operating activities was driven primarily by an increase in net income, decreased amortization of customer relationship intangibles and increased cash flows from accounts payable, accrued marketing expenses, and accrued compensation and related expenses, which were partially offset by a decrease in cash flows from income taxes, inventories, and customer receivables.
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.
Financial Overview A number of general market factors impacted the Company's business in fiscal 2024, some positive and some negative, including: • The unemployment rate increased by 15% compared to April 2023, to 3.9% as of April 2024 according to data provided by the U.S.
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.
As of April 30, 2024, the Company had total deferred tax assets of $59.5 million net of valuation allowance, up from $47.9 million of deferred tax assets net of valuation allowance at April 30, 2023.
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.
Free cash flow FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2024 2023 2022 Cash provided by operating activities $ 230,750 $ 198,837 $ 24,445 Less: Capital expenditures (1) 92,241 45,380 51,582 Free cash flow $ 138,509 $ 153,457 $ (27,137) (1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.
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.
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: Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2024 2023 2022 Net income (loss) (GAAP) $ 116,216 $ 93,723 $ (29,722) Add back: Income tax expense (benefit) 35,752 28,963 (13,257) Interest expense, net 8,207 15,994 10,189 Depreciation and amortization expense 48,337 48,077 50,939 Amortization of customer relationship intangibles 30,444 45,667 45,667 EBITDA (Non-GAAP) $ 238,956 $ 232,424 $ 63,816 Add back: Acquisition and restructuring related expenses (1) 47 80 80 Non-recurring restructuring charges, net (2) (198) 1,525 183 Pension settlement, net — (7) 68,473 Net gain on debt modification (4) — (2,089) — Change in fair value of foreign exchange forward contracts (3) 1,544 — — Stock-based compensation expense 10,682 7,396 4,708 Loss on asset disposal 1,742 1,050 697 Adjusted EBITDA (Non-GAAP) $ 252,773 $ 240,379 $ 137,957 Net Sales $ 1,847,502 $ 2,066,200 $ 1,857,186 Net income (loss) margin (GAAP) 6.3 % 4.5 % (1.6) % Adjusted EBITDA margin (Non-GAAP) 13.7 % 11.6 % 7.4 % (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.
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.
The Company repurchased $87.7 million during fiscal 2024. The Company did not repurchase any of its shares during the fiscal year ended April 30, 2023, and as of April 30, 2024 the current stock repurchase program has a remaining authorization of $89.5 million.
Department of Labor; • There was a decrease in single family housing starts during the Company's fiscal 2023 of 17%, as compared to the Company's fiscal 2022, according to the U.S.
Department of Labor; • There was an increase in single family housing starts during the Company's fiscal 2024 of 3.8%, as compared to the Company's fiscal 2023, and a decrease in housing completions during the Company's fiscal 2024 of 2.3%, as compared to the Company's fiscal 2023, according to the U.S.
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.
Estimated required interest payments based on rates as of April 30, 2024 would be $14.7 million in fiscal 2025, $21.0 million in fiscal 2026-27, $6.2 million in fiscal 2028-29, and $5.0 million in fiscal 2030 and thereafter. SEASONALITY Our business has been subject to seasonal influences, with higher sales typically realized in our first and fourth fiscal quarters.
(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.
The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other expense (income), net in the operating results.
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.
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 2024 was $92.2 million, compared with $45.3 million in fiscal 2023.
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.
The Company's largest remodeling customers and competitors continued to utilize sales promotions in the Company's product category during fiscal 2024. The Company strives to maintain its promotional levels in line with market activity, with a goal of remaining competitive. 20 The Company's net sales decreased by 10.6% during fiscal 2024, which was driven by declines in all sales channels.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2022, filed with the SEC on June 29, 2022. 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.
Results of Operations FISCAL YEARS ENDED APRIL 30, (Dollars in thousands) 2024 2023 2022 2024 vs. 2023 PERCENT CHANGE 2023 vs. 2022 PERCENT CHANGE Net sales $ 1,847,502 $ 2,066,200 $ 1,857,186 (10.6) % 11.3 % Gross profit 377,807 357,524 226,444 5.7 % 57.9 % Selling and marketing expenses 92,603 94,602 92,555 (2.1) % 2.2 % General and administrative expenses 124,008 125,045 97,547 (0.8) % 28.2 % Interest expense, net 8,207 15,994 10,189 (48.7) % 57.0 % Net Sales Net sales for fiscal 2024 decreased 10.6% to $1,847.5 million from the prior fiscal year.
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.
General and Administrative Expenses General and administrative expenses decreased by $1.0 million or 0.8% during fiscal 2024 versus the prior fiscal year. General and administrative costs increased to 6.7% of net sales in fiscal 2024 compared with 6.1% of net sales in fiscal 2023.
Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability and we have also received similar feedback from some of our investors regarding the same.
The amortization of intangible assets is driven by the RSI Acquisition and will recur in future periods. Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability.
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.
Future minimum annual commitments for contractual obligations under term loans, the Revolving Facility, capital and operating lease obligations, and other long-term debt amount to $35.1 million in fiscal 2025, $426.0 million in fiscal 2026-27, $36.9 million in fiscal 2028-29, and $31.1 million in fiscal 2030 and thereafter.
"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.
"Quantitative and Qualitative Disclosures about Market Risk." Liquidity and Capital Resources The Company's cash and cash equivalents totaled $87.4 million at April 30, 2024, representing a $45.7 million increase from its April 30, 2023 levels. At April 30, 2024, total long-term debt (including current maturities) was $374.5 million, an increase of $2.8 million from the balance at April 30, 2023.
The Company's 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.
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.
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.
The change in net sales and Adjusted EBITDA is highly dependent upon overall industry, economic growth trends, material constraints, labor impacts, interest rates and consumer behaviors. Adjusted EBITDA will also be impacted as we continue to ramp up production from our plant expansions in Monterrey, Mexico and Hamlet, North Carolina.
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.
We will be opportunistic in our 24 share repurchasing and lastly, we have our debt position at a leverage ratio we wanted to achieve and will continue to deprioritize paying down debt in fiscal 2025.
(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.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction-in-force implemented in fiscal 2023 and the closure of the manufacturing plant in Humboldt, Tennessee in July 2020. 23 (3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates.
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.
Selling and marketing expenses in fiscal 2024 were 5.0% of net sales, compared with 4.6% of net sales in fiscal 2023. The decrease in selling and marketing expenses was due to controlled discretionary spending within the function, partially offset by static fixed costs within the function and increased digital spend.
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's effective tax rate remained relatively flat from 23.6% in fiscal 2023 to 23.5% in fiscal 2024. 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.
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.
FINANCING ACTIVITIES The Company realized a net outflow of $92.9 million from financing activities in fiscal 2024 compared with a net outflow of $134.1 million in fiscal 2023. During fiscal 2024, $2.7 million, net, was used to repay long-term debt, compared with approximately $132.9 million in fiscal 2023.
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.
Department of Commerce. Gross Profit Gross profit as a percentage of sales increased to 20.4% in fiscal 2024 as compared with 17.3% in fiscal 2023, representing a 310 basis point improvement. The increase in gross profit was primarily due to the result of pricing better matching inflationary pressures and overall increased efficiencies across our existing operating locations.
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.
During fiscal 2025, we will continue our investment back into the business by continuing our path for our digital transformation with investments in our cloud-based ERP and CRM platforms and investing in automation.
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.
On November 29, 2023 the Board of Directors authorized a stock repurchase program of up to $125 million of the Company's outstanding common shares. In conjunction with this authorization the Board of Directors cancelled the remaining $22.9 million that had yet to be repurchased under the $100 million existing authorization from May 25, 2021.
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 ratio of long-term debt to total capital was 29.0% at April 30, 2024, compared with 29.7% at April 30, 2023. The Company's main source of liquidity is its cash and cash equivalents on hand and cash generated from its operating activities, which we expect to continue into fiscal 2025.
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.
The decrease in general and administrative expenses was primarily due to controlled discretionary spending and reduced amortization of customer relationship intangibles, partially offset by increased incentive and profit sharing costs, digital spend, and deleverage created from lower sales. Effective Income Tax Rates The Company generated pre-tax income of $152.0 million during fiscal 2024.
Removed
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.
Added
Gross profit for fiscal 2024 was 20.4%, an increase from 17.3% in fiscal 2023. The Company had net income of $116.2 million in fiscal 2024 and net income of $93.7 million in fiscal 2023.
Removed
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.
Added
Net income and gross profit for fiscal 2024 increased primarily due to the result of pricing better matching inflationary pressures and overall increased efficiencies across our existing operating locations.
Removed
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.
Added
These benefits were partially offset by one-time startup costs and inefficiencies driven by our new locations in Hamlet, North Carolina and Monterrey, Mexico, which will continue to ramp up production throughout the calendar year. The Company regularly considers the need for a valuation allowance against its deferred tax assets. The Company has generated operating profits for the past 12 years.
Removed
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.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2023, filed with the SEC on June 27, 2023.
Removed
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.
Added
Sales in the home center channel decreased 13.9% and the independent dealer and distributor channel decreased 9.1%, primarily due to lower in-store traffic rates and consumers choosing smaller sized projects. Sales in the builder channel decreased 7.7%, primarily due to a decrease in housing completions, which declined 2.3% year over year according to data provided by the U.S.
Removed
The amortization of intangible assets is driven by the RSI Acquisition and will recur in future periods.
Added
These benefits were partially offset by one-time startup costs and inefficiencies driven by our new locations in Hamlet, North Carolina and Monterrey, Mexico. 21 Selling and Marketing Expenses Selling and marketing costs decreased by $2.0 million or 2.1% during fiscal 2024 versus the prior year.
Removed
The Company recognized net loss on debt modification totaling $13.8 million for fiscal year 2021 related to the restructuring of its debt.
Added
Outlook for Fiscal 2025 We expect low single-digit increases in net sales for fiscal 2025 versus fiscal 2024 with growth expected in all channels. Our outlook for Adjusted EBITDA for fiscal 2025 will range from $235 million to $255 million.
Removed
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.
Added
A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2025 is not provided because we do not forecast net income (loss) as we cannot, without unreasonable effort, estimate or predict with certainty various components of net income.
Removed
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.
Added
Investments in property, plant and equipment for fiscal 2024 were $91.0 million, compared with $42.6 million in fiscal 2023, primarily due to 25 our plant expansions in Monterrey, Mexico and Hamlet, North Carolina. Investments in promotional displays were $1.2 million in fiscal 2024, compared with $2.8 million in fiscal 2023.
Removed
There were no impairment charges related to other intangible assets for the fiscal years 2023, 2022, and 2021.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
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.
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, 2024 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. 25
The Company does not currently use commodity or similar financial instruments to manage its commodity price risks. 27

Other AMWD 10-K year-over-year comparisons