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Category: Stock Market and American Woodmark
Date: 28 August 2019 Stock Price: $77.30 We take a look at the 1st quarter 2019 earnings report from American Woodmark, the manufacturer and distributor of kitchen, bath and home organization products.
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About American Woodmark Corporation
American Woodmark Corporation manufactures and distributes kitchen, bath and home organization products for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, builders and through a network of independent dealers and distributors. At July 31, 2019, the Company operated eighteen manufacturing facilities in the United States and Mexico and eight primary service centers located throughout the United States
Financial overview of American Woodmark's latest earnings report
Numbers we are interested in: (for the quarter):
The company's board approved a share repurchase program of $50 million which (if all being bought at current price will see the group's shares in issue reduce by 646 830 (or by 3.8%). So future earnings and dividends will be divided among 3.8% less shareholders. Which is a good thing for shareholders as less shareholders will be sharing in the earnings and dividends.
- Net sales $ 427.365 million (down from $ 428.962 million for the same quarter of last year)
- Cost of sales & distribution: $332.846 (down from $333.226 million for the same quarter of last year)
- Gross profit: $94.519 million (down from $95.736 million for the same quarter of last year)
- Sales & marketing expense: $20.687 million (down from $22,938 million for the same quarter of last year)
- General & administrative expense: $29.432 million (down from $29,830 million for the same quarter of last year)
- Operating income: $44.419 million (down from $40.527 million for the same quarter of last year)
- Net income $ 26.881 millon (up from $ 24.767 million for the same quarter of last year)
- Weighted average shares outstanding - diluted: 16,907,463 (down from 17,618,943 for the same quarter of last year
- Net income per diluted share $ 1.59 (up from $ 1.41 for the same quarter of last year)
- PE ratio: 12.5 (assuming all 4 quarters of 2019 fiscal year earns the same net income per share as this quarter)
- Cash & cash equivalents $ 71.049 million
- Cash and cash equivalents per share: $4.20 (or 5.4% of the group's stock price)
- Customer receivables: $119.999 million
- Customer receivables makes up 7.4% of the group's total assets (we believe anything more than 20% is alarming)
- Inventories: $115.341 million
- Inventories of American Woodmark makes up 7.1% of their total assets
- Stockholders' equity: $651.168 million
- Stock holders equity per share: $38.52
- Net cash provided by operating activities $ 62.612 million (up from $52.937 million for the same quarter of the previous year)
- Cash from operating activities per share: $3.70
The company's board approved a share repurchase program of $50 million which (if all being bought at current price will see the group's shares in issue reduce by 646 830 (or by 3.8%). So future earnings and dividends will be divided among 3.8% less shareholders. Which is a good thing for shareholders as less shareholders will be sharing in the earnings and dividends.
American Woodmark management commentary on the results and earnings guidance
WINCHESTER, Virginia (August 27, 2019) -- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its first fiscal quarter ended July 31, 2019. Net sales for the first fiscal quarter decreased 0.4% to $427.4 million compared with the same quarter of the prior fiscal year. The Company experienced growth in the builder channel which was offset by declines in the home center and independent dealers and distributors channels during the first quarter of fiscal year 2020. Net income was $26.9 million ($1.59 per diluted share) for the first quarter of the current fiscal year compared with $24.8 million ($1.41 per diluted share) in the same quarter of the prior fiscal year.
Net income for the current quarter was positively impacted by lower sales and marketing expense and lower interest expense. Adjusted EPS per diluted share was $2.13 for the first quarter of the current fiscal year compared with $2.04 in the same quarter of the prior fiscal year.
AMERICAN WOODMARK CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Adjusted EBITDA for the first fiscal quarter was $69.6 million, or 16.3% of net sales, compared to $68.1 million, or 15.9% of net sales, for the same quarter of the prior fiscal year. “Despite the difficult market, we are very pleased with our financial performance in our first fiscal quarter,” said Cary Dunston, Chairman and CEO. “Our system is operating very efficiently, overcoming a number of cost headwinds as we continue to capitalize on integration synergies. Within the market, we once again over indexed in the builder channel, however repair and remodel remained challenging.” Cash provided by operating activities for the first fiscal quarter was $62.6 million and free cash flow totaled $56.0 million for the first fiscal quarter.
The Company paid down $42.0 million of its term loan facility during the current fiscal quarter. On August 22, 2019, the Board of Directors authorized a stock repurchase program of up to $50 million of the Company's outstanding common shares.
Net income for the current quarter was positively impacted by lower sales and marketing expense and lower interest expense. Adjusted EPS per diluted share was $2.13 for the first quarter of the current fiscal year compared with $2.04 in the same quarter of the prior fiscal year.
AMERICAN WOODMARK CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Adjusted EBITDA for the first fiscal quarter was $69.6 million, or 16.3% of net sales, compared to $68.1 million, or 15.9% of net sales, for the same quarter of the prior fiscal year. “Despite the difficult market, we are very pleased with our financial performance in our first fiscal quarter,” said Cary Dunston, Chairman and CEO. “Our system is operating very efficiently, overcoming a number of cost headwinds as we continue to capitalize on integration synergies. Within the market, we once again over indexed in the builder channel, however repair and remodel remained challenging.” Cash provided by operating activities for the first fiscal quarter was $62.6 million and free cash flow totaled $56.0 million for the first fiscal quarter.
The Company paid down $42.0 million of its term loan facility during the current fiscal quarter. On August 22, 2019, the Board of Directors authorized a stock repurchase program of up to $50 million of the Company's outstanding common shares.
American Woodmark (NYSE: AMWD) stock price history
The image below shows the stock price history of American Woodmark over the past 5 years. From the graphic it is clear that the group's stock price has largely moved upward at a slow gradual price with it being under $50 a share 5 years ago to trade at the current $77 odd a share now. While not astronomical returns provided the growth has been steady.
American Woodmark's (NYSE: AMWD) latest stock valuation
So what do we value the group at based on their latest set of earnings released? Considering the news of a share buy back, their strong cash generation and moderate inventory and accounts receivable levels value the group's stock at $111.30 a share., which will place the group on a moderate PE ratio of 17.5 (not exactly the lofties of valuations available on the market)