UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~January 31, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 000-14798

American Woodmark Corporation

(Exact name of registrant as specified in its charter)

Virginia

54-1138147

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

561 Shady Elm Road,

Winchester,

Virginia

22602

(Address of principal executive offices)

(Zip Code)

(540) 665-9100

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AMWD	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of ~~November 22, 2021, 16,569,585~~February 23, 2022, 16,570,619 shares of the Registrant's Common Stock were outstanding.

AMERICAN WOODMARK CORPORATION

FORM 10-Q

INDEX


PART I.	FINANCIAL INFORMATION	PAGE NUMBER

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of ~~October~~January 31, ~~2021~~202 2 and April 30, 2021	3

	Condensed Consolidated Statements of Income--Three months ended ~~October~~January 31, ~~2021~~2022 and ~~2020; Six~~2021; Nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021	4

	Condensed Consolidated Statements of Comprehensive Income--Three months ended ~~October~~January 31, ~~2021~~2022 and ~~2020; Six~~2021; Nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021	5

	Condensed Consolidated Statements of Shareholders' Equity--Three months ended ~~October~~January 31, ~~2021~~2022 and ~~2020; Six~~2021; Nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021	6

	Condensed Consolidated Statements of Cash ~~Flows--Six~~Flows--Nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021	8

	Notes to Condensed Consolidated Financial ~~Statements--October~~Statements--January 31, ~~2021~~2022	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	2728

Item 1A.	Risk Factors	28





Item 6.	Exhibits	28

SIGNATURES		29

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)


		October 31, 2021		April 30, 2021			January 31, 2022		April 30, 2021
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	8,007	$	91,071	Cash and cash equivalents	$	871	$	91,071

Customer receivables, net	Customer receivables, net	149,191		146,866		Customer receivables, net	151,121		146,866
Inventories	Inventories	190,998		158,167		Inventories	204,234		158,167
Income taxes receivable	Income taxes receivable	5,109		—		Income taxes receivable	8,349		—
Prepaid expenses and other	Prepaid expenses and other	18,403		13,861		Prepaid expenses and other	19,388		13,861

Total current assets	Total current assets	371,708		409,965		Total current assets	383,963		409,965
Property, plant and equipment, net	Property, plant and equipment, net	208,696		204,002		Property, plant and equipment, net	208,728		204,002
Operating lease right-of-use assets	Operating lease right-of-use assets	118,283		123,118		Operating lease right-of-use assets	112,874		123,118

Customer relationship intangibles, net	Customer relationship intangibles, net	98,944		121,778		Customer relationship intangibles, net	87,528		121,778

Goodwill	Goodwill	767,612		767,612		Goodwill	767,612		767,612
Promotional displays, net	Promotional displays, net	14,313		14,554		Promotional displays, net	12,759		14,554
Deferred income taxes	Deferred income taxes	1,520		1,118		Deferred income taxes	1,490		1,118
Other assets	Other assets	14,663		12,252		Other assets	16,731		12,252
TOTAL ASSETS	TOTAL ASSETS	$	1,595,739	$	1,654,399	TOTAL ASSETS	$	1,591,685	$	1,654,399
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	87,109	$	91,622	Accounts payable	$	87,986	$	91,622
Current maturities of long-term debt	Current maturities of long-term debt	2,160		8,322		Current maturities of long-term debt	2,250		8,322
Short-term lease liability - operating	Short-term lease liability - operating	21,538		19,994		Short-term lease liability - operating	22,303		19,994
Accrued compensation and related expenses	Accrued compensation and related expenses	44,738		58,577		Accrued compensation and related expenses	47,413		58,577
Accrued marketing expenses	Accrued marketing expenses	20,268		20,019		Accrued marketing expenses	15,132		20,019

Other accrued expenses	Other accrued expenses	19,321		21,913		Other accrued expenses	17,866		21,913
Total current liabilities	Total current liabilities	195,134		220,447		Total current liabilities	192,950		220,447
Long-term debt, less current maturities	Long-term debt, less current maturities	501,434		513,450		Long-term debt, less current maturities	506,490		513,450
Deferred income taxes	Deferred income taxes	40,641		42,891		Deferred income taxes	39,330		42,891

Long-term lease liability - operating	Long-term lease liability - operating	104,433		109,628		Long-term lease liability - operating	99,553		109,628
Other long-term liabilities	Other long-term liabilities	10,958		11,745		Other long-term liabilities	2,409		11,745
Shareholders' equity	Shareholders' equity					Shareholders' equity
Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	—		—		Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	—		—
Common stock, no par value; 40,000,000 shares authorized; issued and	Common stock, no par value; 40,000,000 shares authorized; issued and					Common stock, no par value; 40,000,000 shares authorized; issued and
outstanding shares: at October 31, 2021: 16,569,585; at April 30, 2021: 16,801,101		360,902		362,524
outstanding shares: at January 31, 2022: 16,570,619; at April 30, 2021: 16,801,101						outstanding shares: at January 31, 2022: 16,570,619; at April 30, 2021: 16,801,101	361,898		362,524
Retained earnings	Retained earnings	434,167		448,282		Retained earnings	384,910		448,282
Accumulated other comprehensive loss		(51,930)		(54,568)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	4,145		(54,568)
Total shareholders' equity	Total shareholders' equity	743,139		756,238		Total shareholders' equity	750,953		756,238
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,595,739	$	1,654,399	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,591,685	$	1,654,399
See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.					See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(in thousands, except share and per share data)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
		2021		2020		2021		2020			2022		2021		2022		2021

Net sales	Net sales	$	453,163	$	448,583	$	895,744	$	838,670	Net sales	$	459,736	$	431,954	$	1,355,480	$	1,270,624
Cost of sales and distribution	Cost of sales and distribution	401,469		357,911		790,607		668,431		Cost of sales and distribution	407,916		354,458		1,198,523		1,022,889
Gross Profit	Gross Profit	51,694		90,672		105,137		170,239		Gross Profit	51,820		77,496		156,957		247,735

Selling and marketing expenses	Selling and marketing expenses	21,568		21,608		44,555		41,506		Selling and marketing expenses	23,453		21,862		68,008		63,368
General and administrative expenses	General and administrative expenses	24,596		30,229		48,283		60,212		General and administrative expenses	23,270		26,202		71,553		86,414
Restructuring charges, net	Restructuring charges, net	(3)		2,791		310		6,251		Restructuring charges, net	(127)		(847)		183		5,404

Operating Income	Operating Income	5,533		36,044		11,989		62,270		Operating Income	5,224		30,279		17,213		92,549

Interest expense, net	Interest expense, net	2,360		5,981		4,533		12,011		Interest expense, net	2,668		5,746		7,201		17,757
Pension settlement										Pension settlement	69,452		—		69,452		—
Other (income) expense, net	Other (income) expense, net	863		(981)		936		(2,669)		Other (income) expense, net	(329)		(259)		607		(2,928)
Income Before Income Taxes		2,310		31,044		6,520		52,928
Income (Loss) Before Income Taxes										Income (Loss) Before Income Taxes	(66,567)		24,792		(60,047)		77,720

Income tax expense		280		7,922		1,509		13,747
Income tax expense (benefit)										Income tax expense (benefit)	(17,310)		6,347		(15,801)		20,094

Net Income		$	2,030	$	23,122	$	5,011	$	39,181
Net Income (Loss)										Net Income (Loss)	$	(49,257)	$	18,445	$	(44,246)	$	57,626

Weighted Average Shares Outstanding	Weighted Average Shares Outstanding									Weighted Average Shares Outstanding
Basic	Basic	16,567,391		16,992,297		16,614,112		16,964,565		Basic	16,569,881		16,994,975		16,599,369		16,974,701
Diluted	Diluted	16,605,911		17,047,296		16,662,791		17,036,652		Diluted	16,569,881		17,047,211		16,599,369		17,036,586

Net earnings per share
Net earnings (loss) per share										Net earnings (loss) per share
Basic	Basic	$	0.12	$	1.36	$	0.30	$	2.31	Basic	$	(2.97)	$	1.09	$	(2.67)	$	3.39
Diluted	Diluted	$	0.12	$	1.36	$	0.30	$	2.30	Diluted	$	(2.97)	$	1.08	$	(2.67)	$	3.38

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.									See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
		2021		2020		2021		2020			2022		2021		2022		2021

Net income		$	2,030	$	23,122	$	5,011	$	39,181
Net income (loss)										Net income (loss)	$	(49,257)	$	18,445	$	(44,246)	$	57,626

Other comprehensive income, net of tax:	Other comprehensive income, net of tax:									Other comprehensive income, net of tax:
Change in pension benefits, net of deferred taxes of $125 and $111, and $251 and $224 for the three and six months ended October 31, 2021 and 2020, respectively		373		329		746		656
Change in cash flow hedges (swap), net of deferred taxes of $641 for the three and six months ended October 31, 2021, respectively		2,465		—		1,892		—
Change in pension benefits, net of deferred taxes of $18,230 and $111, and $18,481 and $338 for the three and nine months ended January 31, 2022 and 2021, respectively										Change in pension benefits, net of deferred taxes of $18,230 and $111, and $18,481 and $338 for the three and nine months ended January 31, 2022 and 2021, respectively	53,822		328		54,568		984
Change in cash flow hedges (swap), net of deferred taxes of $763 and $1,404 for the three and nine months ended January 31, 2022, respectively										Change in cash flow hedges (swap), net of deferred taxes of $763 and $1,404 for the three and nine months ended January 31, 2022, respectively	2,253		—		4,145		—

Total Comprehensive Income	Total Comprehensive Income	$	4,868	$	23,451	$	7,649	$	39,837	Total Comprehensive Income	$	6,818	$	18,773	$	14,467	$	58,610

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.									See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(Unaudited)


							ACCUMULATED										ACCUMULATED
							OTHER		TOTAL								OTHER		TOTAL
		COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'			COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'
(in thousands, except share data)	(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY		(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY
Balance, April 30, 2020	Balance, April 30, 2020	16,926,537	$	359,430	$	403,193	$	(51,173)	$	711,450	Balance, April 30, 2020	16,926,537	$	359,430	$	403,193	$	(51,173)	$	711,450

Net income	Net income	—	—		16,059		—		16,059		Net income	—	—		16,059		—		16,059
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		327		327		net of tax	—	—		—		327		327
Stock-based compensation	Stock-based compensation	—	961		—		—		961		Stock-based compensation	—	961		—		—		961
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes	withheld for taxes	16,212	(534)		—		—		(534)		withheld for taxes	16,212	(534)		—		—		(534)

Employee benefit plan	Employee benefit plan										Employee benefit plan
contributions	contributions	45,591	3,743		—		—		3,743		contributions	45,591	3,743		—		—		3,743
Balance, July 31, 2020	Balance, July 31, 2020	16,988,340	$	363,600	$	419,252	$	(50,846)	$	732,006	Balance, July 31, 2020	16,988,340	$	363,600	$	419,252	$	(50,846)	$	732,006

Net income	Net income	—	—		23,122		—		23,122		Net income	—	—		23,122		—		23,122
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		329		329		net of tax	—	—		—		329		329
Stock-based compensation	Stock-based compensation	—	1,266		—		—		1,266		Stock-based compensation	—	1,266		—		—		1,266
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes	withheld for taxes	4,920	(177)		—		—		(177)		withheld for taxes	4,920	(177)		—		—		(177)

Balance, October 31, 2020	Balance, October 31, 2020	16,993,260	$	364,689	$	442,374	$	(50,517)	$	756,546	Balance, October 31, 2020	16,993,260	$	364,689	$	442,374	$	(50,517)	$	756,546

Net income											Net income	—	—		18,445		—		18,445
Other comprehensive income,											Other comprehensive income,
net of tax											net of tax	—	—		—		328		328
Stock-based compensation											Stock-based compensation	—	1,316		—		—		1,316
Exercise of stock-based											Exercise of stock-based
compensation awards, net of amounts											compensation awards, net of amounts
withheld for taxes											withheld for taxes	7,887	(642)		—		—		(642)

Balance, January 31, 2021											Balance, January 31, 2021	17,001,147	$	365,363	$	460,819	$	(50,189)	$	775,993

Balance, April 30, 2021	Balance, April 30, 2021	16,801,101	$	362,524	$	448,282	$	(54,568)	$	756,238	Balance, April 30, 2021	16,801,101	$	362,524	$	448,282	$	(54,568)	$	756,238

Net income	Net income	—	—		2,981		—		2,981		Net income	—	—		2,981		—		2,981
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		(200)		(200)		net of tax	—	—		—		(200)		(200)
Stock-based compensation	Stock-based compensation	—	1,177		—		—		1,177		Stock-based compensation	—	1,177		—		—		1,177
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes		20,243	(1,033)		—		—		(1,033)

Stock repurchases		(299,781)	(5,874)		(19,126)		—		(25,000)
Employee benefit plan
contributions		39,491	2,938		—		—		2,938
Balance, July 31, 2021		16,561,054	$	359,732	$	432,137	$	(54,768)	$	737,101

Net income		—	—		2,030		—		2,030
Other comprehensive income,
net of tax		—	—		—		2,838		2,838


							ACCUMULATED										ACCUMULATED
							OTHER		TOTAL								OTHER		TOTAL
		COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'			COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'
(in thousands, except share data)	(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY		(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY
withheld for taxes											withheld for taxes	20,243	(1,033)		—		—		(1,033)

Stock repurchases											Stock repurchases	(299,781)	(5,874)		(19,126)		—		(25,000)
Employee benefit plan											Employee benefit plan
contributions											contributions	39,491	2,938		—		—		2,938
Balance, July 31, 2021											Balance, July 31, 2021	16,561,054	$	359,732	$	432,137	$	(54,768)	$	737,101

Net income											Net income	—	—		2,030		—		2,030
Other comprehensive income,											Other comprehensive income,
net of tax											net of tax	—	—		—		2,838		2,838
Stock-based compensation	Stock-based compensation	—	1,216		—		—		1,216		Stock-based compensation	—	1,216		—		—		1,216
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes	withheld for taxes	8,531	(46)		—		—		(46)		withheld for taxes	8,531	(46)		—		—		(46)

Balance, October 31, 2021	Balance, October 31, 2021	16,569,585	$	360,902	$	434,167	$	(51,930)	$	743,139	Balance, October 31, 2021	16,569,585	$	360,902	$	434,167	$	(51,930)	$	743,139

Net loss											Net loss	—	—		(49,257)		—		(49,257)
Other comprehensive income,											Other comprehensive income,
net of tax											net of tax	—	—		—		56,075		56,075
Stock-based compensation											Stock-based compensation	—	1,006		—		—		1,006
Exercise of stock-based											Exercise of stock-based
compensation awards, net of amounts											compensation awards, net of amounts
withheld for taxes											withheld for taxes	1,034	(10)		—		—		(10)

Balance, January 31, 2022											Balance, January 31, 2022	16,570,619	$	361,898	$	384,910	$	4,145	$	750,953

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.										See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Six Months Ended					Nine Months Ended
		October 31,					January 31,
		2021		2020			2022		2021
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income		$	5,011	$	39,181
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	(44,246)	$	57,626
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	48,780		51,779		Depreciation and amortization	72,703		76,482
Net loss on disposal of property, plant and equipment		151		332
Net loss (gain) on disposal of property, plant and equipment						Net loss (gain) on disposal of property, plant and equipment	516		(2,008)
Reduction in the carrying amount of operating lease right-of-use assets	Reduction in the carrying amount of operating lease right-of-use assets	13,983		13,366		Reduction in the carrying amount of operating lease right-of-use assets	20,823		20,252
Amortization of debt issuance costs	Amortization of debt issuance costs	434		1,263		Amortization of debt issuance costs	651		1,901
Unrealized (gain) loss on foreign exchange forward contracts		170		(1,821)
Unrealized gain on foreign exchange forward contracts						Unrealized gain on foreign exchange forward contracts	(7)		(1,720)

Stock-based compensation expense	Stock-based compensation expense	2,393		2,227		Stock-based compensation expense	3,399		3,543
Deferred income taxes	Deferred income taxes	(3,994)		(6,777)		Deferred income taxes	(24,424)		(8,363)
Pension settlement						Pension settlement	69,452		—
Pension contributions and related (income) expense	Pension contributions and related (income) expense	609		(1,004)		Pension contributions and related (income) expense	710		(1,505)

Contributions of employer stock to employee benefit plan	Contributions of employer stock to employee benefit plan	2,938		3,743		Contributions of employer stock to employee benefit plan	2,938		3,743
Other non-cash items	Other non-cash items	169		2,299		Other non-cash items	(823)		1,899
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Customer receivables	Customer receivables	(2,829)		(45,071)		Customer receivables	(4,436)		(43,564)
Income taxes receivable	Income taxes receivable	(5,750)		2,003		Income taxes receivable	(8,989)		(4,070)
Inventories	Inventories	(33,198)		(17,395)		Inventories	(46,054)		(36,101)
Prepaid expenses and other assets	Prepaid expenses and other assets	(6,206)		(4,825)		Prepaid expenses and other assets	(7,039)		(6,606)
Accounts payable	Accounts payable	(5,214)		21,575		Accounts payable	(5,744)		31,293
Accrued compensation and related expenses	Accrued compensation and related expenses	(13,838)		7,206		Accrued compensation and related expenses	(12,533)		9,309

Operating lease liabilities	Operating lease liabilities	(12,798)		(12,144)		Operating lease liabilities	(18,345)		(18,161)
Marketing and other accrued expenses	Marketing and other accrued expenses	(987)		20,631		Marketing and other accrued expenses	(11,603)		23,559
Net cash (used) provided by operating activities	Net cash (used) provided by operating activities	(10,176)		76,568		Net cash (used) provided by operating activities	(13,051)		107,509

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Payments to acquire property, plant and equipment	Payments to acquire property, plant and equipment	(22,109)		(14,142)		Payments to acquire property, plant and equipment	(29,812)		(25,479)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	5		194		Proceeds from sales of property, plant and equipment	5		3,872

Investment in promotional displays	Investment in promotional displays	(4,994)		(4,982)		Investment in promotional displays	(5,959)		(7,757)
Net cash used by investing activities	Net cash used by investing activities	(27,098)		(18,930)		Net cash used by investing activities	(35,766)		(29,364)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments of long-term debt	Payments of long-term debt	(39,705)		(41,255)		Payments of long-term debt	(40,288)		(81,889)
Proceeds from long-term debt	Proceeds from long-term debt	20,000		—		Proceeds from long-term debt	25,000		—

Repurchase of common stock	Repurchase of common stock	(25,000)		—		Repurchase of common stock	(25,000)		—

Withholding of employee taxes related to stock-based compensation	Withholding of employee taxes related to stock-based compensation	(1,079)		(710)		Withholding of employee taxes related to stock-based compensation	(1,089)		(1,351)
Debt issuance cost	Debt issuance cost	(6)		(172)		Debt issuance cost	(6)		(172)
Net cash used by financing activities	Net cash used by financing activities	(45,790)		(42,137)		Net cash used by financing activities	(41,383)		(83,412)

Net (decrease) increase in cash and cash equivalents		(83,064)		15,501

Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(90,200)		(5,267)


							Nine Months Ended
		Six Months Ended					January 31,
		October 31,					2022		2021
		2021		2020
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	91,071		97,059		Cash and cash equivalents, beginning of period	91,071		97,059

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	8,007	$	112,560	Cash and cash equivalents, end of period	$	871	$	91,792

Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:

Property, plant and equipment included in accounts payable at period end	Property, plant and equipment included in accounts payable at period end	$	701	$	484	Property, plant and equipment included in accounts payable at period end	$	2,108	$	1,130

Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	4,324	$	10,848	Interest	$	6,945	$	11,757
Income taxes	Income taxes	$	11,405	$	18,119	Income taxes	$	17,677	$	31,830

See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.					See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A--Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and ~~six-month~~nine-month period ended ~~October~~January 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, 2022 ("fiscal 2022"). The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 ("fiscal 2021") filed with the U.S. Securities and Exchange Commission ("SEC").

COVID-19: COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of the long-term effects continue to be unknown. We were negatively impacted by the COVID-19 pandemic as demand for our products significantly decreased during the fourth quarter of fiscal year ended April 30, 2020 ("fiscal 2020") and first quarter of fiscal 2021, as "stay at home" orders and other work disruptions created disruptions to our business operations. Our supply chain has been negatively impacted throughout the pandemic. COVID-19 continues to impact our overall business, including hiring and retaining employees and through challenges caused by material availability and transportation delays, as well as increased pricing related to the aforementioned items.

Inventories: Effective May 1, 2021, the Company changed its accounting method for inventory valuation for inventories which previously utilized a last-in, first-out ("LIFO") basis to a first-in, first-out ("FIFO") basis. All prior periods presented in the condensed consolidated financial statements have been retrospectively adjusted to apply the effects of the change in accounting method. The change in accounting method increased operating income and reduced net ~~income,~~loss and earnings per share for the quarter ended ~~October~~January 31, ~~2021~~2022 by $4.1 million, $3.0 million, ~~$2.2~~and $0.18, respectively, and increased operating income and reduced net loss and earnings per share for the nine months ended January 31, 2022 by $9.3 million, $6.8 million, and ~~$0.13,~~$0.41, respectively.

Goodwill and Intangible Assets: Goodwill represents the excess of purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. The Company does not amortize goodwill but evaluates for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In accordance with accounting standards, when evaluating goodwill, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired. If after such assessment an entity concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down to fair value. There were no impairment charges related to goodwill for the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020.~~2021.

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. There were no impairment charges related to intangible assets for the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020.~~2021.

Derivative Financial Instruments: The Company uses derivatives as part of the normal business operations to manage its exposure to fluctuations in interest rates associated with variable interest rate debt and foreign exchange rates. The Company has established policies and procedures that govern the risk management of these exposures. The primary objective in managing these exposures is to add stability to interest expense, manage the Company's exposure to interest rate movements, and manage the risk from adverse fluctuations in foreign exchange rates.

The Company uses interest rate swap contracts to manage interest rate exposures. The Company records derivatives in the condensed consolidated balance sheets at fair value. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive ~~loss,~~income (loss), and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings.

The Company also manages risks through the use of foreign exchange forward contracts. The Company recognizes its outstanding forward contracts in the condensed consolidated balance sheets at their fair values. The Company does not

designate the forward contracts as accounting hedges. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the condensed consolidated statements of income.

Note B--New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company has identified loans and other financial instruments that are directly or indirectly influenced by LIBOR and does not expect the adoption of ASU 2020-04 to have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions for recognizing investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 was effective for the Company beginning May 1, 2021. The Company has reviewed the provisions of the pronouncement and the adoption of this guidance did not have an impact on the Company's consolidated financial statements.

Note C--Net Earnings Per Share

The following table sets forth the computation of basic and diluted net earnings per share:


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
(in thousands, except per share amounts)	(in thousands, except per share amounts)	2021		2020		2021		2020		(in thousands, except per share amounts)	2022		2021		2022		2021
Numerator used in basic and diluted net earnings	Numerator used in basic and diluted net earnings									Numerator used in basic and diluted net earnings
per common share:	per common share:									per common share:
Net income		$	2,030	$	23,122	$	5,011	$	39,181
Net income (loss)										Net income (loss)	$	(49,257)	$	18,445	$	(44,246)	$	57,626
Denominator:	Denominator:									Denominator:
Denominator for basic net earnings per common	Denominator for basic net earnings per common									Denominator for basic net earnings per common
share - weighted-average shares	share - weighted-average shares	16,567		16,992		16,614		16,965		share - weighted-average shares	16,570		16,995		16,599		16,975
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options and restricted stock units	Stock options and restricted stock units	39		55		49		72		Stock options and restricted stock units	—		52		—		62
Denominator for diluted net earnings per common	Denominator for diluted net earnings per common									Denominator for diluted net earnings per common
share - weighted-average shares and assumed	share - weighted-average shares and assumed									share - weighted-average shares and assumed
conversions	conversions	16,606		17,047		16,663		17,037		conversions	16,570		17,047		16,599		17,037
Net earnings per share
Net earnings (loss) per share										Net earnings (loss) per share
Basic	Basic	$	0.12	$	1.36	$	0.30	$	2.31	Basic	$	(2.97)	$	1.09	$	(2.67)	$	3.39
Diluted	Diluted	$	0.12	$	1.36	$	0.30	$	2.30	Diluted	$	(2.97)	$	1.08	$	(2.67)	$	3.38

Potentially dilutive securities of 40,973 and 47,878 for the three- and nine-month periods ended January 31, 2022, respectively, have not been considered in the calculation of net loss per share as the effect would be anti-dilutive. There were no potentially dilutive securities for the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, 2021, ~~and 2020,~~ which were excluded from the calculation of net earnings per diluted share.

Note D--Stock-Based Compensation

The Company has various stock-based compensation plans. During the ~~three-months~~nine-months ended ~~October~~January 31, ~~2021,~~2022, the Board of Directors of the Company approved grants of ~~10,320~~ service-based restricted stock units ("RSUs") to non-employee directors. These service-based RSUs (i) vest daily through the end of the two-year vesting period as long as the recipient continuously remains a member of the Board and (ii) entitle the recipient to receive one share of the Company's common stock per unit

~~vested. During the six-months ended October 31, 2021, the Board of Directors of the Company also approved grants of service-based RSUs~~ and performance-based RSUs to key ~~employees.~~employees and non-employee directors. The performance-based RSUs totaled 57,476 units and the employee and non-employee director service-based RSUs totaled ~~30,984~~41,304 units. The performance-based RSUs entitle the recipients to receive 1 share of the Company's common stock per unit granted if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSUs entitle the recipients to receive 1 share of the Company's common stock per unit granted if they remain continuously employed with the Company until the units vest. All of the Company's RSUs granted to employees cliff-vest three years from the grant ~~date.~~date, while RSUs granted to non-employee directors vest daily over a two-year period from the date of grant.

For the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, stock-based compensation expense was allocated as follows:


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Cost of sales and distribution	Cost of sales and distribution	$	326	$	409	$	675	$	708	Cost of sales and distribution	$	231	$	426	$	906	$	1,134
Selling and marketing expenses	Selling and marketing expenses	343		354		662		333		Selling and marketing expenses	269		365		931		698
General and administrative expenses	General and administrative expenses	547		503		1,056		1,186		General and administrative expenses	506		525		1,562		1,711
Stock-based compensation expense	Stock-based compensation expense	$	1,216	$	1,266	$	2,393	$	2,227	Stock-based compensation expense	$	1,006	$	1,316	$	3,399	$	3,543

During the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, the Company also approved grants of 5,794 cash-settled performance-based restricted stock tracking units ("RSTUs") and 3,096 cash-settled service-based RSTUs for more junior level employees. Each performance-based RSTU entitles the recipient to receive a payment in cash equal to the fair market value of one share of the Company's common stock as of the payment date if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSTUs entitle the recipients to receive a payment in cash equal to the fair market value of one share of the Company's common stock as of the payment date if they remain continuously employed with the Company until the units vest. All of the RSTUs cliff-vest three years from the grant date. Since the RSTUs will be settled in cash, the grant date fair value of these awards is recorded as a liability until the date of payment. The fair value of each cash-settled RSTU award is remeasured at the end of each reporting period and the liability is adjusted, and related expense recorded, based on the new fair value. The Company recognized expense of ~~$0.1~~$0.0 million and $0.2 million for the three-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and $0.0 million and ~~$0.4~~$0.6 million for the ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively. A liability for payment of the RSTUs is included in other long-term liabilities on the condensed consolidated balance sheets in the amount of $0.7 million and $1.0 million as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, respectively.

Note E--Customer Receivables

The components of customer receivables were:


		October 31,		April 30,			January 31,		April 30,
(in thousands)	(in thousands)	2021		2021		(in thousands)	2022		2021
Gross customer receivables	Gross customer receivables	$	159,766	$	156,187	Gross customer receivables	$	162,327	$	156,187
Less:	Less:					Less:
Allowance for doubtful accounts	Allowance for doubtful accounts	(229)		(331)		Allowance for doubtful accounts	(308)		(331)
Allowance for returns and discounts	Allowance for returns and discounts	(10,346)		(8,990)		Allowance for returns and discounts	(10,898)		(8,990)

Net customer receivables	Net customer receivables	$	149,191	$	146,866	Net customer receivables	$	151,121	$	146,866

Note F--Inventories

The components of inventories were:


		October 31,		April 30,			January 31,		April 30,
(in thousands)	(in thousands)	2021		2021		(in thousands)	2022		2021
Raw materials	Raw materials	$	89,596	$	63,384	Raw materials	$	102,609	$	63,384
Work-in-process	Work-in-process	55,451		51,176		Work-in-process	51,604		51,176
Finished goods	Finished goods	45,951		43,607		Finished goods	50,021		43,607

Total inventories	Total inventories	$	190,998	$	158,167	Total inventories	$	204,234	$	158,167

Effective May 1, 2021, the Company changed its accounting principle for inventory valuation for inventories which previously utilized a LIFO basis to a FIFO basis.

Note G--Property, Plant and Equipment

The components of property, plant and equipment were:


		October 31,		April 30,			January 31,		April 30,
(in thousands)	(in thousands)	2021		2021		(in thousands)	2022		2021
Land	Land	$	4,431	$	4,431	Land	$	4,431	$	4,431
Buildings and improvements	Buildings and improvements	117,566		116,103		Buildings and improvements	118,848		116,103
Buildings and improvements - finance leases	Buildings and improvements - finance leases	11,636		11,636		Buildings and improvements - finance leases	11,636		11,636
Machinery and equipment	Machinery and equipment	326,474		315,371		Machinery and equipment	325,219		315,371
Machinery and equipment - finance leases	Machinery and equipment - finance leases	31,232		31,386		Machinery and equipment - finance leases	31,094		31,386
Construction in progress	Construction in progress	32,096		22,669		Construction in progress	36,865		22,669
		523,435		501,596			528,093		501,596
Less accumulated amortization and depreciation	Less accumulated amortization and depreciation	(314,739)		(297,594)		Less accumulated amortization and depreciation	(319,365)		(297,594)

Total	Total	$	208,696	$	204,002	Total	$	208,728	$	204,002

Amortization and depreciation expense on property, plant and equipment amounted to ~~$9.4~~$9.2 million and ~~$10.6~~$10.3 million for the three months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$19.1~~$28.3 million and ~~$22.2~~$32.5 million for the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~three and six~~nine months ended ~~October~~January 31, ~~2020~~2021 includes accelerated depreciation expense of ~~$0.2 million and~~ $1.3 million, ~~respectively,~~ related to the closure of the plant located in Humboldt, Tennessee. There was no accelerated depreciation for the three months ended January 31, 2021. Accumulated amortization on finance leases included in the above table amounted to ~~$32.9~~$32.7 million and $33.0 million as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, respectively.

Note H--Intangibles

The customer relationship intangibles were:


		October 31,		April 30,			January 31,		April 30,
(in thousands)	(in thousands)	2021		2021		(in thousands)	2022		2021
Customer relationship intangibles	Customer relationship intangibles	$	274,000	$	274,000	Customer relationship intangibles	$	274,000	$	274,000
Less accumulated amortization	Less accumulated amortization	(175,056)		(152,222)		Less accumulated amortization	(186,472)		(152,222)

Total	Total	$	98,944	$	121,778	Total	$	87,528	$	121,778

Customer relationship intangibles are amortized over the estimated useful lives on a straight-line basis over six years. Amortization expense for the three month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021 was $11.4 million and ~~$12.3~~$12.0 million

respectively, and ~~$22.8~~$34.2 million and ~~$24.5~~$36.5 million, respectively, for each of the ~~six~~nine month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020.~~2021.

Note I--Product Warranty

The Company estimates outstanding warranty costs based on the historical relationship between warranty claims and revenues. The warranty accrual is reviewed monthly to verify that it properly reflects the remaining obligation based on the anticipated expenditures over the balance of the obligation period. Adjustments are made when actual warranty claim experience differs from estimates. Warranty claims are generally made within two months of the original shipment date.

The following is a reconciliation of the Company's warranty liability, which is included in other accrued expenses on the unaudited condensed consolidated balance sheets:


		Six Months Ended					Nine Months Ended
		October 31,					January 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Beginning balance at May 1	Beginning balance at May 1	$	5,249	$	3,753	Beginning balance at May 1	$	5,249	$	3,753

Accrual	Accrual	9,892		9,560		Accrual	18,729		13,885
Settlements	Settlements	(9,198)		(8,948)		Settlements	(17,821)		(13,150)

Ending balance at October 31		$	5,943	$	4,365
Ending balance at January 31						Ending balance at January 31	$	6,157	$	4,488

Note J--Pension Benefits

Prior to April 30, 2020, the Company had 2 defined benefit pension plans covering many of the Company's employees hired prior to April 30, 2012. Effective April 30, 2012, the Company froze all future benefit accruals under the Company's defined-benefit pension plans. Effective April 30, 2020, these plans were merged into 1 ~~plan.~~

~~On November 16, 2020, the Company filed an application with the Internal Revenue Service to terminate~~plan, the American Woodmark Corporation Employee Pension Plan (the "Plan") ~~with an effective date of~~. Effective December 31, 2020 (the "Plan Termination Date"), the Plan was terminated in a standard termination and the Company expects to incur approximately $1.6 million to terminate the Plan, of which $0.4 million and $0.6 million was incurred in the three and six months ended October 31, 2021, and $0.4 million was incurred in all of fiscal 2021. In connection with the Plan termination and in addition to the Plan termination costs, the Company may be required to make an additional funding contribution to the Plan in order to ensure the Plan is fully fundedbenefits were distributed on a termination basis as of the Benefit Distribution Date, with the amount of such contribution still to be determined. The Benefit Distribution Date will be determined once the Company receives approval from certain regulatory agencies. The additional funding contribution is expected to be funded from cash on hand and cash available under our credit agreement, and the amount will vary depending on the lump sum distribution take rate and the interest rate on the Benefit Distribution Date. The expected Benefit Distribution Date is December 1,2, 2021.

Net periodic pension benefit cost consisted of the following for the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Interest cost	Interest cost	$	1,349	$	1,166	$	2,698	$	2,331	Interest cost	$	450	$	1,165	$	3,148	$	3,496
Expected return on plan assets	Expected return on plan assets	(1,543)		(2,108)		(3,086)		(4,215)		Expected return on plan assets	(515)		(2,107)		(3,601)		(6,322)
Recognized net actuarial loss	Recognized net actuarial loss	498		440		997		880		Recognized net actuarial loss	167		441		1,164		1,321

Net periodic pension benefit	Net periodic pension benefit	$	304	$	(502)	$	609	$	(1,004)	Net periodic pension benefit	$	102	$	(501)	$	711	$	(1,505)

The Company did not contribute to the Plan in fiscal 2021 or the first ~~six~~nine months of fiscal ~~2022. Expected funding for the remainder of fiscal~~ 2022 ~~will be determined on the Benefit Distribution Date . The Company made~~and no additional contributions to the Plan are expected to be required in the future as a result of the settlement. The Company recognized a pension settlement charge of $69.5 million during the third quarter of fiscal ~~2021.~~2022.

Note K--Fair Value Measurements

The Company utilizes the hierarchy of fair value measurements to classify certain of its assets and liabilities based upon the following definitions:

Level 1- Investments with quoted prices in active markets for identical assets or liabilities. The Company's cash equivalents are invested in money market funds, mutual funds, and certificates of deposit. The Company's mutual fund investment assets represent contributions made and invested on behalf of the Company's named executive officers in a supplementary employee retirement plan.

Level 2- Investments with observable inputs other than Level 1 prices, such as: quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3- Investments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no Level 3 assets or liabilities measured on a recurring basis.

The Company's financial instruments include cash and equivalents, marketable securities, and other investments; accounts receivable and accounts payable; interest rate swap and foreign exchange forward contracts; and short- and long-term debt. The carrying values of cash and equivalents, accounts receivable and payable, and short-term debt on the condensed consolidated balance sheets approximate their fair value due to the short maturities of these items. The interest rate swap and foreign exchange forward contracts were marked to market and therefore represent fair value. The fair values of these contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The following table summarizes the fair value of assets and liabilities that are recorded in the Company's consolidated financial statements as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021 at fair value on a recurring basis (in thousands):


		Fair Value Measurements							Fair Value Measurements
		As of October 31, 2021							As of January 31, 2022
		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
ASSETS:	ASSETS:							ASSETS:

Mutual funds	Mutual funds	$	510	$	—	$	—	Mutual funds	$	469	$	—	$	—
Interest rate swap contracts	Interest rate swap contracts	—		2,533		—		Interest rate swap contracts	—		5,548		—

Foreign exchange forward contracts								Foreign exchange forward contracts	—		7		—
Total assets at fair value	Total assets at fair value	$	510	$	2,533	$	—	Total assets at fair value	$	469	$	5,555	$	—

LIABILITIES:

Foreign exchange forward contracts		$	—	$	170	$	—

		As of April 30, 2021							As of April 30, 2021
		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
ASSETS:	ASSETS:							ASSETS:
Mutual funds	Mutual funds	$	642	$	—	$	—	Mutual funds	$	642	$	—	$	—

There were no transfers between Level 1, Level 2, or Level 3 for assets measured at fair value on a recurring basis.

Note L--Loans Payable and Long-Term Debt

On December 29, 2017, the Company entered into a credit agreement (the "Prior Credit Agreement") with a syndicate of lenders and Wells Fargo Bank, National Association, as administrative agent. The Prior Credit Agreement provided for a $100 million revolving loan facility with a $25 million sub-facility for the issuance of letters of credit, a $250 million initial term loan facility, and a $250 million delayed draw term loan facility. The Company borrowed the entire $250 million available under the initial term loan facility, the entire $250 million under the delayed draw term loan facility, and approximately $50 million under the revolving loan facility in connection with its acquisition of RSI Home Products, Inc. ("RSI") in December 2017 and

subsequent refinancing of RSI's debt. The facilities under the Prior Credit Agreement were scheduled to mature on December 29, 2022.

On April 22, 2021, the Company amended and restated the Prior Credit Agreement. The amended and restated credit agreement (the "A&R Credit Agreement") provides for a $500 million revolving loan facility with a $50 million sub-facility for the issuance of letters of credit (the "Revolving Facility") and a $250 million term loan facility (the "Term Loan Facility"). Also on April 22, 2021, the Company borrowed the entire $250 million under the Term Loan Facility and approximately $264 million under the Revolving Facility to fund, in part, the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of the Senior Notes (as defined below). 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. On January 20, 2022, the Company borrowed on a swingline loan under the Revolving Facility in the aggregate principal amount of $5.0 million bearing an interest rate at the base rate of 4.0%. The aggregate principal amount of all loans and letters of credit

obligations outstanding cannot exceed the maximum permitted to be outstanding pursuant to the terms of the A&R Credit Agreement.

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, $237.5 million and $250.0 million, respectively, was outstanding on the Term Loan Facility. As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, $258.0 million and $264.0 million, respectively, was outstanding under the Revolving Facility. Outstanding letters of credit under the Revolving Facility were ~~$9.0~~$10.0 million as of January 31, 2022, leaving approximately ~~$233.0~~$227.0 million in available capacity under the Revolving Facility as of ~~October~~January 31, ~~2021.~~2022. Outstanding letters of credit under the Revolving Facility were $8.3 million as of April 30, 2021, leaving approximately $227.7 million in available capacity under the Revolving Facility as of April 30, 2021. The outstanding balances noted above approximate fair value as the facilities have a floating interest rate.

Amounts outstanding under the Term Loan Facility and the Revolving Facility bear interest based on a fluctuating rate measured by reference to either, at the Company's option, a base rate plus an applicable margin or LIBOR plus an applicable margin, with the applicable margin being determined by reference to the Company's then-current "Secured Net Leverage Ratio." The Company also incurs a quarterly commitment fee on the average daily unused portion of the Revolving Facility during the applicable quarter at a rate per annum also determined by reference to the Company's then-current "Secured Net Leverage Ratio." In addition, a letter of credit fee accrues on the face amount of any outstanding letters of credit at a per annum rate equal to the applicable margin on LIBOR loans, payable quarterly in arrears. As of ~~October~~January 31, ~~2021,~~2022, the applicable margin with respect to base rate loans and LIBOR loans was ~~0.50%~~0.75% and ~~1.50%~~1.75%, respectively, and the commitment fee was ~~0.15%~~0.18%. The A&R Credit Agreement includes provisions providing for the transition from LIBOR to a replacement benchmark upon the occurrence of certain events. The Company does not currently expect any such transition to materially impact its financing costs.

The A&R Credit Agreement includes certain financial covenants that require the Company to maintain (i) a "Consolidated Interest Coverage Ratio" of no less than 2.00 to 1.00 and (ii) a "Total Net Leverage Ratio" of no greater than 4.00 to 1.00, subject, in each case, to certain limited exceptions.

The A&R Credit Agreement includes certain additional covenants, including negative covenants that restrict the ability of the Company and certain of its subsidiaries to incur additional indebtedness, create additional liens on its assets, make certain investments, dispose of its assets, or engage in a merger or other similar transaction, or engage in transactions with affiliates, subject, in each case, to the various exceptions and conditions described in the A&R Credit Agreement. The negative covenants further restrict the ability of the Company and certain of its subsidiaries to make certain restricted payments, including, in the case of the Company, the payment of dividends and the repurchase of common stock, in certain limited circumstances.

As of ~~October~~January 31, ~~2021,~~2022, the Company was in compliance with all covenants included in the A&R Credit Agreement.

The Company's obligations under the A&R Credit Agreement are guaranteed by the Company's domestic subsidiaries, and the obligations of the Company and its domestic subsidiaries under the A&R Credit Agreement and their guarantees, respectively, are secured by a pledge of substantially all of their respective personal property.

On February 12, 2018, the Company issued $350 million in aggregate principal amount of 4.875% Senior Notes due 2026 (the "Senior Notes") and utilized the proceeds, together with the proceeds from the delayed draw term loan under the Prior Credit Agreement, to refinance certain senior notes assumed from the acquisition of RSI. The Senior Notes were guaranteed by the Company's domestic subsidiaries and were scheduled to mature March 15, 2026. On April 26, 2021, the Company redeemed in full the Senior Notes at a redemption price equal to 102.438% of the principal amount of the Senior Notes, plus accrued and unpaid interest to the redemption date.

Note M--Derivative Financial Instruments

Interest Rate Swap Contracts

The Company enters into interest rate swap contracts to manage variability in the amount of known or expected cash payments related to portions of its variable rate debt. On May 28, 2021, the Company entered into ~~four~~4 interest rate swaps with an aggregate notional amount of $200 million to hedge part of the variable rate interest payments under the Term Loan Facility. The interest rate swaps became effective on May 28, 2021 and will terminate on May 30, 2025. The interest rate swaps economically convert a portion of the variable rate debt to fixed rate debt. The Company receives floating interest payments monthly based on one-month LIBOR and pays a fixed rate of 0.5980% to the counterparty.

The interest rate swaps are designated as cash flow hedges. Changes in fair value are recorded to other comprehensive income. The risk management objective in using interest rate swaps is to add stability to interest expense and to manage the Company's exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in earnings, as a component of interest expense, net to offset variability in interest expense associated with the underlying debt's cash flows.

For the three- and ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021,~~2022, unrealized gains, net of deferred taxes, of ~~$2.5~~$2.3 million and ~~$1.9~~$4.1 million, respectively, were recorded in other comprehensive income, and $0.3 million and ~~$0.4~~$0.7 million, respectively, of realized losses were reclassified out of accumulated other comprehensive loss to interest expense due to payments made to the swap counterparties. As of ~~October~~January 31, ~~2021,~~2022, the Company anticipates reclassifying approximately ~~$0.7~~$0.4 million of net hedging ~~losses~~gains from accumulated other comprehensive ~~loss~~income into earnings during the next 12 months to offset the variability of the hedged items during this period. Since the Company did not have outstanding interest rate swaps in the prior year period, there were no gains or losses recorded for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021.

Foreign Exchange Forward Contracts

At ~~October~~January 31, ~~2021,~~2022, the Company held forward contracts maturing from ~~November 2021~~February 2022 to April 2022 to purchase ~~359.1~~164.1 million Mexican pesos at exchange rates ranging from ~~20.53~~20.76 to 20.91 Mexican pesos to one U.S. dollar. ~~A liability of $0.2 million~~An immaterial asset is recorded in prepaid expense and other ~~accrued expenses~~ on the condensed consolidated balance sheet.

Note N--Income Taxes

The effective income tax rate for the three- and ~~six-month period~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 was ~~12.1%~~26.0% and ~~23.1%~~26.3%, ~~respectivley,~~respectively, compared with ~~25.5%~~25.6% and ~~26.0%~~25.9% in the comparable ~~period~~periods in the prior fiscal year. The effective rates were higher than the 21.0% U.S. statutory rate for all periods presented primarily due to state income taxes and lower pretax income for the ~~three-and six-month periods ended October 31, 2021 were lower than the comparable period in the prior fiscal year due to the impact of discrete items on lower pretax income.~~quarter.

Note O--Revenue Recognition

The Company disaggregates revenue from contracts with customers into major sales distribution channels as these categories depict the nature, amount, timing, and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for the three and ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Home center retailers	Home center retailers	$	215,342	$	223,118	$	424,666	$	397,113	Home center retailers	$	225,046	$	216,819	$	649,712	$	613,932
Builders	Builders	183,200		171,042		361,438		335,390		Builders	177,716		161,113		539,154		496,503
Independent dealers and distributors	Independent dealers and distributors	54,621		54,423		109,640		106,167		Independent dealers and distributors	56,974		54,022		166,614		160,189
Net Sales	Net Sales	$	453,163	$	448,583	$	895,744	$	838,670	Net Sales	$	459,736	$	431,954	$	1,355,480	$	1,270,624

Note P--Concentration of Risks

Financial instruments that potentially subject the Company to concentrations of risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with major financial institutions and such balances may, at times, exceed Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk with respect to cash.

Credit is extended to customers based on an evaluation of each customer's financial condition and generally collateral is not required. The Company's customers operate in the new home construction and home remodeling markets.

The Company maintains an allowance for bad debt based upon management's evaluation and judgment of potential net loss. The allowance is estimated based upon historical experience, the effects of current developments and economic conditions, and each customer's current and anticipated financial condition. Estimates and assumptions are periodically reviewed and updated. Any resulting adjustments to the allowance are reflected in current operating results.

As of ~~October~~January 31, ~~2021,~~2022, the Company's two largest customers, Customers A and B, represented ~~33.1%~~31.3% and ~~18.4%~~18.8% of the Company's gross customer receivables, respectively. As of ~~October~~January 31, ~~2020,~~2021, Customers A and B represented ~~31.5%~~32.9% and ~~25.5%~~21.1% of the Company's gross customer receivables, respectively.

The following table summarizes the percentage of net sales attributable to the Company's two largest customers for the three and ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended		Six Months Ended			Three Months Ended		Nine Months Ended
		October 31,		October 31,			January 31,		January 31,
		2021	2020	2021	2020		2022	2021	2022	2021
Customer A	Customer A	31.7%	30.5%	31.8%	29.2%	Customer A	32.1%	31.8%	31.9%	30.1%
Customer B	Customer B	15.8%	19.2%	15.6%	18.1%	Customer B	16.9%	18.4%	16.0%	18.2%

Note Q--Leases

Operating Leases - Right-of-Use ("ROU") assets related to operating leases are presented as operating lease right-of-use assets on the unaudited condensed consolidated balance sheets. Lease liabilities related to operating leases with remaining lease terms less than twelve months are presented in short-term lease liability - operating and operating leases with remaining lease terms greater than twelve months are presented in long-term lease liability - operating on the unaudited condensed consolidated balance sheets.

Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined, in which case, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Operating lease ROU assets may also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may also include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. The Company has lease arrangements with lease and non-lease components which are accounted for separately. Non-lease components of the lease payments are expensed as incurred and are not included in determining the present value.

Finance Leases - ROU assets related to finance leases are presented in property, plant and equipment, net on the unaudited condensed consolidated balance sheet. Lease liabilities related to finance leases are presented in current maturities of long-term debt and long-term debt, less current maturities on the unaudited condensed consolidated balance sheets.

Finance lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. The discount rate used to determine the present value of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined, in which case, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The components of lease costs were as follows:


	Nine Months Ended
	January 31,
(in thousands)	2022		2021
Finance lease cost:
Reduction in the carrying value of right-of-use assets	$	996	$	403
Interest on lease liabilities	$	79	$	50
Operating lease cost	$	20,823	$	20,252

Six Months Ended
October 31,
(in thousands) 2021 2020
Finance lease cost:
Reduction in the carrying value of right-of-use assets $ 623 $ 222
Interest on lease liabilities $ 52 $ 30
Operating lease cost $ 13,983 $ 13,366

Additional information related to leases was as follows:


		Six Months Ended							Nine Months Ended
		October 31,							January 31,
(in thousands)	(in thousands)	2021			2020			(in thousands)	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	Operating cash flows for finance leases	$	52		$	30		Operating cash flows for finance leases	$	79		$	50
Operating cash flows for operating leases	Operating cash flows for operating leases	$	12,798		$	12,164		Operating cash flows for operating leases	$	18,345		$	18,161
Financing cash flows for financing leases	Financing cash flows for financing leases	$	607		$	210		Financing cash flows for financing leases	$	975		$	384
Right-of-use assets obtained in exchange for new finance lease liabilities	Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,100		$	941		Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,614		$	1,531
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,147		$	6,788		Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,608		$	6,886

Weighted average remaining lease term (years)	Weighted average remaining lease term (years)							Weighted average remaining lease term (years)
Weighted average remaining lease term - finance leases	Weighted average remaining lease term - finance leases	2.63			3.18			Weighted average remaining lease term - finance leases	2.49			3.06
Weighted average remaining lease term - operating leases	Weighted average remaining lease term - operating leases	6.16			7.08			Weighted average remaining lease term - operating leases	5.96			6.89

Weighted average discount rate	Weighted average discount rate							Weighted average discount rate
Weighted average discount rate - finance leases	Weighted average discount rate - finance leases	2.86		%	3.02		%	Weighted average discount rate - finance leases	2.83		%	3.00		%
Weighted average discount rate - operating leases	Weighted average discount rate - operating leases	3.15		%	3.31		%	Weighted average discount rate - operating leases	3.14		%	3.29		%

The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on the unaudited condensed consolidated balance sheet as of ~~October~~January 31, ~~2021:~~2022:


(in thousands)	(in thousands)	Operating leases		Financing leases		(in thousands)	Operating leases		Financing leases
Year ending April 30,	Year ending April 30,					Year ending April 30,
2022	2022	$	12,227	$	1,195	2022	$	6,738	$	632
2023	2023	24,735		2,112		2023	24,898		2,284
2024	2024	22,779		1,732		2024	22,957		1,904
2025	2025	19,208		442		2025	19,299		559
2026	2026	18,848		109		2026	18,848		120
Thereafter	Thereafter	41,168		—		Thereafter	41,168		7
Total lease payments	Total lease payments	138,965		5,590		Total lease payments	133,908		5,506
Less imputed interest	Less imputed interest	(12,994)		(203)		Less imputed interest	(12,052)		(188)
Total lease liability	Total lease liability	125,971		5,387		Total lease liability	121,856		5,318
Current maturities	Current maturities	(21,538)		(2,160)		Current maturities	(22,303)		(2,250)
Lease liability - long-term	Lease liability - long-term	$	104,433	$	3,227	Lease liability - long-term	$	99,553	$	3,068
Lease assets	Lease assets	$	118,283	$	9,999	Lease assets	$	112,874	$	9,982

Note R--Restructuring

In the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, the Company implemented nationwide reductions in force, which were substantially completed in the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, respectively. ~~During the second quarter and first half of fiscal 2021, the~~The Company recognized pre-tax restructuring charges, net of $(0.1) million and ~~$1.6~~$(0.1) million for the three months ended January 31, 2022 and 2021, respectively, and $(0.1) million and $1.5 million for the nine months ended January 31, 2022 and 2021, respectively, related to these reductions in force, which were primarily severance and separation costs.

During June 2020, the Company's Board of Directors approved the closure and eventual disposal of its manufacturing plant located in Humboldt, Tennessee. Operations ceased at the Humboldt plant in July 2020. During the third quarter of fiscal 2021, the Company sold the Humboldt plant and recognized a gain of $2.3 million on the sale. ~~During the second quarter and first half of fiscal 2022 and 2021, the~~The Company recognized pre-tax restructuring charges, net of $0.0 million and ~~$2.9~~$(0.7) million for the three months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~ 2021,

respectively, and $0.3 million and ~~$4.7~~$3.9 million for the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the closure of the plant.

Note S--Other Information

The Company is involved in suits and claims in the normal course of business, including without limitation product liability and general liability claims, and claims pending before the Equal Employment Opportunity Commission. On at least a quarterly basis, the Company consults with its legal counsel to ascertain the reasonable likelihood that such claims may result in a loss. As required by FASB Accounting Standards Codification Topic 450, "Contingencies," the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss: those that are probable, those that are reasonably possible, and those that are deemed to be remote. Where losses are deemed to be probable and estimable, accruals are made. Where losses are deemed to be reasonably possible, a range of loss estimates is determined and considered for disclosure. In determining these loss range estimates, the Company considers known values of similar claims and consults with outside counsel.

The Company believes that the aggregate range of loss stemming from the various suits and asserted and unasserted claims that were deemed to be either probable or reasonably possible was not material as of ~~October~~January 31, ~~2021.~~2022.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes, both of which are included in Part I, Item 1 of this report. The Company's critical accounting policies are included in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021.

Forward-Looking Statements

This report contains statements concerning the Company's expectations, plans, objectives, future financial performance, and other statements that are not historical facts. These statements may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify forward-looking statements by words such as "anticipate," "estimate," "forecast," "expect," "believe," "should," "could," "would," "plan," "may," "intend," "estimate," "prospect," "goal," "will," "predict," "potential," or other similar words. Forward-looking statements contained in this report, including elsewhere in "Management's Discussion and Analysis of Financial Condition and Results of Operations," are based on current expectations and our actual results may differ materially from those projected in any forward-looking statements. In addition, the Company participates in an industry that is subject to rapidly changing conditions and there are numerous factors that could cause the Company to experience a decline in sales and/or earnings or deterioration in financial condition. Factors that could cause actual results to differ materially from those in forward-looking statements made in this report include but are not limited to:

•the loss of or a reduction in business from one or more of our key customers;

•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;

•competition from other manufacturers and the impact of such competition on pricing and promotional levels;

•the impact of COVID-19 on our business, the global and U.S. economy, and our employees, customers, suppliers, and logistics system;

•an inability to obtain raw materials in a timely manner or fluctuations in raw material, transportation, and energy costs, including due to inflation;

•a failure to attract and retain certain members of management or other key employees or other negative labor developments, including increases in the cost of labor;

•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;

•~~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;~~

•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, and increased transportation costs and delays;

•unexpected costs resulting from a failure to maintain acceptable quality standards;

•changes in tax laws or the interpretations of existing tax laws;

•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, and our ability to pay amounts due under our credit facilities and our other indebtedness.

Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained in this report, including elsewhere in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and also in the Company's most recent Annual Report on Form 10-K for the fiscal year ended April 30, 2021, filed with the SEC, including under Item 1A, "Risk Factors," Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Item 7A, "Quantitative and Qualitative Disclosures about Market Risk." While the Company believes that these risks are manageable and will not adversely impact the long-term performance of the Company, these risks could, under certain circumstances, have a material adverse impact on its operating results and financial condition.

Any forward-looking statement that the Company makes in this report speaks only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statements or cautionary factors as a result of new information, future events or otherwise, except as required by law.

Overview

American Woodmark Corporation manufactures and distributes kitchen, bath, and home organization products for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers and builders and through a network of independent dealers and distributors. As of ~~October~~January 31, ~~2021,~~2022, the Company operated 17 manufacturing facilities in the United States and Mexico and eight primary service centers and one distribution center located throughout the United States.

The three-month period ended ~~October~~January 31, ~~2021~~2022 was the Company's ~~second~~third quarter of its fiscal year that ends on April 30, 2022 ("fiscal 2022").

COVID-19

The COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020 and continued to impact us throughout fiscal 2021 and now in fiscal 2022. All of our manufacturing facilities qualified as essential operations (or the equivalent) under applicable federal and state orders and were able to continue operating. We were initially negatively impacted by the COVID-19 pandemic as demand for our products significantly decreased during the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, as "stay at home" orders and other work disruptions created disruptions to our business operations. Our supply chain has been negatively impacted throughout the pandemic. COVID-19 continues to impact our overall business, including hiring and retaining employees and through challenges caused by material and worker availability and transportation delays, as well as increased pricing related to the aforementioned items. Refer to Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021 for a disclosure of risk factors related to COVID-19.

Financial Overview

The Company's remodeling-based business was impacted by the following trends during the ~~second~~third quarter of fiscal 2022:

•The median price per existing home sold rose during the ~~third~~fourth calendar quarter of 2021 compared to the same period one year ago by ~~15.4%~~14.1% according to data provided by the National Association of Realtors, and existing home sales decreased ~~0.8%~~11.9% during the ~~third~~fourth calendar quarter of 2021 compared to the same period in the prior year;

•The unemployment rate decreased to ~~4.6%~~4.0% as of ~~October 2021~~January 2022 compared to ~~6.9%~~6.3% as of ~~October 2020~~January 2021 according to data provided by the U.S. Department of Labor; additionally, the unemployment rate decreased from 6.1% in April 2021;

•Mortgage interest rates increased with a thirty-year fixed mortgage rate of approximately ~~3.14%~~3.55% in ~~October 2021,~~January 2022, an increase of approximately 3382 basis points compared to the same period in the prior year, according to Freddie Mac; ~~and~~

•Consumer sentiment as tracked by Thomson Reuters/University of Michigan decreased from ~~81.8~~79.0 in ~~October 2020~~January 2021 to ~~71.7~~67.2 in ~~October 2021.~~January 2022; and

•The inflation rate increased to 7.5% as of January 2022, the highest since February 1982, compared to 1.4% in January 2021 and 4.2% in April 2021 according to data provided by the U.S. Department of Labor.

The Company believes there is no single indicator that directly correlates with cabinet remodeling market activity. For this reason, the Company considers other factors in addition to those discussed above as indicators of overall market activity including credit availability, housing affordability and sales reported by the Kitchen Cabinet Manufacturers Association ("KCMA"), a trade organization that issues the aggregate sales that have been reported by its members including the largest cabinet manufacturers in the United States. Based on the totality of factors listed above, the Company believes that the cabinet remodeling market increased ~~mid-single digits~~low double-digits during the ~~second~~third quarter of fiscal ~~2022.~~2022 versus the prior year quarter.

The Company's total net sales increased 1%6.4% during the ~~second~~third quarter and ~~6.8%~~6.7% during the first ~~half~~nine months of fiscal 2022 compared to the same prior-year period.

The Company's remodeling sales, which consist of our independent dealer and distributor channel sales and home center retail sales, ~~decreased 2.7%~~increased 4.1% during the ~~second~~third quarter and ~~increased 6.2%~~5.5% during the first ~~half~~nine months of fiscal 2022 compared to the same prior-year period. Our independent dealer and distributor channel increased by ~~0.4%~~5.5% during the ~~second~~third quarter and ~~3.3%~~4.0% during the first ~~half~~nine months of fiscal 2022 compared to the comparable prior-year period. Our home center channel ~~decreased~~increased by ~~3.5%~~3.8% during the ~~second~~third quarter and ~~increased 6.9%~~5.8% during the first ~~half~~nine months of fiscal 2022 compared to the comparable prior-year period.

New construction sales increased ~~7.1%~~10.3% in the ~~second~~third quarter and ~~7.8%~~8.6% during the first ~~half~~nine months of fiscal 2022, compared to the same period of fiscal 2021. The Company believes that fluctuations in single-family housing starts are the best indicator of new construction cabinet activity. Assuming a sixty to ninety day lag between housing starts and the installation of cabinetry, single-family housing starts ~~increased 14.8%~~decreased 2.5% during the ~~second~~third quarter over the comparable prior year period, according to the U.S. Department of Commerce. In comparison, housing completions ~~increased 3.4%~~were down 0.3% during the ~~second~~third quarter of fiscal 2022 over the comparable prior year period, according to U.S. Department of Commerce. The Company believes we are continuing to see a temporary shift to extend the lag from 90 days to 120 days or longer.

The Company ~~earned~~incurred a net ~~income~~loss of ~~$2.0~~$49.3 million for the ~~second~~third quarter of fiscal 2022, compared with ~~$23.1~~net income of $18.4 million in the ~~second~~third quarter of its prior fiscal year, and ~~earned~~incurred a net ~~income~~loss of ~~$5.0~~$44.2 million for the first ~~six~~nine months of fiscal 2022, compared with ~~$39.2~~net income of $57.6 million in the same period of the prior year.

Results of Operations


		Three Months Ended						Six Months Ended							Three Months Ended						Nine Months Ended
		October 31,						October 31,							January 31,						January 31,
(in thousands)	(in thousands)	2021		2020		Percent Change		2021		2020		Percent Change		(in thousands)	2022		2021		Percent Change		2022		2021		Percent Change

Net sales	Net sales	$	453,163	$	448,583	1.0	%	$	895,744	$	838,670	6.8	%	Net sales	$	459,736	$	431,954	6.4	%	$	1,355,480	$	1,270,624	6.7	%
Gross profit	Gross profit	$	51,694	$	90,672	(43.0)	%	$	105,137	$	170,239	(38.2)	%	Gross profit	$	51,820	$	77,496	(33.1)	%	$	156,957	$	247,735	(36.6)	%
Selling and marketing expenses	Selling and marketing expenses	$	21,568	$	21,608	(0.2)	%	$	44,555	$	41,506	7.3	%	Selling and marketing expenses	$	23,453	$	21,862	7.3	%	$	68,008	$	63,368	7.3	%
General and administrative expenses	General and administrative expenses	$	24,596	$	30,229	(18.6)	%	$	48,283	$	60,212	(19.8)	%	General and administrative expenses	$	23,270	$	26,202	(11.2)	%	$	71,553	$	86,414	(17.2)	%

Net Sales. Net sales were ~~$453.2~~$459.7 million for the ~~second~~third quarter of fiscal 2022, an increase of ~~1.0%~~6.4% compared with the ~~second~~third quarter of fiscal 2021. For the first ~~half~~nine months of fiscal 2022, net sales were ~~$895.7~~$1,355.5 million, reflecting a ~~6.8%~~6.7% increase compared to the same period of fiscal 2021. The Company experienced growth in ~~the new construction channel~~all sales channels during the ~~second~~third quarter ~~offset by declines in the remodel channel. The~~and first ~~half~~nine months of fiscal 2022 ~~experienced growth across all channels.~~as market demand continued at a strong pace.

Gross Profit. Gross profit margin for the ~~second~~third quarter of fiscal 2022 was ~~11.4%~~11.3% compared with ~~20.2%~~17.9% for the same period of fiscal 2021. Gross profit margin for the first ~~half~~nine months of fiscal 2022 was ~~11.7%~~11.6%, compared with ~~20.3%~~19.5% for the same period of fiscal 2021. Gross profit margin in the ~~second~~third quarter and first ~~half~~nine months of the current fiscal year was negatively impacted by higher material and logistics costs, and increases related to healthcare expenses. These increased costs were partially offset by an increase in sales in the ~~first~~third quarter and first ~~half~~nine months of fiscal 2022.

Selling and Marketing Expenses. Selling and marketing expenses were ~~4.8%~~5.1% of net sales in both the ~~second~~third quarter of fiscal 2022 and the same period in fiscal 2021. Selling and marketing expenses were 5.0% of net sales in both the first ~~half~~nine months of fiscal 2022 ~~compared with 4.9% of net sales for~~and the same period in fiscal 2021.

General and Administrative Expenses. General and administrative expenses were ~~5.4%~~5.1% of net sales in the ~~second~~third quarter of fiscal 2022, compared with ~~6.7%~~6.1% of net sales in the ~~second~~third quarter of fiscal 2021. General and administrative expenses were ~~5.4%~~5.3% of net sales in the first ~~half~~nine months of fiscal 2022, compared with ~~7.2%~~6.8% of net sales in the same period of fiscal 2021.The decrease in general and administrative expenses as a percentage of net sales during the ~~second~~third quarter and first ~~half~~nine months of fiscal 2022 was driven by the leverage from higher sales, lower employee incentive costs, and lack of severance costs that occurred in the first quarter of fiscal 2021.

Effective Income Tax Rates. The effective income tax rate for the three- and ~~six-month period~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 was ~~12.1%~~26.0% and ~~23.1%~~26.3%, ~~respectivley,~~respectively, compared with ~~25.5%~~25.6% and ~~26.0%~~25.9% in the comparable ~~period~~periods in the prior fiscal year. The effective rates were higher than the 21.0% U.S. statutory rate for all periods presented primarily due to state income taxes and lower pretax income for the ~~three-and six-month periods ended October 31, 2021 were lower than the comparable period in the prior fiscal year due to the impact of discrete items on lower pretax income.~~quarter.

Non-GAAP Financial Measures. We have reported our financial results in accordance with U.S. generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using 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 that these non-GAAP financial measures provide an additional means of analyzing the current period's results against the corresponding prior period's results. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin

We use EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.

We define Adjusted EBITDA as net income adjusted to exclude (1) income tax expense, (2) interest expense, net, (3) depreciation and amortization expense, (4) amortization of customer relationship intangibles and trademarks, (5) expenses related to the acquisition of RSI ~~acquisition~~Home Products, Inc. ("RSI acquisition") and the subsequent restructuring charges that the Company incurred related to the acquisition, (6) non-recurring restructuring charges, (7) stock-based compensation expense, (8) gain/loss on asset disposals, (9) change in fair value of foreign exchange forward contracts, ~~and~~ (10) net ~~gain~~gain/loss on debt forgiveness and ~~modification.~~modification, and (11) pension settlement charges. We believe Adjusted EBITDA, when presented in conjunction with comparable GAAP measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.

We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales.

Adjusted EPS per diluted share

We use Adjusted EPS per diluted share in evaluating the performance of our business and profitability. Management believes that this measure provides useful information to investors by offering additional ways of viewing the Company's results by providing an indication of performance and profitability excluding the impact of unusual and/or non-cash items. We define Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of (1) expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the RSI acquisition, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles and trademarks, (4) net loss on debt forgiveness and modification, (5) pension settlement charges, and ~~(5)~~(6) the tax benefit of RSI

acquisition expenses and subsequent restructuring charges, the net gain on debt forgiveness and modification and the amortization of customer relationship intangibles and trademarks. The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods. Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability and we have also received similar feedback from some of our ~~investors regarding the same.~~investors.

Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
Three Months Ended Six Months Ended
October 31, October 31,
(in thousands) 2021 2020 2021 2020
Net income (GAAP) $ 2,030 $ 23,122 $ 5,011 $ 39,181
Add back:
Income tax expense 280 7,922 1,509 13,747
Interest expense, net 2,360 5,981 4,533 12,011
Depreciation and amortization expense 12,921 13,019 25,946 25,978
Amortization of customer relationship intangibles and
trademarks 11,417 12,250 22,834 24,500
EBITDA (Non-GAAP) $ 29,008 $ 62,294 59,833 115,417
Add back:
Acquisition and restructuring related expenses (1) 20 61 40 121
Non-recurring restructuring charges (2) (3) 2,791 310 6,251
Change in fair value of foreign exchange forward contracts (3) 520 (566) 170 (1,821)
Stock-based compensation expense 1,216 1,266 2,393 2,227
Loss on asset disposal 36 286 151 332
Adjusted EBITDA (Non-GAAP) $ 30,797 $ 66,132 62,897 122,527
Net Sales $ 453,163 $ 448,583 $ 895,744 $ 838,670
Net income margin (GAAP) 0.4 % 5.2 % 0.6 % 4.7 %
Adjusted EBITDA margin (Non-GAAP) 6.8 % 14.7 % 7.0 % 14.6 %


Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
	Three Months Ended						Nine Months Ended
	January 31,						January 31,
(in thousands)	2022			2021			2022			2021

Net income (loss) (GAAP)	$	(49,257)		$	18,445		$	(44,246)		$	57,626
Add back:
Income tax expense (benefit)	(17,310)			6,347			(15,801)			20,094
Interest expense, net	2,668			5,746			7,201			17,757
Depreciation and amortization expense	12,507			12,732			38,453			38,710
Amortization of customer relationship intangibles and
trademarks	11,416			11,972			34,250			36,472
EBITDA (Non-GAAP)	$	(39,976)		$	55,242		19,857			170,659
Add back:
Acquisition and restructuring related expenses (1)	20			33			60			154
Non-recurring restructuring charges (2)	(127)			(847)			183			5,404
Pension settlement	69,452			—			69,452			—

Change in fair value of foreign exchange forward contracts (3)	(177)			101			(7)			(1,720)

Stock-based compensation expense	1,006			1,316			3,399			3,543
Loss on asset disposal	365			(97)			516			235
Adjusted EBITDA (Non-GAAP)	$	30,563		$	55,748		93,460			178,275

Net Sales	$	459,736		$	431,954		$	1,355,480		$	1,270,624
Net income margin (GAAP)	(10.7)		%	4.3		%	(3.3)		%	4.5		%
Adjusted EBITDA margin (Non-GAAP)	6.6		%	12.9		%	6.9		%	14.0		%

(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition.

(2) Non-recurring restructuring charges are comprised of expenses incurred related to the permanent layoffs due to COVID-19 and the closure of the manufacturing plant in Humboldt, Tennessee. The ~~three and six~~nine months ended ~~October~~January 31, ~~2020~~2021 includes accelerated depreciation expense of ~~$0.2~~$1.3 million related to Humboldt. The three- and nine-months ended January 31, 2021 includes gain on assets disposal of $2.5 million and ~~$1.3~~$2.2 million, respectively, ~~related~~relate to Humboldt.

(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.

A reconciliation of Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal 2022 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.~~income (loss).

Adjusted EBITDA. Adjusted EBITDA for the ~~second~~third quarter of fiscal 2022 was ~~$30.8~~$30.6 million or ~~6.8%~~6.6% of net sales compared to ~~$66.1~~$55.7 million or ~~14.7%~~12.9% of net sales for the same quarter of the prior fiscal year. Adjusted EBITDA for the first ~~half~~nine months of fiscal 2022 was ~~$62.9~~$93.5 million or ~~7.0%~~6.9% of net sales compared to ~~$122.5~~$178.3 million or ~~14.6%~~14.0% of net sales for the same period of the prior fiscal year. The decrease in Adjusted EBITDA for the ~~second~~third quarter and first ~~half~~nine months of fiscal 2022 is primarily due to decreased net income due to higher material and logistics costs, as well as increased healthcare expenses.


Reconciliation of Net Income to Adjusted Net Income	Reconciliation of Net Income to Adjusted Net Income									Reconciliation of Net Income to Adjusted Net Income
		Three Months Ended				Six Months Ended					Three Months Ended				Nine Months Ended
		October 31,				October 31,					January 31,				January 31,
(in thousands, except share data)	(in thousands, except share data)	2021		2020		2021		2020		(in thousands, except share data)	2022		2021		2022		2021

Net income (GAAP)		$	2,030	$	23,122	$	5,011	$	39,181
Net income (loss) (GAAP)										Net income (loss) (GAAP)	$	(49,257)	$	18,445	$	(44,246)	$	57,626
Add back:	Add back:									Add back:
Acquisition and restructuring related expenses	Acquisition and restructuring related expenses	20		$	61	40		121		Acquisition and restructuring related expenses	20		$	33	60		154

Non-recurring restructuring charges	Non-recurring restructuring charges	(3)		$	—	310		6,251		Non-recurring restructuring charges	(127)		$	(847)	183		5,404
Pension settlement										Pension settlement	69,452		$	—	69,452		—
Amortization of customer relationship intangibles and trademarks	Amortization of customer relationship intangibles and trademarks	11,417		$	12,250	22,834		24,500		Amortization of customer relationship intangibles and trademarks	11,416		$	11,972	34,250		36,472

Tax benefit of add backs	Tax benefit of add backs	(3,100)		$	(3,850)	(6,167)		(7,903)		Tax benefit of add backs	(21,586)		$	(2,815)	(27,753)		(10,718)
Adjusted net income (Non-GAAP)	Adjusted net income (Non-GAAP)	$	10,364	$	34,374	$	22,028	$	62,150	Adjusted net income (Non-GAAP)	$	9,918	$	26,788	$	31,946	$	88,938

Weighted average diluted shares		16,605,911		17,047,296		16,662,791		17,036,652
Weighted average diluted shares (GAAP)										Weighted average diluted shares (GAAP)	16,569,881		17,047,211		16,599,369		17,036,586
Add back: potentially anti-dilutive shares (1)										Add back: potentially anti-dilutive shares (1)	40,973		—		47,878		—
Weighted average diluted shares (Non-GAAP)										Weighted average diluted shares (Non-GAAP)	16,610,854		17,047,211		16,647,247		17,036,586

EPS per diluted share (GAAP)	EPS per diluted share (GAAP)	$	0.12	$	1.36	$	0.30	$	2.30	EPS per diluted share (GAAP)	$	(2.97)	$	1.08	$	(2.67)	$	3.38
Adjusted EPS per diluted share (Non-GAAP)	Adjusted EPS per diluted share (Non-GAAP)	$	0.62	$	2.02	$	1.32	$	3.65	Adjusted EPS per diluted share (Non-GAAP)	$	0.60	$	1.57	$	1.92	$	5.22

(1) Potentially dilutive securities for the three- and nine-month periods ended January 31, 2022, respectively, have not been considered in the GAAP calculation of net loss per share as the effect would be anti-dilutive.

Outlook. The impact on our financial results from the COVID-19 pandemic as well as material and logistical constraints in addition to the availability, retention, and cost of labor continue to be uncertain. The Company's net sales were up ~~6.8%~~6.7% during the first ~~half~~nine months of fiscal 2022 and we expect full year fiscal 2022 sales to be ~~high~~mid single digit growth over the prior year. ~~Margins will continue~~In our fourth fiscal quarter margins are expected to ~~be below historical norms for~~return to similar levels of the ~~next two quarters due to continued inflationary, logistic~~prior year fourth fiscal quarter and ~~labor challenges; however, our expectation is that margins will~~significantly improve sequentially ~~throughout the remainder of the year as~~over our fiscal third quarter. The pricing actions ~~are fully realized. The~~we have executed will deliver $55 million plus in our fiscal fourth quarter which will help offset the inflationary costs incurred through ~~the first quarter of fiscal 2022 will be mostly offset with our second round of price increases across all of our sales channels which were completed during the second quarter~~nine months of fiscal 2022. Given the lag on pricing realization, it takes, on average, three to six months to realize price increases to fully offset the cost impact of the inflationary pressures. The negative trend on margins could continue as we still do not know the full impact of the pandemic and are partially dependent on macro-economic factors to stabilize. The Company had ~~$8.0~~$0.9 million of cash on hand as of ~~October~~January 31, ~~2021~~2022 and access to ~~$233.0~~$227.0 million of additional availability under our revolver. Our cash balance was impacted by carrying higher than normal inventory levels to help counter the supply chain disruptions. In the remainder of fiscal 2022, the Company plans to maintain our cash position near historical norms and may consider additional debt repayments and share repurchases. We ~~plan to~~ continue ~~our investment~~investing back into the business by maintaining our ~~prior outlook on our~~current capital investment rate of approximately ~~3.5%~~2.7% of net sales for the full fiscal year.

The Company continues to track several metrics, including but not limited to housing starts, housing completions, existing home sales, mortgage interest rates, new jobs growth, GDP growth and consumer confidence, which it believes are leading indicators of overall demand for kitchen and bath cabinetry. The Company believes that housing ~~starts~~completions will continue to show positive growth, driven by low mortgage rates, and growth in new household formations, although the unknown long-term impacts from COVID-19, regulatory changes, and a decrease in consumer sentiment are cause for concern.

Additional risks and uncertainties that could affect the Company's results of operations and financial condition are discussed elsewhere in this report, including under "Forward-Looking Statements," and elsewhere in "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in our Annual Report on Form 10-K for the fiscal year ended April 30, 2021, including under Item 1A. "Risk Factors," Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Item 7A. "Quantitative and Qualitative Disclosures about Market Risk."

Liquidity and Capital Resources

The Company's cash and cash equivalents totaled ~~$8.0~~$0.9 million at ~~October~~January 31, ~~2021,~~2022, representing a ~~$83.1~~$90.2 million decrease from its April 30, 2021 levels primarily due to ~~$10.2~~$13.1 million ~~use of~~ cash used from operations in the first ~~six~~nine months of fiscal 2022 compared with ~~a generation~~cash provided by operations of ~~$76.6~~$107.5 million ~~of cash~~ in the same period of the prior year, $25.0 million of share repurchases, ~~$22.1~~$29.8 million in payments to acquire property, plant, and equipment, and ~~$19.7~~$15.3 million of net debt ~~pay down.~~repayments. At ~~October~~January 31, ~~2021,~~2022, total long-term debt (including current maturities) was ~~$503.6~~$508.7 million, a decrease of ~~$18.2~~$13.0 million from its balance at April 30, 2021. The Company's ratio of long-term debt to total capital was 40.3% at ~~October~~January 31, ~~2021,~~2022, compared with 40.4% at April 30, 2021.

The Company's main source of liquidity is its cash and cash equivalents on hand and generally cash generated from its operating activities. The Company can also borrow up to $500 million under the Revolving Facility. Approximately ~~$233.0~~$227.0 million was available under this facility as of ~~October~~January 31, ~~2021.~~2022.

On April 22, 2021, the Company amended and restated the Prior Credit Agreement. The amended and restated credit agreement (the "A&R Credit Agreement") provides for a $500 million revolving loan facility with a $50 million sub-facility for the issuance of letters of credit (the "Revolving Facility") and a $250 million term loan facility (the "Term Loan Facility"). Also on April 22, 2021, the Company borrowed the entire $250 million under the Term Loan Facility and approximately $264 million under the Revolving Facility to fund, in part, the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of the Senior Notes. The Company is required to repay the Term Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026. On January 20, 2022, the Company borrowed on a swingline loan under the Revolving Facility in the aggregate principal amount of $5.0 million bearing an interest rate at the base rate of 4.0%. The aggregate principal amount of all loans and letters of credit obligations outstanding cannot exceed the maximum permitted to be outstanding pursuant to the terms of the A&R Credit Agreement.

The A&R Credit Agreement includes certain additional covenants, including negative covenants that restrict the ability of the Company and certain of its subsidiaries to incur additional indebtedness, create additional liens on its assets, make certain investments, dispose of its assets or engage in a merger or other similar transaction or engage in transactions with affiliates, subject, in each case, to the various exceptions and conditions described in the A&R Credit Agreement. The negative covenants further restrict the ability of the Company and certain of its subsidiaries to make certain restricted payments, including, in the case of the Company, the payment of dividends and the repurchase of common stock, in certain limited circumstances. We were in compliance with all the covenants under the A&R Credit Agreement as of ~~October~~January 31, ~~2021.~~2022.

As of ~~October~~January 31, ~~2021,~~2022, $237.5 million was outstanding on the Term Loan Facility and $258 million was outstanding under the Revolving Facility. As of ~~October~~January 31, ~~2021,~~2022, the applicable margin with respect to base rate loans and LIBOR loans was ~~0.50%~~0.75% and ~~1.50%~~1.75%, respectively, and the commitment fee was ~~0.15%~~0.18%.

See Note L — Loans Payable and Long-Term Debt for further information around our indebtedness and compliance with covenants.

Cash used by operating activities in the first ~~six~~nine months of fiscal 2022 was ~~$10.2~~$13.1 million, compared with cash provided by activities of ~~$76.6~~$107.5 million in the comparable period of fiscal 2021. The decrease in the Company's cash from operating activities was driven primarily by a decrease in net income, ~~and~~ cash outflows from inventories, customer receivables, accounts payable, accrued compensation and related expenses, and other accrued expenses.

The Company's investing activities primarily consist of investment in property, plant and equipment and promotional displays. Net cash used for investing activities was ~~$27.1~~$35.8 million in the first ~~six~~nine months of fiscal 2022, compared with ~~$18.9~~$29.4 million in the comparable period of fiscal 2021.

During the first ~~six~~nine months of fiscal 2022, net cash used by financing activities was ~~$45.8~~$41.4 million, compared with ~~$42.1~~$83.4 million in the comparable period of the prior fiscal year. The ~~increase~~decrease in cash used during the first ~~six~~nine months of fiscal 2022 was primarily driven by ~~$25.0 million of share repurchases, as well as~~ net payments of long-term debt of ~~$19.7~~$15.3 million in the first ~~six~~nine months of fiscal 2022 compared with ~~$41.2~~$81.9 million in the prior ~~year.~~year, offset by $25.0 million of share repurchases.

On May 25, 2021, the Company's Board of Directors (the "Board") authorized a stock repurchase program of up to $100 million of the Company's common shares. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the

Company deems appropriate and subject to the Company's cash requirements for other purposes, compliance with the covenants under the A&R Credit Agreement, and other factors management deems relevant. The authorization does not obligate the Company to acquire a specific number of shares during any period, and the authorization may be modified, suspended or discontinued at any time at the discretion of the Board. Management generally expects to fund any share repurchases using available cash and cash generated from operations. Repurchased shares will become authorized but unissued common shares. The Company repurchased a total of 299,781 common shares, for an aggregate purchase price of $25.0 million, during the first ~~half~~nine months of fiscal 2022. As of ~~October~~January 31, 2021, $75.0 million of funds remained available from the amounts authorized by the Board to repurchase the Company's common stock.

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 the remainder of fiscal 2022.

Seasonal and Inflationary Factors

Our business has been subject to seasonal influences, with higher sales typically realized in our first and fourth fiscal quarters. General economic forces and changes in our customer mix have reduced seasonal fluctuations in revenue over the past few years. The costs of the Company's products are subject to inflationary pressures and commodity price fluctuations. The Company has generally been able, over time, to recover the effects of inflation and commodity price fluctuations through sales price increases.

Critical Accounting Policies

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to the Company's critical accounting policies as disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The costs of the Company's products are subject to inflationary pressures and commodity price fluctuations. The Company has generally been able, over time, to recover the effects of inflation and commodity price fluctuations through sales price increases.

The A&R Credit Agreement includes a variable interest rate component. As a result, we are subject to interest rate risk with respect to such floating-rate debt. A 100 basis point increase in the variable interest rate component of our borrowings as of ~~October~~January 31, ~~2021~~2022 would increase our annual interest expense by approximately $3.0 million. See Note L — Loans Payable and Long-Term Debt for further discussion.

In May 2021, we entered into interest rate swaps to hedge approximately $200 million of our variable interest rate debt. See Note M — Derivative Financial Instruments for further discussion.

The Company enters into foreign exchange forward contracts principally to offset currency fluctuations in transactions denominated in certain foreign currencies, thereby limiting our exposure to risk that would otherwise result from changes in exchange rates. The periods of the foreign exchange forward contracts correspond to the periods of the transactions denominated in foreign currencies.

The Company does not currently use commodity or similar financial instruments to manage its commodity price risks.

Item 4. Controls and Procedures

Senior management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of ~~October~~January 31, ~~2021.~~2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective.

There has been no change in the Company's internal control over financial reporting that occurred during the quarter ended ~~October~~January 31, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various suits and claims in the normal course of business all of which constitute ordinary, routine litigation incidental to the Company's business. The Company is not party to any material litigation that does not constitute ordinary, routine litigation incidental to its business.

Item 1A. Risk Factors

Risk factors that may affect the Company's business, results of operations and financial condition are described in Part I, Item 1A, "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 and there have been no material changes from the risk factors disclosed. Additional risks are discussed elsewhere in this report, including in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the headings "Forward-Looking Statements" and "Outlook."

Item 6. Exhibits


Exhibit Number			Description

3.1 (a)			Articles of Incorporation as amended effective August 12, 1987 (incorporated by reference to Exhibit 3.1 to the Registrant's Form 10-Q for the quarter ended January 31, 2003; Commission File No. 000-14798).

3.1 (b)			Articles of Amendment to the Articles of Incorporation effective September 10, 2004 (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K as filed on August 31, 2004; Commission File No. 000-14798).

3.2			Bylaws – as amended effective February ~~22, 2021~~04, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K as filed on February ~~23, 2021;~~07, 2022; Commission File No. 000-14798).

31.1			Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).

31.2			Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act (Filed Herewith).

32.1			Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished Herewith).

101			Interactive Data File for the Registrant's Quarterly Report on Form 10-Q for the quarter ended ~~October~~January 31, ~~2021~~2022 formatted in Inline XBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements (Filed Herewith).

104			Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN WOODMARK CORPORATION

(Registrant)


			/s/ Paul Joachimczyk
			Paul Joachimczyk
			Vice President and Chief Financial Officer

			Date: ~~November 23, 2021~~February 24, 2022
			Signing on behalf of the registrant and
			as principal financial and accounting officer