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 31, ~~2022~~2023

☐ 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 ~~21, 2022, 16,621,827~~29, 2023, 16,026,398 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 31, ~~2022~~2023 and April 30, ~~2022~~2023	3

	Condensed Consolidated Statements of ~~Income--Three months ended~~ ~~October~~ ~~31, 2022~~Operations--Three and ~~2021; Six~~six months ended October 31, ~~2022~~2023 and ~~2021~~2022	4

	Condensed Consolidated Statements of Comprehensive Income--Three ~~months ended~~ O ~~ctober~~ ~~31, 2022~~ and ~~2021; Six~~six months ended October 31, ~~2022~~2023 and ~~2021~~2022	5

	Condensed Consolidated Statements of Shareholders' Equity--Three ~~months ended~~ ~~October~~ ~~31, 2022~~ and ~~2021; Six~~six months ended October 31, ~~2022~~2023 and ~~2021~~2022	6

	Condensed Consolidated Statements of Cash Flows--Six months ended O ~~ctober~~October 31, ~~2022~~2023 and ~~2021~~2022	8

	Notes to Condensed Consolidated Financial ~~Statements--October~~Statements--October 31, ~~2022~~2023	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	2625

Item 1A.	Risk Factors	26





Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 5.	Other Information	26

Item 6.	Exhibits	2628

SIGNATURES		2729

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, 2022		April 30, 2022			October 31, 2023		April 30, 2023
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	44,834	$	22,325	Cash and cash equivalents	$	96,381	$	41,732
Customer receivables, net	Customer receivables, net	153,644		156,961		Customer receivables, net	120,742		119,163
Inventories	Inventories	252,961		228,259		Inventories	162,062		190,699
Prepaid expenses and other	Prepaid expenses and other	24,872		21,112		Prepaid expenses and other	22,880		16,661

Total current assets	Total current assets	476,311		428,657		Total current assets	402,065		368,255

Property, plant and equipment, net	Property, plant and equipment, net	203,650		213,808		Property, plant and equipment, net	235,172		219,415
Operating lease right-of-use assets	Operating lease right-of-use assets	103,041		108,055		Operating lease right-of-use assets	94,601		99,526
Customer relationship intangibles, net	Customer relationship intangibles, net	53,278		76,111		Customer relationship intangibles, net	7,611		30,444
Goodwill	Goodwill	767,612		767,612		Goodwill	767,612		767,612
Promotional displays, net	Promotional displays, net	10,352		12,565		Promotional displays, net	4,594		6,970
Deferred income taxes	Deferred income taxes	1,469		1,469		Deferred income taxes	1,470		1,469
Other assets	Other assets	35,315		24,219		Other assets	20,980		25,107
TOTAL ASSETS	TOTAL ASSETS	$	1,651,028	$	1,632,496	TOTAL ASSETS	$	1,534,105	$	1,518,798

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	85,622	$	111,422	Accounts payable	$	59,352	$	63,915
Current maturities of long-term debt	Current maturities of long-term debt	2,466		2,264		Current maturities of long-term debt	2,269		2,263
Short-term lease liability - operating	Short-term lease liability - operating	22,249		21,985		Short-term lease liability - operating	25,775		24,778
Accrued compensation and related expenses	Accrued compensation and related expenses	58,826		44,436		Accrued compensation and related expenses	53,078		49,953
Accrued marketing expenses	Accrued marketing expenses	20,186		15,881		Accrued marketing expenses	17,963		12,528
Other accrued expenses	Other accrued expenses	21,847		20,240		Other accrued expenses	23,052		24,687
Total current liabilities	Total current liabilities	211,196		216,228		Total current liabilities	181,489		178,124

Long-term debt, less current maturities	Long-term debt, less current maturities	486,181		506,732		Long-term debt, less current maturities	370,930		369,396
Deferred income taxes	Deferred income taxes	34,454		38,340		Deferred income taxes	7,275		11,930
Long-term lease liability - operating	Long-term lease liability - operating	87,735		95,084		Long-term lease liability - operating	74,995		81,370
Other long-term liabilities	Other long-term liabilities	2,283		3,229		Other long-term liabilities	3,836		4,190

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 outstanding shares: at October 31, 2022: 16,621,827; at April 30, 2022: 16,570,619		366,679		363,224
Common stock, no par value; 40,000,000 shares authorized; issued and outstanding shares: at October 31, 2023: 16,026,398; at April 30, 2023: 16,635,295						Common stock, no par value; 40,000,000 shares authorized; issued and outstanding shares: at October 31, 2023: 16,026,398; at April 30, 2023: 16,635,295	362,057		370,259
Retained earnings	Retained earnings	448,288		399,434		Retained earnings	523,223		493,157
Accumulated other comprehensive income	Accumulated other comprehensive income	14,212		10,225		Accumulated other comprehensive income	10,300		10,372
Total shareholders' equity	Total shareholders' equity	829,179		772,883		Total shareholders' equity	895,580		873,788
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,651,028	$	1,632,496	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,534,105	$	1,518,798
See notes to 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 OPERATIONS

(in thousands, except share and per share data)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
		2022		2021		2022		2021			2023		2022		2023		2022

Net sales	Net sales	$	561,499	$	453,163	$	1,104,392	$	895,744	Net sales	$	473,867	$	561,499	$	972,122	$	1,104,392
Cost of sales and distribution	Cost of sales and distribution	462,765		401,549		918,911		790,784		Cost of sales and distribution	370,708		462,765		759,354		918,911
Gross profit		98,734		51,614		185,481		104,960
Gross Profit										Gross Profit	103,159		98,734		212,768		185,481

Selling and marketing expenses	Selling and marketing expenses	24,651		21,484		50,417		44,372		Selling and marketing expenses	22,685		24,651		47,045		50,417
General and administrative expenses	General and administrative expenses	32,101		24,623		62,281		48,357		General and administrative expenses	35,036		32,101		70,630		62,281
Restructuring charges, net	Restructuring charges, net	—		(3)		—		310		Restructuring charges, net	(26)		—		(198)		—

Operating income		41,982		5,510		72,783		11,921
Operating Income										Operating Income	45,464		41,982		95,291		72,783

Interest expense, net	Interest expense, net	4,422		2,360		8,475		4,533		Interest expense, net	1,953		4,422		4,390		8,475
Pension settlement, net	Pension settlement, net	(6)		—		(245)		—		Pension settlement, net	—		(6)		—		(245)
Other (income) expense, net		(897)		840		(671)		868
Income before income taxes		38,463		2,310		65,224		6,520
Other expense (income), net										Other expense (income), net	3,050		(897)		1,975		(671)
Income Before Income Taxes										Income Before Income Taxes	40,461		38,463		88,926		65,224

Income tax expense	Income tax expense	9,679		280		16,370		1,509		Income tax expense	10,120		9,679		20,735		16,370

Net income		$	28,784	$	2,030	$	48,854	$	5,011
Net Income										Net Income	$	30,341	$	28,784	$	68,191	$	48,854

Weighted Average Shares Outstanding	Weighted Average Shares Outstanding									Weighted Average Shares Outstanding
Basic	Basic	16,614,677		16,567,391		16,599,136		16,614,112		Basic	16,322,069		16,614,677		16,406,239		16,599,136
Diluted	Diluted	16,657,454		16,605,911		16,638,741		16,662,791		Diluted	16,420,760		16,657,454		16,505,266		16,638,741

Net earnings per share	Net earnings per share									Net earnings per share
Basic	Basic	$	1.73	$	0.12	$	2.94	$	0.30	Basic	$	1.86	$	1.73	$	4.16	$	2.94
Diluted	Diluted	$	1.73	$	0.12	$	2.94	$	0.30	Diluted	$	1.85	$	1.73	$	4.13	$	2.94

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				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
		2022		2021		2022		2021			2023		2022		2023		2022

Net income	Net income	$	28,784	$	2,030	$	48,854	$	5,011	Net income	$	30,341	$	28,784	$	68,191	$	48,854

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 $251, for the three and six months ended October 31, 2021, respectively		—		373		—		746
Change in Cash flow hedges (swap), net of deferred taxes of $1,783 and $641, and $1,350 and $641 for the three and six months ended October 31, 2022 and 2021, respectively		5,265		2,465		3,987		1,892

Change in Cash flow hedges (swap), net of deferred taxes (benefit) of $(335) and $1,783, and $(24) and $1,350 for the three- and six-months ended October 31, 2023 and 2022, respectively										Change in Cash flow hedges (swap), net of deferred taxes (benefit) of $(335) and $1,783, and $(24) and $1,350 for the three- and six-months ended October 31, 2023 and 2022, respectively	(986)		5,265		(72)		3,987

Total Comprehensive Income	Total Comprehensive Income	$	34,049	$	4,868	$	52,841	$	7,649	Total Comprehensive Income	$	29,355	$	34,049	$	68,119	$	52,841

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)/INCOME		EQUITY		(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		(LOSS)/INCOME		EQUITY
Balance, April 30, 2021		16,801,101	$	362,524	$	448,282	$	(54,568)	$	756,238

Net income		—	—		2,981		—		2,981
Other comprehensive income,
net of tax		—	—		—		(200)		(200)
Stock-based compensation		—	1,177		—		—		1,177
Exercise of stock-based
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
Balance, April 30, 2022											Balance, April 30, 2022	16,570,619	$	363,224	$	399,434	$	10,225	$	772,883

Net income	Net income	—	—		2,030		—		2,030		Net income	—	—		20,070		—		20,070
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		2,838		2,838		net of tax	—	—		—		(1,278)		(1,278)
Stock-based compensation	Stock-based compensation	—	1,216		—		—		1,216		Stock-based compensation	—	1,635		—		—		1,635
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	25,908	(772)		—		—		(772)

Balance, July 31, 2022											Balance, July 31, 2022	16,596,527	$	364,087	$	419,504	$	8,947	$	792,538

Balance, October 31, 2021		16,569,585	$	360,902	$	434,167	$	(51,930)	$	743,139
Net income											Net income	—	—		28,784		—		28,784
Other comprehensive income,											Other comprehensive income,
net of tax											net of tax	—	—		—		5,265		5,265
Stock-based compensation											Stock-based compensation	—	1,754		—		—		1,754
Exercise of stock-based											Exercise of stock-based
compensation awards, net of amounts											compensation awards, net of amounts
withheld for taxes											withheld for taxes	8,200	—		—		—		—

Employee benefit plan											Employee benefit plan
contributions											contributions	17,100	838		—		—		838
Balance, October 31, 2022											Balance, October 31, 2022	16,621,827	$	366,679	$	448,288	$	14,212	$	829,179


							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)/INCOME		EQUITY		(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		(LOSS)/INCOME		EQUITY

Balance, April 30, 2022		16,570,619	$	363,224	$	399,434	$	10,225	$	772,883
Balance, April 30, 2023											Balance, April 30, 2023	16,635,295	$	370,259	$	493,157	$	10,372	$	873,788

Net income	Net income	—	—		20,070		—		20,070		Net income	—	—		37,850		—		37,850
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		(1,278)		(1,278)		net of tax	—	—		—		914		914
Stock-based compensation	Stock-based compensation	—	1,635		—		—		1,635		Stock-based compensation	—	2,247		—		—		2,247
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	25,908	(772)		—		—		(772)		withheld for taxes	55,092	(1,830)		—		—		(1,830)

Balance, July 31, 2022		16,596,527	$	364,087	$	419,504	$	8,947	$	792,538
Stock repurchases											Stock repurchases	(328,295)	(6,565)		(15,715)		—		(22,280)
Employee benefit plan											Employee benefit plan
contributions											contributions	50,786	3,676		—		—		3,676
Balance, July 31, 2023											Balance, July 31, 2023	16,412,878	$	367,787	$	515,292	$	11,286	$	894,365

Net income	Net income	—	—		28,784		—		28,784		Net income	—	—		30,341		—		30,341
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		5,265		5,265		net of tax	—	—		—		(986)		(986)
Stock-based compensation	Stock-based compensation	—	1,754		—		—		1,754		Stock-based compensation	—	2,155		—		—		2,155
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	8,200	—		—		—		—		withheld for taxes	7,740	—		—		—		—
Stock repurchases											Stock repurchases	(394,220)	(7,885)		(22,410)		—		(30,295)

Employee benefit plan
contributions		17,100	838		—		—		838
Balance, October 31, 2022		16,621,827	$	366,679	$	448,288	$	14,212	$	829,179

Balance, October 31, 2023											Balance, October 31, 2023	16,026,398	$	362,057	$	523,223	$	10,300	$	895,580

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					Six Months Ended
		October 31,					October 31,
		2022		2021			2023		2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	48,854	$	5,011	Net income	$	68,191	$	48,854
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:					Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	47,598		48,780		Depreciation and amortization	46,226		47,598
Net loss on disposal of property, plant and equipment	Net loss on disposal of property, plant and equipment	214		151		Net loss on disposal of property, plant and equipment	1,593		214
Reduction in the carrying amount of operating lease right-of-use assets	Reduction in the carrying amount of operating lease right-of-use assets	13,455		13,983		Reduction in the carrying amount of operating lease right-of-use assets	14,401		13,455
Amortization of debt issuance costs	Amortization of debt issuance costs	432		434		Amortization of debt issuance costs	423		432
Unrealized (gain) loss on foreign exchange forward contracts	Unrealized (gain) loss on foreign exchange forward contracts	(580)		170		Unrealized (gain) loss on foreign exchange forward contracts	2,101		(580)

Stock-based compensation expense	Stock-based compensation expense	3,389		2,393		Stock-based compensation expense	4,402		3,389
Deferred income taxes	Deferred income taxes	(5,237)		(3,994)		Deferred income taxes	(4,649)		(5,237)
Pension settlement, net	Pension settlement, net	(245)		—		Pension settlement, net	—		(245)
Pension contributions and related (income) expense		—		609

Contributions of employer stock to employee benefit plan	Contributions of employer stock to employee benefit plan	838		2,938		Contributions of employer stock to employee benefit plan	3,676		838
Other non-cash items	Other non-cash items	3,552		169		Other non-cash items	574		3,552
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Customer receivables	Customer receivables	1,078		(2,829)		Customer receivables	(1,901)		1,078
Income taxes receivable		(1,258)		(5,750)
Income taxes						Income taxes	(6,412)		(1,258)
Inventories	Inventories	(27,747)		(33,198)		Inventories	27,649		(27,747)
Prepaid expenses and other assets	Prepaid expenses and other assets	(9,211)		(6,206)		Prepaid expenses and other assets	(55)		(9,211)
Accounts payable	Accounts payable	(26,048)		(5,214)		Accounts payable	(5,763)		(26,048)
Accrued compensation and related expenses	Accrued compensation and related expenses	13,996		(13,838)		Accrued compensation and related expenses	3,154		13,996

Operating lease liabilities	Operating lease liabilities	(13,490)		(12,798)		Operating lease liabilities	(14,854)		(13,490)
Marketing and other accrued expenses	Marketing and other accrued expenses	5,836		(987)		Marketing and other accrued expenses	4,966		5,836
Net cash provided (used) by operating activities		55,426		(10,176)
Net cash provided by operating activities						Net cash provided by operating activities	143,722		55,426

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Payments to acquire property, plant and equipment	Payments to acquire property, plant and equipment	(9,535)		(22,109)		Payments to acquire property, plant and equipment	(33,309)		(9,535)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	21		5		Proceeds from sales of property, plant and equipment	5		21

Investment in promotional displays	Investment in promotional displays	(1,452)		(4,994)		Investment in promotional displays	(533)		(1,452)
Net cash used by investing activities	Net cash used by investing activities	(10,966)		(27,098)		Net cash used by investing activities	(33,837)		(10,966)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments of long-term debt	Payments of long-term debt	(21,178)		(39,705)		Payments of long-term debt	(1,278)		(21,178)
Proceeds from long-term debt		—		20,000

Repurchase of common stock	Repurchase of common stock	—		(25,000)		Repurchase of common stock	(52,128)		—

Withholding of employee taxes related to stock-based compensation	Withholding of employee taxes related to stock-based compensation	(773)		(1,079)		Withholding of employee taxes related to stock-based compensation	(1,830)		(773)
Debt issuance cost		—		(6)

Net cash used by financing activities	Net cash used by financing activities	(21,951)		(45,790)		Net cash used by financing activities	(55,236)		(21,951)

Net increase (decrease) in cash and cash equivalents		22,509		(83,064)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	54,649		22,509


		Six Months Ended					Six Months Ended
		October 31,					October 31,
		2022		2021			2023		2022

Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	22,325		91,071		Cash and cash equivalents, beginning of period	41,732		22,325

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	44,834	$	8,007	Cash and cash equivalents, end of period	$	96,381	$	44,834

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	$	247	$	701	Property, plant and equipment included in accounts payable at period end	$	1,200	$	247

Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	8,508	$	4,324	Interest	$	7,603	$	8,508
Income taxes	Income taxes	$	13,362	$	11,405	Income taxes	$	31,711	$	13,362

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 six-month period ended October 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, ~~2023~~2024 ("fiscal ~~2023"~~2024"). 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, ~~2022~~2023 ("fiscal ~~2022"~~2023") filed with the U.S. Securities and Exchange Commission ("SEC").

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 occur or ~~changes in~~ circumstances ~~indicate~~change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company will perform the annual assessment on the first day of the fourth quarter unless an indicator of impairment exists prior to the annual date and the Company determines it is more likely than not that the ~~carrying~~fair value ~~may not be recoverable.~~of the goodwill is below its book value.

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 it is more likely than not 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 toby the amount that the carrying value exceeds the fair ~~value.~~value of the reporting unit. There were no impairment charges related to goodwill for the three- and six-month periods ended October 31, ~~2022~~2023 and ~~2021.~~2022.

Intangible assets consist of customer relationship intangibles. The Company amortizes the cost of intangible assets over their estimated useful lives, six years, unless such lives are deemed indefinite. The Company reviews its intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairment charges related to intangible assets for the three- and six-month periods ended October 31, ~~2022~~2023 and ~~2021.~~2022.

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 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 expense (income) ~~expense,~~, net in the condensed consolidated statements of income.

Reclassifications: Certain reclassifications have been made to prior period balances to conform to the current year presentation.

Note B--New Accounting Pronouncements

In ~~March 2020,~~October 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. ~~2020-04 "Reference Rate Reform (Topic 848): Facilitation of~~2023-06 "Disclosure Improvements", which amends the ~~Effects of Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance~~disclosure or presentation requirements related to ~~ease the potential burden~~various subtopics 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

the FASB Accounting Standards Codification. The ASU was issued in response to the SEC’s August 2018 Final Rule No. 33-10532, "Disclosure Update Simplification," that updated and ~~can~~simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The effective date for each amendment will be ~~adopted as~~the date on which the SEC’s removal of ~~any date~~that related disclosure requirement from ~~the beginning of an interim period that includes~~Regulation S-X or ~~is subsequent to March 12, 2020.~~Regulation S-K becomes effective, with early adoption prohibited. The Company ~~has identified loans and other financial instruments~~is currently evaluating the impact that ~~are directly or indirectly influenced by LIBOR and does not expect the adoption of~~ ASU ~~2020-04 to~~2023-06 will have ~~a material impact~~ on ~~the Company's~~its condensed consolidated financial ~~statements.~~statements and related disclosures.

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				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands, except per share amounts)	(in thousands, except per share amounts)	2022		2021		2022		2021		(in thousands, except per share amounts)	2023		2022		2023		2022
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	Net income	$	28,784	$	2,030	$	48,854	$	5,011	Net income	$	30,341	$	28,784	$	68,191	$	48,854
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	16,615		16,567		16,599		16,614		share - weighted-average shares	16,322		16,615		16,406		16,599
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options and restricted stock units	Stock options and restricted stock units	42		39		40		49		Stock options and restricted stock units	99		42		99		40
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	16,657		16,606		16,639		16,663		conversions	16,421		16,657		16,505		16,639
Net earnings per share	Net earnings per share									Net earnings per share
Basic	Basic	$	1.73	$	0.12	$	2.94	$	0.30	Basic	$	1.86	$	1.73	$	4.16	$	2.94
Diluted	Diluted	$	1.73	$	0.12	$	2.94	$	0.30	Diluted	$	1.85	$	1.73	$	4.13	$	2.94

Potentially dilutive securities of 30,780 and 43,590 for the three- and six-month periods ended October 31, 2023, respectively, were excluded from the calculation of net earnings per diluted share as the effect would be anti-dilutive. There were no potentially dilutive securities for the three- and six-month periods ended October 31, 2022, ~~and 2021,~~ 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~~six-months ended October 31, ~~2022,~~2023, the Board of Directors of the Company approved grants of ~~18,320~~ service-based restricted stock units ("RSUs") to non-employee directors. These service-based RSUs (i) vest daily through the end of the ~~two-year~~one-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, 2022, the~~The Board of Directors ~~of the Company~~also approved grants of service-based RSUs, ~~and~~ performance-based RSUs and non-statutory stock options to key employees. ~~The performance-based RSUs totaled 119,772 units and the service-based RSUs totaled 64,528 units.~~ The performance-based RSUs entitle the recipients to receive one 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.~~cliff vest at the end of the three year vesting period. The service-based RSUs to key employees entitle the recipients to receive one share of the Company's common stock per unit granted if they remain continuously employed with the Company until the units vest. ~~All~~The employee stock options cliff vest at the end of a three-year period and have a ten-year contractual term. Prior to June 2023, all of the Company's RSUs granted to employees cliff-vest three years from the grant date. Beginning in June 2023, service-based RSUs granted to employees vest one-third on each of the first, second and third anniversaries of the grant date. The fair value of the Company's RSU awards is expensed on a straight-line basis over the vesting period of the RSUs to the extent the Company believes it is probable the related performance criteria, if any, will be met.

The following table summarizes the Company's stock-based compensations grants for the six-months ended October 31, 2023:


(in thousands, except per share amounts)						Stock Awards Granted
Service-based RSUs						79,778
Performance-based RSUs						155,062
Non-statutory stock options						92,340

For the three- and six-month periods ended October 31, ~~2022~~2023 and ~~2021,~~2022, stock-based compensation expense was allocated as follows:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Cost of sales and distribution	Cost of sales and distribution	$	498	$	326	$	936	$	675	Cost of sales and distribution	$	473	$	498	$	1,051	$	936
Selling and marketing expenses	Selling and marketing expenses	572		343		1,070		662		Selling and marketing expenses	476		572		1,084		1,070
General and administrative expenses	General and administrative expenses	684		547		1,383		1,056		General and administrative expenses	1,206		684		2,267		1,383
Stock-based compensation expense	Stock-based compensation expense	$	1,754	$	1,216	$	3,389	$	2,393	Stock-based compensation expense	$	2,155	$	1,754	$	4,402	$	3,389

During the six months ended October 31, ~~2022,~~2023, the Company also approved grants of ~~11,945~~12,199 cash-settled performance-based restricted stock tracking units ("RSTUs") and ~~6,490~~6,571 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~~Prior to June 2023, all of the Company's RSTUs granted to employees cliff-vest three years from the grant date. Beginning in June 2023, service-based RSTUs granted to employees vest one-third on each of the first, second and third anniversaries of the grant date. 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 expense recognized for the three- and six-month periods ended October 31, ~~2022~~2023 and ~~2021,~~2022, and the liability as of October 31, ~~2022~~2023 and April 30, ~~2022,~~2023, related to RSTUs is not significant.

Note E--Customer Receivables

The components of customer receivables were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2022		2022		(in thousands)	2023		2023
Gross customer receivables	Gross customer receivables	$	167,472	$	168,699	Gross customer receivables	$	131,359	$	130,655
Less:	Less:					Less:
Allowance for doubtful accounts		(310)		(226)
Allowance for credit losses						Allowance for credit losses	(472)		(449)
Allowance for returns and discounts	Allowance for returns and discounts	(13,518)		(11,512)		Allowance for returns and discounts	(10,145)		(11,043)

Net customer receivables	Net customer receivables	$	153,644	$	156,961	Net customer receivables	$	120,742	$	119,163

Note F--Inventories

The components of inventories were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2022		2022		(in thousands)	2023		2023
Raw materials	Raw materials	$	112,215	$	90,451	Raw materials	$	68,946	$	80,953
Work-in-process	Work-in-process	57,928		59,180		Work-in-process	44,794		49,064
Finished goods	Finished goods	82,818		78,628		Finished goods	48,322		60,682

Total inventories	Total inventories	$	252,961	$	228,259	Total inventories	$	162,062	$	190,699

Note G--Property, Plant and Equipment

The components of property, plant and equipment were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2022		2022		(in thousands)	2023		2023
Land	Land	$	4,431	$	4,431	Land	$	4,475	$	4,475
Buildings and improvements	Buildings and improvements	120,037		119,066		Buildings and improvements	123,129		121,903
Buildings and improvements - finance leases	Buildings and improvements - finance leases	11,164		11,164		Buildings and improvements - finance leases	11,164		11,164
Machinery and equipment	Machinery and equipment	331,523		324,417		Machinery and equipment	343,341		331,146
Machinery and equipment - finance leases	Machinery and equipment - finance leases	30,546		31,341		Machinery and equipment - finance leases	31,031		29,869
Software	Software	27,817		28,115		Software	29,597		29,322
Construction in progress	Construction in progress	22,833		22,794		Construction in progress	59,199		45,710
		548,351		541,328
Total property, plant and equipment						Total property, plant and equipment	601,936		573,589
Less accumulated amortization and depreciation	Less accumulated amortization and depreciation	(344,701)		(327,520)		Less accumulated amortization and depreciation	(366,764)		(354,174)

Total		$	203,650	$	213,808
Property, plant and equipment, net						Property, plant and equipment, net	$	235,172	$	219,415

Amortization and depreciation expense on property, plant and equipment amounted to $9.7 million and ~~$9.4~~$9.7 million for the ~~three months~~three-months ended October 31, 2023 and 2022, respectively and ~~2021, respectively,~~$19.5 million and $19.4 million ~~and $19.1 million~~ for the ~~six months~~six-months ended October 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Accumulated amortization on finance leases included in the above table amounted to ~~$32.5~~$31.6 million and ~~$32.8~~$31.9 million as of October 31, ~~2022~~2023 and April 30, ~~2022,~~2023, respectively.

Note H--Intangibles

The components of customer relationship intangibles were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2022		2022		(in thousands)	2023		2023
Customer relationship intangibles	Customer relationship intangibles	$	274,000	$	274,000	Customer relationship intangibles	$	274,000	$	274,000
Less accumulated amortization	Less accumulated amortization	(220,722)		(197,889)		Less accumulated amortization	(266,389)		(243,556)

Total	Total	$	53,278	$	76,111	Total	$	7,611	$	30,444

Customer relationship intangibles are amortized over the estimated useful lives on a straight-line basis over six years. Amortization expense for the ~~three month~~three-month periods ended October 31, ~~2022~~2023 and ~~2021~~2022 was $11.4 million and $11.4 million, respectively and $22.8 million and $22.8 million, respectively, for each of the ~~six month~~six-month periods ended October 31, ~~2022~~2023 and ~~2021.~~2022.

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					Six Months Ended
		October 31,					October 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Beginning balance at May 1	Beginning balance at May 1	$	6,878	$	5,249	Beginning balance at May 1	$	8,014	$	6,878

Accrual	Accrual	19,022		9,892		Accrual	10,465		19,022
Settlements	Settlements	(17,360)		(9,198)		Settlements	(11,506)		(17,360)

Ending balance at October 31	Ending balance at October 31	$	8,540	$	5,943	Ending balance at October 31	$	6,973	$	8,540

Note J--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 former ~~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 31, ~~2022~~2023 and April 30, ~~2022~~2023 at fair value on a recurring basis (in thousands):

Fair Value Measurements
As of October 31, 2022
Level 1 Level 2 Level 3
ASSETS:
Mutual funds $ 236 $ — $ —
Interest rate swap contracts — 19,025 —
Foreign exchange forward contracts — 580 —
Total assets at fair value $ 236 $ 19,605 $ —
As of April 30, 2022
Level 1 Level 2 Level 3
ASSETS:
Mutual funds $ 404 $ — $ —
Interest rate swap contracts — 13,687 —
Total assets at fair value $ 404 $ 13,687 $ —


	Fair Value Measurements
	As of October 31, 2023
	Level 1		Level 2		Level 3
ASSETS:

Mutual funds	$	185	$	—	$	—
Interest rate swap contracts	—		13,807		—

Total assets at fair value	$	185	$	13,807	$	—

LIABILITIES:

Foreign exchange forward contracts	$	—	$	2,101	$	—


	As of April 30, 2023
	Level 1		Level 2		Level 3
ASSETS:
Mutual funds	$	191	$	—	$	—
Interest rate swap contracts	—		13,885		—
Total assets at fair value	$	191	$	13,885	$	—

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

Note K--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 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") and the refinancing of certain senior notes assumed from RSI. The facilities under the Prior Credit Agreement were scheduled to mature on December 29, 2022.

On April 22, 2021, the Company amended and restated its prior credit agreement and on January 17, 2023 the ~~Prior Credit Agreement.~~Company entered into an amendment of such agreement to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate ("SOFR"), effective January 31, 2023. 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~~its prior credit agreement and the ~~complete~~ redemption of ~~its~~$350 million in aggregate principal amount of 4.875% Senior Notes due 2026. The Company is required to repay the Term Loan Facility in specified quarterly ~~installments.~~installments, which have been prepaid through April 30, 2025. The Revolving Facility and Term Loan Facility mature on April 22, 2026.

As of October 31, ~~2022~~2023 and April 30, ~~2022, $231.3~~2023, $206.3 million and ~~$237.5~~$206.3 million, respectively, was outstanding on the Term Loan Facility. As of October 31, ~~2022~~2023 and April 30, ~~2022, $249.3~~2023, $163.8 million and ~~$263.0~~$163.8 million, respectively, was outstanding under the Revolving Facility.

Outstanding letters of credit under the Revolving Facility were ~~$11.4~~$13.0 million as of October 31, ~~2022,~~2023, leaving approximately ~~$239.4~~$323.2 million in available capacity under the Revolving Facility as of October 31, ~~2022.~~2023. 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~~SOFR plus 10 basis points 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~~SOFR loans, payable quarterly in arrears. As of October 31, ~~2022,~~2023, the applicable margin with respect to base rate loans and ~~LIBOR~~SOFR loans was ~~0.50%~~0.0% and ~~1.50%~~1.0%, respectively, and the commitment fee was ~~0.15%~~0.1%. 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 31, ~~2022,~~2023, 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.

Note L--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 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~~SOFR and pays a fixed rate of ~~0.5980%~~0.53% 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 in connection with required interest payments on 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 periods ended October 31, ~~2022,~~2023, unrealized gains, ~~(losses),~~ net of deferred taxes, of ~~$6.1~~$0.8 million and ~~$5.0~~$3.5 million, respectively, were recorded in other comprehensive income, and ~~$1.1~~$1.8 million and ~~$1.4~~$3.6 million, respectively, of realized gains, ~~(losses)~~net of deferred taxes, were reclassified out of accumulated other comprehensive income (loss) to interest expense, net due to interest received from and payments made to the swap counterparties. For the three- and six-month periods ended October 31, ~~2021,~~2022, unrealized gains, ~~(losses),~~ net of deferred taxes, of ~~$2.5~~$6.1 million and ~~$1.9~~$5.0 million, respectively, were recorded in other comprehensive income, and ~~$0.3~~$0.8 million and ~~$0.4~~$1.0 million, respectively, of realized gains, ~~(losses)~~net of deferred taxes, were reclassified out of accumulated other comprehensive income (loss) to interest expense, net due to interest received from and payments made to the swap counterparties. As of October 31, ~~2022,~~2023, the Company anticipates reclassifying approximately ~~$8.4~~$9.4 million of net hedging gains from accumulated other comprehensive income into earnings during the next 12 months to offset the variability of the hedged items during this period.

The fair value of the derivative instruments are included in other assets on the condensed consolidated balance sheets.

Foreign Exchange Forward Contracts

At October 31, ~~2022,~~2023, the Company held forward contracts maturing from November ~~2022~~2023 to April ~~2023~~2024 to purchase ~~422.4~~229.0 million Mexican pesos at an exchange ~~rates ranging from 21.11 to 21.74~~rate of 18.91 Mexican pesos to one U.S. dollar. ~~An immaterial asset~~Additionally, the Company entered into a contingent forward contract with maturities from May 2024 to April 2025 to purchase 660.0 million Mexican pesos at an exchange rate of 18.91 Mexican pesos to one U.S. dollar. This contingent forward contract gives the bank the option to cancel these forward contracts in April 2024. Additionally, the Company entered into a target accrual redemption forward agreement to purchase Mexican Pesos across 51 defined fixings. These fixings allow for U.S. dollars to be converted into Pesos at a rate of 18.73 Pesos to one U.S. Dollar. Cumulative profit is capped at an aggregate of approximately $0.6 million over the shorter of the life of the contract fixings or the utilization of the cap. A liability of $2.1 million is recorded in ~~prepaid~~other accrued expense ~~and other~~ on the condensed consolidated balance sheet.

Note M--Income Taxes

The effective income tax rates for the three- and six-month periods ended October 31, ~~2022 were 25.2%~~2023 was 25.0% and ~~25.1%~~23.3%, respectively, compared with ~~12.1%~~25.2% and ~~23.1%~~25.1% in the comparable ~~periods~~period in the prior fiscal year. The effective rates were higher than the 21.0% U.S. statutory rate for ~~the three- and six-month~~all periods ~~ended October 31, 2022~~presented primarily due to state income taxes. The effective rate for the periods ended October 31, 2022 was higher than the comparable periods in the prior fiscal year primarily due to a favorable uncertain tax position reversal booked in the prior periods.

Note N--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~~three- and ~~six months~~six-months ended October 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Home center retailers	Home center retailers	$	237,433	$	215,342	$	478,750	$	424,666	Home center retailers	$	193,872	$	237,433	$	404,332	$	478,751
Builders	Builders	244,186		183,200		470,962		361,438		Builders	207,583		233,566		410,958		450,802
Independent dealers and distributors	Independent dealers and distributors	79,880		54,621		154,680		109,640		Independent dealers and distributors	72,412		90,500		156,832		174,839
Net Sales	Net Sales	$	561,499	$	453,163	$	1,104,392	$	895,744	Net Sales	$	473,867	$	561,499	$	972,122	$	1,104,392

Note O--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 expected credit losses 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 31, ~~2022,~~2023, the Company's two largest customers, Customers A and B, represented ~~31.7%~~32.3% and ~~17.5%~~18.4% of the Company's gross customer receivables, respectively. As of October 31, ~~2021,~~2022, Customers A and B represented ~~31.2%~~31.7% and ~~19.6%~~17.5% 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~~three- and ~~six months~~six-months ended October 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended		Six Months Ended			Three Months Ended		Six Months Ended
		October 31,		October 31,			October 31,		October 31,
		2022	2021	2022	2021		2023	2022	2023	2022
Customer A	Customer A	28.9%	31.7%	29.6%	31.8%	Customer A	27.9%	28.9%	28.1%	29.6%
Customer B	Customer B	13.4%	15.8%	13.8%	15.6%	Customer B	13.0%	13.4%	13.5%	13.8%

Note P--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.

Except as described below, 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 31, ~~2022.~~2023.

Antidumping and Countervailing Duties Investigation

In February 2020, a conglomeration of domestic manufacturers filed a scope and circumvention petition seeking the imposition of antidumping (“AD”) and countervailing duties (“CVD”) with the United States Department of Commerce (“DOC”) and the United States International Trade Commission (“ITC”) against imports of hardwood plywood assembled in Vietnam using

cores sourced from China. In July 2022, the DOC issued a Preliminary Scope Determination and Affirmative Preliminary Determination of Circumvention of the Antidumping and Countervailing Duty Orders (“Preliminary Determination”). In July 2023, the DOC issued a Final Determination of Circumvention of the Antidumping and Countervailing Duty Orders (“Final Determination”).

Included in the Final Determination is a list of Vietnamese suppliers not eligible for certification.

AD and CVD cash deposits of 206% are required for imports from the Vietnamese suppliers not eligible for certification. Many of the Vietnamese suppliers ~~have~~ appealed their inclusion on the ineligible for certification ~~list.~~list in the Preliminary Determination. Because two of the Company’s primary Vietnamese plywood vendors ~~are included~~remained on the ineligible for certification list in the Final Determination, the Company ~~has determined that it is reasonably possible that it may experience~~recorded a loss ~~due to these matters and estimates that~~on unliquidated customs entries as of Final Determination in July 2023. The loss recorded in the ~~maximum total potential loss for prior and future purchase to be approximately $8.0 million. During the second~~first quarter of fiscal ~~2023,~~2024 was $4.9 million, or $3.7 million net of tax. Through the second fiscal quarter of 2024, the Company has remitted deposits of $3.8 million pursuant to the Preliminary Determination. ~~The deposits remitted are included in other assets on the Company’s condensed consolidated balance sheet.~~ Based on the evidence provided from the Vietnamese suppliers, the specific characteristics of the product imported and other relevant matters, the Company intends to vigorously appeal ~~any determination~~the Final Determination that it is subject to these duties and ~~believes that any deposits made will ultimately be refunded upon settlement~~disputes the findings of the ~~appeals.~~Final Determination with regards to the Company. Our last order was placed with these vendors in June 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, ~~2022.~~2023.

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, mortgage interest rates, general economy, unemployment ~~rates, interest~~ 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;~~

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

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

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

•an inability to develop new products or respond to changing consumer preferences and purchasing practices;

•increased buying power of large customers and the impact on our ability to maintain or raise prices;

•a failure to effectively manage manufacturing operations, alignment, and capacity or an inability to maintain the quality of our products;

•the impairment of goodwill, other intangible assets, or our long-lived assets;

•information systems interruptions or intrusions or the unauthorized release of confidential information concerning customers, employees, or other third parties;

•the cost of compliance with, or liabilities related to, environmental or other governmental regulations or changes in governmental or industry regulatory standards, especially with respect to health and safety and the environment;

•risks associated with the implementation of our growth, digital transformation, and platform design strategies;

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

•the occurrence of significant natural disasters, including earthquakes, fires, floods, hurricanes, or tropical storms;

•the unavailability of adequate capital for our business to grow and compete; and

•limitations on operating our business as a result of covenant restrictions under our indebtedness, and our ability to pay amounts due under our credit facilities and our other ~~indebtedness.~~indebtedness, and interest rate increases.

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, ~~2022,~~2023, 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 31, ~~2022,~~2023, the Company operated 17 manufacturing facilities in the United States and Mexico, ~~and~~ eight primary service centers, and one distribution center located throughout the United States.

The three-month period ended October 31, ~~2022~~2023 was the Company's second quarter of its fiscal year that ends on April 30, ~~2023~~2024 ("fiscal ~~2023"~~2024").

Financial Overview

The ~~Company's remodeling-based business~~Company was impacted by the following macro-economic trends during the second quarter of fiscal ~~2023:~~2024:

•The median price per existing home sold ~~rose~~increased during the ~~second~~third calendar quarter of ~~2022~~2023 compared to the same period one year ago by ~~8.7%~~2.6% according to data provided by the National Association of Realtors, and existing home sales decreased ~~21.4%~~15.8% during the ~~second~~third calendar quarter of ~~2022~~2023 compared to the same period in the prior year;

•The unemployment rate ~~decreased~~increased to 3.9% as of October 2023 compared to 3.7% as of October 2022, ~~compared to 4.6% as of October 2021~~and 3.4% in April 2023, according to data provided by the U.S. Department of Labor; ~~additionally, the unemployment rate increased slightly from 3.6% in April 2022;~~

•Mortgage interest rates increased with a thirty-year fixed mortgage rate of approximately ~~7.1%~~7.8% in October ~~2022,~~2023, an increase of approximately ~~390~~69 basis points compared to the same period in the prior year, according to Freddie Mac;

•Consumer sentiment as tracked by Thomson Reuters/University of Michigan ~~decreased~~increased from ~~71.7 in October 2021 to~~ 59.9 in October ~~2022;~~2022 to 63.8 in October 2023; and

•The inflation rate as of October ~~2022~~2023 was ~~7.7%~~3.2%, compared to ~~6.2%~~7.7% in October ~~2021~~2022 and ~~8.3%~~4.9% in April ~~2022~~2023 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, home owner equity, and housing affordability.

The ~~Company's total~~Company earned net ~~sales increased 23.9% during~~income of $30.3 million for the second quarter of fiscal 2024, compared with $28.8 million in the same period of the prior year, and ~~23.3% during~~earned net income of $68.2 million for the first six months of fiscal 2024, compared with $48.9 million in the same period of the prior year.

Results of Operations


	Three Months Ended						Six Months Ended
	October 31,						October 31,
(in thousands)	2023		2022		Percent Change		2023		2022		Percent Change

Net sales	$	473,867	$	561,499	(15.6)	%	$	972,122	$	1,104,392	(12.0)	%
Gross profit	$	103,159	$	98,734	4.5	%	$	212,768	$	185,481	14.7	%
Selling and marketing expenses	$	22,685	$	24,651	(8.0)	%	$	47,045	$	50,417	(6.7)	%
General and administrative expenses	$	35,036	$	32,101	9.1	%	$	70,630	$	62,281	13.4	%

Net Sales. Net sales were $473.9 million for the second quarter of fiscal 2024, a decrease of $87.6 million or 15.6% compared to the same period of fiscal 2023. For the first half of fiscal ~~2023~~2024, net sales were $972.1 million, reflecting a $132.3 million or 12.0% decrease compared to the same ~~prior-year period.~~

period of fiscal 2023. The Company's remodeling sales, which consist of our independent dealer and distributor channel sales and home center retail sales, ~~increased 17.5%~~decreased 18.8% during the second quarter and ~~18.6%~~14.2% during the first ~~half~~six months of fiscal ~~2023~~2024 compared to the same ~~prior-year~~prior year periods. Our independent dealer and distributor channel ~~increased by 46.2%~~decreased 20.0% during the second quarter and ~~41.1%~~10.4% during the first ~~half~~six months of fiscal ~~2023~~2024 compared to the comparable ~~prior-year~~prior year periods. Our home center channel ~~increased~~decreased by ~~10.3%~~18.3% during the second quarter of fiscal 2024 and ~~12.7%~~15.5% during the first ~~half~~six months of fiscal ~~2023 compared to the comparable prior-year periods.~~

~~New construction sales increased 33.3% in the second quarter and 30.3% during the first half of fiscal 2023,~~2024 compared to the same periods of fiscal ~~2022.~~2023. Demand trends have slowed for our made-to-order and stock kitchen business due to lower in-store traffic rates and consumers choosing smaller sized projects.

Builder sales decreased 11.1% in the second quarter of fiscal 2024 and 8.8% during the first six months of fiscal 2024 compared to the same periods of fiscal 2023. 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 ~~decreased 15.8%~~remained flat during the second quarter of fiscal 2024 over the comparable prior year period, according to the U.S. Department of Commerce. In comparison, housing completions ~~increased 7.0%~~decreased 3.1% during the second quarter of fiscal ~~2023~~2024 over the comparable prior year period, according to the 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 net income of $28.8 million for~~Sales in the second quarter of fiscal 2023 compared with $2.0 million in the same period of the prior year, and earned net income of $48.9 million for the first six months of fiscal 2023, compared with $5.0 million in the same period of the prior year.

~~Results of Operations~~

Three Months Ended Six Months Ended
October 31, October 31,
(in thousands) 2022 2021 Percent Change 2022 2021 Percent Change
Net sales $ 561,499 $ 453,163 23.9 % $ 1,104,392 $ 895,744 23.3 %
Gross profit $ 98,734 $ 51,614 91.3 % $ 185,481 $ 104,960 76.7 %
Selling and marketing expenses $ 24,651 $ 21,484 14.7 % $ 50,417 $ 44,372 13.6 %
General and administrative expenses $ 32,101 $ 24,623 30.4 % $ 62,281 $ 48,357 28.8 %

~~Net Sales.~~ ~~Net sales~~ were $561.5 million for the second quarter of fiscal 2023, an increase of 23.9% compared with the second quarter of fiscal 2022. For the first half of fiscal 2023, net sales were $1,104.4 million, reflecting a 23.3% increase comparedimpacted by increased shipments, which returned our backlog to ~~the same period of fiscal 2022. The Company experienced growth in all sales channels during the second quarter and first half of fiscal 2023 primarily due to the impact of price increases.~~normal levels.

Gross Profit. Gross profit margin for the second quarter of fiscal ~~2023~~2024 was ~~17.6%~~21.8% compared with ~~11.4%~~17.6% for the same period of fiscal ~~2022.~~2023, representing a 420 basis point improvement. Gross profit margin for the first ~~half~~six months of fiscal ~~2023~~2024 was ~~16.8%~~21.9% compared with ~~11.7%~~16.8% for the same period of fiscal ~~2022.~~2023, representing a 510 basis point improvement. Gross profit margin in the second quarter and first six months of the current fiscal year was positively impacted by favorable product mix and sustained pricing matching inflationary cost impacts, continued operational improvements in our manufacturing facilities and increased ~~net sales and productivity, which were partially offset by higher material and logistics costs which are starting to stabilize.~~stability in the supply chain.

Selling and Marketing Expenses. Selling and marketing expenses decreased by $2.0 million or 8.0% during the second quarter of fiscal 2024 and $3.4 million or 6.7% during the first half of fiscal 2024, compared to the same periods of the prior year. Selling and marketing expenses were ~~4.4%~~4.8% of net sales in the second quarter of fiscal ~~2023,~~2024, compared with ~~4.7%~~4.4% for the same period of fiscal ~~2022.~~2023. Selling and marketing expenses were ~~4.6%~~4.8% of net sales in the first ~~half~~six months of fiscal ~~2023,~~2024, compared with ~~5.0%~~4.6% for the same period of fiscal ~~2022.~~2023. The decrease in selling and marketing expenses was due to lower professional services spend.

General and Administrative Expenses. General and administrative expenses increased by $2.9 million or 9.1% during the second quarter of fiscal 2024 and $8.3 million or 13.4% during the first half of fiscal 2024, compared to the same periods of the prior year. General and administrative expenses were 7.4% of net sales in the second quarter of fiscal 2024, compared with 5.7% of net sales in the second quarter of fiscal ~~2023, compared with 5.4% of net sales in the second quarter of fiscal 2022.~~2023. General and administrative expenses were ~~5.6%~~7.3% of net sales in the first ~~half~~six months of fiscal ~~2023,~~2024, compared with ~~5.4% of net sales in~~5.6% for the ~~second quarter~~same period of fiscal ~~2022.~~2023. The increase in general and administrative

expenses as a percentage of net sales during the second quarter and for the first ~~half~~six months of fiscal ~~2023~~2024 was driven primarily by higher ~~employee~~ incentive and profit sharing costs ~~partially offset by leverage created by higher sales.~~for employees.

Effective Income Tax Rates. The effective income tax rates for the three- and six-month periods ended October 31, ~~2022~~2023 was 25.0% and 23.3% compared with 25.2% and 25.1%, respectively, ~~compared with 12.1% and 23.1%~~ in the comparable periods in the prior fiscal year. The effective ~~rates were~~rate was higher than the 21.0% U.S. statutory rate for the three- and six-month periods ended October 31, ~~2022~~2023 primarily due to state income taxes. The effective rate for the periods ended October 31, 2022 was higher than the comparable periods in the prior fiscal year primarily due to a favorable uncertain tax position reversal booked in the prior periods.

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 (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3) depreciation and amortization expense, (4) amortization of customer relationship intangibles ~~(5)~~and trademarks. We define Adjusted EBITDA as EBITDA adjusted to exclude (1) expenses related to the acquisition of RSI Home Products, Inc. ("RSI acquisition") and the subsequent restructuring charges that the Company incurred related to the acquisition, ~~(6)~~(2) non-recurring restructuring charges, ~~(7)~~(3) net gain/loss on debt forgiveness and modification, (4) stock-based compensation expense, ~~(8)~~(5) gain/loss on asset disposals, ~~(9)~~(6) change in fair value of foreign exchange forward contracts, and ~~(10)~~(7) 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 gain/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.


Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin	Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin													Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
		Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
		October 31,						October 31,							October 31,						October 31,
(in thousands)	(in thousands)	2022			2021			2022			2021			(in thousands)	2023			2022			2023			2022

Net income (GAAP)	Net income (GAAP)	$	28,784		$	2,030		$	48,854		$	5,011		Net income (GAAP)	$	30,341		$	28,784		$	68,191		$	48,854
Add back:	Add back:													Add back:
Income tax expense		9,679			280			16,370			1,509
Income tax expense (benefit)														Income tax expense (benefit)	10,120			9,679			20,735			16,370
Interest expense, net	Interest expense, net	4,422			2,360			8,475			4,533			Interest expense, net	1,953			4,422			4,390			8,475
Depreciation and amortization expense	Depreciation and amortization expense	12,334			12,921			24,764			25,946			Depreciation and amortization expense	11,647			12,334			23,392			24,764
Amortization of customer relationship intangibles	Amortization of customer relationship intangibles	11,417			11,417			22,834			22,834			Amortization of customer relationship intangibles	11,417			11,417			22,834			22,834
EBITDA (Non-GAAP)	EBITDA (Non-GAAP)	$	66,636		$	29,008		121,297			59,833			EBITDA (Non-GAAP)	$	65,478		$	66,636		139,542			121,297
Add back:	Add back:													Add back:
Acquisition and restructuring related expenses (1)	Acquisition and restructuring related expenses (1)	20			20			40			40			Acquisition and restructuring related expenses (1)	20			20			40			40
Non-recurring restructuring charges (2)	Non-recurring restructuring charges (2)	—			(3)			—			310			Non-recurring restructuring charges (2)	(26)			—			(198)			—
Pension settlement, net	Pension settlement, net	(6)			—			(245)			—			Pension settlement, net	—			(6)			—			(245)

Change in fair value of foreign exchange forward contracts (3)	Change in fair value of foreign exchange forward contracts (3)	(818)			520			(580)			170			Change in fair value of foreign exchange forward contracts (3)	3,116			(818)			2,101			(580)

Stock-based compensation expense	Stock-based compensation expense	1,754			1,216			3,389			2,393			Stock-based compensation expense	2,155			1,754			4,402			3,389
Loss on asset disposal	Loss on asset disposal	37			36			214			151			Loss on asset disposal	1,586			37			1,593			214
Adjusted EBITDA (Non-GAAP)	Adjusted EBITDA (Non-GAAP)	$	67,623		$	30,797		124,115			62,897			Adjusted EBITDA (Non-GAAP)	$	72,329		$	67,623		147,480			124,115

Net Sales	Net Sales	$	561,499		$	453,163		$	1,104,392		$	895,744		Net Sales	$	473,867		$	561,499		$	972,122		$	1,104,392
Net income margin (GAAP)	Net income margin (GAAP)	5.1		%	0.4		%	4.4		%	0.6		%	Net income margin (GAAP)	6.4		%	5.1		%	7.0		%	4.4		%
Adjusted EBITDA margin (Non-GAAP)	Adjusted EBITDA margin (Non-GAAP)	12.0		%	6.8		%	11.2		%	7.0		%	Adjusted EBITDA margin (Non-GAAP)	15.3		%	12.0		%	15.2		%	11.2		%

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

(2) Non-recurring restructuring charges are comprised of expenses incurred related to the ~~permanent layoffs due to COVID-19~~nationwide reduction-in-force implemented in the third and ~~the closure~~fourth quarters of ~~the manufacturing plant in Humboldt, Tennessee.~~fiscal 2023.

(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 EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal ~~2023~~2024 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 (loss).

Adjusted EBITDA. Adjusted EBITDA for the second quarter of fiscal ~~2023~~2024 was ~~$67.6~~$72.3 million or ~~12.0%~~15.3% of net sales compared to ~~$30.8~~$67.6 million or ~~6.8%~~12.0% of net sales for the same quarter of the prior fiscal year. Adjusted EBITDA for the first ~~half~~six months of fiscal ~~2023~~2024 was $147.5 million or 15.2% of net sales compared to $124.1 million or 11.2% of net sales ~~compared to $62.9 million or 7.0% of net sales~~ for the same ~~quarter~~periods of the prior fiscal year. The increase in Adjusted EBITDA for the second quarter and first ~~half~~six months of fiscal ~~2023~~2024 is primarily due to increased net income due to ~~higher net sales driven~~pricing better matching inflationary impacts, product mix and improved efficiencies in the manufacturing platforms, as our operations team continues to drive excellence in our plants. This was partially offset by ~~pricing actions and increased efficiencies.~~a $4.9 million pre-tax charge related to the plywood case, as described in Note P — Other Information above.


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				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands, except share data)	(in thousands, except share data)	2022		2021		2022		2021		(in thousands, except share data)	2023		2022		2023		2022

Net income (GAAP)	Net income (GAAP)	$	28,784	$	2,030	$	48,854	$	5,011	Net income (GAAP)	$	30,341	$	28,784	$	68,191	$	48,854
Add back:	Add back:									Add back:
Acquisition and restructuring related expenses	Acquisition and restructuring related expenses	20		$	20	40		40		Acquisition and restructuring related expenses	20		20		40		40

Non-recurring restructuring charges	Non-recurring restructuring charges	—		$	(3)	—		310		Non-recurring restructuring charges	(26)		—		(198)		—
Pension settlement, net	Pension settlement, net	(6)		$	—	(245)		—		Pension settlement, net	—		(6)		—		(245)
Amortization of customer relationship intangibles	Amortization of customer relationship intangibles	11,417		$	11,417	22,834		22,834		Amortization of customer relationship intangibles	11,417		11,417		22,834		22,834

Tax benefit of add backs	Tax benefit of add backs	(2,961)		$	(3,100)	(5,861)		(6,167)		Tax benefit of add backs	(2,956)		(2,961)		(5,896)		(5,861)
Adjusted net income (Non-GAAP)	Adjusted net income (Non-GAAP)	$	37,254	$	10,364	$	65,622	$	22,028	Adjusted net income (Non-GAAP)	$	38,796	$	37,254	$	84,971	$	65,622

Weighted average diluted shares (GAAP)	Weighted average diluted shares (GAAP)	16,657,454		16,605,911		16,638,741		16,662,791		Weighted average diluted shares (GAAP)	16,420,760		16,657,454		16,505,266		16,638,741

EPS per diluted share (GAAP)	EPS per diluted share (GAAP)	$	1.73	$	0.12	$	2.94	$	0.30	EPS per diluted share (GAAP)	$	1.85	$	1.73	$	4.13	$	2.94
Adjusted EPS per diluted share (Non-GAAP)	Adjusted EPS per diluted share (Non-GAAP)	$	2.24	$	0.62	$	3.94	$	1.32	Adjusted EPS per diluted share (Non-GAAP)	$	2.36	$	2.24	$	5.15	$	3.94

Outlook. ~~The impact on~~We are holding our ~~financial results from material and logistical constraints in addition~~expectations for net revenue for fiscal year 2024 to the availability, retention, and cost of labor continue to be uncertain. The Company's net sales were up 23.9% and 23.3% during the second quarter and first half of fiscal 2023, respectively, and we expect full year fiscal 2023 sales to be low double-digit growth ratea low-double digit decline in net sales versus fiscal year ~~2022.~~2023. We ~~expect~~are increasing our Adjusted EBITDA ~~margin~~expectation for the full fiscal year 2024 outlook to a range of $235 million to $250 million for fiscal ~~2023~~2024 (which includes the now completed first six months). The increase in our expected outlook is due to strong operational performance and execution during the first half of fiscal 2024. The expected change in net sales and Adjusted EBITDA is highly dependent upon overall industry performance, economic growth trends, material constraints, labor impacts, interest rates and consumer behaviors. Adjusted EBITDA will also be impacted by one-time start-up costs for our plant expansions in Monterrey, Mexico and Hamlet, North Carolina, which are expected to occur in the second half of fiscal 2024. The total impact of these charges is expected to be ~~low double digits.~~ approximately $8.1 million for fiscal 2024.

We will continue our investment back into the business by ~~increasing our capital investment rate to a range of 3.0 to 3.5% of net sales. As a reminder, these investments will range from the continuation of our Enterprise Resource Planning journey to get~~focusing on the ~~cloud,~~plant expansions in Monterrey, Mexico and Hamlet, North Carolina, continuing our digital transformation path with investments in ~~our~~enterprise resource planning and customer ~~experience, reinvesting~~relationship management, and investing in our manufacturing facilities, specifically the expansion of our Hamlet, NC facility, and a new manufacturing plant in Mexico and automation efforts to help reduce labor dependencies, improve quality and increase capacity.automation. We are choosing to make these additional investments into our core business ~~which will help position the company for improved~~in an effort to improve sales ~~opportunities in our stock platform~~ and enhance our margins in the future.

~~The Company continues~~During the first half of fiscal 2024, we repurchased $52.1 million of the Company's common shares. We will continue to ~~track several metrics, including but not limited~~be opportunistic in our share repurchasing. Lastly, we have our debt position at a leverage ratio we wanted to ~~housing starts, housing completions, existing home sales, mortgage interest rates, new jobs growth, GDP growth~~achieve and ~~consumer confidence, which it believes are leading indicators~~will be deprioritizing paying down debt during the remainder of ~~overall demand for kitchen and bath cabinetry.~~fiscal 2024.

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, ~~2022,~~2023, 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 ~~$44.8~~$96.4 million at October 31, ~~2022,~~2023, representing ~~an $22.5~~a $54.6 million increase from its April 30, ~~2022~~2023 levels primarily due to ~~$55.4~~$143.7 million cash provided by operations in the first six months of fiscal ~~2023~~2024 compared with cash used by operations of ~~$10.2~~$55.4 million in the same period of the prior year, ~~$9.5~~$33.3 million in payments to acquire property, plant, and equipment, and ~~$21.2~~$52.1 million of ~~net debt repayments.~~stock repurchases. The increase in the Company's cash from operating activities was driven primarily by an increase in net income and cash inflows from ~~accrued compensation and related expenses, customer receivables,~~ inventories, ~~accrued marketing expenses and other accrued expenses, partially offset by cash outflows from~~ accounts payable and prepaid expenses and other ~~assets.~~assets, partially offset by cash outflows from customer receivables, net, accrued compensation and related expenses and income taxes. At October 31, ~~2022,~~2023, total long-term debt (including current maturities) was ~~$488.6~~$373.2 million. The Company's ratio of long-term debt to total capital was ~~37.0%~~29.3% at October 31, ~~2022,~~2023, compared with ~~39.6%~~29.7% at April 30, ~~2022.~~2023.

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~~amounts under the Revolving Facility. ~~Approximately $239.4 million was available under this facility as of October 31, 2022.~~

On April 22, 2021, the Company amended and restated its prior credit agreement and on January 17, 2023 the ~~Prior Credit Agreement.~~Company entered into an amendment of such agreement to transition the applicable interest rate from LIBOR to SOFR, effective January 31, 2023. The amended and restated credit agreement (the "A&R Credit Agreement") provides for a $500 million revolving loan facility with ~~a $50 million~~a$50 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~~its prior credit agreement and the complete redemption of its 4.875% Senior Notes due 2026. The Company is required to repay the Term Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026. Approximately $323.2 million was available under the Revolving Facility as of October 31, 2023.

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 31, 2022.~~

As of October 31, 2022, $231.3 million was outstanding on the Term Loan Facility and $249.3 million was outstanding under the Revolving Facility. As of October 31, 2022, the applicable margin with respect to base rate loans and LIBOR loans was 0.50% and 1.50%, respectively, and the commitment fee was 0.15%.

See Note K — Loans Payable and Long-Term Debt for ~~further information around~~a discussion of interest rates under the A&R Credit Agreement and our ~~indebtedness and~~ compliance with ~~covenants.~~the covenants in the A&R Credit Agreement. We expect to remain in compliance with each of the covenants under the A&R Credit Agreement during fiscal 2024.

As of October 31, 2023 and April 30, 2023, the Company had no off-balance sheet arrangements.

The Company's investing activities primarily consist of investment in property, plant and equipment and promotional displays. Net cash used for investing activities was ~~$11.0~~$33.8 million in the first six months of fiscal ~~2023,~~2024, compared with ~~$27.1~~$11.0 million in the comparable period of fiscal ~~2022.~~2023.

During the first six months of fiscal ~~2023,~~2024, net cash used by financing activities was ~~$22.0~~$55.2 million, compared with ~~$45.8~~$22.0 million in the comparable period of the prior fiscal year. The ~~decrease~~increase in cash used during the first ~~half~~six months of fiscal ~~2023~~2024 was primarily driven by ~~the repurchase~~$52.1 million of common stock repurchases, offset by a decrease in net debt repayments of ~~$25.0~~$1.3 million during the first six months of fiscal 2024 compared to $21.2 million of net debt repayments in the same period of the prior fiscal year.

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. The Company repurchased $30.0 million of its common shares during the second quarter of fiscal 2024. As of October 31, 2023, $22.9 million of funds remained available from the amounts authorized by the Board to repurchase the Company's common stock.

On November 29, 2023 the Board of Directors authorized a stock repurchase program of up to $125 million of the Company's outstanding common shares. In conjunction with this authorization the Board of Directors cancelled the remaining $22.1 million that had yet to be repurchased under the $100 million existing authorization from May 25, 2021. 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 did not repurchase any of its common shares during the second quarter or first six months of fiscal 2023. As of October 31, 2022, $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 ~~2023.~~2024.

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, ~~2022.~~2023.

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 although there may be a lag in the recovery.

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 31, ~~2022~~2023 would increase our annual interest expense by approximately ~~$2.8~~$1.7 million. See Note K — 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 L — 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 31, ~~2022.~~2023. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of October 31, 2022 due to the material weaknesses in internal control over financial reporting involving ineffective information technology change management and risk assessment, control activities and monitoring activities related to new system implementation that were disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2022 (our "2022 Annual Report").are effective.

During the quarter ended October 31, 2022, we continued to implement our remediation plans described in Part II, Item 9A of our 2022 Annual Report with respect to the material weakness concerning information technology change management, including the implementation of new and enhanced processes to ensure timeliness of review and approval for emergency and scheduler changes, the removal of developer access to database monitoring logs, and an update of the development deployment process to require additional approvals as appropriate.

During the quarter ended October 31, 2022, we also continue to evaluate available remediation options for an automated solution to the material weakness concerning control and monitoring activities related to new system implementation. However, we've taken actions to implement new and ongoing monitoring activities to mitigate the risks associated with privileged user access, as we continue to work towards a more permanent solution. We will continue to provide additional details concerning progress on our remediation plan for this material weakness in future periodic reports.

During the remainder of fiscal 2023, we are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that control deficiencies contributing to the material weaknesses are remediated as soon as possible. Management will test and evaluate the implementation of the new processes established as a result of the remediation plans, and the related internal controls to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in the financial statements. Notwithstanding the identified material weaknesses, management believes the condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows at October 31, 2022 and for the periods presented in accordance with U.S. GAAP.

~~Except as described above, there~~There has been no change in the Company's internal control over financial reporting that occurred during the quarter ended October 31, ~~2022~~2023 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. See Note P — Other Information for further discussion of the antidumping and countervailing duties investigation.

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, ~~2022~~2023 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 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table details share repurchases made by the Company during the second quarter of fiscal 2024:


	Share Repurchases
	Total Number of Shares Purchased	Average Price Paid		Total Number of Shares Purchased as Part of Publicly Announced	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (000)
	(1)	Per Share		Programs	(1)
August 1 - 31, 2023	—	$	—	—	$	52,872
September 1 - 30, 2023	—	$	—	—	$	52,872
October 1 - 31, 2023	394,220	$	76.08	394,220	$	22,872
Quarter ended October 31, 2023	394,220	$	76.08	394,220	$	22,872

(1) Under a stock repurchase authorization approved by its Board on May 25, 2021, the Company was authorized to purchase up to $100 million of the Company's common shares. Management funded these share repurchases using available cash and cash generated from operations. Repurchased shares became authorized but unissued common shares. At October 31, 2023, $22.9 million of funds remained from the amounts authorized by the Board to repurchase the Company's common shares. The Company purchased a total of 394,220 common shares, for an aggregate purchase price of $30.0 million, during the second quarter of fiscal 2024 under the authorization pursuant to a repurchase plan intended to comply with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the fiscal quarter ended October 31, 2023, none of the Company’s directors or executive officers adopted, terminated or modified a "Rule 10b5-1 trading agreement" or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Amendments to Bylaws

On and effective November 29, 2023, the Board of Directors of American Woodmark Corporation (the “Company”), as part of a periodic review of the Company’s governance documents, approved changes to the Company’s Bylaws (as amended and restated, the “Bylaws”).The amendments, among other things:

•expand the scope of disclosures required by a shareholder seeking to bring a director nomination or other business before a meeting of shareholders (“proposing shareholder”) to include:

◦additional information regarding the proposing shareholder, any beneficial owner on whose behalf such nomination or other proposal is being made and any affiliates or associates or other parties with whom the proposing shareholder or such beneficial owner is acting in concert (each, an “associated person”);

◦any derivative instrument that has been entered into by, or on behalf of, the proposing shareholder, and such beneficial owner, and any associated person, the effect or intent of which is to mitigate loss to, manage risk or benefit share price changes for, or increase or decrease the voting power of, the proposing shareholder or such beneficial owner, or any associated person, with respect to Company shares, or relates to the acquisition or disposition of any Company shares;

◦any agreement pursuant to which the proposing shareholder and any beneficial owner on whose behalf the director nomination or other proposal is being made, or any associated person, has a right to vote or direct the voting of any of the Company’s securities;

◦any rights to dividends on Company shares owned beneficially by the proposing shareholder and any associated person that are separated or separable from the underlying Company shares;

◦any proportionate interest in Company shares or any derivative instruments held, directly or indirectly, by a general or limited partnership or limited liability company or similar entity in which the proposing shareholder, the beneficial owner or any associated person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, is the manager or managing member or, directly or indirectly, beneficially owns an interest in the manager or managing member of a limited liability company or similar entity; and

◦any performance-related fees (other than an asset-based fee) that the proposing shareholder, the beneficial owner or any associated person is entitled to based on the increase or decrease in the value of Company shares or derivative instruments;

•expand the scope of disclosures required by a proposing shareholder seeking to bring a director nomination (“shareholder nominee”) to include:

◦the name, age, business address and, if known, residence address of each shareholder nominee for whom the proposing shareholder is proposing or intends to solicit proxies and of each shareholder nominee who would be presented for election at the annual meeting in the event of a need to change the proposing shareholders’ original slate; and

◦a representation as to whether the proposing shareholder, the beneficial owner or any associated person intends to solicit proxies in support of director nominees other than individuals nominated by the Board of Directors (“board nominees”) in compliance with the requirements of Rule 14a-19(b) under the Securities Exchange Act of 1934 (the “Exchange Act”);

•clarify that, in addition to complying with the advance notice provisions in the Bylaws, each proposing shareholder, each beneficial owner on whose behalf a nomination or other proposal is being made and any associated person must also comply with all applicable requirements of the Company’s Articles of Incorporation, the Bylaws and state and federal law, including the Exchange Act, with respect to any such nomination, such other proposal or the solicitation of proxies with respect thereto;

•provide that any shareholder directly or indirectly soliciting proxies from other shareholders must use a proxy card color other than white;

•provide that (a) no shareholder, any beneficial owner on whose behalf the nomination if being made or associated person may solicit proxies in support of any nominees other than board nominees unless such shareholder and associated person complies with Rule 14a-19 under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Company of notices required thereunder in a timely manner, and (b) if such shareholder, beneficial owner or associated person (i) provides notice pursuant to Rule 14a-19(b) under the Exchange Act and (ii) subsequently fails to comply with any of the requirements of Rule 14a-19 under the Exchange Act, then the Company will disregard any proxies or votes solicited for such shareholder’s nominees;

•provide that, if any shareholder, beneficial owner or associated person provides notice pursuant to Rule 14a-19(b) under the Exchange Act, such shareholder or associated person must deliver to the Company, upon its request, reasonable evidence that such shareholder or associated person has met the requirements of Rule 14a-19 under the Exchange Act no later than five business days prior to the applicable meeting;

•for annual meetings where the date has not been changed by more than 30 days from the one year anniversary of the prior year’s annual meeting, require advance notice of shareholder proposals (outside of the Exchange Act’s 14a-8 procedures) and director nominations to be received not later than 120 days before the one-year anniversary of the date of mailing the notice of the preceding year’s annual meeting of shareholders;

•require shareholder nominees and board nominees to provide any certain specified information as set forth in the Bylaws, including any additional information necessary to permit the Board to determine the nominee’s independence;

•add provisions regarding the organization of shareholder meetings;

•change the term “Chairman” to “Chair” throughout; and

•make various other updates, including technical, clarifying, ministerial and conforming changes.

The foregoing description of the amendments to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Bylaws, a copy of which was filed as Exhibit 3.2 to this Form 10-Q and is incorporated herein by reference.

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~~July 31, 2004; Commission File No. 000-14798).

3.2			Bylaws – as amended (Filed Herewith).

10.1			American Woodmark Corporation 2023 Stock Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the Commission on June 27, 2023 (Commission File No. 000-14798)).

10.2			Form of Grant Letter used in connection with the grant of a supplemental long-term incentive award effective ~~May 24, 2022~~September 5, 2023 under the American Woodmark Corporation 2023 Stock Incentive Plan (incorporated by reference to Exhibit ~~3.1~~10.1 to the ~~Registrant's Form 8-K as~~Company’s Current Report filed with the Commission on ~~May 25, 2022; Commission~~September 6, 2023 (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~~(Filed Herewith).

101			Interactive Data File for the Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31, ~~2022~~2023 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).

2628

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
			Senior Vice President and Chief Financial Officer

			Date: November ~~22, 2022~~30, 2023
			Signing on behalf of the registrant and
			as principal financial and accounting officer

2729


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

Mutual funds	$	236	$	—	$	—
Interest rate swap contracts	—		19,025		—
Foreign exchange forward contracts	—		580		—
Total assets at fair value	$	236	$	19,605	$	—






	As of April 30, 2022
	Level 1		Level 2		Level 3
ASSETS:
Mutual funds	$	404	$	—	$	—
Interest rate swap contracts	—		13,687		—
Total assets at fair value	$	404	$	13,687	$	—