Exhibit 99.1
News Release
®
P. O. Box 1980
Winchester, VA 22604-8090
FOR IMMEDIATE RELEASE
Contact: Glenn Eanes
Vice President and Treasurer
540-665-9100
AMERICAN WOODMARK CORPORATION
ANNOUNCES SECOND QUARTER RESULTS
Winchester, Va. (November 28, 2006) — American Woodmark Corporation (NASDAQ: AMWD) today announced results for its second quarter of fiscal year 2007 ended October 31, 2006.
Net sales declined 2% from the prior year to $210,818,000. During the second quarter, the Company continued its previously announced transition out of certain low margin products. The Company had previously issued forward guidance that anticipated an overall decline in net sales of 1% to 5%, inclusive of the transition impact. Sales of core products grew at a rate of 4%, within the range of the Company’s previous forward guidance of 1% to 5%. Remodeling sales grew at a double digit rate in both the second fiscal quarter and the first six months of fiscal 2007, while new construction sales declined by high single digit percent.
Net income for the second quarter of fiscal 2007 was $9,188,000, or $0.57 per diluted share, compared with net income of $6,172,000, or $0.37 per diluted share, in the prior year. Net income for the second quarter of fiscal 2007 included non-cash share-based compensation expense of $1,009,000, or $0.06 per share. The Company commenced recording stock compensation expense during fiscal 2007 and had no stock compensation expense in its fiscal 2006 results. Net income was within the Company’s previous forward guidance of $0.55 to $0.60 per diluted share. Net income for the first six months of fiscal 2007 was $22,601,000, or $1.40 per diluted share, up 66% from the prior year’s $13,627,000, or $0.81 per diluted share.
Gross profit for the second quarter of fiscal 2007 was 20.3% of sales, up from 15.7% in the previous year. Gross profit for the first six months of fiscal 2007 was 21.2% of sales, up from 16.4% in the prior year. The improved gross profit margin reflected favorable impacts from operational initiatives taken in the previous fiscal year, improved sales mix from the Company’s low-margin products transition and growth in core products sales. Material, labor and freight costs each improved as a percentage of sales.
Selling, general and administrative costs were 13.5% of net sales in the second quarter of fiscal 2007, up from 11.1% of net sales in the prior year. Selling, general and administrative costs were 13.0% of net sales in the first six months of fiscal 2007, up from 11.3% in the prior year. The increase in fiscal 2007 was due to the inclusion of stock-based compensation expense, as well as additional cost relating to the Company’s pay-for-performance incentive plans.
The Company generated $42 million of free cash flow in the first six months of fiscal 2007 and repurchased $30 million of its common stock. These amounts compared favorably to the $13 million of free cash flow and $1 million of stock repurchases in the comparable period of the preceding fiscal year.
Looking ahead to the remainder of fiscal year 2007, the Company expects to continue to gain market share in the remodeling market and expects further double digit remodeling sales increases. The Company also expects to gain market share in the new construction market, but to experience a double digit decline in new construction sales due to weaker market conditions. The Company expects total core sales for the second half of fiscal 2007 to be flat with prior year levels. The Company’s transition out of low-margin products is expected to be completed by the end of the Company’s fiscal year in April 2007. The Company expects sales of low-margin products to decline by 90% in the second half of fiscal 2007 from the comparable period of the preceding fiscal year. Inclusive of the planned impact of the low-margin product sales reduction, the Company expects that total second half sales will decline by 6% to 10% as compared with prior year levels. The Company expects its gross margin rate to exceed 21% for the fiscal year. Inclusive of share-based compensation expense of approximately $0.26 per share, the Company expects to achieve record net income for fiscal year 2007 in a range of from $2.40 to $2.50 per diluted share, as compared with $2.00 in the prior fiscal year.
American Woodmark Corporation manufactures and distributes kitchen cabinets and vanities for the remodeling and new home construction markets. Its products are sold on a national basis directly to home centers, major builders and through a network of independent distributors. The Company presently operates fifteen manufacturing facilities and ten service centers across the country.
Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors that may be beyond the Company’s control. Accordingly, the Company’s future performance and financial results may differ materially from those expressed or implied in any such forward looking statements. Such factors include, but are not limited to, those described in the Company’s filings with the Securities and Exchange Commission and the Annual Report to Shareholders. The Company does not undertake to publicly update or revise its forward looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
-MORE-
AMERICAN WOODMARK CORPORATION
Unaudited Financial Highlights
(in thousands, except share data)
Operating Results
Three Months Ended October 31 | Six Months Ended October 31 | ||||||||||||
| 2006 | 2005 | 2006 | 2005 | ||||||||||
Net Sales | $ | 210,818 | $ | 214,535 | $ | 433,570 | $ | 430,099 | |||||
Cost of Sales & Distribution | 167,955 | 180,808 | 341,596 | 359,482 | |||||||||
Gross Profit | 42,863 | 33,727 | 91,974 | 70,617 | |||||||||
Sales & Marketing Expense | 17,906 | 18,115 | 35,830 | 35,928 | |||||||||
G&A Expense | 10,554 | 5,709 | 20,560 | 12,635 | |||||||||
Operating Income | 14,403 | 9,903 | 35,584 | 22,054 | |||||||||
Interest & Other (Income) Expense | (416) | (52) | (869) | (61) | |||||||||
Income Tax Expense | 5,631 | 3,783 | 13,852 | 8,488 | |||||||||
Net Income | $ | 9,188 | $ | 6,172 | $ | 22,601 | $ | 13,627 | |||||
Earnings Per Share: | |||||||||||||
Weighted Average Shares Outstanding – Diluted | 15,981,527 | 16,793,367 | 16,126,993 | 16,758,552 | |||||||||
Earnings Per Diluted Share | $ | 0.57 | $ | 0.37 | $ | 1.40 | $ | 0.81 | |||||
Balance Sheet | |||||||
October 31 2006 | April 30 2006 | ||||||
Cash & Cash Equivalents | $ | 68,566 | $ | 47,955 | |||
Customer Receivables | 48,775 | 53,514 | |||||
Inventories | 60,912 | 68,522 | |||||
Other Current Assets | 11,286 | 13,608 | |||||
Total Current Assets | 189,539 | 183,599 | |||||
Property, Plant & Equipment | 168,114 | 175,384 | |||||
Other Assets | 18,268 | 18,560 | |||||
Total Assets | $ | 375,921 | $ | 377,543 | |||
Current Portion – Long-Term Debt | $ | 1,209 | $ | 1,456 | |||
Accounts Payable & Accrued Expenses | 77,544 | 81,617 | |||||
Total Current Liabilities | 78,753 | 83,073 | |||||
Long-Term Debt | 27,454 | 27,761 | |||||
Other Liabilities | 20,977 | 25,048 | |||||
Total Liabilities | 127,184 | 135,882 | |||||
Stockholders’ Equity | 248,737 | 241,661 | |||||
Total Liabilities & Stockholders’ Equity | $ | 375,921 | $ | 377,543 | |||
-END-