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, ~~2020~~2021

☐ 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~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~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 ~~23, 2020, 16,993,260~~22, 2021, 16,569,585 shares of the ~~Registrant’s~~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, ~~2020~~2021 and April 30, 22021~~020~~	3

	Condensed Consolidated Statements of Income--Three months ended October 31, ~~2020~~2021 and ~~2019~~;2020; Six months ended October 31, ~~2020~~2021 and ~~2019~~2020	4

	Condensed Consolidated Statements of Comprehensive Income--Three months ended October 31, ~~2020~~2021 and ~~2019~~;2020; Six months ended October 31, ~~2020~~2021 and ~~2019~~2020	5

	Condensed Consolidated Statements of Shareholders' Equity--Three months ended October 31, ~~2020~~2021 and ~~2019~~;2020; Six months ended October 31, ~~2020~~2021 and ~~2019~~2020	6

	Condensed Consolidated Statements of Cash ~~Flows--Six~~Flows--Six months ended October 31, ~~2020~~2021 and ~~2019~~2020	78

	Notes to Condensed Consolidated Financial ~~Statements--October~~Statements--October 31, ~~2020~~2021	~~9-19~~10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~19-26~~20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2627

Item 4.	Controls and Procedures	2627

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	2627

Item 1A.	Risk Factors	2628





Item 6.	Exhibits	2728

SIGNATURES		2829

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, 2020		April 30, 2020			October 31, 2021		April 30, 2021
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	112,560	$	97,059	Cash and cash equivalents	$	8,007	$	91,071

Customer receivables, net	Customer receivables, net	149,165		106,344		Customer receivables, net	149,191		146,866
Inventories	Inventories	127,715		111,836		Inventories	190,998		158,167

Income taxes receivable						Income taxes receivable	5,109		—
Prepaid expenses and other	Prepaid expenses and other	14,913		9,933		Prepaid expenses and other	18,403		13,861

Total current assets	Total current assets	404,353		325,172		Total current assets	371,708		409,965
Property, plant and equipment, net	Property, plant and equipment, net	198,895		203,824		Property, plant and equipment, net	208,696		204,002
Operating lease right-of-use assets	Operating lease right-of-use assets	128,125		127,668		Operating lease right-of-use assets	118,283		123,118

Customer relationship intangibles, net	Customer relationship intangibles, net	144,611		167,444		Customer relationship intangibles, net	98,944		121,778
Trademarks, net		556		2,222

Goodwill	Goodwill	767,612		767,612		Goodwill	767,612		767,612
Promotional displays, net	Promotional displays, net	13,965		13,966		Promotional displays, net	14,313		14,554
Deferred income taxes	Deferred income taxes	1,044		915		Deferred income taxes	1,520		1,118
Other assets	Other assets	13,717		13,983		Other assets	14,663		12,252
TOTAL ASSETS	TOTAL ASSETS	$	1,672,878	$	1,622,806	TOTAL ASSETS	$	1,595,739	$	1,654,399
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	78,401	$	56,342	Accounts payable	$	87,109	$	91,622
Current maturities of long-term debt	Current maturities of long-term debt	2,096		2,216		Current maturities of long-term debt	2,160		8,322
Short-term lease liability - operating	Short-term lease liability - operating	19,519		18,896		Short-term lease liability - operating	21,538		19,994
Accrued compensation and related expenses	Accrued compensation and related expenses	56,270		49,064		Accrued compensation and related expenses	44,738		58,577
Accrued marketing expenses	Accrued marketing expenses	16,958		12,361		Accrued marketing expenses	20,268		20,019

Other accrued expenses	Other accrued expenses	21,904		16,727		Other accrued expenses	19,321		21,913
Total current liabilities	Total current liabilities	195,148		155,606		Total current liabilities	195,134		220,447
Long-term debt, less current maturities	Long-term debt, less current maturities	555,911		594,921		Long-term debt, less current maturities	501,434		513,450
Deferred income taxes	Deferred income taxes	47,701		52,935		Deferred income taxes	40,641		42,891

Long-term lease liability - operating	Long-term lease liability - operating	113,511		112,454		Long-term lease liability - operating	104,433		109,628
Other long-term liabilities	Other long-term liabilities	15,413		6,352		Other long-term liabilities	10,958		11,745
Shareholders' equity	Shareholders' equity					Shareholders' equity
Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	0		0		Preferred stock, $1.00 par value; 2,000,000 shares authorized, none issued	—		—
Common stock, no par value; 40,000,000 shares authorized; issued and	Common stock, no par value; 40,000,000 shares authorized; issued and					Common stock, no par value; 40,000,000 shares authorized; issued and
outstanding shares: at October 31, 2020: 16,993,260; at April 30, 2020: 16,926,537		364,689		359,430
outstanding shares: at October 31, 2021: 16,569,585; at April 30, 2021: 16,801,101						outstanding shares: at October 31, 2021: 16,569,585; at April 30, 2021: 16,801,101	360,902		362,524
Retained earnings	Retained earnings	431,022		392,281		Retained earnings	434,167		448,282
Accumulated other comprehensive loss - Defined benefit pension plans		(50,517)		(51,173)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(51,930)		(54,568)
Total shareholders' equity	Total shareholders' equity	745,194		700,538		Total shareholders' equity	743,139		756,238
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,672,878	$	1,622,806	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,595,739	$	1,654,399
See notes to unaudited condensed consolidated financial statements.	See notes to unaudited condensed consolidated financial statements.					See notes to unaudited condensed consolidated financial statements.

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(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,
		2020		2019		2020		2019			2021		2020		2021		2020

Net sales	Net sales	$	448,583	$	428,016	$	838,670	$	855,381	Net sales	$	453,163	$	448,583	$	895,744	$	838,670
Cost of sales and distribution	Cost of sales and distribution	359,072		340,966		669,021		673,812		Cost of sales and distribution	401,469		357,911		790,607		668,431
Gross Profit	Gross Profit	89,511		87,050		169,649		181,569		Gross Profit	51,694		90,672		105,137		170,239

Selling and marketing expenses	Selling and marketing expenses	21,608		20,451		41,506		41,138		Selling and marketing expenses	21,568		21,608		44,555		41,506
General and administrative expenses	General and administrative expenses	30,229		29,900		60,212		59,332		General and administrative expenses	24,596		30,229		48,283		60,212
Restructuring charges, net	Restructuring charges, net	2,791		(188)		6,251		(207)		Restructuring charges, net	(3)		2,791		310		6,251

Operating Income	Operating Income	34,883		36,887		61,680		81,306		Operating Income	5,533		36,044		11,989		62,270

Interest expense, net	Interest expense, net	5,981		7,436		12,011		15,524		Interest expense, net	2,360		5,981		4,533		12,011
Other income, net		(981)		(527)		(2,669)		(534)
Other (income) expense, net										Other (income) expense, net	863		(981)		936		(2,669)
Income Before Income Taxes	Income Before Income Taxes	29,883		29,978		52,338		66,316		Income Before Income Taxes	2,310		31,044		6,520		52,928

Income tax expense	Income tax expense	7,627		7,815		13,597		17,272		Income tax expense	280		7,922		1,509		13,747

Net Income	Net Income	$	22,256	$	22,163	$	38,741	$	49,044	Net Income	$	2,030	$	23,122	$	5,011	$	39,181

Weighted Average Shares Outstanding	Weighted Average Shares Outstanding									Weighted Average Shares Outstanding
Basic	Basic	16,992,297		16,919,664		16,964,565		16,892,267		Basic	16,567,391		16,992,297		16,614,112		16,964,565
Diluted	Diluted	17,047,296		16,955,835		17,036,652		16,932,236		Diluted	16,605,911		17,047,296		16,662,791		17,036,652

Net earnings per share	Net earnings per share									Net earnings per share
Basic	Basic	$	1.31	$	1.31	$	2.28	$	2.90	Basic	$	0.12	$	1.36	$	0.30	$	2.31
Diluted	Diluted	$	1.31	$	1.31	$	2.27	$	2.90	Diluted	$	0.12	$	1.36	$	0.30	$	2.30

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,
		2020		2019		2020		2019			2021		2020		2021		2020

Net income	Net income	$	22,256	$	22,163	$	38,741	$	49,044	Net income	$	2,030	$	23,122	$	5,011	$	39,181

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 $111 and $108, and $224 and $215 for the three and six months ended October 31, 2020 and 2019, respectively		329		316		656		631
Change in pension benefits, net of deferred taxes of $125 and $111, and $251 and $224 for the three and six months ended October 31, 2021 and 2020, respectively										Change in pension benefits, net of deferred taxes of $125 and $111, and $251 and $224 for the three and six months ended October 31, 2021 and 2020, respectively	373		329		746		656
Change in cash flow hedges (swap), net of deferred taxes of $641 for the three and six months ended October 31, 2021, respectively										Change in cash flow hedges (swap), net of deferred taxes of $641 for the three and six months ended October 31, 2021, respectively	2,465		—		1,892		—

Total Comprehensive Income	Total Comprehensive Income	$	22,585	$	22,479	$	39,397	$	49,675	Total Comprehensive Income	$	4,868	$	23,451	$	7,649	$	39,837

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

AMERICAN WOODMARK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(Unaudited)


							ACCUMULATED										ACCUMULATED
							OTHER		TOTAL								OTHER		TOTAL
		COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'			COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'
(in thousands, except share data)	(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY		(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY
Balance, April 30, 2019		16,849,026	$	352,424	$	317,420	$	(49,491)	$	620,353
Balance, April 30, 2020											Balance, April 30, 2020	16,926,537	$	359,430	$	403,193	$	(51,173)	$	711,450

Net income	Net income	—	—		26,881		—		26,881		Net income	—	—		16,059		—		16,059
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		315		315		net of tax	—	—		—		327		327
Stock-based compensation	Stock-based compensation	—	897		—		—		897		Stock-based compensation	—	961		—		—		961
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes	withheld for taxes	20,923	(1,050)		—		—		(1,050)		withheld for taxes	16,212	(534)		—		—		(534)

Employee benefit plan	Employee benefit plan										Employee benefit plan
contributions	contributions	45,721	3,772		—		—		3,772		contributions	45,591	3,743		—		—		3,743
Balance, July 31, 2019		16,915,670	$	356,043	$	344,301	$	(49,176)	$	651,168
Balance, July 31, 2020											Balance, July 31, 2020	16,988,340	$	363,600	$	419,252	$	(50,846)	$	732,006

Net income	Net income	—	—		22,163		—		22,163		Net income	—	—		23,122		—		23,122
Other comprehensive income,	Other comprehensive income,										Other comprehensive income,
net of tax	net of tax	—	—		—		316		316		net of tax	—	—		—		329		329
Stock-based compensation	Stock-based compensation	—	1,178		—		—		1,178		Stock-based compensation	—	1,266		—		—		1,266
Exercise of stock-based	Exercise of stock-based										Exercise of stock-based
compensation awards, net of amounts	compensation awards, net of amounts										compensation awards, net of amounts
withheld for taxes	withheld for taxes	5,877	83		—		—		83		withheld for taxes	4,920	(177)		—		—		(177)
Stock repurchases		—	—		—		—		0
Balance, October 31, 2019		16,921,547	$	357,304	$	366,464	$	(48,860)	$	674,908

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

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

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

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

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

ACCUMULATED
OTHER TOTAL
COMMON STOCK RETAINED COMPREHENSIVE SHAREHOLDERS'
(in thousands, except share data) SHARES AMOUNT EARNINGS LOSS EQUITY
Balance, April 30, 2020 16,926,537 $ 359,430 $ 392,281 $ (51,173) $ 700,538
Net income — — 16,485 — 16,485
Other comprehensive income,
net of tax — — — 327 327
Stock-based compensation — 961 — — 961
Exercise of stock-based
compensation awards, net of amounts
withheld for taxes 16,212 (534) — — (534)
Employee benefit plan
contributions 45,591 3,743 — — 3,743
Balance, July 31, 2020 16,988,340 $ 363,600 $ 408,766 $ (50,846) $ 721,520
Net income — — 22,256 — 22,256
Other comprehensive income,
net of tax — — — 329 329
Stock-based compensation — 1,266 — — 1,266
Exercise of stock-based
compensation awards, net of amounts
withheld for taxes 4,920 (177) — — (177)
Balance, October 31, 2020 16,993,260 $ 364,689 $ 431,022 $ (50,517) $ 745,194
See notes to unaudited condensed consolidated financial statements.


						ACCUMULATED
						OTHER		TOTAL
	COMMON STOCK			RETAINED		COMPREHENSIVE		SHAREHOLDERS'
(in thousands, except share data)	SHARES	AMOUNT		EARNINGS		LOSS		EQUITY
Stock-based compensation	—	1,216		—		—		1,216
Exercise of stock-based
compensation awards, net of amounts
withheld for taxes	8,531	(46)		—		—		(46)

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














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,
		2020		2019			2021		2020
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	38,741	$	49,044	Net income	$	5,011	$	39,181
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	51,779		48,527		Depreciation and amortization	48,780		51,779
Net loss on disposal of property, plant and equipment	Net loss on disposal of property, plant and equipment	332		217		Net loss on disposal of property, plant and equipment	151		332
Reduction in the carrying amount of operating lease right-of-use assets	Reduction in the carrying amount of operating lease right-of-use assets	13,366		12,768		Reduction in the carrying amount of operating lease right-of-use assets	13,983		13,366
Amortization of debt issuance costs	Amortization of debt issuance costs	1,263		1,316		Amortization of debt issuance costs	434		1,263
Unrealized gain on foreign exchange forward contracts		(1,821)		(96)
Unrealized (gain) loss on foreign exchange forward contracts						Unrealized (gain) loss on foreign exchange forward contracts	170		(1,821)

Stock-based compensation expense	Stock-based compensation expense	2,227		2,075		Stock-based compensation expense	2,393		2,227
Deferred income taxes	Deferred income taxes	(6,927)		(5,464)		Deferred income taxes	(3,994)		(6,777)
Pension contributions in excess of expense		(1,004)		(626)
Pension contributions and related (income) expense						Pension contributions and related (income) expense	609		(1,004)

Contributions of employer stock to employee benefit plan	Contributions of employer stock to employee benefit plan	3,743		3,772		Contributions of employer stock to employee benefit plan	2,938		3,743
Other non-cash items	Other non-cash items	2,299		951		Other non-cash items	169		2,299
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Customer receivables	Customer receivables	(45,071)		5,026		Customer receivables	(2,829)		(45,071)
Income taxes receivable	Income taxes receivable	2,003		(1,695)		Income taxes receivable	(5,750)		2,003
Inventories	Inventories	(16,805)		(12,123)		Inventories	(33,198)		(17,395)
Prepaid expenses and other assets	Prepaid expenses and other assets	(4,825)		(5,634)		Prepaid expenses and other assets	(6,206)		(4,825)
Accounts payable	Accounts payable	21,575		673		Accounts payable	(5,214)		21,575
Accrued compensation and related expenses	Accrued compensation and related expenses	7,206		(4,379)		Accrued compensation and related expenses	(13,838)		7,206

Operating lease liabilities	Operating lease liabilities	(12,144)		(11,783)		Operating lease liabilities	(12,798)		(12,144)
Marketing and other accrued expenses	Marketing and other accrued expenses	20,631		3,663		Marketing and other accrued expenses	(987)		20,631
Net cash provided by operating activities		76,568		86,232
Net cash (used) provided by operating activities						Net cash (used) provided by operating activities	(10,176)		76,568

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Payments to acquire property, plant and equipment	Payments to acquire property, plant and equipment	(14,142)		(15,918)		Payments to acquire property, plant and equipment	(22,109)		(14,142)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	194		313		Proceeds from sales of property, plant and equipment	5		194

Maturities of certificates of deposit		0		1,500

Investment in promotional displays	Investment in promotional displays	(4,982)		(4,183)		Investment in promotional displays	(4,994)		(4,982)
Net cash used by investing activities	Net cash used by investing activities	(18,930)		(18,288)		Net cash used by investing activities	(27,098)		(18,930)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments of long-term debt	Payments of long-term debt	(41,255)		(73,198)		Payments of long-term debt	(39,705)		(41,255)
Proceeds from long-term debt						Proceeds from long-term debt	20,000		—

Proceeds from issuance of common stock		0		83

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

Withholding of employee taxes related to stock-based compensation	Withholding of employee taxes related to stock-based compensation	(710)		(1,050)		Withholding of employee taxes related to stock-based compensation	(1,079)		(710)
Debt issuance cost	Debt issuance cost	(172)		0		Debt issuance cost	(6)		(172)
Net cash used by financing activities	Net cash used by financing activities	(42,137)		(74,165)		Net cash used by financing activities	(45,790)		(42,137)

Net increase (decrease) in cash and cash equivalents		15,501		(6,221)
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	(83,064)		15,501


		Six Months Ended					Six Months Ended
		October 31,					October 31,
		2020		2019			2021		2020
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	97,059		57,656		Cash and cash equivalents, beginning of period	91,071		97,059

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	112,560	$	51,435	Cash and cash equivalents, end of period	$	8,007	$	112,560

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	$	484	$	901	Property, plant and equipment included in accounts payable at period end	$	701	$	484

Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	10,848	$	15,025	Interest	$	4,324	$	10,848
Income taxes	Income taxes	$	18,119	$	24,573	Income taxes	$	11,405	$	18,119

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”~~GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and six-month period ended October 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending April 30, ~~2021.~~2022 ("fiscal 2022"). The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020~~2021 ("fiscal 2021") filed with the U.S. Securities and Exchange Commission ~~(“SEC”~~("SEC").

COVID-19: ~~The~~COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of the long-term effects continue to be unknown. We were negatively impacted by the COVID-19 pandemic ~~impacted~~as demand for our ~~business operations and financial results beginning in~~products significantly decreased during the fourth quarter of fiscal year ended April 30, 2020 ~~and continues to impact us in~~ ("fiscal ~~2021. Although the financial impact on our overall fiscal 2020 results was limited due to the timing of the outbreak, we saw more material impacts on our results for the~~2020") and first quarter of fiscal ~~2021. We continue~~2021, "stay at home" orders and other work disruptions created disruptions to ~~face numerous uncertainties in estimating~~our business operations. Our supply chain has been negatively impacted throughout the ~~direct~~pandemic. COVID-19 continues to impact our overall business, including hiring and ~~indirect effects of COVID-19 on our present~~retaining employees and ~~future business operations, financial condition, results of operations~~through challenges caused by material availability and ~~liquidity. Due to several rapidly changing variables~~transportation delays, as well as increased pricing related to the ~~COVID-19 pandemic, we cannot reasonably estimate future economic trends~~aforementioned items.

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

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

In accordance with accounting standards, when evaluating goodwill, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired. If after such assessment an entity concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down to fair value. There were 0no impairment charges related to goodwill for the three- and six-month periods ended October 31, ~~2020~~2021 and ~~2019.~~2020.

Intangible assets consist of customer relationship ~~intangibles and trademarks.~~intangibles. The Company amortizes the cost of intangible assets over their estimated useful lives, ~~which range from 3 to 6~~six years, unless such lives are deemed indefinite. There were 0no impairment charges related to intangible assets for the three- and six-month periods ended October 31, ~~2020~~2021 and ~~2019.~~2020.

~~Foreign Exchange Forward Contracts:~~Derivative Financial Instruments: InThe Company uses derivatives as part of the normal ~~course~~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 ~~business,~~these exposures. The primary objective in managing these exposures is to add stability to interest expense, manage the ~~Company is subject~~Company's exposure to interest rate movements, and manage the risk from adverse fluctuations in foreign exchange rates.

The Company uses interest rate swap contracts to manage interest rate exposures. The Company records derivatives in the condensed consolidated balance sheets at fair value. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive loss, 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 ~~these~~ risks through the use of foreign exchange forward contracts. The Company recognizes its outstanding forward contracts in the condensed consolidated balance sheets at their fair values. The Company does not

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

At October 31, 2020, the Company held forward contracts maturing from November 2020 to April 2021 to purchase 300.6 million Mexican pesos at exchange rates ranging from 21.89 to 23.42 Mexican pesos to one U.S. dollar. An asset of $0.7 million is recorded in prepaid expenses and other on the condensed consolidated balance sheet.

Note B--New Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2020-04 ~~“Reference~~"Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.”" These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference ~~LIBOR~~the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022 and can be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company has identified loans

and other financial instruments that are directly or indirectly influenced by LIBOR and does not expect the adoption of ASU 2020-04 to have a material impact on ~~its~~the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions for recognizing investments, performing intraperiod tax allocations and calculating income taxes in interim periods. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 iswas effective for the Company beginning May 1, 2021. ~~Early adoption is permitted.~~ The Company ~~is currently reviewing~~has reviewed the provisions of ~~this new~~the pronouncement and ~~the impact, if any,~~ the adoption of this guidance ~~may have on financial position and results of operations.~~

In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. ASU 2016-13 was effective for the Company beginning May 1, 2020. The adoption did not have ~~a material~~an impact on ~~our~~the Company's consolidated financial statements.

Note C--Net Earnings Per Share

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


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands, except per share amounts)	(in thousands, except per share amounts)	2020		2019		2020		2019		(in thousands, except per share amounts)	2021		2020		2021		2020
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	$	22,256	$	22,163	$	38,741	$	49,044	Net income	$	2,030	$	23,122	$	5,011	$	39,181
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	16,992		16,920		16,965		16,892		share - weighted-average shares	16,567		16,992		16,614		16,965
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock options and restricted stock units	Stock options and restricted stock units	55		36		72		40		Stock options and restricted stock units	39		55		49		72
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	17,047		16,956		17,037		16,932		conversions	16,606		17,047		16,663		17,037
Net earnings per share	Net earnings per share									Net earnings per share
Basic	Basic	$	1.31	$	1.31	$	2.28	$	2.90	Basic	$	0.12	$	1.36	$	0.30	$	2.31
Diluted	Diluted	$	1.31	$	1.31	$	2.27	$	2.90	Diluted	$	0.12	$	1.36	$	0.30	$	2.30

There were 0no potentially dilutive securities for the three- and six-month periods ended October 31, ~~2020~~2021 and ~~2019,~~2020, which were excluded from the calculation of net earnings per diluted share.

Note D--Stock-Based Compensation

The Company has various stock-based compensation plans. During the three-months ended October 31, ~~2020,~~2021, the Board of Directors of the Company approved grants of ~~8,200~~10,320 service-based restricted stock units ("RSUs") to non-employee directors. These service-based RSUs (i) vest daily through the end of the two-year vesting period as long as the recipient continuously remains a member of the Board and (ii) entitle the recipient to receive one share of the Company's common stock per unit

vested. During the six-months ended October 31, ~~2020,~~2021, the Board of Directors of the Company also approved grants of service-based RSUs and performance-based RSUs to key employees. The ~~employee~~ performance-based RSUs totaled ~~124,374~~57,476 units and the ~~employee~~ service-based RSUs totaled ~~67,006~~30,984 units. The performance-based RSUs entitle the recipients to receive 1 share of the ~~Company’s~~Company's common stock per unit granted if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSUs entitle the

recipients to receive 1 share of the ~~Company’s~~Company's common stock per unit granted if they remain continuously employed with the Company until the units vest. All of the ~~Company’s~~Company's RSUs granted to employees cliff-vest three years from the grant date.

For the ~~three~~three- and six-month periods ended October 31, ~~2020~~2021 and ~~2019,~~2020, stock-based compensation expense was allocated as follows:


											Three Months Ended				Six Months Ended
		Three Months Ended October 31,				Six Months Ended October 31,					October 31,				October 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Cost of sales and distribution	Cost of sales and distribution	$	409	$	277	$	708	$	492	Cost of sales and distribution	$	326	$	409	$	675	$	708
Selling and marketing expenses	Selling and marketing expenses	354		265		333		473		Selling and marketing expenses	343		354		662		333
General and administrative expenses	General and administrative expenses	503		636		1,186		1,110		General and administrative expenses	547		503		1,056		1,186
Stock-based compensation expense	Stock-based compensation expense	$	1,266	$	1,178	$	2,227	$	2,075	Stock-based compensation expense	$	1,216	$	1,266	$	2,393	$	2,227

During the six months ended October 31, ~~2020,~~2021, the Company also approved grants of ~~11,456~~5,794 cash-settled performance-based restricted stock tracking units ("RSTUs") and ~~6,229~~3,096 cash-settled service-based RSTUs for more junior level employees. Each performance-based RSTU entitles the recipient to receive a payment in cash equal to the fair market value of one share of the Company's common stock as of the payment date if applicable performance conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSTUs entitle the recipients to receive a payment in cash equal to the fair market value of one share of the Company's common stock as of the payment date if they remain continuously employed with the Company until the units vest. All of the RSTUs cliff-vest three years from the grant date. Since the RSTUs will be settled in cash, the grant date fair value of these awards is recorded as a liability until the date of payment. The fair value of each cash-settled RSTU award is remeasured at the end of each reporting period and the liability is adjusted, and related expense recorded, based on the new fair value. The Company recognized expense of ~~$0.2~~$0.1 million and $0.2 million for the three-month periods ended October 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$0.4~~$0.0 million and ~~$0.2~~$0.4 million for the six-month periods ended October 31, ~~2020~~2021 and ~~2019,~~2020, respectively. A liability for payment of the RSTUs is included in other long-term liabilities on the condensed consolidated balance sheets in the amount of ~~$0.6~~$0.7 million and ~~$0.4~~$1.0 million as of October 31, ~~2020~~2021 and April 30, ~~2020,~~2021, respectively.

Note E--Customer Receivables

The components of customer receivables were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2020		2020		(in thousands)	2021		2021
Gross customer receivables	Gross customer receivables	$	158,156	$	112,528	Gross customer receivables	$	159,766	$	156,187
Less:	Less:					Less:
Allowance for doubtful accounts	Allowance for doubtful accounts	(448)		(472)		Allowance for doubtful accounts	(229)		(331)
Allowance for returns and discounts	Allowance for returns and discounts	(8,543)		(5,712)		Allowance for returns and discounts	(10,346)		(8,990)

Net customer receivables	Net customer receivables	$	149,165	$	106,344	Net customer receivables	$	149,191	$	146,866

Note F--Inventories

The components of inventories were:


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2020		2020		(in thousands)	2021		2021
Raw materials	Raw materials	$	51,500	$	51,460	Raw materials	$	89,596	$	63,384
Work-in-process	Work-in-process	50,007		42,381		Work-in-process	55,451		51,176
Finished goods	Finished goods	41,247		32,572		Finished goods	45,951		43,607

Total FIFO inventories		142,754		126,413

Reserve to adjust inventories to LIFO value		(15,039)		(14,577)

Total inventories	Total inventories	$	127,715	$	111,836	Total inventories	$	190,998	$	158,167

OfEffective May 1, 2021, the ~~total~~Company changed its accounting principle for inventory ~~of $127.7 million at October 31, 2020, $78.0 million is carried under the~~valuation for inventories which previously utilized a LIFO basis to a FIFO method of accounting and $49.7 million is carried under the LIFO method. Of the total inventory of $111.8 million at April 30, 2020, $66.0 million is carried under the FIFO method and $45.8 million is carried under the LIFO method.basis.

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)	2020		2020		(in thousands)	2021		2021
Land	Land	$	4,431	$	4,431	Land	$	4,431	$	4,431
Buildings and improvements	Buildings and improvements	121,743		120,819		Buildings and improvements	117,566		116,103
Buildings and improvements - finance leases	Buildings and improvements - finance leases	11,636		11,636		Buildings and improvements - finance leases	11,636		11,636
Machinery and equipment	Machinery and equipment	305,692		312,806		Machinery and equipment	326,474		315,371
Machinery and equipment - finance leases	Machinery and equipment - finance leases	30,870		30,911		Machinery and equipment - finance leases	31,232		31,386
Construction in progress	Construction in progress	13,313		8,164		Construction in progress	32,096		22,669
		487,685		488,767			523,435		501,596
Less accumulated amortization and depreciation	Less accumulated amortization and depreciation	(288,790)		(284,943)		Less accumulated amortization and depreciation	(314,739)		(297,594)

Total	Total	$	198,895	$	203,824	Total	$	208,696	$	204,002

Amortization and depreciation expense on property, plant and equipment amounted to ~~$10.6~~$9.4 million and ~~$9.2~~$10.6 million for the three months ended October 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$22.2~~$19.1 million and ~~$18.3~~$22.2 million for the six months ended October 31, ~~2020~~2021 and ~~2019,~~2020, respectively. The three and six months ended October 31, 2020 includes accelerated depreciation expense of $0.2 million and $1.3 million, respectively, related to the closure of the plant located in Humboldt, Tennessee. Accumulated amortization on finance leases included in the above table amounted to ~~$32.5~~$32.9 million and ~~$32.3~~$33.0 million as of October 31, ~~2020~~2021 and April 30, ~~2020,~~2021, respectively.

Note H--Intangibles

The ~~components of~~ customer relationship intangibles were:

October 31, April 30,
(in thousands) 2020 2020
Customer relationship intangibles $ 274,000 $ 274,000
Less accumulated amortization (129,389) (106,556)
Total $ 144,611 $ 167,444

~~The components of trademarks were:~~


		October 31,		April 30,			October 31,		April 30,
(in thousands)	(in thousands)	2020		2020		(in thousands)	2021		2021
Trademarks		$	10,000	$	10,000
Customer relationship intangibles						Customer relationship intangibles	$	274,000	$	274,000
Less accumulated amortization	Less accumulated amortization	(9,444)		(7,778)		Less accumulated amortization	(175,056)		(152,222)

Total	Total	$	556	$	2,222	Total	$	98,944	$	121,778

Customer relationship intangibles ~~and trademarks~~ are amortized over the estimated useful lives on a straight-line basis over six ~~and three years, respectively.~~years. Amortization expense for ~~each of~~ the three month periods ended October 31, 2021 and 2020 was $11.4 million and ~~2019 was~~ $12.3 million

respectively, and $22.8 million and $24.5 million, respectively, for each of the six month periods ended October 31, ~~2020~~2021 and ~~2019.~~2020.

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~~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)	2020		2019		(in thousands)	2021		2020
Beginning balance at May 1	Beginning balance at May 1	$	3,753	$	4,616	Beginning balance at May 1	$	5,249	$	3,753

Accrual	Accrual	9,560		12,539		Accrual	9,892		9,560
Settlements	Settlements	(8,948)		(12,294)		Settlements	(9,198)		(8,948)

Ending balance at October 31	Ending balance at October 31	$	4,365	$	4,861	Ending balance at October 31	$	5,943	$	4,365

Note J--Pension Benefits

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

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

Net periodic pension benefit cost consisted of the following for the three- and six-month periods ended October 31, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Interest cost	Interest cost	$	1,166	$	1,494	$	2,331	$	2,987	Interest cost	$	1,349	$	1,166	$	2,698	$	2,331
Expected return on plan assets	Expected return on plan assets	(2,108)		(2,082)		(4,215)		(4,163)		Expected return on plan assets	(1,543)		(2,108)		(3,086)		(4,215)
Recognized net actuarial loss	Recognized net actuarial loss	440		423		880		846		Recognized net actuarial loss	498		440		997		880

Net periodic pension benefit	Net periodic pension benefit	$	(502)	$	(165)	$	(1,004)	$	(330)	Net periodic pension benefit	$	304	$	(502)	$	609	$	(1,004)

The Company did not contribute to ~~its pension plan~~the Plan in the first ~~three and~~ six months of fiscal ~~2021 and does not expect to contribute any funds during~~2022. Expected funding for the remainder of fiscal ~~2021.~~2022 will be determined on the Benefit Distribution Date . The Company made no contributions ~~of $0.5 million~~ to ~~its pension plans~~the Plan in fiscal ~~2020.~~2021.

Note K--Fair Value Measurements

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

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

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

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

The Company's financial instruments include cash and equivalents, marketable securities, and other investments; accounts receivable and accounts payable; interest rate swap and foreign exchange forward contracts; and short- and long-term debt. The carrying values of cash and equivalents, accounts receivable and payable, and short-term debt on the condensed consolidated balance sheets approximate their fair value due to the short maturities of these items. The interest rate swap and foreign exchange forward contracts were marked to market and therefore represent fair value. The fair values of these contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The following table summarizes the fair value of assets and liabilities that are recorded in the ~~Company’s~~Company's consolidated financial statements as of October 31, ~~2020~~2021 and April 30, ~~2020~~2021 at fair value on a recurring basis (in thousands):


		Fair Value Measurements							Fair Value Measurements
		As of October 31, 2020							As of October 31, 2021
		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
ASSETS:	ASSETS:							ASSETS:

Mutual funds	Mutual funds	$	827	$	0	$	0	Mutual funds	$	510	$	—	$	—
Foreign exchange forward contracts		0		719		0
Interest rate swap contracts								Interest rate swap contracts	—		2,533		—

Total assets at fair value	Total assets at fair value	$	827	$	719	$	0	Total assets at fair value	$	510	$	2,533	$	—

LIABILITIES:								LIABILITIES:

Foreign exchange forward contracts								Foreign exchange forward contracts	$	—	$	170	$	—

		As of April 30, 2020							As of April 30, 2021
		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3
ASSETS:	ASSETS:							ASSETS:
Mutual funds	Mutual funds	$	773	$	0	$	0	Mutual funds	$	642	$	—	$	—

LIABILITIES:
Foreign exchange forward contracts		$	0	$	(1,102)	$	0

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

Note L--Loans Payable and Long-Term Debt

On December 29, 2017, the Company entered into a credit agreement ~~(as subsequently amended, the "Credit~~(the "Prior Credit Agreement") with a syndicate of lenders and Wells Fargo Bank, National Association, as administrative ~~agent, providing~~agent. The Prior Credit Agreement provided for a $100 million ~~5-year~~ revolving loan facility with a $25 million sub-facility for the issuance of letters of credit, ~~(the “Revolving Facility”),~~ a $250 million ~~5-year~~ initial term loan facility, ~~(the "Initial Term Loan")~~ and a $250 million delayed draw term loan ~~facility (the "Delayed Draw Term Loan" and, together with the Revolving Facility and the Initial Term Loan, the "Credit Facilities").~~facility. The Company borrowed the entire $250 million available under ~~each of~~ the ~~Initial Term Loan~~initial term loan facility, the entire $250 million under the delayed draw term loan facility, and approximately $50 million under the ~~Delayed Draw Term Loan on December 29, 2017 and February 12, 2018, respectively,~~revolving loan facility in connection with its acquisition of RSI Home Products, Inc. ~~(“RSI”~~("RSI") in December 2017 and

subsequent refinancing of ~~RSI’s~~RSI's debt. The ~~Company is required~~facilities under the Prior Credit Agreement were scheduled to make specified quarterly installments on both the Initial Term Loan and the Delayed Draw Loan. As of October 31, 2020, $102 million was outstanding on each of the Initial Term Loan and the Delayed Draw Loan for a total of $204 million. As of April 30, 2020, $122 million was outstanding on each of the Initial Term Loan and the Delayed Draw Loan for a total of $244 million. The outstanding balance approximates fair value as the Initial Term Loan and Delayed Draw Term Loan have a floating interest rate. There were 0 amounts outstanding on the Revolving Facility as of October 31, 2020 or April 30, 2020. The Credit Facilities mature on December 29, 2022.

On April 22, 2021, the Company amended and restated the Prior Credit Agreement. The amended and restated credit agreement (the "A&R Credit Agreement") provides for a $500 million revolving loan facility with a $50 million sub-facility for the issuance of letters of credit (the "Revolving Facility") and a $250 million term loan facility (the "Term Loan Facility"). Also on April 22, 2021, the Company borrowed the entire $250 million under the Term Loan Facility and approximately $264 million under the Revolving Facility to fund, in part, the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of the Senior Notes (as defined below). The Company is required to repay the Term Loan Facility in specified quarterly installments. The Revolving Facility and Term Loan Facility mature on April 22, 2026.

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

Amounts outstanding under the ~~Credit Facilities~~Term Loan Facility and the Revolving Facility bear interest based on a fluctuating rate measured by reference to either, at the ~~Company’s~~Company's option, a base rate plus an applicable margin or LIBOR plus an applicable margin, with the applicable margin being determined by reference to the ~~Company’s~~Company's then-current ~~“Total Funded Debt to EBITDA~~"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~~Company's then-current ~~“Total Funded Debt to EBITDA~~"Secured Net Leverage Ratio.”" In addition, a letter of credit fee ~~will accrue~~accrues on the face amount of any outstanding letters of credit at a per annum rate equal to the applicable margin on LIBOR loans, payable quarterly in arrears. As of October 31, ~~2020,~~2021, the applicable margin with respect to base rate loans and LIBOR loans was 0.50% and 1.50%, respectively, and the commitment fee was ~~0.175%~~0.15%. AsThe A&R Credit Agreement includes provisions providing for the transition from LIBOR to a replacement benchmark upon the occurrence of ~~December 31, 2021, the~~certain events. The Company ~~will~~does not currently expect any such transition to ~~the Secured Overnight Financial Rate ("SOFR") as required by the Credit Facilities. The Company expects the transition to SOFR to be~~ materially ~~similar to LIBOR.~~impact its financing costs.

The A&R Credit Agreement includes certain financial ~~covenants. On September 16, 2020~~covenants that require the “Total Funded Debt to EBITDA Ratio” was amended to a “Total Net Funded Debt to EBITDA Ratio” to include Unrestricted Cash in the aggregate amount not to exceed $100 million. The maximum “Total Net Funded Debt to EBITDA Ratio” can be no more than 3.25 to 1.00 (with an increase to 3.75 to 1.00 for a certain period upon the consummation of a “Qualified Acquisition”). The Company ~~is also required~~ to maintain (i) a ~~“Fixed Charge~~"Consolidated Interest Coverage ~~Ratio”~~Ratio" of no less than ~~1.25~~2.00 to ~~1.00.~~ 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.

various exceptions and conditions described in the A&R Credit Agreement. The negative covenants ~~also~~further restrict the ~~Company’s~~ ability ~~to make~~of the Company and certain ~~investments and~~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. The Company is, however, permitted to make unlimited investments so long as the "Total Net Funded Debt to EBITDA Ratio" is less than or equal to 3.00 to 1.00 after giving effect to any such investment and no default or event of default has occurred and is continuing or would result from any such investment. The Company is also permitted to make (i) unlimited restricted payments so long as the “Total Net Funded Debt to EBITDA Ratio” would be less than or equal to 2.75 to 1.00 after giving effect to any such payment and no default or event of default has occurred and is continuing or would result from any such payment and (ii) up to an aggregate of $50 million in restricted payments not otherwise permitted under the Credit Agreement so long as no default or event of default has occurred and is continuing or would result from any such payment.

As of October 31, ~~2020, the Company's Total Net Funded Debt to EBITDA Ratio was 2.08 and the Fixed Charge Coverage Ratio was 5.34. As of October 31, 2020,~~2021, the Company was in compliance with ~~the~~all covenants included in the A&R Credit Agreement.

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

On February 12, 2018, the Company issued $350 million in aggregate principal amount of 4.875% Senior Notes due 2026 (the ~~“Senior Notes”~~"Senior Notes"). and utilized the proceeds, together with the proceeds from the delayed draw term loan under the Prior Credit Agreement, to refinance certain senior notes assumed from the acquisition of RSI. The Senior Notes were guaranteed by the Company's domestic subsidiaries and were scheduled to mature on March 15, ~~2026 and interest on~~2026. On April 26, 2021, the Company redeemed in full the Senior Notes ~~is payable semi-annually in arrears on March 15 and September 15 of each year. The Senior Notes are fully and unconditionally guaranteed by each~~at a redemption price equal to 102.438% of the ~~Company’s current and future wholly-owned domestic subsidiaries that guarantee the Company’s obligations under the Credit Agreement. The indenture governing~~principal amount of the Senior Notes, ~~restricts~~plus accrued and unpaid interest to the ~~ability~~redemption date.

Note M--Derivative Financial Instruments

Interest Rate Swap Contracts

The Company enters into interest rate swap contracts to manage variability in the amount of known or expected cash payments related to portions of its variable rate debt. On May 28, 2021, the Company entered into four interest rate swaps with an aggregate notional amount of $200 million to hedge part of the ~~Company~~variable rate interest payments under the Term Loan Facility. The interest rate swaps became effective on May 28, 2021 and the Company’s “restricted subsidiaries” to, as applicable, (i) incur additional indebtedness or issue certain preferred shares, (ii) create liens, (iii) pay dividends, redeem or repurchase stock or make other distributions or restricted payments, (iv) make certain investments, (v) create restrictionswill terminate on ~~the ability~~May 30, 2025. The interest rate swaps economically convert a portion of the ~~“restricted subsidiaries”~~variable rate debt to ~~pay dividends~~fixed rate debt. The Company receives floating interest payments monthly based on one-month LIBOR and pays a fixed rate of 0.5980% to the counterparty.

The interest rate swaps are designated as cash flow hedges. Changes in fair value are recorded to other comprehensive income. The risk management objective in using interest rate swaps is to add stability to interest expense and to manage the Company's exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company ~~or make other intercompany transfers, (vi) transfer or sell assets, (vii) merge or consolidate with a third party and (viii) enter into certain transactions with affiliates~~making fixed-rate payments over the life of the ~~Company, subject,~~contract agreements without exchange of the underlying notional amount. Realized gains or losses from interest rate swaps are recorded in ~~each case,~~earnings, as a component of interest expense, net to ~~certain qualifications~~offset variability in interest expense associated with the underlying debt's cash flows.

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

Foreign Exchange Forward Contracts

At October 31, ~~2020,~~2021, the ~~book value~~Company held forward contracts maturing from November 2021 to April 2022 to purchase 359.1 million Mexican pesos at exchange rates ranging from 20.53 to 20.91 Mexican pesos to one U.S. dollar. A liability of $0.2 million is recorded in other accrued expenses on the ~~Senior Notes was $350 million and the fair value was $356.6 million, based on Level 1 inputs.~~condensed consolidated balance sheet.

Note ~~M--Income~~N--Income Taxes

The effective income tax rate for the three- and six-month ~~periods~~period ended October 31, ~~2020~~2021 was ~~25.5%~~12.1% and ~~26.0%~~23.1%, ~~respectively,~~respectivley, compared with ~~26.1%~~25.5% and 26.0% in the comparable ~~periods~~period in the prior fiscal year. The ~~decrease in the~~ effective ~~tax rate~~rates for the ~~second quarter of fiscal~~three-and six-month periods ended October 31, 2021 ~~as compared to~~were lower than the comparable period in the prior fiscal year ~~was primarily~~ due to ~~less unfavorable permanent tax items. During~~ the ~~first six months~~impact of ~~fiscal 2021 and 2020, the Company recognized a tax detriment related to stock-based compensation transactions of $0.2 million and a tax benefit of $0.1 million, respectively.~~discrete items on lower pretax income.

Note ~~N--Revenue~~O--Revenue Recognition

The Company disaggregates revenue from contracts with customers into major sales distribution channels as these categories depict the nature, amount, timing, and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for the ~~three-~~three and ~~six-months~~six months ended October 31, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		October 31,				October 31,					October 31,				October 31,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Home center retailers	Home center retailers	$	223,118	$	189,148	$	397,113	$	387,899	Home center retailers	$	215,342	$	223,118	$	424,666	$	397,113
Builders	Builders	171,042		184,755		335,390		357,344		Builders	183,200		171,042		361,438		335,390
Independent dealers and distributors	Independent dealers and distributors	54,423		54,113		106,167		110,138		Independent dealers and distributors	54,621		54,423		109,640		106,167
Net Sales	Net Sales	$	448,583	$	428,016	$	838,670	$	855,381	Net Sales	$	453,163	$	448,583	$	895,744	$	838,670

Note ~~O--Concentration~~P--Concentration of Risks

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

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

The Company maintains an allowance for bad debt based upon management's evaluation and judgment of potential net loss. The allowance is estimated based upon historical experience, the effects of current developments and economic conditions, and each ~~customer’s~~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.

AtAs of October 31, ~~2020,~~2021, the Company's two largest customers, Customers A and B, represented ~~31.5%~~33.1% and ~~25.5%~~18.4% of the Company's gross customer receivables, respectively. AtAs of October 31, ~~2019,~~2020, Customers A and B represented ~~25.5%~~31.5% and ~~19.7%~~25.5% of the ~~Company’s~~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, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended		Six Months Ended			Three Months Ended		Six Months Ended
		October 31,		October 31,			October 31,		October 31,
		2020	2019	2020	2019		2021	2020	2021	2020
Customer A	Customer A	30.5%	28.7%	29.2%	28.7%	Customer A	31.7%	30.5%	31.8%	29.2%
Customer B	Customer B	19.2%	15.5%	18.1%	16.6%	Customer B	15.8%	19.2%	15.6%	18.1%

Note ~~P--Leases~~Q--Leases

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

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

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

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

The components of lease costs were as follows:

Six Months Ended
October 31,
(in thousands) 2020 2019
Finance lease cost:
Reduction in the carrying value of right-of-use assets $ 222 $ 1,239
Interest on lease liabilities 30 105
Operating lease cost 13,366 12,768


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

Additional information related to leases was as follows:


		Six Months Ended							Six Months Ended
		October 31,							October 31,
(in thousands)	(in thousands)	2020			2019			(in thousands)	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	Operating cash flows for finance leases	$	30		$	105		Operating cash flows for finance leases	$	52		$	30
Operating cash flows for operating leases	Operating cash flows for operating leases	12,164			11,783			Operating cash flows for operating leases	$	12,798		$	12,164
Financing cash flows for financing leases	Financing cash flows for financing leases	210			1,203			Financing cash flows for financing leases	$	607		$	210
Right-of-use assets obtained in exchange for new finance lease liabilities	Right-of-use assets obtained in exchange for new finance lease liabilities	941			643			Right-of-use assets obtained in exchange for new finance lease liabilities	$	1,100		$	941
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	6,788			24,178			Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,147		$	6,788

Weighted average remaining lease term (years)	Weighted average remaining lease term (years)							Weighted average remaining lease term (years)
Weighted average remaining lease term - finance leases	Weighted average remaining lease term - finance leases	3.18			3.36			Weighted average remaining lease term - finance leases	2.63			3.18
Weighted average remaining lease term - operating leases	Weighted average remaining lease term - operating leases	7.08			6.51			Weighted average remaining lease term - operating leases	6.16			7.08

Weighted average discount rate	Weighted average discount rate							Weighted average discount rate
Weighted average discount rate - finance leases	Weighted average discount rate - finance leases	3.02		%	3.20		%	Weighted average discount rate - finance leases	2.86		%	3.02		%
Weighted average discount rate - operating leases	Weighted average discount rate - operating leases	3.31		%	4.26		%	Weighted average discount rate - operating leases	3.15		%	3.31		%

The following is a reconciliation of future undiscounted cash flows to the operating and finance lease liabilities, and the related ROU assets, presented on the unaudited condensed consolidated balance sheet as of October 31, ~~2020:~~2021:


(in thousands)	(in thousands)	Operating leases		Financing leases		(in thousands)	Operating leases		Financing leases
Year ending April 30,	Year ending April 30,					Year ending April 30,
2021		$	12,157	$	1,247
2022	2022	21,928		1,766		2022	$	12,227	$	1,195
2023	2023	21,250		1,300		2023	24,735		2,112
2024	2024	19,345		1,001		2024	22,779		1,732
2025	2025	17,157		318		2025	19,208		442
2026						2026	18,848		109
Thereafter	Thereafter	57,709		92		Thereafter	41,168		—
Total lease payments	Total lease payments	149,546		5,724		Total lease payments	138,965		5,590
Less imputed interest	Less imputed interest	(16,516)		(259)		Less imputed interest	(12,994)		(203)
Total lease liability	Total lease liability	133,030		5,465		Total lease liability	125,971		5,387
Current maturities	Current maturities	(19,519)		(2,140)		Current maturities	(21,538)		(2,160)
Lease liability - long-term	Lease liability - long-term	$	113,511	$	3,325	Lease liability - long-term	$	104,433	$	3,227
Lease assets	Lease assets	$	128,125	$	10,013	Lease assets	$	118,283	$	9,999

Note ~~Q--Restructuring~~R--Restructuring

During June 2020, the Company's Board of Directors approved the closure and eventual disposal of its manufacturing plant located in Humboldt, Tennessee. The Company expects to incur total pre-tax restructuring costs of $3.0 million to $5.0 million related to the closing of the plant, net of building proceeds. The restructuring costs consist of employee severance and separation costs of approximately $0.5 million to $1.0 million, and charges for accelerated depreciation and relocation of property and equipment and inventory write-offs of approximately $2.5 million to $4.0 million. The Company expects to recognize substantially all of these costs during fiscal 2021. Operations ceased at the Humboldt plant in July 2020. During the third quarter of fiscal 2021, the Company sold the Humboldt plant and recognized a gain of $2.3 million on the sale. During the second quarter and first half of fiscal 2022 and 2021, the Company recognized pre-tax restructuring charges, net of $0.0 million and $2.9 million for the three months ended October 31, 2021 and 2020, respectively, and $0.3 million and $4.7 million for the six months ended October 31, 2021 and 2020, respectively, related to the closure of the plant. Included in the $4.7 million of restructuring charges for the first half of fiscal 2021 were $0.8 million of severance and separation costs and $3.9 million for equipment, inventory and facilities-related expenses.

A reserve for restructuring charges is included in accrued compensation and related expenses in the condensed consolidated balance sheets as of October 31, 2020 which relates to employee termination costs accrued but not yet paid as follows:


	~~October 31,~~
~~(in thousands)~~	~~2020~~
~~Restructuring reserve balance at May 1~~	$	~~189~~
~~Expense~~	~~1,736~~
~~Payments and adjustments~~	~~(1,502)~~

~~Restructuring reserve balance at October 31~~	$	~~423~~

Note S--Other Information

~~Note R--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,”~~"Contingencies," the Company categorizes the various suits and claims into three categories according to their likelihood for resulting in potential loss: those that are probable, those that are reasonably possible, and those that are deemed to be remote. Where losses are deemed to be probable and estimable, accruals are made. Where losses are deemed to be reasonably possible, a range of loss estimates is determined and considered for disclosure. In determining these loss range estimates, the Company considers known values of similar claims and consults with outside counsel.

The Company believes that the aggregate range of loss stemming from the various suits and asserted and unasserted claims that were deemed to be either probable or reasonably possible was not material as of October 31, ~~2020.~~2021.

The Company’s second quarter of fiscal 2021 results were negatively impacted by an accrual of $1.5 million related to a proposed legal settlement of a putative class action brought on behalf of certain hourly-paid current and former employees of our subsidiaries, RSI Home Products, Inc. and RSI Professional Cabinet Solutions, asserting several claims including violations of California wage and hour laws.

Item 2. ~~Management’s~~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~~Company's critical accounting policies are included in the ~~Company’s~~Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020.~~2021.

Forward-Looking Statements

This report contains statements concerning the ~~Company’s~~Company's expectations, plans, objectives, future financial performance, and other statements that are not historical facts. These statements may be ~~“forward-looking statements”~~"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”"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~~"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 ~~impact of COVID-19 on our business, the global and U.S. economy and our customers and suppliers;~~

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

•negative developments in the macro-economic factors that impact our performance such as the U.S. housing market, general economy, unemployment rates, and consumer sentiment and the impact of such developments on our and our ~~customers’~~customers' business, operations, and access to financing;

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

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

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

•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;

•~~an inability to obtain raw materials in a timely manner or fluctuations in raw material and energy costs;~~

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

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

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

•risks associated with the implementation of our growth strategy;

•risks related to sourcing and selling products internationally and doing business globally, including the imposition of ~~or increases in~~ tariffs or duties on those ~~products;~~products, and increased transportation costs and delays;

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

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

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

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

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

•our ability to successfully integrate RSI into our business and operations and the risk that the anticipated economic benefits, costs savings and other synergies in connection with our acquisition of RSI are not fully realized or take longer to realize than expected; and

•limitations on operating our business as a result of covenant restrictions under our indebtedness, and our ability to pay amounts due under ~~the Credit Facilities, the Senior Notes~~our credit facilities and our other indebtedness.

Additional information concerning factors that could cause actual results to differ materially from those in forward-looking statements is contained in this report, including elsewhere in ~~"Management’s~~"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, ~~2020,~~2021, filed with the SEC, including under Item 1A, "Risk Factors," Item 7, ~~“Management’s~~"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. OnAs of October 31, ~~2020,~~2021, the Company operated ~~seventeen~~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, ~~2020~~2021 was the ~~Company’s~~Company's second quarter of its fiscal year that ends on April 30, ~~2021 (“~~2022 ("fiscal ~~2021”~~2022").

COVID-19

The pandemic caused by COVID-19 was first reported in Wuhan, China in December 2019 and has since spread throughout the world. Financial markets have been volatile in 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic.

As the spread of the virus began to be identified within the United States in March 2020, we acted by imposing travel restrictions, transitioning large meetings from in-person to virtual formats, assessing our information technology infrastructure to ensure readiness for a remote workforce, staying connected to customers, suppliers and business partners, planning for return to the workplace and making operational adjustments as needed to ensure continued safety of our workforce.

The pandemic has resulted in federal, state and local governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions or bans, business curtailments, school closures, and other protective measures, some of which have been recently reinstated.

All of our U.S. manufacturing facilities currently qualify as essential operations (or the equivalent) under applicable federal and state orders. Operations in our component plants in Mexico were temporarily suspended for a period of time in April 2020, however, all of our manufacturing facilities and service centers are currently open and operating. We are enforcing social distancing and enhanced health, safety and sanitization measures in accordance with guidelines from the Center for Disease Control. We have also implemented necessary procedures and support to enable a significant portion of our office personnel to work remotely.

The COVID-19 pandemic impacted our business operations and financial results beginning in the fourth quarter of fiscal 2020 and ~~continues~~continued to impact us throughout fiscal 2021 and now in fiscal ~~2021. Although~~2022. All of our manufacturing facilities qualified as essential operations (or the ~~financial impact on~~equivalent) under applicable federal and state orders and were able to continue operating. We were initially negatively impacted by the COVID-19 pandemic as demand for our ~~overall~~products significantly decreased during the fourth quarter of fiscal 2020 ~~results was limited due to the timing of the outbreak, we saw more material impacts on our results for the~~and first quarter of fiscal ~~2021. We continue~~2021, as "stay at home" orders and other work disruptions created disruptions to ~~face numerous uncertainties in estimating~~our business operations. Our supply chain has been negatively impacted throughout the ~~direct~~pandemic. COVID-19 continues to impact our overall business, including hiring and ~~indirect effects of COVID-19 on our present~~retaining employees and ~~future business operations, financial condition, results of operations,~~through challenges caused by material availability and ~~liquidity. Due to several rapidly changing variables~~transportation delays, as well as increased pricing related to the ~~COVID-19 pandemic including recent rises in case counts, we cannot reasonably estimate future economic trends and the timing of when stability will return.~~ aforementioned items. Refer to Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020~~2021 for a disclosure of risk factors related to COVID-19.

Financial Overview

The ~~Company’s~~Company's remodeling-based business was impacted by the following trends during the second quarter of fiscal ~~2021:~~ 2022:

•The median price per existing home sold rose during the third calendar quarter of ~~2020~~2021 compared to the same period one year ago by ~~11.7%~~15.4% according to data provided by the National Association of Realtors, and existing home sales ~~increased 13.3%~~decreased 0.8% during the third calendar quarter of ~~2020~~2021 compared to the same period in the prior year;

•The unemployment rate ~~increased~~decreased to 4.6% as of October 2021 compared to 6.9% as of October 2020 ~~compared to 3.6% as of October 2019~~ according to data provided by the U.S. Department of Labor; ~~however,~~additionally, the unemployment rate decreased from ~~14.7%~~6.1% in April ~~2020;~~2021;

•Mortgage interest rates ~~decreased~~increased with a thirty-year fixed mortgage rate of approximately ~~2.81%~~3.14% in October ~~2020, a decrease~~2021, an increase of approximately 8833 basis points compared to the same period in the prior year, according to Freddie Mac; and

•Consumer sentiment as tracked by Thomson Reuters/University of Michigan decreased from ~~95.5 in October 2019 to~~ 81.8 in October ~~2020.~~2020 to 71.7 in October 2021.

The Company believes there is no single indicator that directly correlates with cabinet remodeling market activity. For this reason, the Company considers other factors in addition to those discussed above as indicators of overall market activity including credit availability, housing affordability and sales reported by the Kitchen Cabinet Manufacturers Association ~~(“KCMA”~~("KCMA"), a trade organization that issues the aggregate sales that have been reported by its members including the largest

cabinet manufacturers in the United States. Based on the totality of factors listed above, the Company believes that the cabinet remodeling market increased ~~in the low to~~ mid-single digits during the second quarter of fiscal ~~2021.~~ 2022.

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

The Company's remodeling sales, which consist of our independent dealer and distributor channel sales and home center retail sales, ~~increased 14.1%~~decreased 2.7% during the second quarter and ~~1.1%~~increased 6.2% during the first half of fiscal ~~2021~~2022 compared to the same prior-year period. Our independent dealer and distributor channel increased by ~~0.6%~~0.4% during the second quarter and ~~decreased 3.6%~~3.3% during the first half of fiscal ~~2021~~2022 compared to the comparable prior-year period. Our home center channel ~~increased~~decreased by ~~18.0%~~3.5% during the second quarter and ~~2.4%~~increased 6.9% during the first half of fiscal ~~2021~~2022 compared to the comparable prior-year period.

New construction sales ~~decreased 7.4%~~increased 7.1% in the second quarter and ~~6.1% in~~7.8% during the first half of fiscal ~~2021,~~2022, compared to the same period of fiscal ~~2020.~~2021. The Company believes that fluctuations in single-family housing starts are the best indicator of new construction cabinet activity. Assuming a sixty to ninety day lag between housing starts and the installation of cabinetry, single-family housing starts increased ~~9.5%~~14.8% during the second quarter over the comparable prior year period, according to the U.S. Department of Commerce. In comparison, housing completions increased 3.4% during the second quarter of fiscal ~~2021~~2022 over the comparable prior year ~~period.~~period, according to U.S. Department of Commerce. The Company believes we are ~~seeing~~continuing to see a temporary shift to extend the ~~upper side of the sixty~~lag from 90 days to ~~ninety day lag and that we are tracking to market demand on a unit basis within made-to-order framed builder direct, which was offset by price, mix and declines in our frameless business.~~

The Company’s total net sales increased 4.8% during the second quarter and decreased 2.0% during the first half of fiscal 2021 compared to the same prior-year period, which was driven primarily by growth in the home center channel offset by declines in our new construction channel, primarily within our frameless business.

In the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, the Company implemented nationwide reductions in force, which were substantially completed in the fourth quarter of fiscal 2020 and first quarter of fiscal 2021, respectively. During June 2020, the Company's Board of Directors approved the closure and eventual disposal of its manufacturing plant located in Humboldt, Tennessee. The Company expects to recognize substantially all of the costs related to the closure of the Humboldt facility during fiscal 2021. The Company recorded restructuring charges, net related to these two actions for the three- and six-months ended October 31, 2020 of $2.8 million and $6.3 million, respectively.120 days or longer.

The Company earned net income of ~~$22.3~~$2.0 million for the second quarter of fiscal ~~2021,~~2022, compared with ~~$22.2~~$23.1 million in the second quarter of its prior fiscal year, and earned net income of ~~$38.7~~$5.0 million for the first ~~half~~six months of fiscal ~~2021,~~2022, compared with ~~$49.0~~$39.2 million in the same period of the prior year.

Results of Operations


		Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
		October 31,						October 31,							October 31,						October 31,
(in thousands)	(in thousands)	2020		2019		Percent Change		2020		2019		Percent Change		(in thousands)	2021		2020		Percent Change		2021		2020		Percent Change

Net sales	Net sales	$	448,583	$	428,016	4.8	%	$	838,670	$	855,381	(2.0)	%	Net sales	$	453,163	$	448,583	1.0	%	$	895,744	$	838,670	6.8	%
Gross profit	Gross profit	89,511		87,050		2.8		169,649		181,569		(6.6)		Gross profit	$	51,694	$	90,672	(43.0)	%	$	105,137	$	170,239	(38.2)	%
Selling and marketing expenses	Selling and marketing expenses	21,608		20,451		5.7		41,506		41,138		0.9		Selling and marketing expenses	$	21,568	$	21,608	(0.2)	%	$	44,555	$	41,506	7.3	%
General and administrative expenses	General and administrative expenses	30,229		29,900		1.1		60,212		59,332		1.5		General and administrative expenses	$	24,596	$	30,229	(18.6)	%	$	48,283	$	60,212	(19.8)	%

Net Sales. Net sales were ~~$448.6~~$453.2 million for the second quarter of fiscal ~~2021,~~2022, an increase of ~~4.8%~~1.0% compared with the second quarter of fiscal ~~2020.~~2021. For the first ~~six months~~half of fiscal ~~2021,~~2022, net sales were ~~$838.7~~$895.7 million, reflecting a ~~2.0% decrease~~6.8% increase compared to the same period of fiscal ~~2020.~~2021. The Company experienced ~~double digit~~ growth in the ~~repair and remodel sales~~new construction channel during the second quarter ~~of fiscal 2021~~ offset by declines in the ~~new construction markets, which were negatively impacted by COVID-19.~~remodel channel. The first half of fiscal ~~2021~~2022 experienced ~~single digit~~ growth ~~in our home center sales offset by declines in our dealer distributor and new construction sales~~across all channels.

Gross Profit. Gross profit margin for the second quarter of fiscal ~~2021~~2022 was ~~20.0%~~11.4% compared with 20.2% for the same period of fiscal 2021. Gross profit margin for the first half of fiscal 2022 was 11.7%, compared with 20.3% for the same period of fiscal ~~2020. Gross profit margin for the first half of fiscal 2021 was 20.2%, compared with 21.2% for the same period of fiscal 2020.~~2021. Gross profit margin in the second quarter and first half of the current fiscal year was negatively impacted by higher material and logistics costs, and increases related to ~~wage and retention programs. This was~~healthcare expenses. These increased costs were partially offset by ~~the leverage of our fixed expenses and a one-time benefit received~~an increase in sales in the first quarter ~~related to Employee Retention Credit of $0.8 million. Gross profit margin in the~~and first

half of fiscal ~~2021 was impacted by higher material and logistics costs, with costs related to wage and retention programs and the deleveraging of our fixed costs due to lower sales.~~2022.

Selling and Marketing Expenses. Selling and marketing expenses were 4.8% of net sales in both the second quarter of fiscal 2022 and ~~4.9%~~the same period in fiscal 2021. Selling and marketing expenses were 5.0% of net sales in the first half of fiscal ~~2021,~~2022, compared with ~~4.8%~~4.9% of net sales for ~~each of~~ the same ~~periods~~period in fiscal 2020. Selling and marketing expenses as a percentage of net sales remained flat during the second quarter and first half of fiscal 2021 as a result of higher launch costs and incentive expenses offset with a one-time benefit received in the quarter related to Employee Retention Credit of $1.7 million, and leverage created from higher sales in the second quarter of fiscal 2021.

General and Administrative Expenses. General and administrative expenses were 5.4% of net sales in the second quarter of fiscal 2022, compared with 6.7% of net sales in the second quarter of fiscal ~~2021, compared with 7.0% of net sales in the second quarter of fiscal 2020.~~2021. General and administrative expenses were ~~7.2%~~5.4% of net sales in the first half of fiscal ~~2021,~~2022, compared with ~~6.9%~~7.2% of net sales in the same period of fiscal ~~2020. The~~2021.The decrease in general and administrative expenses as a percentage of net sales during the second quarter and first half of fiscal 2022 was driven by the leverage from higher sales, lower ~~spending, impacts~~employee incentive costs, and lack of ~~our actions taken~~severance costs that occurred in the first quarter of fiscal 2021 and an Employee Retention Credit of $0.4 million, offset by a one-time legal charge of $1.5 million (more fully described in Note R). The increase in general and administrative expenses for the first half of fiscal 2021 was a result of the deleveraging from lower sales, higher incentive costs, severance costs that were not part of the previously announced restructurings and a one-time legal charge of $1.5 million offset by lower spending, the impacts of our actions taken in the first fiscal quarter and an Employee Retention Credit of $0.4 million.2021.

Effective Income Tax Rates. The ~~Company’s~~ effective income tax rate for the three- and six-month ~~periods~~period ended October 31, ~~2020~~2021 was ~~25.5%~~12.1% and ~~26.0%~~23.1%, ~~respectively,~~respectivley, compared with ~~26.1%~~25.5% and 26.0% in the comparable ~~periods~~period in the prior fiscal year. The ~~decrease in the~~ effective ~~tax rate~~rates for the ~~second quarter of fiscal~~three-and six-month periods ended October 31, 2021 ~~as compared to~~were lower than the comparable period in the prior fiscal year ~~was primarily~~ due to ~~less unfavorable permanent tax items.~~the impact of discrete items on lower pretax income.

Non-GAAP Financial Measures. We have reported our financial results in accordance with 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~~period's results against the corresponding prior ~~period’s~~period's results. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the ~~Company’s~~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.

~~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 subsequent restructuring charges, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles and trademarks, (4) net gain on debt forgiveness and modification and (5) the tax benefit of RSI acquisition expenses and subsequent restructuring charges, the net gain on debt forgiveness and modification and the amortization of customer relationship intangibles and trademarks. The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods. Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability and we have also received similar feedback from some of our investors regarding the same.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin

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

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

Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents
Three Months Ended Six Months Ended
October 31, October 31,
(in thousands) 2020 2019 2020 2019
Net income (GAAP) $ 22,256 $ 22,163 $ 38,741 $ 49,044
Add back:
Income tax expense 7,627 7,815 13,597 17,272
Interest expense, net 5,981 7,436 12,011 15,524
Depreciation and amortization expense 13,019 12,164 25,978 24,027
Amortization of customer relationship intangibles and
trademarks 12,250 12,250 24,500 24,500
EBITDA (Non-GAAP) $ 61,133 $ 61,828 114,827 130,367
Add back:
Acquisition and restructuring related expenses (1) 61 (130) 121 (89)
Non-recurring restructuring charges (2) 2,791 — 6,251 —
Change in fair value of foreign exchange forward contracts (3) (566) (152) (1,821) (96)
Stock-based compensation expense 1,266 1,178 2,227 2,075
Loss on asset disposal 286 151 332 217
Adjusted EBITDA (Non-GAAP) $ 64,971 $ 62,875 121,937 132,474
Net Sales $ 448,583 $ 428,016 $ 838,670 $ 855,381
Adjusted EBITDA margin (Non-GAAP) 14.5 % 14.7 % 14.5 % 15.5 %

Adjusted EPS per diluted share

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


Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
	Three Months Ended						Six Months Ended
	October 31,						October 31,
(in thousands)	2021			2020			2021			2020

Net income (GAAP)	$	2,030		$	23,122		$	5,011		$	39,181
Add back:
Income tax expense	280			7,922			1,509			13,747
Interest expense, net	2,360			5,981			4,533			12,011
Depreciation and amortization expense	12,921			13,019			25,946			25,978
Amortization of customer relationship intangibles and
trademarks	11,417			12,250			22,834			24,500
EBITDA (Non-GAAP)	$	29,008		$	62,294		59,833			115,417
Add back:
Acquisition and restructuring related expenses (1)	20			61			40			121
Non-recurring restructuring charges (2)	(3)			2,791			310			6,251

Change in fair value of foreign exchange forward contracts (3)	520			(566)			170			(1,821)

Stock-based compensation expense	1,216			1,266			2,393			2,227
Loss on asset disposal	36			286			151			332
Adjusted EBITDA (Non-GAAP)	$	30,797		$	66,132		62,897			122,527

Net Sales	$	453,163		$	448,583		$	895,744		$	838,670
Net income margin (GAAP)	0.4		%	5.2		%	0.6		%	4.7		%
Adjusted EBITDA margin (Non-GAAP)	6.8		%	14.7		%	7.0		%	14.6		%

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

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

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

A reconciliation of Adjusted EBITDA and Adjusted EBITDA margin as projected for fiscal ~~2021~~2022 is not provided because we do not forecast net income as we cannot, without unreasonable effort, estimate or predict with certainty various components of net income.

Adjusted EBITDA. Adjusted EBITDA for the second quarter of fiscal ~~2021~~2022 was ~~$65.0~~$30.8 million or ~~14.5%~~6.8% of net sales compared to ~~$62.9~~$66.1 million or 14.7% of net sales for the same quarter of the prior fiscal year. Adjusted EBITDA for the first half of fiscal ~~2021~~2022 was ~~$121.9~~$62.9 million or ~~14.5%~~7.0% of net sales compared to ~~$132.5~~$122.5 million or ~~15.5%~~14.6% of net sales for the same period of the prior fiscal year. The ~~increase~~decrease in Adjusted EBITDA for the second quarter and first half of fiscal ~~2021~~2022 is primarily due to ~~increased sales, leveraging of fixed costs across the Company, lower spending and positive impacts of the actions taken in the first fiscal quarter of 2021.The decrease in Adjusted EBITDA for the first half of fiscal 2021 is primarily~~decreased net income due to ~~a decrease in sales due to COVID-19~~higher material and ~~deleveraging of our fixed costs.~~logistics costs, as well as increased healthcare expenses.

2524


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)	2020		2019		2020		2019		(in thousands, except share data)	2021		2020		2021		2020

Net income (GAAP)	Net income (GAAP)	$	22,256	$	22,163	$	38,741	$	49,044	Net income (GAAP)	$	2,030	$	23,122	$	5,011	$	39,181
Add back:	Add back:									Add back:
Acquisition and restructuring related expenses	Acquisition and restructuring related expenses	61		$	(130)	121		(89)		Acquisition and restructuring related expenses	20		$	61	40		121

Non-recurring restructuring charges	Non-recurring restructuring charges	2,791		$	—	6,251		—		Non-recurring restructuring charges	(3)		$	—	310		6,251
Amortization of customer relationship intangibles and trademarks	Amortization of customer relationship intangibles and trademarks	12,250		$	12,250	24,500		24,500		Amortization of customer relationship intangibles and trademarks	11,417		$	12,250	22,834		24,500

Tax benefit of add backs	Tax benefit of add backs	(3,850)		$	(3,103)	(7,903)		(6,200)		Tax benefit of add backs	(3,100)		$	(3,850)	(6,167)		(7,903)
Adjusted net income (Non-GAAP)	Adjusted net income (Non-GAAP)	$	33,508	$	31,180	$	61,710	$	67,255	Adjusted net income (Non-GAAP)	$	10,364	$	34,374	$	22,028	$	62,150

Weighted average diluted shares	Weighted average diluted shares	17,047,296		16,955,835		17,036,652		16,932,236		Weighted average diluted shares	16,605,911		17,047,296		16,662,791		17,036,652
EPS per diluted share (GAAP)										EPS per diluted share (GAAP)	$	0.12	$	1.36	$	0.30	$	2.30
Adjusted EPS per diluted share (Non-GAAP)	Adjusted EPS per diluted share (Non-GAAP)	$	1.97	$	1.84	$	3.62	$	3.97	Adjusted EPS per diluted share (Non-GAAP)	$	0.62	$	2.02	$	1.32	$	3.65

Outlook. The impact on our ~~fiscal 2021~~ financial results ~~as a result of~~from the COVID-19 pandemic ~~are~~as well as material and logistical constraints in addition to the availability, retention, and cost of labor continue to be uncertain.The ~~Company’s~~Company's net sales were up ~~4.8%~~6.8% during the first half of fiscal 2022 and we expect full year fiscal 2022 sales to be high single digit growth over the prior year. Margins will continue to be below historical norms for the next two quarters due to continued inflationary, logistic and labor challenges; however, our expectation is that margins will improve sequentially throughout the remainder of the year as pricing actions are fully realized. The inflationary costs incurred through the first quarter of fiscal 2022 will be mostly offset with our second round of price increases across all of our sales channels which were completed during the second quarter of fiscal ~~2021.~~2022. Given the lag on pricing realization, it takes, on average, three to six months to realize price increases to fully offset the cost impact of the inflationary pressures. The negative trend on margins could continue as we still do not know the full impact of the pandemic and are partially dependent on macro-economic factors to stabilize. The Company ~~currently expects that sales will reflect mid to upper single digit growth in the third quarter of fiscal 2021 versus the same period of the prior year.~~This growth rate is very dependent upon overall industry and economic growth, both of which are subject to the ever-changing COVID-19 environment. Margins will be challenged with increases in labor costs and product launch costs.~~The Company expects adjusted EBITDA margins for the third quarter of fiscal 2021 to increase compared to the same period of the prior year.The Company has taken actions to improve its cash position and as of October 31, 2020~~ had ~~$112.6~~$8.0 million of cash on hand as of October 31, 2021 and access to ~~$93.0~~$233.0 million of additional availability under ~~its~~our revolver.~~We will continue~~ In the remainder of fiscal 2022, the Company plans to ~~monitor the situation closely and may implement further measures to provide additional financial flexibility as we work to protect~~maintain our cash position near historical norms and ~~liquidity.~~may consider additional debt repayments and share repurchases. We plan to continue our investment back into the business by maintaining our prior outlook on our capital investment rate of approximately 3.5% of net sales for the full fiscal year.

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

Additional risks and uncertainties that could affect the ~~Company’s~~Company's results of operations and financial condition are discussed elsewhere in this report, including under ~~“Forward-Looking~~"Forward-Looking Statements,”" and elsewhere in ~~“Management’s~~"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, ~~2020,~~2021, including under Item 1A. ~~“Risk~~"Risk Factors,”" Item 7. ~~“Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of Operations,”" and Item 7A. ~~“Quantitative~~"Quantitative and Qualitative Disclosures about Market Risk.”"

Liquidity and Capital Resources

The ~~Company’s~~Company's cash and cash equivalents totaled ~~$112.6~~$8.0 million at October 31, ~~2020,~~2021, representing a ~~$15.5~~$83.1 million ~~increase~~decrease from its April 30, ~~2020 levels.~~2021 levels primarily due to $10.2 million use of cash from operations in the first six months of fiscal 2022 compared with a generation of $76.6 million of cash in the same period of the prior year, $25.0 million of share repurchases, $22.1 million in payments to acquire property, plant, and equipment, and $19.7 million of net debt pay down. At October 31, ~~2020,~~2021, total long-term debt (including current maturities) was ~~$558.0~~$503.6 million, a decrease of ~~$39.1~~$18.2 million from its balance at April 30, ~~2020.~~2021. The ~~Company’s~~Company's ratio of long-term debt to total capital was ~~42.7%~~40.3% at October 31, ~~2020,~~2021, compared with ~~45.9%~~40.4% at April 30, ~~2020.~~2021.

The ~~Company’s~~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 ~~$100~~$500 million under the Revolving Facility. Approximately ~~$93.0~~$233.0 million was available under this facility as of October 31, ~~2020.~~2021.

On April 22, 2021, the Company amended and restated the Prior Credit Agreement.The amended and restated credit agreement (the "A&R Credit Agreement") provides for a $500 million revolving loan facility with a $50 million sub-facility for the issuance of letters of credit (the "Revolving Facility") and a $250 million term loan facility (the "Term Loan Facility").Also on April 22, 2021, the Company borrowed the entire $250 million under the Term Loan Facility and approximately $264 million under the Revolving Facility to fund, in part, the repayment in full of the amounts then outstanding under the Prior Credit Agreement and the redemption of the Senior Notes.The Company is required to repay the Term Loan Facility in specified quarterly installments.The Revolving Facility and Term Loan Facility mature on April 22, 2026.

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. We were in compliance with all the covenants under the A&R Credit Agreement as of October 31, 2021.

As of October 31, ~~2020, $102.0~~2021, $237.5 million was outstanding on ~~each of~~ the ~~Initial~~ Term Loan Facility and ~~the Delayed Draw Term Loan for a total of $204.0 million. Amounts~~$258 million was outstanding under the ~~Credit Facilities bear interest based on a fluctuating rate measured by reference to either, at the Company’s option, a base rate plus an applicable margin ranging between 0.00% and 1.00% or~~

LIBOR plus an applicable margin ranging between 1.00% and 2.00%, with the applicable margin being determined by reference to the Company’s then-current “Total Funded Debt to EBITDA 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 “Total Funded Debt to EBITDA Ratio.”~~Facility. As of October 31, ~~2020,~~2021, the applicable margin with respect to base rate loans and LIBOR loans was 0.50% and 1.50%, respectively, and the commitment fee was ~~0.175%~~0.15%.

The Company is required to repay the aggregate outstanding amounts under the Initial Term Loan and the Delayed Draw Term Loan in certain specified quarterly installments that began on April 30, 2018. The Credit Facilities mature on December 29, 2022.

As of October 31, 2020, the Company’s previously issued $350 million in aggregate principal amount of Senior Notes remained outstanding. Interest on the Senior Notes accrues at an annual rate of 4.875% and is payable semi-annually in arrears on March 15 and September 15 of each year. The Senior Notes mature on March 15, 2026.

The Credit Agreement and the indenture governing the Senior Notes restrict the ability of the Company and certain of the Company’s subsidiaries to, among other things, incur additional indebtedness, create additional liens, make certain investments, dispose of assets or engage in a merger or consolidation, engage in certain transactions with affiliates, and make certain restricted payments, including the payment of dividends or the repurchase or redemption of stock, subject, in each case, to the various exceptions and conditions described in the Credit Agreement and the indenture governing the Senior Notes.

See Note ~~L--~~L — Loans Payable and Long-Term Debt for ~~additional~~further information ~~about the Credit Facilities~~around our indebtedness and ~~Senior Notes and a discussion of our~~ compliance with ~~the covenants in the Credit Agreement and the indenture.~~covenants.

Cash ~~provided~~used by operating activities in the first six months of fiscal ~~2021~~2022 was ~~$76.6~~$10.2 million, compared with ~~$86.2~~cash provided by activities of $76.6 million in the comparable period of fiscal ~~2020.~~2021. The decrease in the ~~Company’s~~Company's cash from operating activities was driven primarily by a decrease in net income and cash outflows from inventories, customer receivables, accounts payable, accrued compensation and ~~inventories, offset by cash inflows from accounts payable.~~related expenses, and other accrued expenses.

The ~~Company’s~~Company's investing activities primarily consist of investment in property, plant and equipment and promotional displays. Net cash used for investing activities was ~~$18.9~~$27.1 million in the first six months of fiscal ~~2021,~~2022, compared with ~~$18.3~~$18.9 million in the comparable period of fiscal ~~2020. The increase in cash used was due to a decrease in cash received from maturities of certificates of deposit.~~2021.

During the first six months of fiscal ~~2021,~~2022, net cash used by financing activities was ~~$42.1~~$45.8 million, compared with ~~$74.2~~$42.1 million in the comparable period of the prior fiscal year. The ~~decrease~~increase in cash used during the first six months of fiscal 2022 was primarily driven by ~~the Company’s~~$25.0 million of share repurchases, as well as net payments of long-term debt of ~~$41.3~~$19.7 million in the first ~~half~~six months of fiscal ~~2021~~2022 compared with ~~$73.2~~$41.2 million in the prior year.

On ~~August 22, 2019,~~May 25, 2021, the ~~Company’s~~Company's Board of Directors (the ~~“Board”~~"Board") authorized a stock repurchase program of up to ~~$50~~$100 million of the ~~Company’s~~Company's common shares. Repurchases may be made from time to time in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms the Company deems appropriate and subject to the Company's cash requirements for other purposes, compliance with the covenants under the A&R Credit Agreement, ~~and the indenture governing the Senior Notes,~~ 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~~repurchased a total of ~~its~~299,781 common shares, for an aggregate purchase price of $25.0 million, during the first half of fiscal ~~quarter ended~~2022. As of October 31, ~~2020.~~2021, $75.0 million of funds remained available from the amounts authorized by the Board to repurchase the Company's common stock.

Cash flow from operations combined with accumulated cash and cash equivalents on hand are expected to be more than sufficient to support forecasted working capital requirements, service existing debt obligations and fund capital expenditures for the remainder of fiscal ~~2021.~~

2022.

Seasonal and Inflationary Factors

Our business has been subject to seasonal influences, with higher sales typically realized in our first and fourth fiscal quarters. General economic forces and changes in our customer mix have reduced seasonal fluctuations in revenue over the past few years. The costs of the ~~Company’s~~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~~Company's critical accounting policies as disclosed in the ~~Company’s~~Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020.~~2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

The ~~Revolving Facility, Initial Term Loan and Delayed Draw Term Loan include~~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, ~~2020~~2021 would increase our annual interest expense by approximately ~~$2.0~~$3.0 million. See Note L — Loans Payable and Long-Term Debtfor further discussion.

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

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

The Company does not currently use commodity or ~~interest rate derivatives or~~ similar financial instruments to manage its commodity price ~~or interest rate~~ 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, ~~2020.~~2021. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective.

There has been no change in the Company's internal control over financial reporting that occurred during the quarter ended October 31, ~~2020~~2021 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~~Company's business. The Company is not party to any material litigation that does not constitute ordinary, routine litigation incidental to its business.

Item 1A. Risk Factors

Risk factors that may affect the ~~Company’s~~Company's business, results of operations and financial condition are described in Part I, Item 1A, ~~“Risk Factors”~~"Risk Factors" of the ~~Company’s~~Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020~~2021 and there have been no material changes from the risk factors disclosed. Additional risks are discussed elsewhere in this report, including in ~~“Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations" under the headings ~~“Forward-Looking Statements”~~"Forward-Looking Statements" and ~~“Outlook.”~~"Outlook."

Item 6. Exhibits


Exhibit Number			Description

3.1 (a)			Articles of Incorporation as amended effective August 12, 1987 (incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~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~~Registrant's Form 8-K as filed on August 31, 2004; Commission File No. 000-14798).

3.2			Bylaws – as amended ~~and restated August 20, 2020~~effective February 22, 2021 (incorporated by reference to Exhibit 3.1 to the ~~Registrant’s~~Registrant's Form 8-K as filed on ~~August 21, 2020;~~February 23, 2021; Commission File No. 000-14798).

~~10.1(g)~~			Amendment No. 3, dated as of September 16, 2020, to the Credit Agreement, dated as of December 29, 2017, among American Woodmark Corporation, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent (filed herewith).

~~10.8(a)~~			~~Employment Agreement for Mr. M. Scott Culbreth (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K/A filed on August 25, 2020; Commission File No. 000-14798).~~

~~10.8(b)~~			~~Employment Agreement for Mr. Paul Joachimczyk (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K/A filed on August 25, 2020; Commission File No. 000-14798).~~

~~10.8(c)~~			~~Employment Agreement for Ms. Teresa M. May (incorporated by reference to Exhibit 10.8(c) to the Registrant’s Form 10-Q filed on August 26, 2020; Commission File No. 000-14798).~~

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

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

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

101			Interactive Data File for the ~~Registrant’s~~Registrant's Quarterly Report on Form 10-Q for the quarter ended October 31, ~~2020~~2021 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).

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SIGNATURES

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

AMERICAN WOODMARK CORPORATION

(Registrant)


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

			Date: November ~~24, 2020~~23, 2021
			Signing on behalf of the registrant and
			as principal financial and accounting officer

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