American Woodmark Corporation · NASDAQ:AMWD
American Woodmark — Investor Presentation (January 2024)
37 slides from American Woodmark's investor presentation, January 2024
Slide 1: Investor Presentation
Investor Presentation Updated: January 2024
Slide 2: Legal Disclosure
Legal Disclosure Forward-Looking Statements This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements as to expected future financial and operating results. These forward-looking statements may be
Slide 3: Table of Contents
Table of Contents American Woodmark at a Glance 5 Long-Term Strategy 12 Competitive Advantages 20 Financial Overview 28 3
Slide 4: Key Messages: Why Invest With Us?
Key Messages: Why Invest With Us? Leveraging market leadership in resilient value segment 1 of the U.S. cabinet market to drive deeper channel penetration Superior Service Platform is a key competitive advantage ingrained in 2 our growth strategy Our culture and connections deliver profitability thr
Slide 5: American Woodmark: At a Glance
American Woodmark: At a Glance Key Company Facts American Woodmark is a U.S. based pure play cabinet manufacturer highly focused on the resilient value segment of the U.S. market Winchester, VA ~8,900 Headquarters Team Members From inspiration to design and installation, we strive for simplification
Slide 6: Our Purpose Driven Culture Sustains Our Competitive Advantage
Our Purpose Driven Culture Sustains Our Competitive Advantage Mission Vision Values Create value through people: Uncover and celebrate Our CITE principles: the unique potential in every • Provide kitchens and baths of individual: • Customer Satisfaction pride for the American family • Community Conn
Slide 7: Our Leadership Team
Our Leadership Team Strong leadership with decades of experience and industry expertise Scott Culbreth Paul Joachimczyk Rob Adams Kim Coldiron President & Chief Senior Vice President & Senior Vice President, Senior Vice President & Executive Officer Chief Financial Officer Manufacturing & Chief Huma
Slide 8: Steady Evolution Has Strengthened Our Scale And Market Position
Steady Evolution Has Strengthened Our Scale And Market Position Raygold Industries Formation of relationships Acquisition of RSI Investment grows sales with Home Depot and solidified position in in manufacturing to $6M and is Lowe’s precedes the opening price capabilities in acquired by company’s IP
Slide 9: Tailwinds From Demographic Shifts and Undersupplied Housing Support Higher Levels of Future Residential Investment
Tailwinds From Demographic Shifts and Undersupplied Housing Support Higher Levels of Future Residential Investment U.S. Population Age 41-56 ~65 million (Gen X)1 Demographics and past underinvestment, combined with • Move up buyers; drives investment mobility and migration trends, provide strong mul
Slide 10: Aging U.S. Housing Stock Is An Important Repair & Remodeling Leading Indicator
Aging U.S. Housing Stock Is An Important Repair & Remodeling Leading Indicator Increasing Age in Years of U.S. Historically Stable Growth in U.S. Repair Housing Stock: 2011 vs 20211 & Remodel (R&R) Expenditures ($B)2,3 600 28-year CAGR of ~5% 500 400 300 200 100 0 11 or less 12 to 21 22 to 31 32 to
Slide 11: Building On a Solid Foundation to Accelerate Adjusted EBITDA Growth
Building On a Solid Foundation to Accelerate Adjusted EBITDA1 Growth Efficiently aligning our scaled platform with a favorable long-term growth outlook by providing quality solutions and executing our “GDP” strategy EBITDA Long Term Target >$350M1,4 Growth Where We Are Targeting growth in excess of
Slide 12: Long-term Strategy: "GDP"
Long-term Strategy: “GDP” 12
Slide 13: "GDP": Our Economic Engine To Drive Growth & Margin Expansion
“GDP”: Our Economic Engine To Drive Growth & Margin Expansion Our “GDP” Strategy is the lens we view long-term decision-making through, enabling growth and profitability through the cycle Growth Digital Transformation Platform Design Product Innovation One American Woodmark Customer Experience (CX)
Slide 14: Growth: Maximize Our Market Opportunity Through Key Growth Pillar Initiatives
Growth: Maximize Our Market Opportunity Through Key Growth Pillar Initiatives Highly Fragmented Key Growth Drivers Market Opportunity Kitchen & Bath Cabinet Industry1 Product Innovation and Expand Channel Capacity Investments Opportunities Top 3 • Accelerating growth through product • Simple Trends
Slide 15: Case Study: Adapting Our Offerings To Add Value And Accelerate Growth
Case Study: Adapting Our Offerings To Add Value And Accelerate Growth Builder Channel Opportunity • Builders increasingly look to suppliers to find ways to improve new home affordability • Demographic shifts drive more first-time home buyers Outcome further accelerating the need for value-oriented o
Slide 16: Digital Transformation: Customer Experience and Drive Efficiencies
Digital Transformation: Customer Experience and Drive Efficiencies Strengthening Our Competitive Advantage and Profitability by Leveraging Digital Capabilities Unlock Efficiencies Through Increase Consumer Centric One American Woodmark Approach to Digital Marketing • Enterprise Resource Planning and
Slide 17: Digital Transformation Case Study: Digital Marketing Platform
Digital Transformation Case Study: Digital Marketing Platform Digital Lead Generation • Kitchen & Bath retailers in the dealer channel are key growth drivers with billions in cabinetry sales • Local retailers often rely on advertising methods with limited reach due to budget constraints American Woo
Slide 18: Platform Design: Leverage Complexity Reduction and Operational Excellence to Drive Margin Improvement
Platform Design: Leverage Complexity Reduction and Operational Excellence to Drive Margin Improvement Complexity Reduction and Operational Excellence and Significant Opportunity Customer Experience Systems Thinking For Margin Expansion • Localize capacity needs and position • Increase use of high-qu
Slide 19: Creating Manufacturing Centers of Excellence to Meet Growing Demand
Creating Manufacturing Centers of Excellence to Meet Growing Demand Greenfield Expansion of Monterrey, MX Hamlet, NC Facility Facility Expected Completion: Completed in: Q4 FY24 Q3 FY24 Highlights: Highlights: • Strategically located components capacity • Creates a new Bath Manufacturing Center of E
Slide 20: Competitive Advantages
Competitive Advantages
Slide 21: How We Win: By Providing a Superior Customer Experience Across Our Targeted Product Offerings
How We Win: By Providing a Superior Customer Experience Across Our Targeted Product Offerings with a Focus on Value Market Product Channels & Customers Customer Experience Objective Be the preeminent kitchen and Innovation focus on a relevant, Win in the value segment by selling Create differentiate
Slide 22: U.S. Centric Revenue Profile with Significant Scale and Operational Capabilities in Key Growth Regions
U.S. Centric Revenue Profile with Significant Scale and Operational Capabilities in Key Growth Regions Proximity to customers enhances our service capabilities and improves overall speed and customer experience Strategically located manufacturing facilities is a critical cost and logistics different
Slide 23: Positioned to Capture Outsized Growth Towards Affordable Offerings
Positioned to Capture Outsized Growth Towards Affordable Offerings New Construction1 Home Center1 Dealer1 E-commerce1 Market Size $5.8 B Market Size $3.2 B Market Size $7.5 B Market Size ~$1.2 B 15% 24% 2% 9% Approximate American Woodmark Market Share2 Cabinet Market Channel Total Domestic Market of
Slide 24: Market Shifting to Value Offering Plays into Our Core Competency
Market Shifting to Value Offering Plays into Our Core Competency High Custom Made-to-Stock • Provide less cyclical growth with affordable, high-quality products Semi-Custom Wide range of • Lean, on trend, and relevant offerings personalization options help drive operational excellence and supply cha
Slide 25: Our Leading Brands Reinforce Long-Term Customer Relationships
Our Leading Brands Reinforce Long-Term Customer Relationships and Allow Us To Capitalize On Emerging Trends Leading Brands Builders Home Centers Dealer/Distributor/E-Commerce Relationships with 40+ year ~1,800+ 19 of top 20 builders relationships customers 25
Slide 26: Case Study: Superior Service Platform
Case Study: Superior Service Platform Builder Channel Opportunity • Builders seek to provide superior service to maximize positive customer experiences from purchase decision to install • Cabinetry is one of the most essential parts of the home, and one of the most complicated aspects to plan Outcom
Slide 27: Commitment to Sustainability Supports Our People and Our Brand
Commitment to Sustainability Supports Our People and Our Brand Three Main Focus Areas Guide Our Path to Sustainability 2030 Our Team Members Carbon Footprint The Planet Leveraging Our Deploying Innovation to Reduce Reducing Waste and Assuring a Greatest Resource Emissions and Fuel Consumption Respon
Slide 28: Financial Overview
Financial Overview
Slide 29: Leveraging Our Strategy And Long-Term Housing Tailwinds To Drive Strong Adjusted EBITDA Growth
Leveraging Our Strategy And Long-Term Housing Tailwinds To Drive Strong Adjusted EBITDA Growth 5-6% 6-7% Maintaining Strong Free Cash Flow FY28E Five Year CAGR FY28E Five Year CAGR Closed over half the gap in FY23 to reach FY28 ~$2,500 >$350 $153 >$150 $1,934 $264 LTM FY28E LTM FY28E FY23 FY28E Net
Slide 30: Powerful Cash Engine Supports Our Capital Deployment Priorities And Fuels Our Strategy
Powerful Cash Engine Supports Our Capital Deployment Priorities And Fuels Our Strategy Free Cash Flow1 ($M) Capital Allocation Priorities Strong Balance Sheet Next 5 Years Est. Capital Deployment >$1.0B Net Debt/Adj. EBITDA1 $520 $500 4.2x 3.5x Target leverage: Growth Capex 2.6x Significant 2.1x <1.
Slide 31: Key Takeaways
Key Takeaways A compelling investment opportunity with a purpose driven culture and 1 clearly defined “GDP” strategy 2 A track record of attractive growth with long-term industry tailwinds and strong market position in our core value segment Investments in supply chain, production capabilities, and
Slide 32: Appendix
Appendix
Slide 33: Additional Disclosures
Additional Disclosures 1 The projections herein are based on a number of assumptions and estimates that are inherently subject to business, economic and competitive uncertainties and contingencies, many of which are beyond our control. See page 2 of this presentation for a discussion of the risks an
Slide 34: Appendix A
Appendix A Adjusted EBITDA, and Adjusted EBITDA margin Definition 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.
Slide 35: Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents
Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents LTM Adjusted EBITDA and Adjusted EBITDA Margin (in Year ended Year ended Year ended Year ended Year ended Year ended Year ended October 31, thousands) April 30, 2013 April 30, 2018 April 30, 2019 April 30, 2020 April 30,
Slide 36: Additional Definitions
Additional Definitions Free cash flow To better understand trends in our business, we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays from cash flows from continuing op
Slide 37: Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents
Reconciliation of Adjusted Non-GAAP Financial Measures to the GAAP Equivalents Free Cash Flow (in thousands) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cash provided by operating activities $ 40,535 $ 58,737 $ 71,778 $ 77,080 $ 86,775 $ 190,845 $ 177,542 $ 151,763 $ 24,445 $ 196,727 Less: Cap
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