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Summary of Significant Accounting Policies | 12 Months Ended
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Apr. 30, 2022
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies American Woodmark Corporation ("American Woodmark," the "Company," "we," "our" or "us") 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. The Company operates within a single reportable segment primarily within the U.S.; long-lived assets and sales outside the U.S. are not significant. The following is a description of the Company's significant accounting policies: Principles of Consolidation and Basis of Presentation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Revenue Recognition: Our principal performance obligations are the sale of kitchen, bath, and home organization products. The Company recognizes revenue as control of our products is transferred to our customers, which is at the time of shipment or upon delivery based on the contractual terms with our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties are recognized as expense when the products are sold. See Note L — Commitments and Contingencies for further discussion. When revenue is recognized, we record estimates to reduce revenue for customer programs and incentives in order to determine the amount of consideration the Company will ultimately be entitled to receive. Customer programs and incentives are considered variable consideration, and include price discounts, volume-based incentives, promotions, and cooperative advertising. The Company includes variable consideration in revenue only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. This determination is made based upon known customer programs and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated each reporting period. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. We account for shipping and handling costs that occur before the customer has obtained control of a product as a fulfillment activity rather than as a promised service. These costs are classified within costs of sales and distribution. Cost of Sales and Distribution: Cost of sales and distribution includes all costs associated with the manufacture and distribution of the Company's products including the costs of shipping and handling. Advertising Costs: Advertising costs are expensed as incurred. Advertising expenses for fiscal years 2022, 2021, and 2020 were $32.6 million, $34.1 million, and $33.9 million, respectively. Cash and Cash Equivalents: Cash in excess of operating requirements is invested in money market accounts which are carried at cost (which approximates fair value). The Company considers all highly liquid short-term investments with an original maturity of three months or less when purchased to be cash equivalents. Inventories: On 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. As of April 30, 2022 and 2021, inventories accounted for under the LIFO method would have represented approximately 44%, and 43%, respectively, of the Company's total inventories during each of the respective periods. We believe this change in accounting method is preferable as it: (i) results in a uniform method to value our inventory across the entire organization; (ii) improves comparability with our peers; (iii) is expected to better reflect the current value of inventory on the consolidated balance sheets and would result in a better matching of revenue and expense, and (iv) is reflective of the physical flow of inventory. All prior periods presented in the Consolidated Financial Statements have been retrospectively adjusted to apply the effects of the change in accounting method from the LIFO method to FIFO method of accounting. As of April 30, 2021, the cumulative effect of the change increased inventories by $17.9 million, partially offset by $4.5 million in deferred income taxes resulting in an impact to retained earnings of approximately $13.3 million. There was no impact on total cash provided by operating activities for the periods presented as a result of this change. The impact of the change in accounting method to net earnings was $1.9 million in fiscal 2022. As a result of the change in accounting method, the Company now uses the FIFO method of inventory costing across the entire organization. Costs include materials, labor, and production overhead at normal production capacity. Costs do not exceed net realizable values. See Note C — Inventories for additional information. The following tables reflect the effect of the change in accounting method on our current period Consolidated Financial Statements (in thousands except for per share amounts):
Consolidated Statement of Income for the year ended April 30, 2022
| As Computed under previous method |  | Effect of Change |  | As Reported under FIFO
Cost of sales and distribution | $ | 1,633,255 |  |  | $ | (2,513) |  |  | $ | 1,630,742 |
Gross Profit | $ | 223,931 |  |  | $ | 2,513 |  |  | $ | 226,444 |
Operating Income | $ | 33,646 |  |  | $ | 2,513 |  |  | $ | 36,159 |
Income (Loss) Before Income Taxes | $ | (45,492) |  |  | $ | 2,513 |  |  | $ | (42,979) |
Income tax expense (benefit) | $ | (13,913) |  |  | $ | 656 |  |  | $ | (13,257) |
Net Income (Loss) | $ | (31,579) |  |  | $ | 1,857 |  |  | $ | (29,722) |
Net earnings (loss) per share, basic | $ | (1.90) |  |  | $ | 0.11 |  |  | $ | (1.79) |
Net earnings (loss) per share, diluted | $ | (1.90) |  |  | $ | 0.11 |  |  | $ | (1.79) |
Consolidated Balance Sheet as of April 30,2022
| As Computed under previous method |  | Effect of Change |  | As Reported under FIFO
Inventories | $ | 225,746 |  |  | $ | 2,513 |  |  | $ | 228,259 |
Total current assets | $ | 426,144 |  |  | $ | 2,513 |  |  | $ | 428,657 |
Total assets | $ | 1,629,983 |  |  | $ | 2,513 |  |  | $ | 1,632,496 |
Other accrued expenses | $ | 19,584 |  |  | $ | 656 |  |  | $ | 20,240 |
Total current liabilities | $ | 215,572 |  |  | $ | 656 |  |  | $ | 216,228 |
Retained earnings | $ | 397,577 |  |  | $ | 1,857 |  |  | $ | 399,434 |
Total shareholders' equity | $ | 771,026 |  |  | $ | 1,857 |  |  | $ | 772,883 |
Total liabilities and shareholders' equity | $ | 1,629,983 |  |  | $ | 2,513 |  |  | $ | 1,632,496 |
Consolidated Statement of Cash Flows for the year ended April 30, 2022
| As Computed under previous method |  | Effect of Change |  | As Reported under FIFO
Net Income (Loss) | $ | (31,579) |  |  | $ | 1,857 |  |  | $ | (29,722) |
Inventories | $ | (67,873) |  |  | $ | (2,513) |  |  | $ | (70,386) |
Income taxes receivable | $ | (6,862) |  |  | $ | 656 |  |  | $ | (6,206) |
Consolidated Statement of Shareholders' equity for the year ended April 30, 2022
| As Computed under previous method |  | Effect of Change |  | As Reported under FIFO
Net Income (Loss) | $ | (31,579) |  |  | $ | 1,857 |  |  | $ | (29,722) |
Total shareholders' equity | $ | 771,026 |  |  | $ | 1,857 |  |  | $ | 772,883 |
Consolidated Statement of Comprehensive income for the year ended April 30, 2022
| As Computed under previous method |  | Effect of Change |  | As Reported under FIFO
Net Income (Loss) | $ | (31,579) |  |  | $ | 1,857 |  |  | $ | (29,722) |
Total Comprehensive Income | $ | 33,214 |  |  | $ | 1,857 |  |  | $ | 35,071 |
As a result of the retrospective application of the change in accounting method, certain line items in our Consolidated Financial Statements and related notes were adjusted as follows:
Consolidated Statement of Income for the year ended April 30, 2021
| As Previously Reported |  | Effect of Change |  | As Adjusted
Cost of sales and distribution | $ | 1,424,739 |  |  | $ | (2,843) |  |  | $ | 1,421,896 |
Gross Profit | $ | 319,275 |  |  | $ | 2,843 |  |  | $ | 322,118 |
Operating Income | $ | 111,680 |  |  | $ | 3,058 |  |  | $ | 114,738 |
Income Before Income Taxes | $ | 77,435 |  |  | $ | 3,258 |  |  | $ | 80,693 |
Income tax expense | $ | 18,672 |  |  | $ | 828 |  |  | $ | 19,500 |
Net Income | $ | 58,763 |  |  | $ | 2,430 |  |  | $ | 61,193 |
Net earnings per share, basic | $ | 3.46 |  |  | $ | 0.15 |  |  | $ | 3.61 |
Net earnings per share, diluted | $ | 3.45 |  |  | $ | 0.14 |  |  | $ | 3.59 |
Consolidated Balance Sheet as of April 30, 2021
| As Previously Reported |  | Effect of Change |  | As Adjusted
Inventories | $ | 140,282 |  |  | $ | 17,885 |  |  | $ | 158,167 |
Total current assets | $ | 392,080 |  |  | $ | 17,885 |  |  | $ | 409,965 |
Total assets | $ | 1,636,514 |  |  | $ | 17,885 |  |  | $ | 1,654,399 |
Deferred income taxes | $ | 38,348 |  |  | $ | 4,543 |  |  | $ | 42,891 |
Retained earnings | $ | 434,940 |  |  | $ | 13,342 |  |  | $ | 448,282 |
Total shareholders' equity | $ | 742,896 |  |  | $ | 13,342 |  |  | $ | 756,238 |
Total liabilities and shareholders' equity | $ | 1,636,514 |  |  | $ | 17,885 |  |  | $ | 1,654,399 |
Consolidated Statement of Cash Flows for the year ended April 30, 2021
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 58,763 |  |  | $ | 2,430 |  |  | $ | 61,193 |
Deferred income taxes | $ | (13,668) |  |  | $ | 828 |  |  | $ | (12,840) |
Inventories | $ | (31,196) |  |  | $ | (3,258) |  |  | $ | (34,454) |
Consolidated Statement of Shareholders' equity for the year ended April 30, 2021
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 58,763 |  |  | $ | 2,430 |  |  | $ | 61,193 |
Total shareholders' equity | $ | 742,896 |  |  | $ | 13,342 |  |  | $ | 756,238 |
Consolidated Statement of Comprehensive income for the year ended April 30, 2021
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 58,763 |  |  | $ | 2,430 |  |  | $ | 61,193 |
Total Comprehensive Income | $ | 55,368 |  |  | $ | 2,430 |  |  | $ | 57,798 |
Consolidated Statement of Income for the year ended April 30, 2020
| As Previously Reported |  | Effect of Change |  | As Adjusted
Cost of sales and distribution | $ | 1,321,147 |  |  | $ | 2,624 |  |  | $ | 1,323,771 |
Gross Profit | $ | 329,186 |  |  | $ | (2,624) |  |  | $ | 326,562 |
Operating Income | $ | 132,262 |  |  | $ | (2,127) |  |  | $ | 130,135 |
Income Before Income Taxes | $ | 100,548 |  |  | $ | (1,620) |  |  | $ | 98,928 |
Income tax expense | $ | 25,687 |  |  | $ | (412) |  |  | $ | 25,275 |
Net Income | $ | 74,861 |  |  | $ | (1,208) |  |  | $ | 73,653 |
Net earnings per share, basic | $ | 4.43 |  |  | $ | (0.07) |  |  | $ | 4.36 |
Net earnings per share, diluted | $ | 4.42 |  |  | $ | (0.08) |  |  | $ | 4.34 |
Consolidated Statement of Cash Flows for the year ended April 30, 2020
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 74,861 |  |  | $ | (1,208) |  |  | $ | 73,653 |
Deferred income taxes | $ | (11,499) |  |  | $ | (412) |  |  | $ | (11,911) |
Inventories | $ | (4,486) |  |  | $ | 1,620 |  |  | $ | (2,866) |
Consolidated Statement of Shareholders' equity for the year ended April 30, 2020
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 74,861 |  |  | $ | (1,208) |  |  | $ | 73,653 |
Total shareholders' equity | $ | 700,538 |  |  | $ | 10,912 |  |  | $ | 711,450 |
Consolidated Statement of Comprehensive income for the year ended April 30, 2020
| As Previously Reported |  | Effect of Change |  | As Adjusted
Net income | $ | 74,861 |  |  | $ | (1,208) |  |  | $ | 73,653 |
Total Comprehensive Income | $ | 73,179 |  |  | $ | (1,208) |  |  | $ | 71,971 |
Consolidated Statement of Stockholders' equity for the year ended April 31, 2019
| As Previously Reported |  | Effect of Change |  | As Adjusted
Retained earnings as of April 30, 2019 | $ | 317,420 |  |  | $ | 12,120 |  |  | $ | 329,540 |
Total shareholders' equity as of April 30,2019 | $ | 620,353 |  |  | $ | 12,120 |  |  | $ | 632,473 |
Property, Plant and Equipment: Property, plant and equipment is stated on the basis of cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 15 to 30 years for buildings and improvements and 3 to 12 years for machinery and equipment. Assets under financing leases are amortized over the shorter of their estimated useful lives or the term of the related lease. Impairment of Long-Lived Assets: The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During fiscal years 2022, 2021, and 2020, the Company concluded no impairment existed. Goodwill: Goodwill represents the excess of purchase price over the fair value of net assets acquired. 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 the accounting standards, 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 more likely than not impaired, the entity is not required to take further action. However, if an entity concludes otherwise, 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. During fiscal years 2022, 2021, and 2020, the Company concluded no impairment existed. Intangible Assets: Intangible assets consist of customer relationship intangibles. The Company amortizes the cost of intangible assets over their estimated useful lives, six years, unless such lives are deemed indefinite. The Company reviews its intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During fiscal years 2022, 2021, and 2020, the Company concluded no impairment existed. Promotional Displays: The Company invests in promotional displays in retail stores to demonstrate product features, product and quality specifications, and to serve as a training tool for retail kitchen designers. The Company invests in these long-lived productive assets to provide the aforementioned benefits. The Company's investment in promotional displays is carried at cost less applicable amortization. Amortization is calculated using the straight-line method on an individual display basis over periods of 24 to 60 months (the estimated period of benefit). Promotional display amortization expense for fiscal years 2022, 2021, and 2020 was $10.0 million, $10.0 million, and $8.2 million, respectively, and is included in selling and marketing expenses. Income Taxes: The Company accounts for deferred income taxes utilizing the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effects of temporary differences between the financial statement amounts and the tax basis of assets and liabilities, using enacted tax rates in effect for the year in which these items are expected to reverse. At each reporting date, the Company evaluates the need for a valuation allowance to adjust deferred tax assets and liabilities to an amount that more likely than not will be realized. Pensions: Prior to April 30, 2020, the Company had two non-contributory 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 hourly and salaried defined benefit pension plans. Effective April 30, 2020, these plans were merged into one plan, the American Woodmark Corporation Employee Pension Plan (the "Pension Plan"). The Company recognizes the overfunded or underfunded status of its defined benefit pension plan, measured as the difference between the fair value of plan assets and the benefit obligation, in its consolidated balance sheets. The Company also recognizes the actuarial gains and losses and the prior service costs, credits and transition costs as a component of other comprehensive loss, net of tax. Effective December 31, 2020 (the "Plan Termination Date"), the Pension Plan was terminated in a standard termination and benefits were distributed on December 2, 2021. Stock-Based Compensation: The Company recognizes stock-based compensation expense based on the grant date fair value over the requisite service period. The Company records the expense for stock-based compensation awards subject to performance-based criteria vesting over the remaining service period when the Company determines that achievement of the performance criteria is probable. The Company evaluates when the achievement of performance-based criteria is probable based on the expected satisfaction of the performance criteria at each reporting date. Self Insurance: The Company is self-insured for certain costs related to employee medical coverage, workers' compensation liability, general liability, auto liability, and property insurance. The Company maintains stop-loss coverage with third-party insurers to limit total exposure. The Company establishes a liability at each balance sheet date based on estimates for a variety of factors that influence the Company's ultimate cost. In the event that actual experience is substantially different from the estimates, the financial results for the period could be adversely affected. The Company believes that the methodologies used to estimate insurance liabilities are an accurate reflection of the liabilities as of the date of the consolidated balance sheets. Derivative Financial Instruments: The Company uses derivatives as part of the normal business operations to manage its exposure to fluctuations in interest rates associated with variable interest rate debt and foreign exchange rates. The Company has established policies and procedures that govern the risk management of these exposures. The primary objective in managing these exposures is to add stability to interest expense, manage the Company's exposure to interest rate movements, and manage the risk from adverse fluctuations in foreign exchange rates. The Company uses interest rate swap contracts to manage interest rate exposures. The Company records derivatives in the condensed consolidated balance sheets at fair value. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income (loss), and subsequently reclassified into earnings in the period the hedged forecasted transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings. The Company also manages risks through the use of foreign exchange forward contracts. The Company recognizes its outstanding forward contracts in the condensed consolidated balance sheets at their fair values. The Company does not designate the forward contracts as accounting hedges. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the condensed consolidated statements of income. Use of Estimates: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements: 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 deferred taxes for 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 became effective for the Company beginning May 1, 2021. The Company has reviewed the provisions of this new pronouncement and the adoption of this guidance did not have an impact on the Company's consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU 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 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 consolidated financial statements. Reclassifications: Certain reclassifications have been made to prior period balances to conform to the current year presentation.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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