Margin Expansion Drives Improved Fiscal
2016 Results
Quanex Building Products Corporation
(NYSE:NX) (“Quanex” or the “Company”) today announced its results
for the quarter and fiscal year ended October 31, 2016.
Fourth Quarter 2016
Highlights
- Net sales increased 27% to $249.2 million compared to $195.5
million in Q4 2015
- Income from continuing operations of $5.4 million, primarily
impacted by $12.6 million non-cash goodwill impairment related to
U.S. vinyl profiles business, compared to income from continuing
operations of $9.9 million in Q4 2015
- Adjusted EBITDA increased 14% to $34.6 million versus $30.4
million in Q4 2015
- Bank debt reduced by approximately $32 million in the
quarter
Fiscal Year 2016 Highlights
- Net sales increased 44% to $928.2 million compared to $645.5
million in 2015
- Loss from continuing operations of $1.9 million, largely
impacted by $16.7 million interest expense related to the debt
refinancing and $12.6 million non-cash goodwill impairment related
to U.S. vinyl profiles business, compared to income from continuing
operations of $15.6 million in 2015
- Adjusted EBITDA increased 58% to $110.3 million versus $69.7
million in 2015
- Cash provided by operating activities increased 29% to $86.4
million compared to $67.1 million during 2015
- Bank debt reduced by approximately $52 million since closing
acquisition of Woodcraft Industries on November 2, 2015
- Debt refinanced, significantly reducing future annual interest
expense
Bill Griffiths, Chairman, President and Chief
Executive Officer, commented, “Our stated goals for fiscal 2016
were to expand margins, improve the leverage profile and refinance
our debt. The dedication of our hard working employees
allowed us to accomplish all of these goals, and we look forward to
another successful year in 2017.”
Fourth Quarter 2016 Results
Summary(Unaudited – See Non-GAAP Terminology Definitions
and Disclaimers section for additional information)
|
|
Three Months Ended October 31,
2016 |
|
Three Months Ended October 31,
2015 |
|
|
Results
BeforeAdjustments |
|
Adjustments |
|
Adjusted Results |
|
Results
BeforeAdjustments |
|
Adjustments |
|
Adjusted Results |
Net
sales |
|
$ |
249,171 |
|
|
$ |
- |
|
|
$ |
249,171 |
|
|
$ |
195,459 |
|
|
$ |
- |
|
|
$ |
195,459 |
|
Cost of
sales (1) |
|
|
188,168 |
|
|
|
(32 |
) |
|
|
188,136 |
|
|
|
145,628 |
|
|
|
(1,229 |
) |
|
|
144,399 |
|
Selling,
general and administrative (2) |
|
|
26,480 |
|
|
|
(1 |
) |
|
|
26,479 |
|
|
|
22,379 |
|
|
|
(1,698 |
) |
|
|
20,681 |
|
Restructuring charges (3) |
|
|
529 |
|
|
|
(529 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Asset
impairment charges (4) |
|
|
12,602 |
|
|
|
(12,602 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EBITDA |
|
|
21,392 |
|
|
|
13,164 |
|
|
|
34,556 |
|
|
|
27,452 |
|
|
|
2,927 |
|
|
|
30,379 |
|
Depreciation and amortization(5) |
|
|
13,387 |
|
|
|
(1,295 |
) |
|
|
12,092 |
|
|
|
10,679 |
|
|
|
- |
|
|
|
10,679 |
|
Operating income |
|
|
8,005 |
|
|
|
14,459 |
|
|
|
22,464 |
|
|
|
16,773 |
|
|
|
2,927 |
|
|
|
19,700 |
|
Interest
expense |
|
|
(2,174 |
) |
|
|
- |
|
|
|
(2,174 |
) |
|
|
(367 |
) |
|
|
- |
|
|
|
(367 |
) |
Other,
net (6) |
|
|
(1,443 |
) |
|
|
1,501 |
|
|
|
58 |
|
|
|
(831 |
) |
|
|
962 |
|
|
|
131 |
|
Income
before income taxes |
|
|
4,388 |
|
|
|
15,960 |
|
|
|
20,348 |
|
|
|
15,575 |
|
|
|
3,889 |
|
|
|
19,464 |
|
Income
tax benefit (expense) (7) |
|
|
1,043 |
|
|
|
(5,764 |
) |
|
|
(4,721 |
) |
|
|
(5,632 |
) |
|
|
(468 |
) |
|
|
(6,100 |
) |
Income
from continuing operations |
|
$ |
5,431 |
|
|
$ |
10,196 |
|
|
$ |
15,627 |
|
|
$ |
9,943 |
|
|
$ |
3,421 |
|
|
$ |
13,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share from continuing operations |
|
$ |
0.16 |
|
|
|
|
$ |
0.45 |
|
|
$ |
0.29 |
|
|
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Cost
of sales adjustment relates solely to purchase price accounting
inventory step-up impact from HL Plastics acquisition. |
(2)
Selling, general and administrative adjustments are for acquisition
related transaction costs. |
(3)
Restructuring charges relate to the closure of several
manufacturing plant facilities. |
(4) Asset
impairment charges relate to goodwill impairment. |
(5)
Depreciation and amortization adjustments relate to accelerated
amortization for restructured PP&E and intangible assets. |
(6) Other,
net adjustments relate to foreign currency transaction gains
(losses). |
(7)
Effective tax rate reflects impacts of adjustments on a with and
without basis. |
Fiscal Year 2016 Results Summary(Unaudited –
See Non-GAAP Terminology Definitions and Disclaimers section for
additional information
|
|
Twelve Months Ended October 31,
2016 |
|
Twelve Months Ended October 31,
2015 |
|
|
Results
BeforeAdjustments |
|
Adjustments |
|
Adjusted Results |
|
Results
BeforeAdjustments |
|
Adjustments |
|
Adjusted Results |
Net
sales |
|
$ |
928,184 |
|
|
$ |
- |
|
|
$ |
928,184 |
|
|
$ |
645,528 |
|
|
$ |
- |
|
|
$ |
645,528 |
|
Cost of
sales (1) |
|
|
710,644 |
|
|
|
(2,671 |
) |
|
|
707,973 |
|
|
|
499,097 |
|
|
|
(4,159 |
) |
|
|
494,938 |
|
Selling,
general and administrative (2) |
|
|
114,910 |
|
|
|
(4,988 |
) |
|
|
109,922 |
|
|
|
86,536 |
|
|
|
(5,628 |
) |
|
|
80,908 |
|
Restructuring charges(3) |
|
|
529 |
|
|
|
(529 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Asset
impairment charges(4) |
|
|
12,602 |
|
|
|
(12,602 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EBITDA |
|
|
89,499 |
|
|
|
20,790 |
|
|
|
110,289 |
|
|
|
59,895 |
|
|
|
9,787 |
|
|
|
69,682 |
|
Depreciation and amortization(5) |
|
|
53,146 |
|
|
|
(1,295 |
) |
|
|
51,851 |
|
|
|
35,220 |
|
|
|
- |
|
|
|
35,220 |
|
Operating income |
|
|
36,353 |
|
|
|
22,085 |
|
|
|
58,438 |
|
|
|
24,675 |
|
|
|
9,787 |
|
|
|
34,462 |
|
Interest
(expense) benefit (9) |
|
|
(36,498 |
) |
|
|
16,677 |
|
|
|
(19,821 |
) |
|
|
(991 |
) |
|
|
- |
|
|
|
(991 |
) |
Other,
net (6) |
|
|
(5,479 |
) |
|
|
5,380 |
|
|
|
(99 |
) |
|
|
(531 |
) |
|
|
779 |
|
|
|
248 |
|
(Loss)
income before income taxes |
|
|
(5,624 |
) |
|
|
44,142 |
|
|
|
38,518 |
|
|
|
23,153 |
|
|
|
10,566 |
|
|
|
33,719 |
|
Income
tax benefit (expense) (7) |
|
|
3,765 |
|
|
|
(14,591 |
) |
|
|
(10,826 |
) |
|
|
(7,539 |
) |
|
|
(2,511 |
) |
|
|
(10,050 |
) |
(Loss)
income from continuing operations |
|
$ |
(1,859 |
) |
|
$ |
29,551 |
|
|
$ |
27,692 |
|
|
$ |
15,614 |
|
|
$ |
8,055 |
|
|
$ |
23,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
(loss) earnings per share from continuing operations (8) |
|
$ |
(0.05 |
) |
|
|
|
$ |
0.80 |
|
|
$ |
0.46 |
|
|
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Cost
of sales adjustments relate solely to purchase price accounting
inventory step-up impact from HL Plastics and Woodcraft Industries
acquisitions. |
(2)
Selling, general and administrative adjustments are for acquisition
related transaction costs. |
(3)
Restructuring charges relate to the closure of several
manufacturing plant facilities. |
(4) Asset
impairment charges relate to goodwill impairment. |
(5)
Depreciation and amortization adjustments relate to accelerated
amortization for restructured PP&E and intangible assets. |
(6) Other,
net adjustments relate to foreign currency transaction gains
(losses). |
(7)
Effective tax rate reflects impacts of adjustments on a with and
without basis. |
(8)
Adjusted EPS is calculated using diluted shares outstanding of 34.5
million shares. |
(9)
Interest expense adjustments relate to write off of deferred loan
costs, unamortized original issuance discount, and prepayment call
premium related to debt refinance. |
|
Quanex reported net sales of $249.2 million and
$928.2 million for the three months and twelve months ended October
31, 2016, an increase of 27% and 44%, respectively, compared to
$195.5 million and $645.5 million for the three months and twelve
months ended October 31, 2015. The increases were primarily
driven by revenue generated from the acquisitions of HL Plastics
and Woodcraft Industries in 2015, partially offset by foreign
exchange translation impact. (See Sales Analysis table for
additional information)
Adjusted EBITDA increased to $34.6 million and
$110.3 million during the fourth quarter and full fiscal year 2016,
respectively, compared to $30.4 million and $69.7 million during
the same periods of fiscal 2015. Due to the successful
implementation of ongoing operational initiatives, the Company’s
consolidated Adjusted EBITDA margin improved by approximately 110
basis points during fiscal 2016. For its “legacy” U.S.
windows components business, the Company realized an Adjusted
EBITDA margin improvement of approximately 45 basis points during
the three months ended October 31, 2016, and approximately 225
basis points during the twelve months ended October 31, 2016.
(See Non-GAAP Terminology Definitions and Disclaimers section and
Selected Segment Data table for additional information)
As of October 31, 2016, Quanex’s leverage ratio
of Net Debt to LTM Adjusted EBITDA was 2.2x. (See Non-GAAP
Terminology Definitions and Disclaimers section for additional
information)
Business Update
The Company has been open about its willingness
to walk away from less profitable business in an effort to protect
margins and free up capacity to reduce further investment.
Quanex continues to evaluate profitability by customer and product
line, specifically in its U.S. vinyl profiles and cabinet
components businesses. As a result, the Company has
initiated the process of reducing volumes manufactured for a large
U.S. vinyl profiles customer and expects the process to be carried
out in a phased manner throughout 2017 and into 2018.
Similarly, Quanex has decided to discontinue manufacturing certain
low-margin cabinet component products and continues to explore
additional opportunities to improve margins in this business.
In total, the Company shed approximately $15 million of business in
fiscal 2016 as part of this initiative while expanding
margins. It is probable that Quanex will shed a further $50
million to $70 million of business in fiscal 2017, which should
have a positive impact on margin percentages.
To prepare for these reductions, the Company has
taken appropriate actions to rationalize capacity by closing two of
its U.S. vinyl profile operations and one of its cabinet component
operations, relocating assets to improve overall operational
efficiency.
Fiscal 2017 Outlook
Bill Griffiths, Chairman, President and Chief
Executive Officer, stated, “Based on end market dynamics that
continue to be positive, we remain steadfast in our belief that the
housing recovery will follow a slow, steady path of mid to high
single digit growth for the next three to five years. We do
not subscribe to the rhetoric that suggests we are in the late
innings of the housing recovery. In addition, we continue to
believe that new housing starts need to return to at least 1.5
million per year and that there is pent up demand in the R&R
market.”
Quanex is projecting underlying sales growth of
5% to 6% for fiscal 2017 offset by the customer actions discussed
above and a potential negative foreign currency translation impact,
which could be approximately $20 million based on current exchange
rates. The Company remains focused on driving continued margin
enhancement and working capital management in an effort to further
improve its free cash flow profile.
Conference Call and Webcast
Information
The Company has scheduled a conference call for
Friday, December 16, 2016, at 11:00 a.m. ET (10:00 a.m. CT).
To participate in the conference call dial (877) 388-2139 for
domestic callers and (541) 797-2983 for international callers, in
both cases using the conference passcode 29475717, and ask for the
Quanex call a few minutes prior to the start time. A link to
the live audio webcast will also be available on the Company’s
website at http://www.quanex.com in the Investors section under
Presentations & Events. A telephonic replay of the call
will be available approximately two hours after the live broadcast
ends and will be accessible through December 23, 2016. To
access the replay dial (855) 859-2056 for domestic callers and
(404) 537-3406 for international callers, in both cases referencing
conference passcode 29475717.
About Quanex
Quanex Building Products Corporation is an
industry-leading manufacturer of components sold to Original
Equipment Manufacturers (OEMs) in the building products
industry. Quanex designs and produces energy-efficient
fenestration products in addition to kitchen and bath cabinet
components.
For more information contact Scott Zuehlke, Vice
President of Investor Relations & Treasurer, at (713) 877-5327
or scott.zuehlke@quanex.com.
Non-GAAP Terminology Definitions and
Disclaimers
EBITDA (defined as net income or loss before
interest, taxes, depreciation and amortization and other, net) and
Adjusted EBITDA (defined as net income or loss before interest,
taxes, depreciation and amortization and other, net, excluding
transaction costs and purchase price accounting inventory step-ups)
are non-GAAP financial measures that Quanex's management uses to
measure its operational performance and assist with financial
decision-making. The Company believes these non-GAAP measures
provide a consistent basis for comparison between periods, and will
assist investors in understanding our financial performance when
comparing our results to other investment opportunities. The
leverage ratio of Net Debt to LTM Adjusted EBITDA is a financial
measure that Quanex’s management believes is useful to investors
and financial analysts in evaluating the Company’s leverage. In
addition, with certain limited adjustments, this leverage ratio is
the basis for a key covenant in Quanex’s credit agreements.
Net Debt is calculated using the sum of current maturities of
long-term debt and long-term debt, minus cash and cash
equivalents. Adjusted Income (Loss) from Continuing
Operations and Adjusted Diluted Earnings (Loss) from Continuing
Operations are non-GAAP financial measures that exclude certain
charges and credits because the Company believes that such items
are not indicative of its core operating results, are not
indicative of trends, and do not provide meaningful comparisons
with other reporting periods. Quanex believes the presented
non-GAAP measures provide a consistent basis for comparison between
periods, and will assist investors in understanding our financial
performance when comparing our results to other investment
opportunities. The presented non-GAAP measures may not be the
same as those used by other companies. The Company does not
intend for this information to be considered in isolation or as a
substitute for other measures prepared in accordance with US
GAAP.
Forward Looking Statements
Statements that use the words “estimated,”
“expect,” “could,” “should,” “believe,” “will,” “might,” or similar
words reflecting future expectations or beliefs are forward-looking
statements. The forward-looking statements include, but are not
limited to, future operating results of Quanex, the future
financial condition of Quanex, future uses of cash and other
expenditures, expenses and tax rates, expectations relating to the
Company’s industry, and Quanex’s future growth, including any
guidance discussed in this press release. Guidance is a
forward-looking estimate of performance and may not be indicative
of actual results. The statements and guidance set forth in
this release are based on current expectations. Actual results or
events may differ materially from this release. Factors that could
impact future results may include, without limitation, the effect
of both domestic and global economic conditions, the impact of
competitive products and pricing, the availability and cost of raw
materials, and customer demand. For a more complete discussion of
factors that may affect the Company’s future performance, please
refer to the Company’s Annual Report on Form 10-K for the fiscal
year ended October 31, 2015, under the sections entitled
“Cautionary Note Regarding Forward-Looking Statements” and “Risk
Factors,” and in Quanex’s other documents filed with the Securities
and Exchange Commission from time to time. Any
forward-looking statements in this press release are made as of the
date hereof, and Quanex Building Products Corporation undertakes no
obligation to update or revise any forward-looking statements to
reflect new information or events.
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS) |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
249,171 |
|
|
$ |
195,459 |
|
|
$ |
928,184 |
|
|
$ |
645,528 |
|
Cost of sales |
|
|
188,168 |
|
|
|
145,628 |
|
|
|
710,644 |
|
|
|
499,097 |
|
Selling, general and administrative |
|
|
26,480 |
|
|
|
22,379 |
|
|
|
114,910 |
|
|
|
86,536 |
|
Restructuring charges |
|
|
529 |
|
|
|
- |
|
|
|
529 |
|
|
|
- |
|
Depreciation and amortization |
|
|
13,387 |
|
|
|
10,679 |
|
|
|
53,146 |
|
|
|
35,220 |
|
Asset impairment charges |
|
|
12,602 |
|
|
|
- |
|
|
|
12,602 |
|
|
|
- |
|
Operating income |
|
|
8,005 |
|
|
|
16,773 |
|
|
|
36,353 |
|
|
|
24,675 |
|
Interest expense |
|
|
(2,174 |
) |
|
|
(367 |
) |
|
|
(36,498 |
) |
|
|
(991 |
) |
Other, net |
|
|
(1,443 |
) |
|
|
(831 |
) |
|
|
(5,479 |
) |
|
|
(531 |
) |
Income (loss) before income taxes |
|
|
4,388 |
|
|
|
15,575 |
|
|
|
(5,624 |
) |
|
|
23,153 |
|
Income tax benefit (expense) |
|
|
1,043 |
|
|
|
(5,632 |
) |
|
|
3,765 |
|
|
|
(7,539 |
) |
Income (loss) from continuing operations |
|
|
5,431 |
|
|
|
9,943 |
|
|
|
(1,859 |
) |
|
|
15,614 |
|
Income from discontinued operations, net of taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
479 |
|
Net income (loss) |
|
$ |
5,431 |
|
|
$ |
9,943 |
|
|
$ |
(1,859 |
) |
|
$ |
16,093 |
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share: |
|
|
|
|
|
|
|
|
From continuing operations |
|
$ |
0.16 |
|
|
$ |
0.30 |
|
|
$ |
(0.05 |
) |
|
$ |
0.46 |
|
From discontinued operations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.01 |
|
Income (loss) per common share, basic |
|
$ |
0.16 |
|
|
$ |
0.30 |
|
|
$ |
(0.05 |
) |
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common share: |
|
|
|
|
|
|
|
|
From continuing operations |
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
(0.05 |
) |
|
$ |
0.46 |
|
From discontinued operations |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
0.01 |
|
Income (loss) per common share, diluted |
|
$ |
0.16 |
|
|
$ |
0.29 |
|
|
$ |
(0.05 |
) |
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
33,953 |
|
|
|
33,640 |
|
|
|
33,876 |
|
|
|
33,993 |
|
Diluted |
|
|
34,536 |
|
|
|
34,148 |
|
|
|
33,876 |
|
|
|
34,502 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per share |
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
October 31, 2016 |
|
October 31, 2015
(1) |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
25,526 |
|
|
$ |
23,125 |
|
Accounts receivable, net |
|
|
83,625 |
|
|
|
64,080 |
|
Inventories, net |
|
|
84,335 |
|
|
|
63,029 |
|
Prepaid and other current assets |
|
|
10,488 |
|
|
|
7,992 |
|
Total current assets |
|
|
203,974 |
|
|
|
158,226 |
|
Property, plant and
equipment, net |
|
|
198,497 |
|
|
|
140,672 |
|
Deferred income
taxes |
|
|
- |
|
|
|
8,783 |
|
Goodwill |
|
|
217,035 |
|
|
|
129,770 |
|
Intangible assets,
net |
|
|
154,180 |
|
|
|
120,810 |
|
Other assets |
|
|
6,667 |
|
|
|
7,255 |
|
Total assets |
|
$ |
780,353 |
|
|
$ |
565,516 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
47,781 |
|
|
$ |
47,778 |
|
Accrued liabilities |
|
|
55,101 |
|
|
|
37,364 |
|
Income taxes payable |
|
|
732 |
|
|
|
747 |
|
Current maturities of long-term debt |
|
|
10,520 |
|
|
|
2,359 |
|
Total current liabilities |
|
|
114,134 |
|
|
|
88,248 |
|
Long-term debt |
|
|
259,011 |
|
|
|
53,767 |
|
Deferred pension and
postretirement benefits |
|
|
8,167 |
|
|
|
5,701 |
|
Deferred income
taxes |
|
|
18,322 |
|
|
|
- |
|
Liabilities for
uncertain tax positions |
|
|
579 |
|
|
|
564 |
|
Other liabilities |
|
|
12,309 |
|
|
|
21,941 |
|
Total liabilities |
|
|
412,522 |
|
|
|
170,221 |
|
Stockholders’
equity: |
|
|
|
|
Common stock |
|
|
376 |
|
|
|
376 |
|
Additional paid-in-capital |
|
|
254,540 |
|
|
|
250,937 |
|
Retained earnings |
|
|
214,047 |
|
|
|
222,138 |
|
Accumulated other comprehensive loss |
|
|
(38,765 |
) |
|
|
(10,049 |
) |
Treasury stock at cost |
|
|
(62,367 |
) |
|
|
(68,107 |
) |
Total stockholders’ equity |
|
|
367,831 |
|
|
|
395,295 |
|
Total liabilities and stockholders' equity |
|
$ |
780,353 |
|
|
$ |
565,516 |
|
|
|
|
|
|
(1) October
31, 2015 balance sheet reflects adoption of ASU 2015-03 and ASU
2015-17. |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
|
Twelve Months Ended October 31, |
|
|
2016 |
|
|
|
2015 |
|
Operating activities: |
|
|
|
Net (loss) income |
$ |
(1,859 |
) |
|
$ |
16,093 |
|
Adjustments to reconcile net (loss) income to cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
53,146 |
|
|
|
35,220 |
|
Loss on disposition of capital assets |
|
(20 |
) |
|
|
495 |
|
Stock-based compensation |
|
6,089 |
|
|
|
4,266 |
|
Deferred income tax |
|
(8,469 |
) |
|
|
5,204 |
|
Excess tax benefit from share-based compensation |
|
(136 |
) |
|
|
(60 |
) |
Charge for deferred loan costs and debt discount |
|
16,022 |
|
|
|
- |
|
Asset impairment charges |
|
12,602 |
|
|
|
- |
|
Gain on involuntary conversion |
|
- |
|
|
|
(1,263 |
) |
Other, net |
|
339 |
|
|
|
(19 |
) |
Changes in assets and liabilities, net of effects from
acquisitions: |
|
|
|
Decrease in accounts receivable |
|
796 |
|
|
|
2,668 |
|
Decrease in inventory |
|
5,346 |
|
|
|
9,805 |
|
Decrease (increase) in other current assets |
|
2,503 |
|
|
|
(1,304 |
) |
Decrease in accounts payable |
|
(2,273 |
) |
|
|
(2,862 |
) |
Increase (decrease) in accrued liabilities |
|
1,246 |
|
|
|
(576 |
) |
(Decrease) increase in income taxes payable |
|
(365 |
) |
|
|
369 |
|
Increase (decrease) in deferred pension and postretirement
benefits |
|
588 |
|
|
|
(372 |
) |
Increase (decrease) in other long-term liabilities |
|
956 |
|
|
|
(283 |
) |
Other, net |
|
(93 |
) |
|
|
(294 |
) |
Cash provided by
operating activities |
|
86,418 |
|
|
|
67,087 |
|
Investing activities: |
|
|
|
Acquisitions, net of cash acquired |
|
(245,904 |
) |
|
|
(131,689 |
) |
Capital expenditures |
|
(37,243 |
) |
|
|
(29,982 |
) |
Proceeds from property insurance claim |
|
- |
|
|
|
1,263 |
|
Proceeds from disposition of capital assets |
|
1,044 |
|
|
|
264 |
|
Cash used for investing
activities |
|
(282,103 |
) |
|
|
(160,144 |
) |
Financing activities: |
|
|
|
Borrowings under credit facilities |
|
634,800 |
|
|
|
117,000 |
|
Repayments of credit facility borrowings |
|
(422,875 |
) |
|
|
(67,000 |
) |
Debt issuance costs |
|
(11,435 |
) |
|
|
(496 |
) |
Repayments of other long-term debt |
|
(2,185 |
) |
|
|
(1,020 |
) |
Common stock dividends paid |
|
(5,470 |
) |
|
|
(5,515 |
) |
Issuance of common stock |
|
3,400 |
|
|
|
5,109 |
|
Excess tax benefit from share-based compensation |
|
136 |
|
|
|
60 |
|
Purchase of treasury stock |
|
- |
|
|
|
(52,719 |
) |
Cash provided by
financing activities |
|
196,371 |
|
|
|
(4,581 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
1,715 |
|
|
|
379 |
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents |
|
2,401 |
|
|
|
(97,259 |
) |
Cash and cash
equivalents at beginning of period |
|
23,125 |
|
|
|
120,384 |
|
Cash and cash
equivalents at end of period |
$ |
25,526 |
|
|
$ |
23,125 |
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
SELECTED SEGMENT DATA |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
This table provides operating income (loss), EBITDA, and
Adjusted EBITDA by reportable segment. Non-operating expense
and income tax expense are not allocated to the reportable
segments. For a reconciliation of income from continuing
operations to operating income (loss), see Non-GAAP Financial
Measure Disclosure table. |
|
|
|
|
|
|
|
|
|
|
|
|
|
NA Engineered Components |
|
EU Engineered Components |
|
NA Cabinet Components |
|
Unallocated Corp &
Other |
|
Total |
Three months
ended October 31, 2016 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
154,000 |
|
|
$ |
39,953 |
|
|
$ |
56,485 |
|
|
$ |
(1,267 |
) |
|
$ |
249,171 |
|
Cost of sales |
|
|
111,491 |
|
|
|
27,754 |
|
|
|
49,844 |
|
|
|
(921 |
) |
|
|
188,168 |
|
Restructuring charges |
|
|
387 |
|
|
|
- |
|
|
|
142 |
|
|
|
- |
|
|
|
529 |
|
Asset impairment charges |
|
|
12,602 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,602 |
|
Operating income (loss) |
|
|
4,098 |
|
|
|
4,234 |
|
|
|
1,706 |
|
|
|
(2,033 |
) |
|
|
8,005 |
|
Depreciation and amortization |
|
|
8,874 |
|
|
|
2,148 |
|
|
|
2,239 |
|
|
|
126 |
|
|
|
13,387 |
|
EBITDA |
|
|
12,972 |
|
|
|
6,382 |
|
|
|
3,945 |
|
|
|
(1,907 |
) |
|
|
21,392 |
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
PPA-Inventory Step-up |
|
|
- |
|
|
|
32 |
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
Restructuring charges |
|
|
387 |
|
|
|
- |
|
|
|
142 |
|
|
|
- |
|
|
|
529 |
|
Asset impairment charges |
|
|
12,602 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,602 |
|
Adjusted EBITDA |
|
$ |
25,961 |
|
|
$ |
6,414 |
|
|
$ |
4,087 |
|
|
$ |
(1,906 |
) |
|
$ |
34,556 |
|
Adjusted EBITDA Margin % |
|
|
17 |
% |
|
|
16 |
% |
|
|
7 |
% |
|
|
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended October 31, 2015 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
154,301 |
|
|
$ |
42,340 |
|
|
$ |
- |
|
|
$ |
(1,182 |
) |
|
$ |
195,459 |
|
Cost of sales |
|
|
114,122 |
|
|
|
32,105 |
|
|
|
- |
|
|
|
(599 |
) |
|
|
145,628 |
|
Operating income (loss) |
|
|
18,126 |
|
|
|
2,873 |
|
|
|
- |
|
|
|
(4,226 |
) |
|
|
16,773 |
|
Depreciation and amortization |
|
|
7,221 |
|
|
|
3,037 |
|
|
|
- |
|
|
|
421 |
|
|
|
10,679 |
|
EBITDA |
|
|
25,347 |
|
|
|
5,910 |
|
|
|
- |
|
|
|
(3,805 |
) |
|
|
27,452 |
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,698 |
|
|
|
1,698 |
|
PPA-Inventory Step-up |
|
|
- |
|
|
|
1,229 |
|
|
|
- |
|
|
|
- |
|
|
|
1,229 |
|
Adjusted EBITDA |
|
$ |
25,347 |
|
|
$ |
7,139 |
|
|
$ |
- |
|
|
$ |
(2,107 |
) |
|
$ |
30,379 |
|
Adjusted EBITDA Margin % |
|
|
16 |
% |
|
|
17 |
% |
|
|
0 |
% |
|
|
|
|
16 |
% |
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended October 31, 2016 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
560,029 |
|
|
$ |
150,203 |
|
|
$ |
223,391 |
|
|
$ |
(5,439 |
) |
|
$ |
928,184 |
|
Cost of sales |
|
|
415,925 |
|
|
|
104,452 |
|
|
|
193,560 |
|
|
|
(3,293 |
) |
|
|
710,644 |
|
Restructuring charges |
|
|
387 |
|
|
|
- |
|
|
|
142 |
|
|
|
- |
|
|
|
529 |
|
Asset impairment charges |
|
|
12,602 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,602 |
|
Operating income (loss) |
|
|
37,883 |
|
|
|
13,225 |
|
|
|
1,821 |
|
|
|
(16,576 |
) |
|
|
36,353 |
|
Depreciation and amortization |
|
|
30,298 |
|
|
|
9,339 |
|
|
|
12,948 |
|
|
|
561 |
|
|
|
53,146 |
|
EBITDA |
|
|
68,181 |
|
|
|
22,564 |
|
|
|
14,769 |
|
|
|
(16,015 |
) |
|
|
89,499 |
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,988 |
|
|
|
4,988 |
|
PPA-Inventory Step-up |
|
|
- |
|
|
|
384 |
|
|
|
2,287 |
|
|
|
- |
|
|
|
2,671 |
|
Restructuring charges |
|
|
387 |
|
|
|
- |
|
|
|
142 |
|
|
|
- |
|
|
|
529 |
|
Asset impairment charges |
|
|
12,602 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,602 |
|
Adjusted EBITDA |
|
$ |
81,170 |
|
|
$ |
22,948 |
|
|
$ |
17,198 |
|
|
$ |
(11,027 |
) |
|
$ |
110,289 |
|
Adjusted EBITDA Margin % |
|
|
14 |
% |
|
|
15 |
% |
|
|
8 |
% |
|
|
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended October 31, 2015 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
556,550 |
|
|
$ |
93,644 |
|
|
$ |
- |
|
|
$ |
(4,666 |
) |
|
$ |
645,528 |
|
Cost of sales |
|
|
429,097 |
|
|
|
72,319 |
|
|
|
- |
|
|
|
(2,319 |
) |
|
|
499,097 |
|
Operating income (loss) |
|
|
39,253 |
|
|
|
3,253 |
|
|
|
- |
|
|
|
(17,831 |
) |
|
|
24,675 |
|
Depreciation and amortization |
|
|
28,911 |
|
|
|
5,020 |
|
|
|
- |
|
|
|
1,289 |
|
|
|
35,220 |
|
EBITDA |
|
|
68,164 |
|
|
|
8,273 |
|
|
|
- |
|
|
|
(16,542 |
) |
|
|
59,895 |
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,628 |
|
|
|
5,628 |
|
PPA-Inventory Step-up |
|
|
- |
|
|
|
4,159 |
|
|
|
- |
|
|
|
- |
|
|
|
4,159 |
|
Adjusted EBITDA |
|
$ |
68,164 |
|
|
$ |
12,432 |
|
|
$ |
- |
|
|
$ |
(10,914 |
) |
|
$ |
69,682 |
|
Adjusted EBITDA Margin % |
|
|
12 |
% |
|
|
13 |
% |
|
|
0 |
% |
|
|
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
SALES ANALYSIS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Bridge for Three Months Ended October
31, 2016 |
|
|
NA Engineered |
|
EU Engineered |
|
NA Cabinet |
|
Unallocated |
|
|
|
|
Components |
|
Components |
|
Components |
|
Corporate & Other |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Net sales, three months ended October 31, 2015 |
|
$ |
154,301 |
|
|
$ |
42,340 |
|
|
$ |
- |
|
$ |
(1,182 |
) |
|
$ |
195,459 |
|
Market volume |
|
|
2,403 |
|
|
|
527 |
|
|
|
- |
|
|
(85 |
) |
|
|
2,845 |
|
Eliminated products |
|
|
(1,946 |
) |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(1,946 |
) |
Price changes |
|
|
(426 |
) |
|
|
(342 |
) |
|
|
- |
|
|
- |
|
|
|
(768 |
) |
Foreign currency impacts |
|
|
- |
|
|
|
(1,029 |
) |
|
|
- |
|
|
- |
|
|
|
(1,029 |
) |
Mergers & acquisitions |
|
|
- |
|
|
|
(1,543 |
) |
|
|
56,485 |
|
|
- |
|
|
|
54,942 |
|
Raw material pass through adjustments |
|
|
(332 |
) |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(332 |
) |
Net Sales, three months ended October 31, 2016 |
|
$ |
154,000 |
|
|
$ |
39,953 |
|
|
$ |
56,485 |
|
$ |
(1,267 |
) |
|
$ |
249,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Bridge for Twelve Months Ended October
31, 2016 |
|
|
NA Engineered |
|
EU Engineered |
|
NA Cabinet |
|
Unallocated |
|
|
|
|
Components |
|
Components |
|
Components |
|
Corporate & Other |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Net sales, twelve months ended October 31, 2015 |
|
$ |
556,550 |
|
|
$ |
93,644 |
|
|
$ |
- |
|
$ |
(4,666 |
) |
|
$ |
645,528 |
|
Market volume |
|
|
17,161 |
|
|
|
3,244 |
|
|
|
- |
|
|
(773 |
) |
|
|
19,632 |
|
Eliminated products |
|
|
(6,634 |
) |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(6,634 |
) |
Price changes |
|
|
(1,819 |
) |
|
|
(1,710 |
) |
|
|
- |
|
|
- |
|
|
|
(3,529 |
) |
Foreign currency impacts |
|
|
- |
|
|
|
(2,803 |
) |
|
|
- |
|
|
- |
|
|
|
(2,803 |
) |
Mergers & acquisitions |
|
|
- |
|
|
|
57,828 |
|
|
|
223,391 |
|
|
- |
|
|
|
281,219 |
|
Raw material pass through adjustments |
|
|
(5,229 |
) |
|
|
- |
|
|
|
- |
|
|
- |
|
|
|
(5,229 |
) |
Net Sales, twelve months ended October 31, 2016 |
|
$ |
560,029 |
|
|
$ |
150,203 |
|
|
$ |
223,391 |
|
$ |
(5,439 |
) |
|
$ |
928,184 |
|
|
|
|
|
|
|
|
|
|
|
|
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