Underlying Sales Growth of ~6% in Fiscal
2018Working Capital Management Helped Boost Free
Cash Flow by ~73% in Fiscal 2018Gross Margin
Expansion of >200 Basis Points in NA Cabinet Components Segment
in 4Q18
Quanex Building Products Corporation (NYSE:NX)
(“Quanex” or the “Company”) today announced its results for the
quarter and fiscal year ended October 31, 2018.
Bill Griffiths, Chairman, President and Chief
Executive Officer, commented, “The free cash flow profile of our
business is strong and our disciplined management of working
capital was exceptional during the fourth quarter. As a
result, and consistent with our plans to return capital to
shareholders, we repurchased approximately $32 million in stock
during the fourth quarter while maintaining our leverage ratio of
2.0x. In addition, we paid down approximately $28 million of
bank debt in fiscal 2018. Looking ahead, we remain committed
to maintaining a healthy balance sheet and returning capital to
shareholders.
“Market growth and price increases led to
underlying growth of approximately 6% in fiscal 2018; however, net
sales in August and September were softer than anticipated.
Overall, fourth quarter results were impacted by elevated SG&A
expense due to a rise in unforeseen medical costs coupled with
higher annual incentive accruals, which are based on a modified
free cash flow metric. At the same time, as a result of
operational improvements and better pricing, we achieved gross
margin expansion for the second consecutive quarter and for the
full fiscal year in our North American Cabinet Components
segment.”
Fourth Quarter and Fiscal Year 2018
Results Summary
The Company reported the following selected financial
results:
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net Sales |
|
$244.1 |
|
$233.0 |
|
$889.8 |
|
$866.6 |
Net Income |
|
$6.5 |
|
$10.7 |
|
$26.3 |
|
$18.7 |
Diluted EPS |
|
$0.19 |
|
$0.31 |
|
$0.75 |
|
$0.54 |
|
|
|
|
|
|
|
|
|
Adjusted Net
Income |
|
$7.6 |
|
$13.1 |
|
$22.7 |
|
$27.0 |
Adjusted Diluted
EPS |
|
$0.22 |
|
$0.37 |
|
$0.65 |
|
$0.77 |
Adjusted EBITDA |
|
$25.2 |
|
$33.3 |
|
$90.9 |
|
$99.0 |
|
|
|
|
|
|
|
|
|
Cash provided by
operating activities |
|
$56.2 |
|
$33.3 |
|
$104.6 |
|
$79.8 |
Free Cash Flow |
|
$50.8 |
|
$25.8 |
|
$78.1 |
|
$45.2 |
(See Non-GAAP Terminology Definitions and Disclaimers section,
Non-GAAP Financial Measure Disclosure table, Selected Segment Data
table and Free Cash Flow Reconciliation table for additional
information)
The increases in net sales were mainly driven by
market growth combined with price increases largely related to raw
material inflation recovery and a favorable foreign exchange
impact. (See Sales Analysis table for additional
information)
The decreases in adjusted earnings were mostly
due to the negative impact of inflationary pressures and an
increase in selling, general and administrative expense. The
increase in selling, general and administrative expense was driven
by elevated medical costs and higher annual incentive accruals.
Results for the fourth quarter and full fiscal year 2017 included a
benefit of $2.0 million and $4.0 million, respectively, related to
legal expense reimbursement from one of the Company’s insurance
carriers. (See Non-GAAP Terminology Definitions and
Disclaimers section, Non-GAAP Financial Measure Disclosure table
and Selected Segment Data table for additional
information)
As previously disclosed, Quanex repurchased 1.9
million shares in a privately negotiated transaction at $16.86 per
share during the fourth quarter of 2018 and has approximately $28
million remaining under its current share repurchase
program.
As of October 31, 2018, the Company’s leverage
ratio of Net Debt to LTM Adjusted EBITDA was unchanged at
2.0x. (See Non-GAAP Terminology Definitions and Disclaimers
section for additional information)
Outlook
Bill Griffiths, Chairman, President and Chief
Executive Officer, stated, “It is clear that, at a macro level,
expectations for growth in the new construction segment are
dropping; however, we believe the repair and remodel segment will
continue to strengthen, and Quanex is more weighted to this segment
than new construction. Accordingly, we expect revenue growth
of 4% to 6% in fiscal 2019.
“It is also clear that inflation is here to
stay, and while we are very confident that we can recover this
through pricing, realizing significant margin expansion will be
challenging. Therefore, we expect to generate between $97
million and $107 million in Adjusted EBITDA in fiscal 2019.”
(See Forward Looking Statements and Non-GAAP Terminology
Definitions and Disclaimers sections for additional
information)
Conference Call and Webcast
Information
The Company has scheduled a conference call for
Tuesday, December 11, 2018, 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 6995087, 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 18, 2018. To
access the replay dial (855) 859-2056 for domestic callers and
(404) 537-3406 for international callers, in both cases referencing
conference passcode 6995087.
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, Investor Relations & Treasurer, at 713-877-5327 or
scott.zuehlke@quanex.com.
Non-GAAP Terminology Definitions and
Disclaimers
Adjusted Net Income (Loss) (defined as net
income further adjusted to exclude purchase price accounting
inventory step-ups, transaction costs, gain/loss on the sale of
fixed assets, restructuring charges, other net adjustments related
to foreign currency transaction gain/loss and effective tax rates
reflecting impacts of adjustments on a with and without basis) and
Adjusted EPS are non-GAAP financial measures that Quanex believes
provide a consistent basis for comparison between periods and more
accurately reflects operational performance, as they are not
influenced by certain income or expense items not affecting ongoing
operations. EBITDA (defined as net income or loss before interest,
taxes, depreciation and amortization and other, net) and Adjusted
EBITDA (defined as EBITDA further adjusted to exclude purchase
price accounting inventory step-ups, transaction costs, gain/loss
on the sale of fixed assets, and restructuring charges) are
non-GAAP financial measures that the Company uses to measure
operational performance and assist with financial
decision-making. When Quanex provides expectations for
Adjusted EBITDA on a forward-looking basis, a reconciliation of the
differences between the non-GAAP expectations and corresponding
GAAP measures is generally not available without unreasonable
effort. Net Debt is calculated using the sum of current
maturities of long-term debt and long-term debt, minus cash and
cash equivalents. The leverage ratio of Net Debt to LTM
Adjusted EBITDA is a financial measure that the Company believes is
useful to investors and financial analysts in evaluating Quanex’s
leverage. In addition, with certain limited adjustments, this
leverage ratio is the basis for a key covenant in the Company’s
credit agreement. Free Cash Flow is a non-GAAP measure
calculated using cash provided by operating activities less capital
expenditures. Free Cash Flow is measured before application
of certain contractual commitments (including capital lease
obligations), and accordingly is not a true measure of Quanex’s
residual cash flow available for discretionary expenditures.
The Company believes that the presented non-GAAP measures provide a
consistent basis for comparison between periods, and will assist
investors in understanding Quanex’s financial performance when
comparing 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 U.S. 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, the Company’s future operating results, future
financial condition, future uses of cash and other expenditures,
expenses and tax rates, expectations relating to Quanex’s industry,
and the Company’s future growth, including any guidance discussed
in this press release. The statements and guidance set forth
in this release are based on current expectations. Actual
results or events may differ materially from this release.
For a complete discussion of factors that may affect Quanex’s
future performance, please refer to the Company’s Annual Report on
Form 10-K for the fiscal year ended October 31, 2017, under the
sections entitled “Cautionary Note Regarding Forward-Looking
Statements” and “Risk Factors”. Any forward-looking
statements in this press release are made as of the date hereof,
and Quanex undertakes no obligation to update or revise any
forward-looking statements to reflect new information or
events. When the Company provides expectations for Adjusted
EBITDA on a forward-looking basis, a reconciliation of the
differences between the non-GAAP expectations and corresponding
GAAP measures is generally not available without unreasonable
effort. Certain items required for such a reconciliation are
outside of Quanex’s control and/or cannot be reasonably predicted
or estimated, such as the provision for income taxes.
QUANEX BUILDING PRODUCTS
CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF NET
INCOME |
|
(In thousands, except per share data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
244,086 |
|
|
$ |
232,959 |
|
|
$ |
889,785 |
|
|
$ |
866,555 |
|
|
Cost of sales |
|
|
187,776 |
|
|
|
178,325 |
|
|
|
696,567 |
|
|
|
672,162 |
|
|
Selling, general and
administrative |
|
|
31,486 |
|
|
|
23,142 |
|
|
|
103,535 |
|
|
|
97,981 |
|
|
Restructuring
charges |
|
|
635 |
|
|
|
1,467 |
|
|
|
1,486 |
|
|
|
4,550 |
|
|
Depreciation and
amortization |
|
|
12,548 |
|
|
|
13,794 |
|
|
|
51,822 |
|
|
|
57,495 |
|
|
Operating income |
|
|
11,641 |
|
|
|
16,231 |
|
|
|
36,375 |
|
|
|
34,367 |
|
|
Interest expense |
|
|
(3,516 |
) |
|
|
(2,469 |
) |
|
|
(11,100 |
) |
|
|
(9,595 |
) |
|
Other, net |
|
|
28 |
|
|
|
158 |
|
|
|
178 |
|
|
|
730 |
|
|
Income before income
taxes |
|
|
8,153 |
|
|
|
13,920 |
|
|
|
25,453 |
|
|
|
25,502 |
|
|
Income tax (expense)
benefit |
|
|
(1,661 |
) |
|
|
(3,188 |
) |
|
|
875 |
|
|
|
(6,819 |
) |
|
Net income |
|
$ |
6,492 |
|
|
$ |
10,732 |
|
|
$ |
26,328 |
|
|
$ |
18,683 |
|
|
|
|
|
|
|
|
|
|
|
|
Income per common
share, basic |
|
$ |
0.19 |
|
|
$ |
0.31 |
|
|
$ |
0.76 |
|
|
$ |
0.55 |
|
|
Income per common
share, diluted |
|
$ |
0.19 |
|
|
$ |
0.31 |
|
|
$ |
0.75 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
34,508 |
|
|
|
34,493 |
|
|
|
34,701 |
|
|
|
34,230 |
|
|
Diluted |
|
|
34,732 |
|
|
|
35,169 |
|
|
|
35,025 |
|
|
|
34,837 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
|
$ |
0.20 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
October 31, 2018 |
|
October 31, 2017 |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
29,003 |
|
|
$ |
17,455 |
|
|
Accounts
receivable, net |
|
|
84,014 |
|
|
|
79,411 |
|
|
Inventories, net |
|
|
69,365 |
|
|
|
87,529 |
|
|
Prepaid
and other current assets |
|
|
7,296 |
|
|
|
7,406 |
|
|
Total
current assets |
|
|
189,678 |
|
|
|
191,801 |
|
|
Property, plant and
equipment, net |
|
|
201,370 |
|
|
|
211,131 |
|
|
Goodwill |
|
|
219,627 |
|
|
|
222,194 |
|
|
Intangible assets,
net |
|
|
121,919 |
|
|
|
139,778 |
|
|
Other assets |
|
|
9,255 |
|
|
|
8,975 |
|
|
Total
assets |
|
$ |
741,849 |
|
|
$ |
773,879 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
52,389 |
|
|
$ |
44,150 |
|
|
Accrued
liabilities |
|
|
45,968 |
|
|
|
38,871 |
|
|
Income
taxes payable |
|
|
2,780 |
|
|
|
2,192 |
|
|
Current
maturities of long-term debt |
|
|
1,224 |
|
|
|
21,242 |
|
|
Total
current liabilities |
|
|
102,361 |
|
|
|
106,455 |
|
|
Long-term debt |
|
|
209,332 |
|
|
|
218,184 |
|
|
Deferred pension and
postretirement benefits |
|
|
4,218 |
|
|
|
4,433 |
|
|
Deferred income
taxes |
|
|
17,215 |
|
|
|
21,960 |
|
|
Liabilities for
uncertain tax positions |
|
|
606 |
|
|
|
591 |
|
|
Other liabilities |
|
|
13,965 |
|
|
|
15,409 |
|
|
Total
liabilities |
|
|
347,697 |
|
|
|
367,032 |
|
|
Stockholders’
equity: |
|
|
|
|
|
Common
stock |
|
|
374 |
|
|
|
375 |
|
|
Additional paid-in-capital |
|
|
254,678 |
|
|
|
255,719 |
|
|
Retained
earnings |
|
|
242,834 |
|
|
|
225,704 |
|
|
Accumulated other comprehensive loss |
|
|
(30,705 |
) |
|
|
(25,076 |
) |
|
Treasury
stock at cost |
|
|
(73,029 |
) |
|
|
(49,875 |
) |
|
Total
stockholders’ equity |
|
|
394,152 |
|
|
|
406,847 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
741,849 |
|
|
$ |
773,879 |
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
Twelve Months Ended October 31, |
|
|
2018 |
|
2017 (1) |
|
Operating activities: |
|
|
|
|
Net
income |
$ |
26,328 |
|
|
$ |
18,683 |
|
|
Adjustments to reconcile net income to cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
51,822 |
|
|
|
57,495 |
|
|
Stock-based compensation |
|
1,874 |
|
|
|
5,189 |
|
|
Deferred
income tax |
|
(5,631 |
) |
|
|
(112 |
) |
|
(Gain)
loss on the disposition of capital assets |
|
(142 |
) |
|
|
1,528 |
|
|
Charge
for deferred loan costs |
|
1,064 |
|
|
|
- |
|
|
Other,
net |
|
135 |
|
|
|
1,741 |
|
|
Changes
in assets and liabilities: |
|
|
|
|
(Increase) decrease in accounts receivable |
|
(5,550 |
) |
|
|
5,378 |
|
|
Decrease
(increase) in inventory |
|
17,530 |
|
|
|
(3,240 |
) |
|
Decrease
in other current assets |
|
217 |
|
|
|
186 |
|
|
Increase
(decrease) in accounts payable |
|
8,325 |
|
|
|
(4,893 |
) |
|
Increase
(decrease) in accrued liabilities |
|
6,892 |
|
|
|
(7,521 |
) |
|
Increase
in income taxes payable |
|
676 |
|
|
|
4,670 |
|
|
Increase
(decrease) in deferred pension and postretirement benefits |
|
2,038 |
|
|
|
(271 |
) |
|
(Decrease) Increase in other long-term liabilities |
|
(523 |
) |
|
|
1,382 |
|
|
Other,
net |
|
(444 |
) |
|
|
(437 |
) |
|
Cash provided by
operating activities |
|
104,611 |
|
|
|
79,778 |
|
|
Investing activities: |
|
|
|
|
Acquisitions, net of cash acquired |
|
- |
|
|
|
(8,497 |
) |
|
Capital
expenditures |
|
(26,484 |
) |
|
|
(34,564 |
) |
|
Proceeds
from disposition of capital assets |
|
432 |
|
|
|
1,937 |
|
|
Cash used for investing
activities |
|
(26,052 |
) |
|
|
(41,124 |
) |
|
Financing activities: |
|
|
|
|
Borrowings under credit facilities |
|
268,500 |
|
|
|
53,500 |
|
|
Repayments of credit facility borrowings |
|
(296,250 |
) |
|
|
(98,875 |
) |
|
Debt
issuance costs |
|
(1,001 |
) |
|
|
- |
|
|
Repayments of other long-term debt |
|
(1,798 |
) |
|
|
(2,722 |
) |
|
Common
stock dividends paid |
|
(7,020 |
) |
|
|
(5,516 |
) |
|
Issuance
of common stock |
|
4,746 |
|
|
|
7,953 |
|
|
Payroll
tax paid to settle shares forfeited upon vesting of stock |
|
(960 |
) |
|
|
(976 |
) |
|
Purchase
of treasury stock |
|
(32,034 |
) |
|
|
- |
|
|
Cash used for financing
activities |
|
(65,817 |
) |
|
|
(46,636 |
) |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(1,194 |
) |
|
|
(89 |
) |
|
Decrease in cash and
cash equivalents |
|
11,548 |
|
|
|
(8,071 |
) |
|
Cash and cash
equivalents at beginning of period |
|
17,455 |
|
|
|
25,526 |
|
|
Cash and cash
equivalents at end of period |
$ |
29,003 |
|
|
$ |
17,455 |
|
|
|
|
|
|
|
(1)
Updated to reflect adoption of ASU 2016-09. |
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
|
FREE CASH FLOW RECONCILIATION |
|
(In thousands) |
|
(Unaudited) |
|
|
|
The following table reconciles the Company's calculation of
Free Cash Flow, a non-GAAP measure, to its most directly comparable
GAAP measure. The Company defines Free Cash Flow as cash
provided by operating activities less capital expenditures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Cash provided by
operating activities |
|
$56,158 |
|
|
$33,313 |
|
|
|
104,611 |
|
|
|
79,778 |
|
|
Capital
expenditures |
|
|
(5,386 |
) |
|
|
(7,466 |
) |
|
|
(26,484 |
) |
|
|
(34,564 |
) |
|
Free Cash Flow |
|
$50,772 |
|
|
$25,847 |
|
|
$78,127 |
|
|
$45,214 |
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
|
NON-GAAP FINANCIAL MEASURE
DISCLOSURE |
|
(In thousands, except per share data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted Net Income and Adjusted EPS |
|
Three Months EndedOctober 31,
2018 |
|
|
Three Months EndedOctober 31,
2017 |
|
|
Twelve Months EndedOctober 31,
2018 |
|
|
Twelve Months EndedOctober 31,
2017 |
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net
income as reported |
|
$ |
6,492 |
|
|
$ |
0.19 |
|
|
|
$ |
10,732 |
|
|
$ |
0.31 |
|
|
|
$ |
26,328 |
|
|
$ |
0.75 |
|
|
|
$ |
18,683 |
|
|
$ |
0.54 |
|
|
|
Reconciling items from below |
|
|
1,085 |
|
|
|
0.03 |
|
|
|
|
2,337 |
|
|
|
0.06 |
|
|
|
|
(3,642 |
) |
|
|
(0.11 |
) |
|
|
|
8,303 |
|
|
|
0.23 |
|
|
|
Adjusted
net income and adjusted EPS |
|
$ |
7,577 |
|
|
$ |
0.22 |
|
|
|
$ |
13,069 |
|
|
$ |
0.37 |
|
|
|
$ |
22,686 |
|
|
$ |
0.65 |
|
|
|
$ |
26,986 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Adjusted EBITDA |
|
Three Months Ended October 31,
2018 |
|
|
Three Months Ended October 31,
2017 |
|
|
Twelve Months Ended October
31, 2018 |
|
|
Twelve Months Ended October
31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Net
income as reported |
|
$ |
6,492 |
|
|
|
|
|
$ |
10,732 |
|
|
|
|
|
$ |
26,328 |
|
|
|
|
|
$ |
18,683 |
|
|
|
|
|
Income
tax expense (benefit) |
|
|
1,661 |
|
|
|
|
|
|
3,188 |
|
|
|
|
|
|
(875 |
) |
|
|
|
|
|
6,819 |
|
|
|
|
|
Other,
net |
|
|
(28 |
) |
|
|
|
|
|
(158 |
) |
|
|
|
|
|
(178 |
) |
|
|
|
|
|
(730 |
) |
|
|
|
|
Interest
expense |
|
|
3,516 |
|
|
|
|
|
|
2,469 |
|
|
|
|
|
|
11,100 |
|
|
|
|
|
|
9,595 |
|
|
|
|
|
Depreciation and amortization |
|
|
12,548 |
|
|
|
|
|
|
13,794 |
|
|
|
|
|
|
51,822 |
|
|
|
|
|
|
57,495 |
|
|
|
|
|
EBITDA |
|
|
24,189 |
|
|
|
|
|
|
30,025 |
|
|
|
|
|
|
88,197 |
|
|
|
|
|
|
91,862 |
|
|
|
|
|
Reconciling items from below |
|
|
1,043 |
|
|
|
|
|
|
3,263 |
|
|
|
|
|
|
2,693 |
|
|
|
|
|
|
7,156 |
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
25,232 |
|
|
|
|
|
$ |
33,288 |
|
|
|
|
|
$ |
90,890 |
|
|
|
|
|
$ |
99,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
Items |
|
Three Months Ended October 31,
2018 |
|
|
Three Months Ended October 31,
2017 |
|
|
Twelve Months Ended October
31, 2018 |
|
|
Twelve Months Ended October
31, 2017 |
|
|
|
|
Income Statement |
|
Reconciling
Items |
|
|
Income Statement |
|
Reconciling
Items |
|
|
Income Statement |
|
Reconciling
Items |
|
|
Income Statement |
|
Reconciling
Items |
|
|
Net
sales |
|
$ |
244,086 |
|
|
$ |
- |
|
|
|
$ |
232,959 |
|
|
$ |
- |
|
|
|
$ |
889,785 |
|
|
$ |
- |
|
|
|
$ |
866,555 |
|
|
$ |
- |
|
|
|
Cost of
sales |
|
|
187,776 |
|
|
|
(300 |
) |
(1 |
) |
|
|
178,325 |
|
|
|
- |
|
|
|
|
696,567 |
|
|
|
(300 |
) |
(1 |
) |
|
|
672,162 |
|
|
|
(104 |
) |
(2 |
) |
|
Selling, general and
administrative |
|
|
31,486 |
|
|
|
(108 |
) |
(3 |
) |
|
|
23,142 |
|
|
|
(1,796 |
) |
(3 |
) |
|
|
103,535 |
|
|
|
(907 |
) |
(3 |
) |
|
|
97,981 |
|
|
|
(2,502 |
) |
(3 |
) |
|
Restructuring charges |
|
|
635 |
|
|
|
(635 |
) |
(4 |
) |
|
|
1,467 |
|
|
|
(1,467 |
) |
(4 |
) |
|
|
1,486 |
|
|
|
(1,486 |
) |
(4 |
) |
|
|
4,550 |
|
|
|
(4,550 |
) |
(4 |
) |
|
EBITDA |
|
|
24,189 |
|
|
|
1,043 |
|
|
|
|
30,025 |
|
|
|
3,263 |
|
|
|
|
88,197 |
|
|
|
2,693 |
|
|
|
|
91,862 |
|
|
|
7,156 |
|
|
|
Depreciation and amortization |
|
|
12,548 |
|
|
|
- |
|
|
|
|
13,794 |
|
|
|
(731 |
) |
(5 |
) |
|
|
51,822 |
|
|
|
(852 |
) |
(6 |
) |
|
|
57,495 |
|
|
|
(6,233 |
) |
(5 |
) |
|
Operating income |
|
|
11,641 |
|
|
|
1,043 |
|
|
|
|
16,231 |
|
|
|
3,994 |
|
|
|
|
36,375 |
|
|
|
3,545 |
|
|
|
|
34,367 |
|
|
|
13,389 |
|
|
|
Interest
expense |
|
|
(3,516 |
) |
|
|
1,064 |
|
|
|
|
(2,469 |
) |
|
|
- |
|
|
|
|
(11,100 |
) |
|
|
1,064 |
|
|
|
|
(9,595 |
) |
|
|
- |
|
|
|
Other,
net |
|
|
28 |
|
|
|
(14 |
) |
(7 |
) |
|
|
158 |
|
|
|
(111 |
) |
(7 |
) |
|
|
178 |
|
|
|
(102 |
) |
(7 |
) |
|
|
730 |
|
|
|
(625 |
) |
(7 |
) |
|
Income
before income taxes |
|
|
8,153 |
|
|
|
2,093 |
|
|
|
|
13,920 |
|
|
|
3,883 |
|
|
|
|
25,453 |
|
|
|
4,507 |
|
|
|
|
25,502 |
|
|
|
12,764 |
|
|
|
Income
tax (expense) benefit |
|
|
(1,661 |
) |
|
|
(1,008 |
) |
(8 |
) |
|
|
(3,188 |
) |
|
|
(1,546 |
) |
(8 |
) |
|
|
875 |
|
|
|
(8,149 |
) |
(8 |
) |
|
|
(6,819 |
) |
|
|
(4,461 |
) |
(8 |
) |
|
Net
income (loss) |
|
$ |
6,492 |
|
|
$ |
1,085 |
|
|
|
$ |
10,732 |
|
|
$ |
2,337 |
|
|
|
$ |
26,328 |
|
|
$ |
(3,642 |
) |
|
|
$ |
18,683 |
|
|
$ |
8,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share |
|
$ |
0.19 |
|
|
|
|
|
$ |
0.31 |
|
|
|
|
|
$ |
0.75 |
|
|
|
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) LIFO
inventory reserve adjustment. |
|
(2)
Relates to purchase price accounting inventory step-up impact from
HL Plastics acquisition. |
|
(3)
Transaction and advisory fees and in 2017, the loss on the sale of
a plant in 4Q17. |
|
|
|
|
|
|
|
|
|
(4)
Restructuring charges relate to the closure of several
manufacturing plant facilities. |
|
(5)
Accelerated depreciation and amortization for restructured PP&E
and intangible assets. |
|
|
(6)
Accelerated depreciation for a plant re-layout in the North
American Cabinet Components segment. |
|
|
(7)
Foreign currency transaction gains. |
|
|
(8) Impact
on a with and without basis. Twelve months ended October 31,
2018 includes $6.5 million adjustment related to the Tax Cuts and
Jobs Act. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
|
|
|
NA Engineered Components |
|
EU Engineered Components |
|
NA Cabinet Components |
|
Unallocated Corp &
Other |
|
Total |
|
Three months
ended October 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
135,086 |
|
|
$ |
44,491 |
|
|
$ |
66,108 |
|
|
$ |
(1,599 |
) |
|
$ |
244,086 |
|
|
Cost of
sales |
|
|
102,129 |
|
|
|
31,634 |
|
|
|
54,996 |
|
|
|
(983 |
) |
|
|
187,776 |
|
|
Selling,
general and administrative |
|
|
14,755 |
|
|
|
5,971 |
|
|
|
5,605 |
|
|
|
5,155 |
|
|
|
31,486 |
|
|
Restructuring charges |
|
|
629 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
635 |
|
|
Depreciation and amortization |
|
|
6,687 |
|
|
|
2,278 |
|
|
|
3,444 |
|
|
|
139 |
|
|
|
12,548 |
|
|
Operating
income (loss) |
|
|
10,886 |
|
|
|
4,608 |
|
|
|
2,057 |
|
|
|
(5,910 |
) |
|
|
11,641 |
|
|
Depreciation and amortization |
|
|
6,687 |
|
|
|
2,278 |
|
|
|
3,444 |
|
|
|
139 |
|
|
|
12,548 |
|
|
EBITDA |
|
|
17,573 |
|
|
|
6,886 |
|
|
|
5,501 |
|
|
|
(5,771 |
) |
|
|
24,189 |
|
|
LIFO
inventory reserve adjustment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
|
|
300 |
|
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
108 |
|
|
|
108 |
|
|
Restructuring charges |
|
|
629 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
635 |
|
|
Adjusted
EBITDA |
|
$ |
18,202 |
|
|
$ |
6,886 |
|
|
$ |
5,507 |
|
|
$ |
(5,363 |
) |
|
$ |
25,232 |
|
|
Adjusted
EBITDA Margin % |
|
|
13.5 |
% |
|
|
15.5 |
% |
|
|
8.3 |
% |
|
|
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended October 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
131,380 |
|
|
$ |
41,830 |
|
|
$ |
61,110 |
|
|
$ |
(1,361 |
) |
|
$ |
232,959 |
|
|
Cost of
sales |
|
|
97,523 |
|
|
|
29,572 |
|
|
|
52,214 |
|
|
|
(984 |
) |
|
|
178,325 |
|
|
Selling,
general and administrative |
|
|
14,076 |
|
|
|
5,449 |
|
|
|
3,887 |
|
|
|
(270 |
) |
|
|
23,142 |
|
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
110 |
|
|
|
- |
|
|
|
1,467 |
|
|
Depreciation and amortization |
|
|
7,932 |
|
|
|
2,080 |
|
|
|
3,650 |
|
|
|
132 |
|
|
|
13,794 |
|
|
Operating
income (loss) |
|
|
10,492 |
|
|
|
4,729 |
|
|
|
1,249 |
|
|
|
(239 |
) |
|
|
16,231 |
|
|
Depreciation and amortization |
|
|
7,932 |
|
|
|
2,080 |
|
|
|
3,650 |
|
|
|
132 |
|
|
|
13,794 |
|
|
EBITDA |
|
|
18,424 |
|
|
|
6,809 |
|
|
|
4,899 |
|
|
|
(107 |
) |
|
|
30,025 |
|
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
169 |
|
|
|
169 |
|
|
Loss on
sale of plant |
|
|
1,627 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,627 |
|
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
110 |
|
|
|
- |
|
|
|
1,467 |
|
|
Adjusted
EBITDA |
|
$ |
21,408 |
|
|
$ |
6,809 |
|
|
$ |
5,009 |
|
|
$ |
62 |
|
|
$ |
33,288 |
|
|
Adjusted
EBITDA Margin % |
|
|
16.3 |
% |
|
|
16.3 |
% |
|
|
8.2 |
% |
|
|
|
|
14.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended October 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
485,366 |
|
|
$ |
159,973 |
|
|
$ |
249,813 |
|
|
$ |
(5,367 |
) |
|
$ |
889,785 |
|
|
Cost of
sales |
|
|
371,285 |
|
|
|
114,894 |
|
|
|
214,062 |
|
|
|
(3,674 |
) |
|
|
696,567 |
|
|
Selling,
general and administrative |
|
|
53,992 |
|
|
|
22,770 |
|
|
|
17,973 |
|
|
|
8,800 |
|
|
|
103,535 |
|
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
129 |
|
|
|
- |
|
|
|
1,486 |
|
|
Depreciation and amortization |
|
|
27,248 |
|
|
|
9,607 |
|
|
|
14,401 |
|
|
|
566 |
|
|
|
51,822 |
|
|
Operating
income (loss) |
|
|
31,484 |
|
|
|
12,702 |
|
|
|
3,248 |
|
|
|
(11,059 |
) |
|
|
36,375 |
|
|
Depreciation and amortization |
|
|
27,248 |
|
|
|
9,607 |
|
|
|
14,401 |
|
|
|
566 |
|
|
|
51,822 |
|
|
EBITDA |
|
|
58,732 |
|
|
|
22,309 |
|
|
|
17,649 |
|
|
|
(10,493 |
) |
|
|
88,197 |
|
|
LIFO
inventory reserve adjustment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
|
|
300 |
|
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
907 |
|
|
|
907 |
|
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
129 |
|
|
|
- |
|
|
|
1,486 |
|
|
Adjusted
EBITDA |
|
$ |
60,089 |
|
|
$ |
22,309 |
|
|
$ |
17,778 |
|
|
$ |
(9,286 |
) |
|
$ |
90,890 |
|
|
Adjusted
EBITDA Margin % |
|
|
12.4 |
% |
|
|
13.9 |
% |
|
|
7.1 |
% |
|
|
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended October 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
474,878 |
|
|
$ |
147,963 |
|
|
$ |
248,808 |
|
|
$ |
(5,094 |
) |
|
$ |
866,555 |
|
|
Cost of
sales |
|
|
357,806 |
|
|
|
104,876 |
|
|
|
213,257 |
|
|
|
(3,777 |
) |
|
|
672,162 |
|
|
Selling,
general and administrative |
|
|
52,889 |
|
|
|
20,581 |
|
|
|
16,626 |
|
|
|
7,885 |
|
|
|
97,981 |
|
|
Restructuring charges |
|
|
3,564 |
|
|
|
- |
|
|
|
986 |
|
|
|
- |
|
|
|
4,550 |
|
|
Depreciation and amortization |
|
|
34,308 |
|
|
|
8,833 |
|
|
|
13,811 |
|
|
|
543 |
|
|
|
57,495 |
|
|
Operating
income (loss) |
|
|
26,311 |
|
|
|
13,673 |
|
|
|
4,128 |
|
|
|
(9,745 |
) |
|
|
34,367 |
|
|
Depreciation and amortization |
|
|
34,308 |
|
|
|
8,833 |
|
|
|
13,811 |
|
|
|
543 |
|
|
|
57,495 |
|
|
EBITDA |
|
|
60,619 |
|
|
|
22,506 |
|
|
|
17,939 |
|
|
|
(9,202 |
) |
|
|
91,862 |
|
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
497 |
|
|
|
497 |
|
|
Mexico
restructuring, loss on disposal of fixed assets |
|
|
- |
|
|
|
- |
|
|
|
190 |
|
|
|
- |
|
|
|
190 |
|
|
One-time
employee benefit adjustment |
|
|
- |
|
|
|
- |
|
|
|
188 |
|
|
|
- |
|
|
|
188 |
|
|
PPA-Inventory Step-up |
|
|
- |
|
|
|
104 |
|
|
|
- |
|
|
|
- |
|
|
|
104 |
|
|
Loss on
sale of plant |
|
|
1,627 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,627 |
|
|
Restructuring charges |
|
|
3,564 |
|
|
|
- |
|
|
|
986 |
|
|
|
- |
|
|
|
4,550 |
|
|
Adjusted
EBITDA |
|
$ |
65,810 |
|
|
$ |
22,610 |
|
|
$ |
19,303 |
|
|
$ |
(8,705 |
) |
|
$ |
99,018 |
|
|
Adjusted
EBITDA Margin % |
|
|
13.9 |
% |
|
|
15.3 |
% |
|
|
7.8 |
% |
|
|
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
|
SALES ANALYSIS |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
October 31, 2018 |
|
October 31, 2017 |
|
October 31, 2018 |
|
October 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
NA
Engineered Components: |
|
|
|
|
|
|
|
|
|
United States -
fenestration (1) |
$ |
114,299 |
|
|
$ |
110,659 |
|
|
$ |
412,000 |
|
|
$ |
399,694 |
|
|
|
International -
fenestration |
|
11,552 |
|
|
|
9,334 |
|
|
|
39,309 |
|
|
|
34,279 |
|
|
|
United States -
non-fenestration (2) |
|
4,693 |
|
|
|
5,673 |
|
|
|
18,211 |
|
|
|
25,263 |
|
|
|
International -
non-fenestration |
|
4,542 |
|
|
|
5,714 |
|
|
|
15,846 |
|
|
|
15,642 |
|
|
|
|
$ |
135,086 |
|
|
$ |
131,380 |
|
|
$ |
485,366 |
|
|
$ |
474,878 |
|
|
EU
Engineered Components
(3): |
|
|
|
|
|
|
|
|
|
United States -
fenestration |
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
303 |
|
|
|
International -
fenestration (4) |
|
37,816 |
|
|
|
37,015 |
|
|
|
135,415 |
|
|
|
129,140 |
|
|
|
International -
non-fenestration |
|
6,675 |
|
|
|
4,815 |
|
|
|
24,558 |
|
|
|
18,520 |
|
|
|
|
$ |
44,491 |
|
|
$ |
41,830 |
|
|
$ |
159,973 |
|
|
$ |
147,963 |
|
|
NA
Cabinet Components: |
|
|
|
|
|
|
|
|
|
United States -
fenestration |
$ |
4,096 |
|
|
$ |
5,597 |
|
|
$ |
14,596 |
|
|
$ |
17,083 |
|
|
|
United States -
non-fenestration (5) |
|
61,442 |
|
|
|
54,977 |
|
|
|
232,990 |
|
|
|
229,550 |
|
|
|
International -
non-fenestration |
|
570 |
|
|
|
536 |
|
|
|
2,227 |
|
|
|
2,175 |
|
|
|
|
$ |
66,108 |
|
|
$ |
61,110 |
|
|
$ |
249,813 |
|
|
$ |
248,808 |
|
|
Unallocated Corporate & Other: |
|
|
|
|
|
|
|
|
|
Eliminations |
$ |
(1,599 |
) |
|
$ |
(1,361 |
) |
|
$ |
(5,367 |
) |
|
$ |
(5,094 |
) |
|
|
|
$ |
(1,599 |
) |
|
$ |
(1,361 |
) |
|
$ |
(5,367 |
) |
|
$ |
(5,094 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
Sales |
$ |
244,086 |
|
|
$ |
232,959 |
|
|
$ |
889,785 |
|
|
$ |
866,555 |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Reflects the loss of revenue associated with eliminated products of
$1.0 million and $12.7 million for the three and twelve months
ended October 31, 2018. |
|
(2)
Reflects the loss of revenue associated with eliminated products of
$1.9 million and $9.4 million for the three and twelve months ended
October 31, 2018. |
|
(3)
Reflects a loss of $0.6 million and gain of $8.7 million in revenue
associated with foreign currency exchange rate impacts for the
three and twelve months ended October 31, 2018. |
|
(4)
Reflects loss of revenue associated with eliminated products of
$0.4 million and $7.1 million for the three and twelve months ended
October 31, 2018. |
|
(5)
Reflects the loss of revenue associated with eliminated products of
$3.9 million for the twelve months ended October 31, 2018. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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