Quanex Building Products Corporation (NYSE:NX)
(“Quanex” or the “Company”) today announced its results for the
three months ended July 31, 2019.
Bill Griffiths, Chairman, President and Chief
Executive Officer, commented, “We continue to benefit from the
successful implementation of pricing initiatives and we are
performing well operationally, both of which contributed to margin
expansion of approximately 100 basis points on a consolidated basis
during the quarter. More specifically, margins expanded by
approximately 180 basis points in our European and North American
Fenestration segments. Revenue was impacted by
lower-than-expected volumes, primarily in our North American
Cabinet Components segment, coupled with inclement weather in the
U.S. Despite softer-than-expected volumes, we benefitted from
better pricing year-over-year and our European Fenestration segment
realized above market sales growth of 9.3%, excluding foreign
exchange impact, and sales in our North American Fenestration
segment grew at 2.2% during the quarter, which compares favorably
to Ducker’s latest window shipment estimate of negative 2.3% growth
for the three months ended June 30, 2019. Solid free cash
flow generation during the third quarter allowed us to pay down
$32.5 million in bank debt and buyback approximately $1.6 million
in stock.”
Third Quarter 2019 Results
Summary
The Company reported the following selected
financial results:
|
|
Three Months Ended July 31, |
|
|
2019 |
|
2018 |
Net Sales |
|
$238.5 |
|
$239.8 |
Net Income |
|
$11.8 |
|
$10.8 |
Diluted EPS |
|
$0.36 |
|
$0.31 |
|
|
|
|
|
Adjusted Net Income |
|
$13.7 |
|
$11.6 |
Adjusted Diluted EPS |
|
$0.41 |
|
$0.33 |
Adjusted EBITDA |
|
$32.8 |
|
$30.5 |
|
|
|
|
|
Cash provided by operating
activities |
|
$29.9 |
|
$26.8 |
Free Cash Flow |
|
$25.9 |
|
$21.0 |
(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 decrease in net sales during the third
quarter of 2019 was primarily attributable to a weaker demand
environment, mainly in the North American Cabinet Components
segment, and inclement weather in the U.S. However, the
European and North American Fenestration segments continued to
generate net sales growth above that of their respective markets,
largely due to price increases related to raw material inflation
recovery. (See Sales Analysis table for additional information)
The increase in earnings was mostly driven by
the successful implementation of pricing initiatives combined with
operational efficiency gains.
As of July 31, 2019, Quanex’s leverage ratio of
Net Debt to LTM Adjusted EBITDA decreased to 2.0x. Quanex
continues to expect to end fiscal 2019 with a leverage ratio
between 1.5x and 2.0x. (See Non-GAAP Terminology Definitions
and Disclaimers section for additional information)
Share Repurchases
The Company’s Board of Directors authorized a
$60 million share repurchase program in September of 2018.
Repurchases under this program will be made in open market
transactions or privately negotiated transactions, subject to
market conditions, applicable legal requirements and other relevant
factors. The program does not have an expiration date or a
limit on the number of shares that may be repurchased. During
the three months ended July 31, 2019, Quanex repurchased 93,352
shares of common stock for approximately $1.6 million at an average
price of $17.50 per share. As of July 31, 2019, approximately
$21.6 million remained under the existing share repurchase
authorization.
Outlook
Bill Griffiths, Chairman, President and Chief
Executive Officer, stated, “Looking ahead, we expect a strong
finish to our fiscal year from a cash flow and earnings
perspective, but consolidated revenue is trending below prior
expectations. As such, we now expect consolidated net sales
for the full year 2019 to be flat year-over-year. We continue
to convert well and are maintaining the midpoint of our original
Adjusted EBITDA* guidance, but are revising the guidance to a more
narrow range of $100 million to $105 million. We intend to
stay focused on deleveraging the balance sheet for the remainder of
the year while opportunistically repurchasing stock. In the
future, we will be comfortable with a Leverage Ratio of around
1.5x, at which time we will evaluate all options with respect to
our capital allocation priorities in an effort to enhance
shareholder value.”
*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. Certain items required for such a reconciliation are
outside of the Company’s control and/or cannot be reasonably
predicted or estimated, such as the provision for income taxes.
Recent Events
The Company’s Board of Directors declared a
quarterly cash dividend of $0.08 per share on Quanex’s common
stock, payable September 30, 2019, to shareholders of record on
September 16, 2019.
Conference Call and Webcast
Information
The Company has scheduled a conference call for
Friday, September 6, 2019, 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 6297156, 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 September 20, 2019. To
access the replay dial (855) 859-2056 for domestic callers and
(404) 537-3406 for international callers, in both cases referencing
conference passcode 6297156.
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, certain severance charges,
gain/loss on the sale of fixed assets, restructuring charges, asset
impairment 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, certain severance
charges, gain/loss on the sale of fixed assets, restructuring
charges and asset impairment 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. The Company is not
able to provide reconciliations of forward-looking Adjusted EBITDA
to GAAP financial measures because certain items required for such
reconciliations are outside of Quanex’s control and/or cannot be
reasonably predicted, such as the provision for income taxes.
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, 2018, 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.
|
|
QUANEX BUILDING PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF NET (LOSS)
INCOME |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2019 |
|
|
2018 (1) |
|
|
2019 |
|
|
2018 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
238,461 |
|
|
$ |
239,821 |
|
|
$ |
653,472 |
|
|
$ |
645,699 |
|
Cost of sales |
|
|
181,357 |
|
|
|
185,811 |
|
|
|
511,292 |
|
|
|
509,357 |
|
Selling, general and
administrative |
|
|
25,718 |
|
|
|
24,246 |
|
|
|
77,466 |
|
|
|
72,217 |
|
Restructuring charges |
|
|
94 |
|
|
|
243 |
|
|
|
281 |
|
|
|
851 |
|
Depreciation and
amortization |
|
|
12,182 |
|
|
|
12,691 |
|
|
|
37,158 |
|
|
|
39,274 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
29,978 |
|
|
|
- |
|
Operating income (loss) |
|
|
19,110 |
|
|
|
16,830 |
|
|
|
(2,703 |
) |
|
|
24,000 |
|
Interest expense |
|
|
(2,570 |
) |
|
|
(2,641 |
) |
|
|
(7,614 |
) |
|
|
(7,584 |
) |
Other, net |
|
|
259 |
|
|
|
195 |
|
|
|
461 |
|
|
|
884 |
|
Income (loss) before income
taxes |
|
|
16,799 |
|
|
|
14,384 |
|
|
|
(9,856 |
) |
|
|
17,300 |
|
Income tax (expense)
benefit |
|
|
(4,958 |
) |
|
|
(3,631 |
) |
|
|
(5,926 |
) |
|
|
2,536 |
|
Net income (loss) |
|
$ |
11,841 |
|
|
$ |
10,753 |
|
|
$ |
(15,782 |
) |
|
$ |
19,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common
share, basic |
|
$ |
0.36 |
|
|
$ |
0.31 |
|
|
$ |
(0.48 |
) |
|
$ |
0.57 |
|
Income (loss) per common
share, diluted |
|
$ |
0.36 |
|
|
$ |
0.31 |
|
|
$ |
(0.48 |
) |
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
32,899 |
|
|
|
34,840 |
|
|
|
32,984 |
|
|
|
34,766 |
|
Diluted |
|
|
33,162 |
|
|
|
35,120 |
|
|
|
32,984 |
|
|
|
35,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share |
|
$ |
0.08 |
|
|
$ |
0.04 |
|
|
$ |
0.24 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Updated to reflect adoption of ASU 2017-07. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
July 31, 2019 |
|
October 31, 2018 (1) |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,651 |
|
|
$ |
29,003 |
|
Accounts receivable, net |
|
|
82,302 |
|
|
|
84,014 |
|
Inventories, net |
|
|
84,762 |
|
|
|
70,730 |
|
Prepaid and other current assets |
|
|
8,270 |
|
|
|
7,296 |
|
Total current assets |
|
|
185,985 |
|
|
|
191,043 |
|
Property, plant and equipment,
net |
|
|
190,447 |
|
|
|
201,370 |
|
Goodwill |
|
|
186,829 |
|
|
|
219,627 |
|
Intangible assets, net |
|
|
108,620 |
|
|
|
121,919 |
|
Other assets |
|
|
8,183 |
|
|
|
9,255 |
|
Total assets |
|
$ |
680,064 |
|
|
$ |
743,214 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
52,602 |
|
|
$ |
52,389 |
|
Accrued liabilities |
|
|
30,056 |
|
|
|
45,968 |
|
Income taxes payable |
|
|
3,101 |
|
|
|
2,780 |
|
Current maturities of long-term debt |
|
|
871 |
|
|
|
1,224 |
|
Total current liabilities |
|
|
86,630 |
|
|
|
102,361 |
|
Long-term debt |
|
|
191,109 |
|
|
|
209,332 |
|
Deferred pension and
postretirement benefits |
|
|
6,580 |
|
|
|
4,218 |
|
Deferred income taxes |
|
|
19,051 |
|
|
|
17,510 |
|
Other liabilities |
|
|
15,344 |
|
|
|
14,571 |
|
Total liabilities |
|
|
318,714 |
|
|
|
347,992 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
374 |
|
|
|
374 |
|
Additional paid-in-capital |
|
|
254,053 |
|
|
|
254,678 |
|
Retained earnings |
|
|
219,340 |
|
|
|
243,904 |
|
Accumulated other comprehensive loss |
|
|
(38,274 |
) |
|
|
(30,705 |
) |
Treasury stock at cost |
|
|
(74,143 |
) |
|
|
(73,029 |
) |
Total stockholders’ equity |
|
|
361,350 |
|
|
|
395,222 |
|
Total liabilities and stockholders' equity |
|
$ |
680,064 |
|
|
$ |
743,214 |
|
|
|
|
|
|
|
|
|
|
(1) Updated to reflect accounting change to FIFO cost method. |
|
|
|
|
|
QUANEX BUILDING PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW |
(In thousands) |
(Unaudited) |
|
|
|
Nine Months Ended July 31, |
|
|
2019 |
|
|
|
2018 |
|
Operating activities: |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(15,782 |
) |
|
$ |
19,836 |
|
Adjustments to reconcile net (loss) income to cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
37,158 |
|
|
|
39,274 |
|
Stock-based compensation |
|
1,424 |
|
|
|
1,002 |
|
Deferred income tax |
|
1,930 |
|
|
|
(5,788 |
) |
Asset impairment charges |
|
29,978 |
|
|
|
- |
|
Other, net |
|
1,724 |
|
|
|
404 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable |
|
323 |
|
|
|
(1,247 |
) |
(Increase) decrease in inventory |
|
(14,747 |
) |
|
|
310 |
|
Increase in other current assets |
|
(1,022 |
) |
|
|
(1,242 |
) |
Increase in accounts payable |
|
1,562 |
|
|
|
1,161 |
|
Decrease in accrued liabilities |
|
(15,366 |
) |
|
|
(7,565 |
) |
Increase in income taxes payable |
|
396 |
|
|
|
231 |
|
Increase in deferred pension and postretirement benefits |
|
2,351 |
|
|
|
2,179 |
|
(Decrease) increase in other long-term liabilities |
|
(143 |
) |
|
|
210 |
|
Other, net |
|
250 |
|
|
|
(312 |
) |
Cash provided by operating
activities |
|
30,036 |
|
|
|
48,453 |
|
Investing activities: |
|
|
|
|
|
|
|
Capital expenditures |
|
(16,984 |
) |
|
|
(21,098 |
) |
Proceeds from disposition of capital assets |
|
315 |
|
|
|
260 |
|
Cash used for investing
activities |
|
(16,669 |
) |
|
|
(20,838 |
) |
Financing activities: |
|
|
|
|
|
|
|
Borrowings under credit facilities |
|
66,500 |
|
|
|
33,500 |
|
Repayments of credit facility borrowings |
|
(84,000 |
) |
|
|
(62,750 |
) |
Repayments of other long-term debt |
|
(1,102 |
) |
|
|
(1,394 |
) |
Common stock dividends paid |
|
(7,990 |
) |
|
|
(4,202 |
) |
Issuance of common stock |
|
2,710 |
|
|
|
3,767 |
|
Payroll tax paid to settle shares forfeited upon vesting of
stock |
|
(330 |
) |
|
|
(960 |
) |
Purchase of treasury stock |
|
(6,336 |
) |
|
|
- |
|
Cash used for financing
activities |
|
(30,548 |
) |
|
|
(32,039 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(1,171 |
) |
|
|
(631 |
) |
Decrease in cash and cash
equivalents |
|
(18,352 |
) |
|
|
(5,055 |
) |
Cash and cash equivalents at
beginning of period |
|
29,003 |
|
|
|
17,455 |
|
Cash and cash equivalents at
end of period |
$ |
10,651 |
|
|
$ |
12,400 |
|
|
|
|
|
|
|
|
|
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 July 31, |
|
Nine Months Ended July 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
Cash provided by operating
activities |
|
$ |
29,893 |
|
|
$ |
26,838 |
|
|
$ |
30,036 |
|
|
$ |
48,453 |
|
Capital expenditures |
|
|
(3,962 |
) |
|
|
(5,885 |
) |
|
|
(16,984 |
) |
|
|
(21,098 |
) |
Free Cash Flow |
|
$ |
25,931 |
|
|
$ |
20,953 |
|
|
$ |
13,052 |
|
|
$ |
27,355 |
|
QUANEX BUILDING PRODUCTS CORPORATION |
NON-GAAP FINANCIAL MEASURE DISCLOSURE |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
Reconciliation of
Adjusted Net Income and Adjusted EPS |
|
July 31, 2019 |
|
|
July 31, 2018 |
|
|
July 31, 2019 |
|
|
July 31, 2018 |
|
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
Net income (loss) as reported |
|
$ |
11,841 |
|
|
$ |
0.36 |
|
|
|
$ |
10,753 |
|
|
$ |
0.31 |
|
|
|
$ |
(15,782 |
) |
|
$ |
(0.48 |
) |
|
|
$ |
19,836 |
|
|
$ |
0.56 |
|
|
Reconciling items from below |
|
|
1,809 |
|
|
|
0.05 |
|
|
|
|
828 |
|
|
|
0.02 |
|
|
|
|
33,595 |
|
|
|
1.02 |
|
|
|
|
(4,727 |
) |
|
|
(0.13 |
) |
|
Adjusted net income and adjusted EPS |
|
$ |
13,650 |
|
|
$ |
0.41 |
|
|
|
$ |
11,581 |
|
|
$ |
0.33 |
|
|
|
$ |
17,813 |
|
|
$ |
0.54 |
|
|
|
$ |
15,109 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA |
|
Three Months Ended July 31,
2019 |
|
|
Three Months Ended July 31,
2018 |
|
|
Nine Months Ended July 31,
2019 |
|
|
Nine Months Ended July 31,
2018 |
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
Net income (loss) as reported |
|
$ |
11,841 |
|
|
|
|
|
$ |
10,753 |
|
|
|
|
|
$ |
(15,782 |
) |
|
|
|
|
$ |
19,836 |
|
|
|
|
Income tax expense (benefit) |
|
|
4,958 |
|
|
|
|
|
|
3,631 |
|
|
|
|
|
|
5,926 |
|
|
|
|
|
|
(2,536 |
) |
|
|
|
Other, net |
|
|
(259 |
) |
|
|
|
|
|
(195 |
) |
|
|
|
|
|
(461 |
) |
|
|
|
|
|
(884 |
) |
|
|
|
Interest expense |
|
|
2,570 |
|
|
|
|
|
|
2,641 |
|
|
|
|
|
|
7,614 |
|
|
|
|
|
|
7,584 |
|
|
|
|
Depreciation and amortization |
|
|
12,182 |
|
|
|
|
|
|
12,691 |
|
|
|
|
|
|
37,158 |
|
|
|
|
|
|
39,274 |
|
|
|
|
EBITDA |
|
|
31,292 |
|
|
|
|
|
|
29,521 |
|
|
|
|
|
|
34,455 |
|
|
|
|
|
|
63,274 |
|
|
|
|
Reconciling items from below |
|
|
1,495 |
|
|
|
|
|
|
1,027 |
|
|
|
|
|
|
33,777 |
|
|
|
|
|
|
1,649 |
|
|
|
|
Adjusted EBITDA |
|
$ |
32,787 |
|
|
|
|
|
$ |
30,548 |
|
|
|
|
|
$ |
68,232 |
|
|
|
|
|
$ |
64,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
Items |
|
Three Months Ended July 31,
2019 |
|
|
Three Months Ended July 31,
2018 |
|
|
Nine Months Ended July 31,
2019 |
|
|
Nine Months Ended July 31,
2018 |
|
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
Net sales |
|
$ |
238,461 |
|
|
$ |
- |
|
|
|
$ |
239,821 |
|
|
$ |
- |
|
|
|
$ |
653,472 |
|
|
$ |
- |
|
|
|
$ |
645,699 |
|
|
$ |
- |
|
|
Cost of sales |
|
|
181,357 |
|
|
|
- |
|
|
|
|
185,811 |
|
|
|
- |
|
|
|
|
511,292 |
|
|
|
- |
|
|
|
|
509,357 |
|
|
|
- |
|
|
Selling, general and administrative |
|
|
25,718 |
|
|
|
(1,401 |
) |
(1) |
|
|
24,246 |
|
|
|
(784 |
) |
(1) |
|
|
77,466 |
|
|
|
(3,518 |
) |
(1) |
|
|
72,217 |
|
|
|
(798 |
) |
(1) |
Restructuring charges |
|
|
94 |
|
|
|
(94 |
) |
(2) |
|
|
243 |
|
|
|
(243 |
) |
(2) |
|
|
281 |
|
|
|
(281 |
) |
(2) |
|
|
851 |
|
|
|
(851 |
) |
(2) |
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
29,978 |
|
|
|
(29,978 |
) |
(3) |
|
|
- |
|
|
|
- |
|
|
EBITDA |
|
|
31,292 |
|
|
|
1,495 |
|
|
|
|
29,521 |
|
|
|
1,027 |
|
|
|
|
34,455 |
|
|
|
33,777 |
|
|
|
|
63,274 |
|
|
|
1,649 |
|
|
Depreciation and amortization |
|
|
12,182 |
|
|
|
- |
|
|
|
|
12,691 |
|
|
|
- |
|
|
|
|
37,158 |
|
|
|
- |
|
|
|
|
39,274 |
|
|
|
(852 |
) |
(4) |
Operating income (loss) |
|
|
19,110 |
|
|
|
1,495 |
|
|
|
|
16,830 |
|
|
|
1,027 |
|
|
|
|
(2,703 |
) |
|
|
33,777 |
|
|
|
|
24,000 |
|
|
|
2,501 |
|
|
Interest expense |
|
|
(2,570 |
) |
|
|
- |
|
|
|
|
(2,641 |
) |
|
|
- |
|
|
|
|
(7,614 |
) |
|
|
- |
|
|
|
|
(7,584 |
) |
|
|
- |
|
|
Other, net |
|
|
259 |
|
|
|
(112 |
) |
(5) |
|
|
195 |
|
|
|
79 |
|
(5) |
|
|
461 |
|
|
|
(67 |
) |
(5) |
|
|
884 |
|
|
|
(88 |
) |
(5) |
Income (loss) before income taxes |
|
|
16,799 |
|
|
|
1,383 |
|
|
|
|
14,384 |
|
|
|
1,106 |
|
|
|
|
(9,856 |
) |
|
|
33,710 |
|
|
|
|
17,300 |
|
|
|
2,413 |
|
|
Income tax (expense) benefit |
|
|
(4,958 |
) |
|
|
426 |
|
(6) |
|
|
(3,631 |
) |
|
|
(278 |
) |
(6) |
|
|
(5,926 |
) |
|
|
(115 |
) |
(6) |
|
|
2,536 |
|
|
|
(7,140 |
) |
(6 |
Net income (loss) |
|
$ |
11,841 |
|
|
$ |
1,809 |
|
|
|
$ |
10,753 |
|
|
$ |
828 |
|
|
|
$ |
(15,782 |
) |
|
$ |
33,595 |
|
|
|
$ |
19,836 |
|
|
$ |
(4,727 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share |
|
$ |
0.36 |
|
|
|
|
|
$ |
0.31 |
|
|
|
|
|
$ |
(0.48 |
) |
|
|
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Transaction
and advisory fees, $1.2 million of executive severance charges in
the three and nine months ended July 31, 2019, and in the nine
months ended July 31, 2019, $1.2 million of severance related to a
reorganization. |
(2) Restructuring
charges relate to the closure of several manufacturing plant
facilities. |
(3) Asset
impairment charges relate to a goodwill impairment in the North
American Cabinet Components segment. |
(4) Accelerated
depreciation for plant re-layout in the North American Cabinet
Components segment. |
(5) Foreign
currency transaction (gains) losses. |
(6) Impact on a with and without basis. Three and nine months
ended July 31, 2019 include $0.8 million and $0.6 million of tax
expense adjustment, respectively, and nine months ended July 31,
2018 includes $6.5 million of tax benefit 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 Fenestration (1) |
|
EU Fenestration (1) |
|
NA Cabinet Components |
|
Unallocated Corp & Other |
|
Total |
Three months ended
July 31, 2019 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
136,259 |
|
|
$ |
44,326 |
|
|
$ |
58,689 |
|
|
$ |
(813 |
) |
|
$ |
238,461 |
|
Cost of sales |
|
|
101,693 |
|
|
|
30,708 |
|
|
|
49,389 |
|
|
|
(433 |
) |
|
|
181,357 |
|
Selling, general and administrative |
|
|
11,950 |
|
|
|
6,038 |
|
|
|
4,484 |
|
|
|
3,246 |
|
|
|
25,718 |
|
Restructuring charges |
|
|
94 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
94 |
|
Depreciation and amortization |
|
|
6,578 |
|
|
|
2,213 |
|
|
|
3,258 |
|
|
|
133 |
|
|
|
12,182 |
|
Operating income (loss) |
|
|
15,944 |
|
|
|
5,367 |
|
|
|
1,558 |
|
|
|
(3,759 |
) |
|
|
19,110 |
|
Depreciation and amortization |
|
|
6,578 |
|
|
|
2,213 |
|
|
|
3,258 |
|
|
|
133 |
|
|
|
12,182 |
|
EBITDA |
|
|
22,522 |
|
|
|
7,580 |
|
|
|
4,816 |
|
|
|
(3,626 |
) |
|
|
31,292 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250 |
|
|
|
250 |
|
Severance charges |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,151 |
|
|
|
1,151 |
|
Restructuring charges |
|
|
94 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
94 |
|
Adjusted EBITDA |
|
$ |
22,616 |
|
|
$ |
7,580 |
|
|
$ |
4,816 |
|
|
$ |
(2,225 |
) |
|
$ |
32,787 |
|
Adjusted EBITDA Margin % |
|
|
16.6 |
% |
|
|
17.1 |
% |
|
|
8.2 |
% |
|
|
|
|
13.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three months ended
July 31, 2018 (2) |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
133,397 |
|
|
$ |
42,661 |
|
|
$ |
65,114 |
|
|
$ |
(1,351 |
) |
|
$ |
239,821 |
|
Cost of sales |
|
|
101,179 |
|
|
|
30,840 |
|
|
|
54,776 |
|
|
|
(984 |
) |
|
|
185,811 |
|
Selling, general and administrative (3) |
|
|
12,525 |
|
|
|
5,292 |
|
|
|
3,280 |
|
|
|
3,149 |
|
|
|
24,246 |
|
Restructuring charges |
|
|
240 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
243 |
|
Depreciation and amortization |
|
|
6,741 |
|
|
|
2,352 |
|
|
|
3,432 |
|
|
|
166 |
|
|
|
12,691 |
|
Operating income (loss) |
|
|
12,712 |
|
|
|
4,177 |
|
|
|
3,623 |
|
|
|
(3,682 |
) |
|
|
16,830 |
|
Depreciation and amortization |
|
|
6,741 |
|
|
|
2,352 |
|
|
|
3,432 |
|
|
|
166 |
|
|
|
12,691 |
|
EBITDA |
|
|
19,453 |
|
|
|
6,529 |
|
|
|
7,055 |
|
|
|
(3,516 |
) |
|
|
29,521 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
784 |
|
|
|
784 |
|
Restructuring charges |
|
|
240 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
243 |
|
Adjusted EBITDA |
|
$ |
19,693 |
|
|
$ |
6,529 |
|
|
$ |
7,058 |
|
|
$ |
(2,732 |
) |
|
$ |
30,548 |
|
Adjusted EBITDA Margin % |
|
|
14.8 |
% |
|
|
15.3 |
% |
|
|
10.8 |
% |
|
|
|
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Nine months ended July
31, 2019 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
360,654 |
|
|
$ |
121,203 |
|
|
$ |
175,377 |
|
|
$ |
(3,762 |
) |
|
$ |
653,472 |
|
Cost of sales |
|
|
278,877 |
|
|
|
84,139 |
|
|
|
150,944 |
|
|
|
(2,668 |
) |
|
|
511,292 |
|
Selling, general and administrative |
|
|
37,240 |
|
|
|
17,444 |
|
|
|
13,914 |
|
|
|
8,868 |
|
|
|
77,466 |
|
Restructuring charges |
|
|
281 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
281 |
|
Depreciation and amortization |
|
|
20,208 |
|
|
|
6,669 |
|
|
|
9,902 |
|
|
|
379 |
|
|
|
37,158 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
29,978 |
|
|
|
- |
|
|
|
29,978 |
|
Operating income (loss) |
|
|
24,048 |
|
|
|
12,951 |
|
|
|
(29,361 |
) |
|
|
(10,341 |
) |
|
|
(2,703 |
) |
Depreciation and amortization |
|
|
20,208 |
|
|
|
6,669 |
|
|
|
9,902 |
|
|
|
379 |
|
|
|
37,158 |
|
EBITDA |
|
|
44,256 |
|
|
|
19,620 |
|
|
|
(19,459 |
) |
|
|
(9,962 |
) |
|
|
34,455 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
29,978 |
|
|
|
- |
|
|
|
29,978 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,217 |
|
|
|
1,217 |
|
Severance charges |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,301 |
|
|
|
2,301 |
|
Restructuring charges |
|
|
281 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
281 |
|
Adjusted EBITDA |
|
$ |
44,537 |
|
|
$ |
19,620 |
|
|
$ |
10,519 |
|
|
$ |
(6,444 |
) |
|
$ |
68,232 |
|
Adjusted EBITDA Margin % |
|
|
12.3 |
% |
|
|
16.2 |
% |
|
|
6.0 |
% |
|
|
|
|
10.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Nine months ended July
31, 2018 (2) |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
350,280 |
|
|
$ |
115,481 |
|
|
$ |
183,705 |
|
|
$ |
(3,767 |
) |
|
$ |
645,699 |
|
Cost of sales |
|
|
269,660 |
|
|
|
83,261 |
|
|
|
159,128 |
|
|
|
(2,692 |
) |
|
|
509,357 |
|
Selling, general and administrative (3) |
|
|
39,371 |
|
|
|
16,798 |
|
|
|
12,368 |
|
|
|
3,680 |
|
|
|
72,217 |
|
Restructuring charges |
|
|
728 |
|
|
|
- |
|
|
|
123 |
|
|
|
- |
|
|
|
851 |
|
Depreciation and amortization |
|
|
20,561 |
|
|
|
7,328 |
|
|
|
10,957 |
|
|
|
428 |
|
|
|
39,274 |
|
Operating income (loss) |
|
|
19,960 |
|
|
|
8,094 |
|
|
|
1,129 |
|
|
|
(5,183 |
) |
|
|
24,000 |
|
Depreciation and amortization |
|
|
20,561 |
|
|
|
7,328 |
|
|
|
10,957 |
|
|
|
428 |
|
|
|
39,274 |
|
EBITDA |
|
|
40,521 |
|
|
|
15,422 |
|
|
|
12,086 |
|
|
|
(4,755 |
) |
|
|
63,274 |
|
Transaction related costs |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
798 |
|
|
|
798 |
|
Restructuring charges |
|
|
728 |
|
|
|
- |
|
|
|
123 |
|
|
|
- |
|
|
|
851 |
|
Adjusted EBITDA |
|
$ |
41,249 |
|
|
$ |
15,422 |
|
|
$ |
12,209 |
|
|
$ |
(3,957 |
) |
|
$ |
64,923 |
|
Adjusted EBITDA Margin % |
|
|
11.8 |
% |
|
|
13.4 |
% |
|
|
6.6 |
% |
|
|
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
(1) NA
Fenestration and EU Fenestration were previously named "NA
Engineered Components" and "EU Engineered Components,"
respectively. |
|
|
|
|
|
|
(2) Updated to reflect the
adoption of ASU 2017-07. |
|
|
|
|
|
|
|
|
|
|
(3) Updated to
reflect a reduction in corporate allocations of $1.2 million and
$2.1 million during the three and nine months ended July 31, 2018
due to a change in allocation methodology during the fourth quarter
of 2018. |
|
QUANEX BUILDING PRODUCTS CORPORATION |
SALES ANALYSIS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
July 31, 2019 |
|
July 31, 2018 |
|
July 31, 2019 |
|
July 31, 2018 |
|
|
|
|
|
|
|
|
|
NA
Fenestration: |
|
|
|
|
|
|
|
|
United States - fenestration |
$ |
119,481 |
|
|
$ |
112,914 |
|
|
$ |
312,509 |
|
|
$ |
297,700 |
|
|
International -
fenestration |
|
7,172 |
|
|
|
11,851 |
|
|
|
23,474 |
|
|
|
27,758 |
|
|
United States -
non-fenestration |
|
3,982 |
|
|
|
4,675 |
|
|
|
12,290 |
|
|
|
13,518 |
|
|
International -
non-fenestration |
|
5,624 |
|
|
|
3,957 |
|
|
|
12,381 |
|
|
|
11,304 |
|
|
|
$ |
136,259 |
|
|
$ |
133,397 |
|
|
$ |
360,654 |
|
|
$ |
350,280 |
|
EU
Fenestration (1): |
|
|
|
|
|
|
|
|
International -
fenestration |
$ |
36,342 |
|
|
$ |
34,881 |
|
|
$ |
102,038 |
|
|
$ |
97,597 |
|
|
International -
non-fenestration |
|
7,984 |
|
|
|
7,780 |
|
|
|
19,165 |
|
|
|
17,884 |
|
|
|
$ |
44,326 |
|
|
$ |
42,661 |
|
|
$ |
121,203 |
|
|
$ |
115,481 |
|
NA Cabinet
Components: |
|
|
|
|
|
|
|
|
United States -
fenestration |
$ |
3,561 |
|
|
$ |
3,650 |
|
|
$ |
9,909 |
|
|
$ |
10,500 |
|
|
United States -
non-fenestration |
|
54,512 |
|
|
|
60,843 |
|
|
|
163,694 |
|
|
|
171,547 |
|
|
International -
non-fenestration |
|
616 |
|
|
|
621 |
|
|
|
1,774 |
|
|
|
1,658 |
|
|
|
$ |
58,689 |
|
|
$ |
65,114 |
|
|
$ |
175,377 |
|
|
$ |
183,705 |
|
Unallocated Corporate & Other: |
|
|
|
|
|
|
|
|
Eliminations |
$ |
(813 |
) |
|
$ |
(1,351 |
) |
|
$ |
(3,762 |
) |
|
$ |
(3,767 |
) |
|
|
$ |
(813 |
) |
|
$ |
(1,351 |
) |
|
$ |
(3,762 |
) |
|
$ |
(3,767 |
) |
|
|
|
|
|
|
|
|
|
Net
Sales |
$ |
238,461 |
|
|
$ |
239,821 |
|
|
$ |
653,472 |
|
|
$ |
645,699 |
|
|
|
|
|
|
|
|
|
|
(1) Reflects
reductions of $2.1 million and $6.5 million in revenue associated
with foreign currency exchange rate impacts for the three and nine
months ended July 31, 2019. |
|
|
|
|
|
|
|
|
|
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