Quanex Building Products Corporation (NYSE:NX)
(“Quanex” or the “Company”) today announced its results for the
three months and twelve months ended October 31, 2019.
The Company reported the following selected
financial results:
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
|
$240.4 |
|
$244.1 |
|
$893.8 |
|
$889.8 |
Gross
Margin |
|
$57.2 |
|
$56.4 |
|
$199.4 |
|
$192.8 |
Gross Margin % |
|
23.8% |
|
23.1% |
|
22.3% |
|
21.7% |
Net (Loss)
Income |
|
($30.9) |
|
$6.7 |
|
($46.7) |
|
$26.6 |
Diluted
EPS |
|
($0.94) |
|
$0.19 |
|
($1.42) |
|
$0.76 |
|
|
|
|
|
|
|
|
|
Adjusted Net
Income |
|
$14.0 |
|
$7.6 |
|
$31.4 |
|
$22.7 |
Adjusted
Diluted EPS |
|
$0.42 |
|
$0.22 |
|
$0.95 |
|
$0.65 |
Adjusted
EBITDA |
|
$34.4 |
|
$25.0 |
|
$102.7 |
|
$89.9 |
Adjusted EBITDA Margin % |
|
14.3% |
|
10.2% |
|
11.5% |
|
10.1% |
|
|
|
|
|
|
|
|
|
Cash
provided by operating activities |
|
$66.3 |
|
$56.2 |
|
$96.4 |
|
$104.6 |
Free Cash
Flow |
|
$58.4 |
|
$50.8 |
|
$71.5 |
|
$78.1 |
(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) |
Bill Griffiths, Chairman, President and Chief
Executive Officer, commented, “Overall we are pleased with our
fourth quarter and full year 2019 results. Despite what has
been a softer demand environment compared to our original forecast
for 2019, we converted well operationally and benefitted from
improved pricing. On a consolidated basis, we were able to
realize Adjusted EBITDA margin expansion of approximately 410 basis
points in the fourth quarter and approximately 140 basis points for
the full year. Furthermore, in our North American
Fenestration segment, those margins expanded by approximately 250
basis points in the fourth quarter and approximately 110 basis
points for the full year. In Europe, the margins improved by
approximately 340 basis points in the fourth quarter and
approximately 300 basis points for the full year. It is
important to note that even with softer-than-expected volumes,
sales in our North American Fenestration segment grew at 6.0%
during the fourth quarter and 3.8% for the full year, which
compares favorably to Ducker’s latest window shipment estimate of
negative 0.4% for the three months ended September 30, 2019 and
negative 1.6% for the twelve months ended September 30, 2019.
Excluding foreign exchange impact, we realized above market sales
growth of 3.3% during the fourth quarter and 9.1% for the full year
in our European Fenestration segment. Volumes in our North
American Cabinet Components segment continue to be negatively
impacted by the ongoing shift in the market from semi-custom to
stock cabinets and strategy changes amongst certain
customers.
“Our ongoing effort to improve working capital
helped us achieve another year of solid Free Cash Flow generation,
which allowed us to pay down $52.5 million in bank debt, $35
million in the fourth quarter alone, and buyback approximately $9.6
million in stock. The goal was to generate $50 million to $55
million of Free Cash Flow in fiscal 2019 and exit the year with a
leverage ratio of Net Debt to LTM Adjusted EBITDA of 1.5x.
Needless to say we comfortably exceeded those targets in fiscal
2019 by generating $71.5 million in Free Cash Flow and exiting the
year with a leverage ratio of Net Debt to LTM Adjusted EBITDA of
1.2x.” (See Non-GAAP Terminology Definitions and Disclaimers
section for additional information)
Fourth Quarter and Fiscal Year 2019
Results Summary
The decrease in net sales during the three
months ended October 31, 2019 was primarily attributable to
continued softness in the North American Cabinet Components
segment. However, the Company realized net sales growth for
the twelve months ended October 31, 2019 as the North American and
European Fenestration segments generated revenue growth above that
of their respective markets, mostly due to price increases related
to raw material inflation recovery. (See Sales Analysis table
for additional information)
The decreases in reported earnings were
primarily the result of a $44.6 million non-cash goodwill
impairment in the fourth quarter and a $30.0 million non-cash
goodwill impairment in the second quarter, both in the North
American Cabinet Components segment, mainly due to lower volume
expectations related to the ongoing shift in the market from
semi-custom to stock cabinets and customer specific strategy
changes. The increases in adjusted earnings were largely
driven by lower incentive accruals, operational efficiency gains
and the successful implementation of pricing initiatives in late
2018.
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. Quanex
repurchased 175,000 shares of common stock for approximately $3.2
million at an average price of $18.37 per share during the three
months ended October 31, 2019, and 583,398 shares of common stock
for approximately $9.6 million at an average price of $16.37 per
share during the twelve months ended October 31, 2019. As of
October 31, 2019, approximately $18.4 million remained under the
existing share repurchase authorization.
Outlook
Bill Griffiths, Chairman, President and Chief
Executive Officer, stated, “Based on current trends and the latest
macro data, we are taking a measured approach to our 2020 revenue
forecast. As such, we expect low single-digit sales growth in
our North American and European Fenestration segments, offset by a
continued decline in revenues in our North American Cabinet
Components segment. Overall, on a consolidated basis, this
should equate to sales of approximately $865 million to $885
million in fiscal 2020. However, we expect to continue on our
journey of operational excellence by converting well and managing
costs. Therefore, we expect to generate between $102 million
and $110 million in Adjusted EBITDA* in fiscal 2020, which would
yield margin expansion of approximately 60 basis points to the
midpoint of guidance. We plan to stay focused on generating
cash and maintaining a strong balance sheet while also continuing
to opportunistically repurchase stock.”
*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.
Conference Call and Webcast
Information
The Company has scheduled a conference call for
Thursday, December 12, 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 9067783, 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 26,
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 9067783.
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 certain 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 certain 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 INCOME (LOSS) |
(In thousands,
except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Twelve Months Ended October 31, |
|
|
2019 |
|
2018(1) |
|
2019 |
|
2018(1) |
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
240,369 |
|
|
$ |
244,086 |
|
|
$ |
893,841 |
|
|
$ |
889,785 |
|
Cost of
sales |
|
|
183,128 |
|
|
|
187,660 |
|
|
|
694,420 |
|
|
|
697,022 |
|
Selling,
general and administrative |
|
|
23,826 |
|
|
|
31,547 |
|
|
|
101,292 |
|
|
|
103,758 |
|
Restructuring charges |
|
|
89 |
|
|
|
635 |
|
|
|
370 |
|
|
|
1,486 |
|
Depreciation
and amortization |
|
|
12,428 |
|
|
|
12,548 |
|
|
|
49,586 |
|
|
|
51,822 |
|
Asset
impairment charges |
|
|
44,622 |
|
|
|
- |
|
|
|
74,600 |
|
|
|
- |
|
Operating
(loss) income |
|
|
(23,724 |
) |
|
|
11,696 |
|
|
|
(26,427 |
) |
|
|
35,697 |
|
Interest
expense |
|
|
(2,029 |
) |
|
|
(3,516 |
) |
|
|
(9,643 |
) |
|
|
(11,100 |
) |
Other,
net |
|
|
(345 |
) |
|
|
273 |
|
|
|
116 |
|
|
|
1,156 |
|
(Loss)
income before income taxes |
|
|
(26,098 |
) |
|
|
8,453 |
|
|
|
(35,954 |
) |
|
|
25,753 |
|
Income tax
(expense) benefit |
|
|
(4,850 |
) |
|
|
(1,736 |
) |
|
|
(10,776 |
) |
|
|
800 |
|
Net (loss)
income |
|
$ |
(30,948 |
) |
|
$ |
6,717 |
|
|
$ |
(46,730 |
) |
|
$ |
26,553 |
|
|
|
|
|
|
|
|
|
|
(Loss)
income per common share, basic |
|
$ |
(0.94 |
) |
|
$ |
0.19 |
|
|
$ |
(1.42 |
) |
|
$ |
0.77 |
|
(Loss)
income per common share, diluted |
|
$ |
(0.94 |
) |
|
$ |
0.19 |
|
|
$ |
(1.42 |
) |
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
32,893 |
|
|
|
34,508 |
|
|
|
32,960 |
|
|
|
34,701 |
|
Diluted |
|
|
32,893 |
|
|
|
34,732 |
|
|
|
32,960 |
|
|
|
35,025 |
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
|
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
0.32 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
(1) Reflects
retrospective accounting change to FIFO and adoption of ASU
2017-07. |
|
|
|
|
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATION |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
October 31, 2019 |
|
October 31, 2018(1) |
|
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
30,868 |
|
|
$ |
29,003 |
|
Accounts receivable, net |
|
|
82,946 |
|
|
|
84,014 |
|
Inventories, net |
|
|
67,159 |
|
|
|
70,730 |
|
Prepaid and other current assets |
|
|
9,353 |
|
|
|
7,296 |
|
Total current assets |
|
|
190,326 |
|
|
|
191,043 |
|
Property,
plant and equipment, net |
|
|
193,600 |
|
|
|
201,370 |
|
Goodwill |
|
|
145,563 |
|
|
|
219,627 |
|
Intangible
assets, net |
|
|
107,297 |
|
|
|
121,919 |
|
Other
assets |
|
|
8,324 |
|
|
|
9,255 |
|
Total assets |
|
$ |
645,110 |
|
|
$ |
743,214 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
63,604 |
|
|
$ |
52,389 |
|
Accrued liabilities |
|
|
39,221 |
|
|
|
45,968 |
|
Income taxes payable |
|
|
6,183 |
|
|
|
2,780 |
|
Current maturities of long-term debt |
|
|
746 |
|
|
|
1,224 |
|
Total current liabilities |
|
|
109,754 |
|
|
|
102,361 |
|
Long-term
debt |
|
|
156,414 |
|
|
|
209,332 |
|
Deferred
pension and postretirement benefits |
|
|
13,322 |
|
|
|
4,218 |
|
Deferred
income taxes |
|
|
19,363 |
|
|
|
17,510 |
|
Liabilities
for uncertain tax positions |
|
|
556 |
|
|
|
606 |
|
Other
liabilities |
|
|
15,514 |
|
|
|
13,965 |
|
Total liabilities |
|
|
314,923 |
|
|
|
347,992 |
|
Stockholders’ equity: |
|
|
|
|
Common stock |
|
|
374 |
|
|
|
374 |
|
Additional paid-in-capital |
|
|
254,673 |
|
|
|
254,678 |
|
Retained earnings |
|
|
185,703 |
|
|
|
243,904 |
|
Accumulated other comprehensive loss |
|
|
(33,817 |
) |
|
|
(30,705 |
) |
Treasury stock at cost |
|
|
(76,746 |
) |
|
|
(73,029 |
) |
Total stockholders’ equity |
|
|
330,187 |
|
|
|
395,222 |
|
Total liabilities and stockholders' equity |
|
$ |
645,110 |
|
|
$ |
743,214 |
|
|
|
|
|
|
(1) Reflects retrospective accounting change to FIFO. |
|
QUANEX
BUILDING PRODUCTS CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
|
Twelve Months Ended October 31, |
|
2019 |
|
2018(1) |
Operating activities: |
|
|
|
Net (loss) income |
$ |
(46,730 |
) |
|
$ |
26,553 |
|
Adjustments to reconcile net (loss) income to cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
49,586 |
|
|
|
51,822 |
|
Stock-based compensation |
|
2,045 |
|
|
|
1,874 |
|
Deferred income tax |
|
3,260 |
|
|
|
(5,556 |
) |
Loss (gain) on the disposition of capital assets |
|
732 |
|
|
|
(142 |
) |
Charge for deferred loan costs |
|
- |
|
|
|
1,064 |
|
Asset impairment charge |
|
74,600 |
|
|
|
- |
|
Other, net |
|
2,176 |
|
|
|
135 |
|
Changes in assets and liabilities: |
|
|
|
Decrease (increase) in accounts receivable |
|
574 |
|
|
|
(5,550 |
) |
Decrease in inventory |
|
3,797 |
|
|
|
17,230 |
|
(Increase) decrease in other current assets |
|
(2,014 |
) |
|
|
217 |
|
Increase in accounts payable |
|
8,124 |
|
|
|
8,325 |
|
(Decrease) increase in accrued liabilities |
|
(6,760 |
) |
|
|
6,892 |
|
Increase in income taxes payable |
|
3,416 |
|
|
|
676 |
|
Increase in deferred pension and postretirement benefits |
|
2,531 |
|
|
|
2,038 |
|
Increase (Decrease) in other long-term liabilities |
|
513 |
|
|
|
(523 |
) |
Other, net |
|
522 |
|
|
|
(444 |
) |
Cash
provided by operating activities |
|
96,372 |
|
|
|
104,611 |
|
Investing activities: |
|
|
|
Capital expenditures |
|
(24,883 |
) |
|
|
(26,484 |
) |
Proceeds from disposition of capital assets |
|
1,324 |
|
|
|
432 |
|
Cash used
for investing activities |
|
(23,559 |
) |
|
|
(26,052 |
) |
Financing activities: |
|
|
|
Borrowings under credit facilities |
|
83,500 |
|
|
|
268,500 |
|
Repayments of credit facility borrowings |
|
(136,000 |
) |
|
|
(296,250 |
) |
Debt issuance costs |
|
- |
|
|
|
(1,001 |
) |
Repayments of other long-term debt |
|
(1,526 |
) |
|
|
(1,798 |
) |
Common stock dividends paid |
|
(10,644 |
) |
|
|
(7,020 |
) |
Issuance of common stock |
|
3,287 |
|
|
|
4,746 |
|
Payroll tax paid to settle shares forfeited upon vesting of
stock |
|
(330 |
) |
|
|
(960 |
) |
Purchase of treasury stock |
|
(9,551 |
) |
|
|
(32,034 |
) |
Cash used
for financing activities |
|
(71,264 |
) |
|
|
(65,817 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
316 |
|
|
|
(1,194 |
) |
Increase in
cash and cash equivalents |
|
1,865 |
|
|
|
11,548 |
|
Cash and
cash equivalents at beginning of period |
|
29,003 |
|
|
|
17,455 |
|
Cash and
cash equivalents at end of period |
$ |
30,868 |
|
|
$ |
29,003 |
|
|
|
|
|
|
|
|
|
(1) Reflects retrospective accounting change to FIFO. |
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATIONFREE 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, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Cash
provided by operating activities |
|
$66,336 |
|
|
$56,158 |
|
|
96,372 |
|
|
104,611 |
|
Capital
expenditures |
|
(7,899 |
) |
|
(5,386 |
) |
|
(24,883 |
) |
|
(26,484 |
) |
Free Cash
Flow |
|
$58,437 |
|
|
$50,772 |
|
|
$71,489 |
|
|
$78,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2019 |
|
|
Three Months EndedOctober 31, 2018 |
|
|
Twelve Months EndedOctober 31, 2019 |
|
|
Twelve Months EndedOctober 31, 2018 |
|
|
|
Net (Loss)Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
|
Net (Loss)Income |
|
Diluted EPS |
|
|
Net Income |
|
Diluted EPS |
|
Net (loss)
income as reported |
|
$ |
(30,948 |
) |
|
$ |
(0.94 |
) |
|
|
$ |
6,717 |
|
|
$ |
0.19 |
|
|
|
$ |
(46,730 |
) |
|
$ |
(1.42 |
) |
|
|
$ |
26,553 |
|
|
$ |
0.76 |
|
|
Reconciling
items from below |
|
|
44,963 |
|
|
|
1.36 |
|
|
|
|
890 |
|
|
|
0.03 |
|
|
|
|
78,155 |
|
|
|
2.37 |
|
|
|
|
(3,836 |
) |
|
|
(0.11 |
) |
|
Adjusted net
income and adjusted EPS |
|
$ |
14,015 |
|
|
$ |
0.42 |
|
|
|
$ |
7,607 |
|
|
$ |
0.22 |
|
|
|
$ |
31,425 |
|
|
$ |
0.95 |
|
|
|
$ |
22,717 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA |
|
Three Months EndedOctober 31, 2019 |
|
|
Three Months EndedOctober 31, 2018 |
|
|
Twelve Months EndedOctober 31, 2019 |
|
|
Twelve Months EndedOctober 31, 2018 |
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
|
Reconciliation |
|
|
|
Net (loss)
income as reported |
|
$ |
(30,948 |
) |
|
|
|
|
$ |
6,717 |
|
|
|
|
|
$ |
(46,730 |
) |
|
|
|
|
$ |
26,553 |
|
|
|
|
Income tax
expense (benefit) |
|
|
4,850 |
|
|
|
|
|
|
1,736 |
|
|
|
|
|
|
10,776 |
|
|
|
|
|
|
(800 |
) |
|
|
|
Other,
net |
|
|
345 |
|
|
|
|
|
|
(273 |
) |
|
|
|
|
|
(116 |
) |
|
|
|
|
|
(1,156 |
) |
|
|
|
Interest
expense |
|
|
2,029 |
|
|
|
|
|
|
3,516 |
|
|
|
|
|
|
9,643 |
|
|
|
|
|
|
11,100 |
|
|
|
|
Depreciation
and amortization |
|
|
12,428 |
|
|
|
|
|
|
12,548 |
|
|
|
|
|
|
49,586 |
|
|
|
|
|
|
51,822 |
|
|
|
|
EBITDA |
|
|
(11,296 |
) |
|
|
|
|
|
24,244 |
|
|
|
|
|
|
23,159 |
|
|
|
|
|
|
87,519 |
|
|
|
|
Reconciling
items from below |
|
|
45,727 |
|
|
|
|
|
|
743 |
|
|
|
|
|
|
79,504 |
|
|
|
|
|
|
2,393 |
|
|
|
|
Adjusted
EBITDA |
|
$ |
34,431 |
|
|
|
|
|
$ |
24,987 |
|
|
|
|
|
$ |
102,663 |
|
|
|
|
|
$ |
89,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items |
|
Three Months EndedOctober 31, 2019 |
|
|
Three Months EndedOctober 31, 2018 |
|
|
Twelve Months EndedOctober 31, 2019 |
|
|
Twelve Months EndedOctober 31, 2018 |
|
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
|
Income Statement |
|
Reconciling Items |
|
Net
sales |
|
$ |
240,369 |
|
|
$ |
- |
|
|
|
$ |
244,086 |
|
|
$ |
- |
|
|
|
$ |
893,841 |
|
|
$ |
- |
|
|
|
$ |
889,785 |
|
|
$ |
- |
|
|
Cost of
sales |
|
|
183,128 |
|
|
|
- |
|
|
|
|
187,660 |
|
|
|
- |
|
|
|
|
694,420 |
|
|
|
- |
|
|
|
|
697,022 |
|
|
|
- |
|
|
Selling,
general and administrative |
|
|
23,826 |
|
|
|
(1,016 |
) |
(1) |
|
|
31,547 |
|
|
|
(108 |
) |
(1) |
|
|
101,292 |
|
|
|
(4,534 |
) |
(1) |
|
|
103,758 |
|
|
|
(907 |
) |
(1) |
Restructuring charges |
|
|
89 |
|
|
|
(89 |
) |
(2) |
|
|
635 |
|
|
|
(635 |
) |
(2) |
|
|
370 |
|
|
|
(370 |
) |
(2) |
|
|
1,486 |
|
|
|
(1,486 |
) |
(2) |
Asset
impairment charges |
|
|
44,622 |
|
|
|
(44,622 |
) |
(3) |
|
|
- |
|
|
|
- |
|
|
|
|
74,600 |
|
|
|
(74,600 |
) |
(3) |
|
|
- |
|
|
|
- |
|
|
EBITDA |
|
|
(11,296 |
) |
|
|
45,727 |
|
|
|
|
24,244 |
|
|
|
743 |
|
|
|
|
23,159 |
|
|
|
79,504 |
|
|
|
|
87,519 |
|
|
|
2,393 |
|
|
Depreciation
and amortization |
|
|
12,428 |
|
|
|
(192 |
) |
(4) |
|
|
12,548 |
|
|
|
- |
|
|
|
|
49,586 |
|
|
|
(192 |
) |
(4) |
|
|
51,822 |
|
|
|
(852 |
) |
(5) |
Operating
(loss) income |
|
|
(23,724 |
) |
|
|
45,919 |
|
|
|
|
11,696 |
|
|
|
743 |
|
|
|
|
(26,427 |
) |
|
|
79,696 |
|
|
|
|
35,697 |
|
|
|
3,245 |
|
|
Interest
expense |
|
|
(2,029 |
) |
|
|
- |
|
|
|
|
(3,516 |
) |
|
|
1,064 |
|
(6) |
|
|
(9,643 |
) |
|
|
- |
|
|
|
|
(11,100 |
) |
|
|
1,064 |
|
(6) |
Other,
net |
|
|
(345 |
) |
|
|
451 |
|
(7) |
|
|
273 |
|
|
|
(14 |
) |
(7) |
|
|
116 |
|
|
|
384 |
|
(7) |
|
|
1,156 |
|
|
|
(102 |
) |
(7) |
(Loss)
income before income taxes |
|
|
(26,098 |
) |
|
|
46,370 |
|
|
|
|
8,453 |
|
|
|
1,793 |
|
|
|
|
(35,954 |
) |
|
|
80,080 |
|
|
|
|
25,753 |
|
|
|
4,207 |
|
|
Income tax
(expense) benefit |
|
|
(4,850 |
) |
|
|
(1,407 |
) |
(8) |
|
|
(1,736 |
) |
|
|
(903 |
) |
(8) |
|
|
(10,776 |
) |
|
|
(1,925 |
) |
(8) |
|
|
800 |
|
|
|
(8,043 |
) |
(8) |
Net (loss)
income |
|
$ |
(30,948 |
) |
|
$ |
44,963 |
|
|
|
$ |
6,717 |
|
|
$ |
890 |
|
|
|
$ |
(46,730 |
) |
|
$ |
78,155 |
|
|
|
$ |
26,553 |
|
|
$ |
(3,836 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
(loss) earnings per share |
|
$ |
(0.94 |
) |
|
|
|
|
$ |
0.19 |
|
|
|
|
|
$ |
(1.42 |
) |
|
|
|
|
$ |
0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Transaction and
advisory fees, $0.8 million related to the loss on the sale of a
plant in the three and twelve months ended 2019, and $2.3 million
of severance charges related to a reorganization and executive
severance in the twelve months ended 2019. |
(2) Restructuring
charges relate to the closure of several manufacturing plant
facilities. |
(3) Asset impairment
charges relate to goodwill impairment for the North American
Cabinet Components segment. |
(4) Accelerated
depreciation and amortization for equipment replacement in the
North American Fenestration segment. |
(5) Accelerated
depreciation for a plant re-layout in the North American Cabinet
Components segment. |
(6) Impact of deferred
loan costs for credit facility |
(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
gross margin, operating (loss) income, EBITDA, and Adjusted EBITDA
by reportable segment. Non-operating expense and income tax expense
are not allocated to the reportable segments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA EngineeredComponents |
|
EU EngineeredComponents |
|
NA CabinetComponents |
|
UnallocatedCorp & Other |
|
Total |
Three months ended October 31, 2019 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
143,183 |
|
|
$ |
43,794 |
|
|
$ |
54,266 |
|
|
$ |
(874 |
) |
|
$ |
240,369 |
|
Cost of sales |
|
|
107,316 |
|
|
|
29,997 |
|
|
|
46,319 |
|
|
|
(504 |
) |
|
|
183,128 |
|
Gross Margin |
|
|
35,867 |
|
|
|
13,797 |
|
|
|
7,947 |
|
|
|
(370 |
) |
|
|
57,241 |
|
Gross Margin % |
|
|
25.0 |
% |
|
|
31.5 |
% |
|
|
14.6 |
% |
|
|
|
|
23.8 |
% |
Selling, general and administrative |
|
|
13,215 |
|
|
|
5,532 |
|
|
|
4,925 |
|
|
|
154 |
|
|
|
23,826 |
|
Restructuring charges |
|
|
89 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
89 |
|
Depreciation and amortization |
|
|
6,846 |
|
|
|
2,176 |
|
|
|
3,276 |
|
|
|
130 |
|
|
|
12,428 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
44,622 |
|
|
|
- |
|
|
|
44,622 |
|
Operating income (loss) |
|
|
15,717 |
|
|
|
6,089 |
|
|
|
(44,876 |
) |
|
|
(654 |
) |
|
|
(23,724 |
) |
Depreciation and amortization |
|
|
6,846 |
|
|
|
2,176 |
|
|
|
3,276 |
|
|
|
130 |
|
|
|
12,428 |
|
EBITDA |
|
|
22,563 |
|
|
|
8,265 |
|
|
|
(41,600 |
) |
|
|
(524 |
) |
|
|
(11,296 |
) |
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
44,622 |
|
|
|
- |
|
|
|
44,622 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250 |
|
|
|
250 |
|
Loss on sale of plant |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
766 |
|
|
|
766 |
|
Restructuring charges |
|
|
89 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
89 |
|
Adjusted EBITDA |
|
$ |
22,652 |
|
|
$ |
8,265 |
|
|
$ |
3,022 |
|
|
$ |
492 |
|
|
$ |
34,431 |
|
Adjusted EBITDA Margin % |
|
|
15.8 |
% |
|
|
18.9 |
% |
|
|
5.6 |
% |
|
|
|
|
14.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three months ended October 31, 2018 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
135,086 |
|
|
$ |
44,491 |
|
|
$ |
66,108 |
|
|
$ |
(1,599 |
) |
|
$ |
244,086 |
|
Cost of sales |
|
|
102,293 |
|
|
|
31,634 |
|
|
|
55,016 |
|
|
|
(1,283 |
) |
|
|
187,660 |
|
Gross Margin |
|
|
32,793 |
|
|
|
12,857 |
|
|
|
11,092 |
|
|
|
(316 |
) |
|
|
56,426 |
|
Gross Margin % |
|
|
24.3 |
% |
|
|
28.9 |
% |
|
|
16.8 |
% |
|
|
|
|
23.1 |
% |
Selling, general and administrative |
|
|
14,805 |
|
|
|
5,971 |
|
|
|
5,605 |
|
|
|
5,166 |
|
|
|
31,547 |
|
Restructuring charges |
|
|
629 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
635 |
|
Depreciation and amortization |
|
|
6,687 |
|
|
|
2,278 |
|
|
|
3,444 |
|
|
|
139 |
|
|
|
12,548 |
|
Operating income (loss) |
|
|
10,672 |
|
|
|
4,608 |
|
|
|
2,037 |
|
|
|
(5,621 |
) |
|
|
11,696 |
|
Depreciation and amortization |
|
|
6,687 |
|
|
|
2,278 |
|
|
|
3,444 |
|
|
|
139 |
|
|
|
12,548 |
|
EBITDA |
|
|
17,359 |
|
|
|
6,886 |
|
|
|
5,481 |
|
|
|
(5,482 |
) |
|
|
24,244 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
108 |
|
|
|
108 |
|
Restructuring charges |
|
|
629 |
|
|
|
- |
|
|
|
6 |
|
|
|
- |
|
|
|
635 |
|
Adjusted EBITDA |
|
$ |
17,988 |
|
|
$ |
6,886 |
|
|
$ |
5,487 |
|
|
$ |
(5,374 |
) |
|
$ |
24,987 |
|
Adjusted EBITDA Margin % |
|
|
13.3 |
% |
|
|
15.5 |
% |
|
|
8.3 |
% |
|
|
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended October 31, 2019 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
503,837 |
|
|
$ |
164,997 |
|
|
$ |
229,644 |
|
|
$ |
(4,637 |
) |
|
$ |
893,841 |
|
Cost of sales |
|
|
386,194 |
|
|
|
114,136 |
|
|
|
197,263 |
|
|
|
(3,173 |
) |
|
|
694,420 |
|
Gross Margin |
|
|
117,643 |
|
|
|
50,861 |
|
|
|
32,381 |
|
|
|
(1,464 |
) |
|
|
199,421 |
|
Gross Margin % |
|
|
23.3 |
% |
|
|
30.8 |
% |
|
|
14.1 |
% |
|
|
|
|
22.3 |
% |
Selling, general and administrative |
|
|
50,454 |
|
|
|
22,976 |
|
|
|
18,839 |
|
|
|
9,023 |
|
|
|
101,292 |
|
Restructuring charges |
|
|
370 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
370 |
|
Depreciation and amortization |
|
|
27,054 |
|
|
|
8,845 |
|
|
|
13,178 |
|
|
|
509 |
|
|
|
49,586 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
74,600 |
|
|
|
- |
|
|
|
74,600 |
|
Operating income (loss) |
|
|
39,765 |
|
|
|
19,040 |
|
|
|
(74,236 |
) |
|
|
(10,996 |
) |
|
|
(26,427 |
) |
Depreciation and amortization |
|
|
27,054 |
|
|
|
8,845 |
|
|
|
13,178 |
|
|
|
509 |
|
|
|
49,586 |
|
EBITDA |
|
|
66,819 |
|
|
|
27,885 |
|
|
|
(61,058 |
) |
|
|
(10,487 |
) |
|
|
23,159 |
|
Asset impairment charges |
|
|
- |
|
|
|
- |
|
|
|
74,600 |
|
|
|
- |
|
|
|
74,600 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,467 |
|
|
|
1,467 |
|
Loss on sale of plant |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
766 |
|
|
|
766 |
|
Reorganization and executive severance charges |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,301 |
|
|
|
2,301 |
|
Restructuring charges |
|
|
370 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
370 |
|
Adjusted EBITDA |
|
$ |
67,189 |
|
|
$ |
27,885 |
|
|
$ |
13,542 |
|
|
$ |
(5,953 |
) |
|
$ |
102,663 |
|
Adjusted EBITDA Margin % |
|
|
13.3 |
% |
|
|
16.9 |
% |
|
|
5.9 |
% |
|
|
|
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended October 31, 2018 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
485,366 |
|
|
$ |
159,973 |
|
|
$ |
249,813 |
|
|
$ |
(5,367 |
) |
|
$ |
889,785 |
|
Cost of sales |
|
|
371,959 |
|
|
|
114,894 |
|
|
|
214,143 |
|
|
|
(3,974 |
) |
|
|
697,022 |
|
Gross Margin |
|
|
113,407 |
|
|
|
45,079 |
|
|
|
35,670 |
|
|
|
(1,393 |
) |
|
|
192,763 |
|
Gross Margin % |
|
|
23.4 |
% |
|
|
28.2 |
% |
|
|
14.3 |
% |
|
|
|
|
21.7 |
% |
Selling, general and administrative |
|
|
54,169 |
|
|
|
22,770 |
|
|
|
17,973 |
|
|
|
8,846 |
|
|
|
103,758 |
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
129 |
|
|
|
- |
|
|
|
1,486 |
|
Depreciation and amortization |
|
|
27,248 |
|
|
|
9,607 |
|
|
|
14,401 |
|
|
|
566 |
|
|
|
51,822 |
|
Operating income (loss) |
|
|
30,633 |
|
|
|
12,702 |
|
|
|
3,167 |
|
|
|
(10,805 |
) |
|
|
35,697 |
|
Depreciation and amortization |
|
|
27,248 |
|
|
|
9,607 |
|
|
|
14,401 |
|
|
|
566 |
|
|
|
51,822 |
|
EBITDA |
|
|
57,881 |
|
|
|
22,309 |
|
|
|
17,568 |
|
|
|
(10,239 |
) |
|
|
87,519 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
907 |
|
|
|
907 |
|
Restructuring charges |
|
|
1,357 |
|
|
|
- |
|
|
|
129 |
|
|
|
- |
|
|
|
1,486 |
|
Adjusted EBITDA |
|
$ |
59,238 |
|
|
$ |
22,309 |
|
|
$ |
17,697 |
|
|
$ |
(9,332 |
) |
|
$ |
89,912 |
|
Adjusted EBITDA Margin % |
|
|
12.2 |
% |
|
|
13.9 |
% |
|
|
7.1 |
% |
|
|
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATION |
SALES
ANALYSIS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve
Months Ended |
|
October 31, 2019 |
|
October 31, 2018 |
|
October 31, 2019 |
|
October 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA Engineered Components: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States - fenestration |
$ |
127,027 |
|
|
$ |
114,299 |
|
|
$ |
439,536 |
|
|
$ |
412,000 |
|
International - fenestration |
|
7,631 |
|
|
|
11,552 |
|
|
|
31,106 |
|
|
|
39,309 |
|
United States - non-fenestration |
|
4,771 |
|
|
|
4,693 |
|
|
|
17,061 |
|
|
|
18,211 |
|
International - non-fenestration |
|
3,754 |
|
|
|
4,542 |
|
|
|
16,134 |
|
|
|
15,846 |
|
|
$ |
143,183 |
|
|
$ |
135,086 |
|
|
$ |
503,837 |
|
|
$ |
485,366 |
|
EU Engineered Components
(1): |
|
|
|
|
|
|
|
International - fenestration |
$ |
37,599 |
|
|
$ |
37,816 |
|
|
$ |
139,638 |
|
|
$ |
135,415 |
|
International - non-fenestration |
|
6,195 |
|
|
|
6,675 |
|
|
|
25,359 |
|
|
|
24,558 |
|
|
$ |
43,794 |
|
|
$ |
44,491 |
|
|
$ |
164,997 |
|
|
$ |
159,973 |
|
NA Cabinet Components: |
|
|
|
|
|
|
|
United States - fenestration |
$ |
3,235 |
|
|
$ |
4,096 |
|
|
$ |
13,144 |
|
|
$ |
14,596 |
|
United States - non-fenestration |
|
50,516 |
|
|
|
61,442 |
|
|
|
214,211 |
|
|
|
232,990 |
|
International - non-fenestration |
|
515 |
|
|
|
570 |
|
|
|
2,289 |
|
|
|
2,227 |
|
|
$ |
54,266 |
|
|
$ |
66,108 |
|
|
$ |
229,644 |
|
|
$ |
249,813 |
|
Unallocated Corporate & Other: |
|
|
|
|
|
|
|
Eliminations |
$ |
(874 |
) |
|
$ |
(1,599 |
) |
|
$ |
(4,637 |
) |
|
$ |
(5,367 |
) |
|
$ |
(874 |
) |
|
$ |
(1,599 |
) |
|
$ |
(4,637 |
) |
|
$ |
(5,367 |
) |
|
|
|
|
|
|
|
|
Net Sales |
$ |
240,369 |
|
|
$ |
244,086 |
|
|
$ |
893,841 |
|
|
$ |
889,785 |
|
|
|
|
|
|
|
|
|
(1) Reflects
reductions of $2.1 million and $8.7 million in revenue associated
with foreign currency exchange rate impacts for the three and
twelve months ended October 31, 2019. |
|
|
|
|
|
|
|
|
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