Quanex Building Products Corporation (NYSE:NX)
(“Quanex” or the “Company”) today announced its results for the
three months ended April 30, 2023.
The Company reported the following selected
financial results:
QUANEX BUILDING PRODUCTS CORPORATION |
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Q2
2023 Earnings Release |
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Three Months Ended April 30, |
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Six Months Ended April 30, |
($ in millions, except per share data) |
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2023 |
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2022 |
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2023 |
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2022 |
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Net
Sales |
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$273.5 |
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$322.9 |
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$535.5 |
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$589.9 |
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Gross
Margin |
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$67.2 |
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$73.2 |
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$118.9 |
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$128.4 |
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Gross Margin % |
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24.6% |
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22.7% |
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22.2% |
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21.8% |
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Net
Income |
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$21.5 |
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$26.5 |
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$23.4 |
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$37.8 |
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Diluted
EPS |
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$0.65 |
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$0.80 |
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$0.71 |
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$1.13 |
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Adjusted Net
Income |
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$21.7 |
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$26.5 |
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$27.8 |
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$37.8 |
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Adjusted
Diluted EPS |
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$0.66 |
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$0.80 |
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$0.84 |
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$1.14 |
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Adjusted
EBITDA |
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$39.9 |
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$45.2 |
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$60.4 |
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$69.6 |
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Adjusted EBITDA Margin % |
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14.6% |
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14.0% |
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11.3% |
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11.8% |
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Cash
Provided by (Used For) Operating Activities |
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$35.3 |
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$19.8 |
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$38.5 |
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($1.9) |
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Free Cash
Flow |
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$27.8 |
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$13.4 |
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$23.4 |
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($15.7) |
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(See Non-GAAP Terminology Definitions and
Disclaimers section, Non-GAAP Financial Measure Disclosure table,
Selected Segment Data table and reconciliation tables for
additional information)
George Wilson, President and Chief Executive
Officer, commented, “We are pleased with the results we reported
for the second quarter of 2023, and we are now more confident in
our belief that we are seeing a return to normal seasonality in our
business. Demand improved across all product lines during the
second quarter of this year compared to the first quarter of this
year, and we executed well from an operational standpoint. The
customer inventory rebalancing initiatives that impacted results in
our fenestration segments in the first quarter also impacted
results in the second quarter, albeit to a lesser degree. However,
based on ongoing conversations with our customers, coupled with
recent order trends, we do not anticipate a meaningful impact from
customer inventory rebalancing initiatives for the remainder of the
year. The LMI Custom Mixing business we acquired on November 1,
2022 continues to perform well and we have already achieved our
synergy target.
“When compared to the second quarter of 2022,
which was a record quarter, revenue declined in the second quarter
of 2023 across all operating segments as ongoing macroeconomic
challenges spurred continued market volume declines and some
pricing pressure, mostly due to surcharge rollbacks and index
pricing mechanism triggers in North America as raw material costs
decline. Despite the pressure on revenue, we converted well
operationally and realized margin expansion in our North American
Cabinet Components and European Fenestration segments. We
controlled the things we can control, and we will continue to focus
on operational efficiency and flexing our cost structure
accordingly.
“Our continued focus on managing working capital
is serving us well and we were able to generate enough free cash to
buyback $5.6 million of our stock and pay down our bank debt by $20
million during the second quarter. Our balance sheet remains
strong, and our leverage ratio improved versus the first quarter of
this year.”
Second Quarter 2023 Results
Summary
The Company reported net sales of $273.5 million
during the three months ended April 30, 2023, which represents a
decrease of 15.3% compared to $322.9 million for the same period of
2022. The decrease was mostly attributable to softer demand, caused
in part by customer inventory rebalancing initiatives, lower
pricing in North America, and foreign exchange translation impact.
Quanex realized a decline in net sales of 11.8% for the second
quarter of 2023 in its North American Fenestration segment.
Excluding LMI, net sales in the North American Fenestration segment
would have declined by approximately 21.8% year-over-year. The
Company reported a decline in net sales of 26.6% in its North
American Cabinet Components segment and a decline of 7.1% in net
sales in its European Fenestration segment, excluding foreign
exchange impact. (See Sales Analysis table for additional
information)
The decrease in earnings for the three months
ended April 30, 2023 was mostly attributable to lower volumes,
decreased pricing mainly due to surcharge rollbacks and raw
material index pricing mechanisms in North America, foreign
exchange translation, and higher interest expense.
Balance Sheet Update
As of April 30, 2023, Quanex had total debt of
$135.6 million ($82.5 million excluding real-estate leases that are
considered “finance” leases under U.S. GAAP) and the Company’s
leverage ratio of Net Debt to LTM Adjusted EBITDA decreased to 0.6x
(0.3x excluding these real-estate leases). As of April 30, 2023,
Quanex’s LTM Adjusted EBITDA was $143.3 million and LTM Net Income,
the most directly comparable GAAP measure, was $74.0
million. (See Non-GAAP Terminology Definitions and
Disclaimers section, Net Debt Reconciliation table and Last Twelve
Months Adjusted EBITDA Reconciliation table for additional
information)
Outlook
Mr. Wilson stated, “We continue to be cautiously
optimistic for the second half of our fiscal year, especially as we
gain confidence from recent results and our belief that we are
seeing a return to normal seasonality. In addition, the long-term
underlying fundamentals for the residential housing market remain
positive. Based on conversations with our customers and recent
demand trends, we are reaffirming prior guidance for fiscal 2023.
On a consolidated basis, we continue to estimate that we will
generate net sales of $1.12 billion to $1.16 billion, which we
expect will yield approximately $130 million to $142 million in
Adjusted EBITDA* in fiscal 2023.
Our capital allocation priorities continue to be
generating cash, paying down debt, evaluating growth opportunities
and opportunistically buying back our 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 also scheduled a conference call
for Friday, June 2, 2023 at 11:00 a.m. ET (10:00 a.m. CT) to
discuss the release. A link to the live audio webcast will be
available on Quanex’s website at http://www.quanex.com in the
Investors section under Presentations & Events.
Participants can pre-register for the conference call using the
following link:
https://register.vevent.com/register/BI63b3d21eb76d4b8ba3f1693da2ce90ac
Registered participants will receive an email containing
conference call details for dial-in options. To avoid delays, it is
recommended that participants dial into the conference call ten
minutes ahead of the scheduled start time. A replay will be
available for a limited time on the Company’s website at
http://www.quanex.com in the Investors section under Presentations
& Events.
About Quanex
Quanex is a global manufacturer with core
capabilities and broad applications across various end markets. The
Company currently collaborates and partners with leading OEMs to
provide innovative solutions in the window, door, vinyl fencing,
solar, refrigeration and cabinetry markets. Looking ahead,
Quanex plans to leverage its material science expertise and process
engineering to expand into adjacent markets.
For more information contact Scott Zuehlke,
Senior Vice President, Chief Financial Officer & Treasurer, at
713-877-5327 or scott.zuehlke@quanex.com.
Non-GAAP Terminology Definitions and
Disclaimers
Adjusted Net Income (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. Net
Debt is defined as total debt (outstanding balance on the revolving
credit facility plus financial lease obligations) less 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. Quanex uses the Free Cash Flow metric to measure
operational and cash management performance and assist with
financial decision-making. Free Cash Flow is measured before
application of certain contractual commitments (including capital
lease obligations), and accordingly is not a true measure of the
Company’s residual cash flow available for discretionary
expenditures. Quanex believes Free Cash Flow is useful to investors
in understanding and evaluating the Company’s financial and cash
management performance. Quanex believes that the presented non-GAAP
measures provide a consistent basis for comparison between periods
and will assist investors in understanding the Company’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. Quanex 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 following: impacts from public health issues
(including pandemics, such as the recent COVID-19 pandemic) on the
economy and the demand for Quanex’s products, 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, 2022, and the Company’s Quarterly Reports on Form 10-Q
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 |
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CONDENSED
CONSOLIDATED STATEMENTS OF NET INCOME |
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(In thousands,
except per share
data) |
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(Unaudited) |
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Three Months Ended April 30, |
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Six Months Ended April 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Net
sales |
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$ |
273,535 |
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$ |
322,893 |
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|
$ |
535,451 |
|
|
$ |
589,933 |
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Cost of
sales |
|
|
206,372 |
|
|
|
249,651 |
|
|
|
416,521 |
|
|
|
461,485 |
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Selling,
general and administrative |
|
|
27,371 |
|
|
|
28,129 |
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|
64,115 |
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|
58,952 |
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Depreciation
and amortization |
|
|
10,456 |
|
|
|
10,563 |
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|
21,076 |
|
|
|
20,820 |
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Operating
income |
|
|
29,336 |
|
|
|
34,550 |
|
|
|
33,739 |
|
|
|
48,676 |
|
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Interest
expense |
|
|
(2,244 |
) |
|
|
(602 |
) |
|
|
(4,503 |
) |
|
|
(1,125 |
) |
|
Other,
net |
|
|
(29 |
) |
|
|
453 |
|
|
|
189 |
|
|
|
507 |
|
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Income
before income taxes |
|
|
27,063 |
|
|
|
34,401 |
|
|
|
29,425 |
|
|
|
48,058 |
|
|
Income tax
expense |
|
|
(5,551 |
) |
|
|
(7,879 |
) |
|
|
(6,004 |
) |
|
|
(10,297 |
) |
|
Net
income |
|
$ |
21,512 |
|
|
$ |
26,522 |
|
|
$ |
23,421 |
|
|
$ |
37,761 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share, basic |
|
$ |
0.65 |
|
|
$ |
0.80 |
|
|
$ |
0.71 |
|
|
$ |
1.14 |
|
|
Earnings per
common share, diluted |
|
$ |
0.65 |
|
|
$ |
0.80 |
|
|
$ |
0.71 |
|
|
$ |
1.13 |
|
|
|
|
|
|
|
|
|
|
|
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Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
32,858 |
|
|
|
33,157 |
|
|
|
32,905 |
|
|
|
33,140 |
|
|
Diluted |
|
|
33,017 |
|
|
|
33,291 |
|
|
|
33,070 |
|
|
|
33,292 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
|
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
|
|
|
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QUANEX
BUILDING PRODUCTS CORPORATION |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
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|
April 30, 2023 |
|
October 31, 2022 |
ASSETS |
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Current
assets: |
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Cash and cash equivalents |
|
$ |
43,496 |
|
|
$ |
55,093 |
|
Accounts receivable, net |
|
|
94,038 |
|
|
|
96,018 |
|
Inventories, net |
|
|
114,015 |
|
|
|
120,890 |
|
Prepaid and other current assets |
|
|
12,210 |
|
|
|
8,664 |
|
Total current assets |
|
|
263,759 |
|
|
|
280,665 |
|
Property,
plant and equipment, net |
|
|
242,521 |
|
|
|
180,400 |
|
Operating
lease right-of-use assets |
|
|
45,725 |
|
|
|
56,000 |
|
Goodwill |
|
|
185,224 |
|
|
|
137,855 |
|
Intangible
assets, net |
|
|
80,981 |
|
|
|
65,035 |
|
Other
assets |
|
|
3,902 |
|
|
|
4,662 |
|
Total assets |
|
$ |
822,112 |
|
|
$ |
724,617 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
64,477 |
|
|
$ |
77,907 |
|
Accrued liabilities |
|
|
44,655 |
|
|
|
52,114 |
|
Income taxes payable |
|
|
- |
|
|
|
1,049 |
|
Current maturities of long-term debt |
|
|
2,113 |
|
|
|
1,046 |
|
Current operating lease liabilities |
|
|
7,403 |
|
|
|
7,727 |
|
Total current liabilities |
|
|
118,648 |
|
|
|
139,843 |
|
Long-term
debt |
|
|
132,150 |
|
|
|
29,628 |
|
Noncurrent
operating lease liabilities |
|
|
39,215 |
|
|
|
49,286 |
|
Deferred
pension benefits |
|
|
- |
|
|
|
3,917 |
|
Deferred
income taxes |
|
|
23,396 |
|
|
|
22,277 |
|
Other
liabilities |
|
|
15,976 |
|
|
|
14,831 |
|
Total liabilities |
|
|
329,385 |
|
|
|
259,782 |
|
Stockholders’ equity: |
|
|
|
|
Common stock |
|
|
372 |
|
|
|
372 |
|
Additional paid-in-capital |
|
|
250,427 |
|
|
|
251,947 |
|
Retained earnings |
|
|
355,557 |
|
|
|
337,456 |
|
Accumulated other comprehensive loss |
|
|
(34,968 |
) |
|
|
(49,422 |
) |
Treasury stock at cost |
|
|
(78,661 |
) |
|
|
(75,518 |
) |
Total stockholders’ equity |
|
|
492,727 |
|
|
|
464,835 |
|
Total liabilities and stockholders' equity |
|
$ |
822,112 |
|
|
$ |
724,617 |
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
Operating activities: |
|
|
|
Net income |
$ |
23,421 |
|
|
$ |
37,761 |
|
Adjustments to reconcile net income to cash provided by (used for)
operating activities: |
|
|
|
Depreciation and amortization |
|
21,076 |
|
|
|
20,820 |
|
Loss on the disposition of capital assets |
|
|
|
Stock-based compensation |
|
1,398 |
|
|
|
1,124 |
|
Deferred income tax |
|
97 |
|
|
|
583 |
|
Other, net |
|
982 |
|
|
|
1,534 |
|
Changes in assets and liabilities: |
|
|
|
Decrease (increase) in accounts receivable |
|
11,564 |
|
|
|
(13,008 |
) |
Decrease (increase) in inventory |
|
14,799 |
|
|
|
(39,771 |
) |
Increase in other current assets |
|
(1,746 |
) |
|
|
(3,541 |
) |
(Decrease) increase in accounts payable |
|
(19,825 |
) |
|
|
7,381 |
|
Decrease in accrued liabilities |
|
(14,407 |
) |
|
|
(15,984 |
) |
(Decrease) increase in income taxes payable |
|
(1,754 |
) |
|
|
1,679 |
|
Increase (decrease) in deferred pension benefits |
|
17 |
|
|
|
(159 |
) |
Increase in other long-term liabilities |
|
1,808 |
|
|
|
443 |
|
Other, net |
|
1,030 |
|
|
|
(743 |
) |
Cash
provided by (used for) operating activities |
|
38,460 |
|
|
|
(1,881 |
) |
Investing activities: |
|
|
|
Business acquisition |
|
(91,302 |
) |
|
|
- |
|
Capital expenditures |
|
(15,074 |
) |
|
|
(13,785 |
) |
Proceeds from disposition of capital assets |
|
101 |
|
|
|
36 |
|
Cash used
for investing activities |
|
(106,275 |
) |
|
|
(13,749 |
) |
Financing activities: |
|
|
|
Borrowings under credit facilities |
|
102,000 |
|
|
|
70,500 |
|
Repayments of credit facility borrowings |
|
(35,000 |
) |
|
|
(45,500 |
) |
Repayments of other long-term debt |
|
(1,306 |
) |
|
|
(432 |
) |
Common stock dividends paid |
|
(5,320 |
) |
|
|
(5,258 |
) |
Issuance of common stock |
|
99 |
|
|
|
173 |
|
Payroll tax paid to settle shares forfeited upon vesting of
stock |
|
(567 |
) |
|
|
(1,412 |
) |
Purchase of treasury stock |
|
(5,593 |
) |
|
|
(1,569 |
) |
Cash used
for financing activities |
|
54,313 |
|
|
|
16,502 |
|
Cash provided by financing activities |
|
1,905 |
|
|
|
(2,033 |
) |
Decrease in
cash and cash equivalents |
|
(11,597 |
) |
|
|
(1,161 |
) |
Cash and
cash equivalents at beginning of period |
|
55,093 |
|
|
|
40,061 |
|
Cash and
cash equivalents at end of period |
$ |
43,496 |
|
|
$ |
38,900 |
|
|
|
|
|
QUANEX
BUILDING PRODUCTS
CORPORATION |
|
Reconciliations of Free Cash Flow and Net
Debt |
|
(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 April 30, |
|
Six Months Ended April 30, |
|
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Cash
provided by (used for) operating activities |
|
|
$35,325 |
|
$19,770 |
|
$38,460 |
|
($1,881) |
|
Capital
expenditures |
|
|
(7,492) |
|
(6,415) |
|
(15,074) |
|
(13,785) |
|
Free
Cash Flow |
|
|
$27,833 |
|
$13,355 |
|
$23,386 |
|
($15,666) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the Company's Net Debt which is
defined as total debt principal of the Company plus finance lease
obligations minus cash. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 30, |
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
Revolving
credit facility |
|
|
$80,000 |
|
$63,000 |
|
|
|
|
|
Finance
lease obligations (1) |
|
|
55,626 |
|
13,971 |
|
|
|
|
|
Total debt
(2) |
|
|
135,626 |
|
76,971 |
|
|
|
|
|
Less: Cash
and cash equivalents |
|
|
43,496 |
|
38,900 |
|
|
|
|
|
Net
Debt |
|
|
$92,130 |
|
$38,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $53.1 million and $12.7 million in real estate lease
liabilities considered finance leases under U.S. GAAP as of April,
30 2023 and April 30, 2022, respectively. |
|
|
|
|
|
(2) Excludes
outstanding letters of credit. |
|
|
|
|
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS
CORPORATION |
|
NON-GAAP
FINANCIAL MEASURE
DISCLOSURE |
|
(In
thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Last Twelve Months Adjusted
EBITDA |
|
Three Months Ended April 30, 2023 |
|
Three Months Ended January 31, 2023 |
|
Three Months Ended October 31, 2022 |
|
Three Months Ended July 31, 2022 |
|
Total |
|
|
|
Reconciliation |
|
Reconciliation |
|
Reconciliation |
|
Reconciliation |
|
Reconciliation |
|
Net income as reported |
|
$ |
21,512 |
|
$ |
1,909 |
|
|
$ |
24,667 |
|
|
$ |
25,908 |
|
|
$ |
73,996 |
|
|
Income tax
expense |
|
|
5,551 |
|
|
453 |
|
|
|
3,329 |
|
|
|
7,801 |
|
|
|
17,134 |
|
|
Other,
net |
|
|
29 |
|
|
(218 |
) |
|
|
(136 |
) |
|
|
(398 |
) |
|
|
(723 |
) |
|
Interest
expense |
|
|
2,244 |
|
|
2,259 |
|
|
|
710 |
|
|
|
724 |
|
|
|
5,937 |
|
|
Depreciation
and amortization |
|
|
10,456 |
|
|
10,620 |
|
|
|
9,555 |
|
|
|
9,734 |
|
|
|
40,365 |
|
|
EBITDA |
|
|
39,792 |
|
|
15,023 |
|
|
|
38,125 |
|
|
|
43,769 |
|
|
|
136,709 |
|
|
Cost of
sales (1) |
|
|
48 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
48 |
|
|
Selling,
general and administrative (1),(2) |
|
|
63 |
|
|
5,448 |
|
|
|
564 |
|
|
|
419 |
|
|
|
6,494 |
|
|
Adjusted
EBITDA |
|
$ |
39,903 |
|
$ |
20,471 |
|
|
$ |
38,689 |
|
|
$ |
44,188 |
|
|
$ |
143,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Loss on damage to
manufacturing facilities caused by weather. |
(2) Transaction and
advisory fees. |
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATION |
|
NON-GAAP
FINANCIAL MEASURE DISCLOSURE |
|
(In thousands,
except per share data) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
SIx Months Ended |
|
SIx Months Ended |
|
Reconciliation of Adjusted Net Income and Adjusted
EPS |
|
April 30, 2023 |
|
April 30, 2022 |
|
April 30, 2023 |
|
April 30, 2022 |
|
|
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
Net income
as reported |
|
$
21,512 |
|
$ 0.65 |
|
$
26,522 |
|
$ 0.80 |
|
$
23,421 |
|
$ 0.71 |
|
$
37,761 |
|
$ 1.13 |
|
Net income
reconciling items from below |
|
195 |
|
$ 0.01 |
|
1 |
|
$ - |
|
4,349 |
|
$ 0.13 |
|
34 |
|
$ 0.01 |
|
Adjusted net
income and adjusted EPS |
|
$ 21,707 |
|
$ 0.66 |
|
$ 26,523 |
|
$ 0.80 |
|
$ 27,770 |
|
$ 0.84 |
|
$ 37,795 |
|
$ 1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA |
|
Three Months Ended April 30, 2023 |
|
Three Months Ended April 30, 2022 |
|
Six Months Ended April 30, 2023 |
|
Six Months Ended April 30, 2022 |
|
|
|
Reconciliation |
|
|
|
Reconciliation |
|
|
|
Reconciliation |
|
|
|
Reconciliation |
|
|
|
Net income
as reported |
|
$
21,512 |
|
|
|
$
26,522 |
|
|
|
$
23,421 |
|
|
|
$
37,761 |
|
|
|
Income tax
expense |
|
5,551 |
|
|
|
7,879 |
|
|
|
6,004 |
|
|
|
10,297 |
|
|
|
Other,
net |
|
29 |
|
|
|
(453) |
|
|
|
(189) |
|
|
|
(507) |
|
|
|
Interest
expense |
|
2,244 |
|
|
|
602 |
|
|
|
4,503 |
|
|
|
1,125 |
|
|
|
Depreciation
and amortization |
|
10,456 |
|
|
|
10,563 |
|
|
|
21,076 |
|
|
|
20,820 |
|
|
|
EBITDA |
|
39,792 |
|
|
|
45,113 |
|
|
|
54,815 |
|
|
|
69,496 |
|
|
|
EBITDA
reconciling items from below |
|
111 |
|
|
|
131 |
|
|
|
5,559 |
|
|
|
131 |
|
|
|
Adjusted
EBITDA |
|
$ 39,903 |
|
|
|
$ 45,244 |
|
|
|
$ 60,374 |
|
|
|
$ 69,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items |
|
Three Months Ended April 30, 2023 |
|
Three Months Ended April 30, 2022 |
|
Six Months Ended April 30, 2023 |
|
Six Months Ended April 30, 2022 |
|
|
|
Income Statement |
|
Reconciling Items |
|
Income Statement |
|
Reconciling Items |
|
Income Statement |
|
Reconciling Items |
|
Income Statement |
|
Reconciling Items |
|
Net
sales |
|
$
273,535 |
|
$ - |
|
$
322,893 |
|
$ - |
|
$
535,451 |
|
$ - |
|
$
589,933 |
|
$ - |
|
Cost of
sales |
|
206,372 |
|
(48) |
(1) |
249,651 |
|
- |
|
416,521 |
|
(48) |
(1) |
461,485 |
|
- |
|
Selling,
general and administrative |
|
27,371 |
|
(63) |
(1),(2) |
28,129 |
|
(131) |
(2) |
64,115 |
|
(5,511) |
(1),(2) |
58,952 |
|
(131) |
(2) |
EBITDA |
|
39,792 |
|
111 |
|
45,113 |
|
131 |
|
54,815 |
|
5,559 |
|
69,496 |
|
131 |
|
Depreciation
and amortization |
|
10,456 |
|
- |
|
10,563 |
|
- |
|
21,076 |
|
- |
|
20,820 |
|
- |
|
Operating
income |
|
29,336 |
|
111 |
|
34,550 |
|
131 |
|
33,739 |
|
5,559 |
|
48,676 |
|
131 |
|
Interest
expense |
|
(2,244) |
|
- |
|
(602) |
|
- |
|
(4,503) |
|
- |
|
(1,125) |
|
- |
|
Other,
net |
|
(29) |
|
132 |
(3) |
453 |
|
(123) |
(3) |
189 |
|
90 |
(3) |
507 |
|
(82) |
(3) |
Income
before income taxes |
|
27,063 |
|
243 |
|
34,401 |
|
8 |
|
29,425 |
|
5,649 |
|
48,058 |
|
49 |
|
Income tax
expense |
|
(5,551) |
|
(48) |
(4) |
(7,879) |
|
(7) |
(4) |
(6,004) |
|
(1,300) |
(4) |
(10,297) |
|
(15) |
(4) |
Net
income |
|
$ 21,512 |
|
$ 195 |
|
$ 26,522 |
|
$ 1 |
|
$ 23,421 |
|
$ 4,349 |
|
$ 37,761 |
|
$ 34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share |
|
$ 0.65 |
|
|
|
$ 0.80 |
|
|
|
$ 0.71 |
|
|
|
$ 1.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Loss on damage to manufacturing facilities caused by
weather. |
|
|
|
|
|
|
|
|
|
(2) Transaction and advisory fees. |
|
|
|
|
|
|
|
|
|
(3) Foreign currency transaction losses (gains). |
|
|
|
|
|
|
|
|
|
(4) Tax
impact of net income reconciling items. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Fenestration |
|
EU Fenestration |
|
NA Cabinet Components |
|
Unallocated Corp & Other |
|
Total |
Three months ended April 30, 2023 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
156,975 |
|
|
$ |
63,763 |
|
|
$ |
53,518 |
|
|
$ |
(721 |
) |
|
$ |
273,535 |
|
Cost of sales |
|
|
122,472 |
|
|
|
40,452 |
|
|
|
43,731 |
|
|
|
(283 |
) |
|
|
206,372 |
|
Gross Margin |
|
|
34,503 |
|
|
|
23,311 |
|
|
|
9,787 |
|
|
|
(438 |
) |
|
|
67,163 |
|
Gross Margin % |
|
|
22.0% |
|
|
|
36.6% |
|
|
|
18.3% |
|
|
|
|
|
24.6% |
|
Selling, general and administrative |
|
|
14,158 |
|
|
|
8,452 |
|
|
|
5,971 |
|
|
|
(1,210 |
) |
|
|
27,371 |
|
Depreciation and amortization |
|
|
5,050 |
|
|
|
2,353 |
|
|
|
2,970 |
|
|
|
83 |
|
|
|
10,456 |
|
Operating income |
|
|
15,295 |
|
|
|
12,506 |
|
|
|
846 |
|
|
|
689 |
|
|
|
29,336 |
|
Depreciation and amortization |
|
|
5,050 |
|
|
|
2,353 |
|
|
|
2,970 |
|
|
|
83 |
|
|
|
10,456 |
|
EBITDA |
|
|
20,345 |
|
|
|
14,859 |
|
|
|
3,816 |
|
|
|
772 |
|
|
|
39,792 |
|
Loss on damage to manufacturing facilities (Cost of sales) |
|
|
35 |
|
|
|
- |
|
|
|
13 |
|
|
|
- |
|
|
|
48 |
|
Loss on damage to manufacturing facilities (SG&A) |
|
|
- |
|
|
|
- |
|
|
|
200 |
|
|
|
- |
|
|
|
200 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(137 |
) |
|
|
(137 |
) |
Adjusted EBITDA |
|
$ |
20,380 |
|
|
$ |
14,859 |
|
|
$ |
4,029 |
|
|
$ |
635 |
|
|
$ |
39,903 |
|
Adjusted EBITDA Margin % |
|
|
13.0% |
|
|
|
23.3% |
|
|
|
7.5% |
|
|
|
|
|
14.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended April 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
177,908 |
|
|
$ |
73,427 |
|
|
$ |
72,878 |
|
|
$ |
(1,320 |
) |
|
$ |
322,893 |
|
Cost of sales |
|
|
137,571 |
|
|
|
49,708 |
|
|
|
63,175 |
|
|
|
(803 |
) |
|
|
249,651 |
|
Gross Margin |
|
|
40,337 |
|
|
|
23,719 |
|
|
|
9,703 |
|
|
|
(517 |
) |
|
|
73,242 |
|
Gross Margin % |
|
|
22.7% |
|
|
|
32.3% |
|
|
|
13.3% |
|
|
|
|
|
22.7% |
|
Selling, general and administrative |
|
|
14,078 |
|
|
|
8,601 |
|
|
|
5,218 |
|
|
|
232 |
|
|
|
28,129 |
|
Depreciation and amortization |
|
|
4,038 |
|
|
|
2,522 |
|
|
|
3,917 |
|
|
|
86 |
|
|
|
10,563 |
|
Operating income (loss) |
|
|
22,221 |
|
|
|
12,596 |
|
|
|
568 |
|
|
|
(835 |
) |
|
|
34,550 |
|
Depreciation and amortization |
|
|
4,038 |
|
|
|
2,522 |
|
|
|
3,917 |
|
|
|
86 |
|
|
|
10,563 |
|
EBITDA |
|
|
26,259 |
|
|
|
15,118 |
|
|
|
4,485 |
|
|
|
(749 |
) |
|
|
45,113 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
131 |
|
|
|
131 |
|
Adjusted EBITDA |
|
$ |
26,259 |
|
|
$ |
15,118 |
|
|
$ |
4,485 |
|
|
$ |
(618 |
) |
|
$ |
45,244 |
|
Adjusted EBITDA Margin % |
|
|
14.8% |
|
|
|
20.6% |
|
|
|
6.2% |
|
|
|
|
|
14.0% |
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended April 30, 2023 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
309,955 |
|
|
$ |
118,715 |
|
|
$ |
108,192 |
|
|
$ |
(1,411 |
) |
|
$ |
535,451 |
|
Cost of sales |
|
|
247,189 |
|
|
|
78,155 |
|
|
|
91,787 |
|
|
|
(610 |
) |
|
|
416,521 |
|
Gross Margin |
|
|
62,766 |
|
|
|
40,560 |
|
|
|
16,405 |
|
|
|
(801 |
) |
|
|
118,930 |
|
Gross Margin % |
|
|
20.3% |
|
|
|
34.2% |
|
|
|
15.2% |
|
|
|
|
|
22.2% |
|
Selling, general and administrative |
|
|
27,453 |
|
|
|
15,957 |
|
|
|
10,844 |
|
|
|
9,861 |
|
|
|
64,115 |
|
Depreciation and amortization |
|
|
10,295 |
|
|
|
4,701 |
|
|
|
5,904 |
|
|
|
176 |
|
|
|
21,076 |
|
Operating income (loss) |
|
|
25,018 |
|
|
|
19,902 |
|
|
|
(343 |
) |
|
|
(10,838 |
) |
|
|
33,739 |
|
Depreciation and amortization |
|
|
10,295 |
|
|
|
4,701 |
|
|
|
5,904 |
|
|
|
176 |
|
|
|
21,076 |
|
EBITDA |
|
|
35,313 |
|
|
|
24,603 |
|
|
|
5,561 |
|
|
|
(10,662 |
) |
|
|
54,815 |
|
Loss on damage to manufacturing facilities (Cost of sales) |
|
|
35 |
|
|
|
- |
|
|
|
13 |
|
|
|
- |
|
|
|
48 |
|
Loss on damage to manufacturing facilities (SG&A) |
|
|
- |
|
|
|
- |
|
|
|
200 |
|
|
|
- |
|
|
|
200 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,311 |
|
|
|
5,311 |
|
Adjusted EBITDA |
|
$ |
35,348 |
|
|
$ |
24,603 |
|
|
$ |
5,774 |
|
|
$ |
(5,351 |
) |
|
$ |
60,374 |
|
Adjusted EBITDA Margin % |
|
|
11.4% |
|
|
|
20.7% |
|
|
|
5.3% |
|
|
|
|
|
11.3% |
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended April 30, 2022 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
324,539 |
|
|
$ |
132,341 |
|
|
$ |
135,231 |
|
|
$ |
(2,178 |
) |
|
$ |
589,933 |
|
Cost of sales |
|
|
253,535 |
|
|
|
90,935 |
|
|
|
118,248 |
|
|
|
(1,233 |
) |
|
|
461,485 |
|
Gross Margin |
|
|
71,004 |
|
|
|
41,406 |
|
|
|
16,983 |
|
|
|
(945 |
) |
|
|
128,448 |
|
Gross Margin % |
|
|
21.9% |
|
|
|
31.3% |
|
|
|
12.6% |
|
|
|
|
|
21.8% |
|
Selling, general and administrative |
|
|
28,455 |
|
|
|
15,904 |
|
|
|
10,488 |
|
|
|
4,105 |
|
|
|
58,952 |
|
Depreciation and amortization |
|
|
8,177 |
|
|
|
5,091 |
|
|
|
7,380 |
|
|
|
172 |
|
|
|
20,820 |
|
Operating income (loss) |
|
|
34,372 |
|
|
|
20,411 |
|
|
|
(885 |
) |
|
|
(5,222 |
) |
|
|
48,676 |
|
Depreciation and amortization |
|
|
8,177 |
|
|
|
5,091 |
|
|
|
7,380 |
|
|
|
172 |
|
|
|
20,820 |
|
EBITDA |
|
|
42,549 |
|
|
|
25,502 |
|
|
|
6,495 |
|
|
|
(5,050 |
) |
|
|
69,496 |
|
Transaction and advisory fees |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
131 |
|
|
|
131 |
|
Adjusted EBITDA |
|
$ |
42,549 |
|
|
$ |
25,502 |
|
|
$ |
6,495 |
|
|
$ |
(4,919 |
) |
|
$ |
69,627 |
|
Adjusted EBITDA Margin % |
|
|
13.1% |
|
|
|
19.3% |
|
|
|
4.8% |
|
|
|
|
|
11.8% |
|
|
|
|
|
|
|
|
|
|
|
|
QUANEX
BUILDING PRODUCTS CORPORATION |
|
SALES
ANALYSIS |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended April 30, |
|
Six Months
Ended April 30, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
NA Fenestration:(1) |
|
|
|
|
|
|
|
|
|
United
States - fenestration |
$ |
120,756 |
|
|
$ |
156,843 |
|
|
$ |
241,523 |
|
|
$ |
285,210 |
|
|
|
International - fenestration |
|
8,350 |
|
|
|
11,094 |
|
|
|
13,477 |
|
|
|
20,230 |
|
|
|
United
States - non-fenestration |
|
24,334 |
|
|
|
7,077 |
|
|
|
47,400 |
|
|
|
13,793 |
|
|
|
International - non-fenestration |
|
3,535 |
|
|
|
2,894 |
|
|
|
7,555 |
|
|
|
5,306 |
|
|
|
|
$ |
156,975 |
|
|
$ |
177,908 |
|
|
$ |
309,955 |
|
|
$ |
324,539 |
|
|
EU Fenestration:(2) |
|
|
|
|
|
|
|
|
|
International - fenestration |
$ |
47,903 |
|
|
$ |
54,863 |
|
|
$ |
90,257 |
|
|
$ |
99,484 |
|
|
|
International - non-fenestration |
|
15,860 |
|
|
|
18,564 |
|
|
|
28,458 |
|
|
|
32,857 |
|
|
|
|
$ |
63,763 |
|
|
$ |
73,427 |
|
|
$ |
118,715 |
|
|
$ |
132,341 |
|
|
NA Cabinet Components: |
|
|
|
|
|
|
|
|
|
United
States - fenestration |
$ |
4,219 |
|
|
$ |
4,666 |
|
|
$ |
8,127 |
|
|
$ |
8,431 |
|
|
|
United
States - non-fenestration |
|
48,526 |
|
|
|
67,383 |
|
|
|
98,575 |
|
|
|
125,150 |
|
|
|
International - non-fenestration |
|
773 |
|
|
|
829 |
|
|
|
1,490 |
|
|
|
1,650 |
|
|
|
|
$ |
53,518 |
|
|
$ |
72,878 |
|
|
$ |
108,192 |
|
|
$ |
135,231 |
|
|
Unallocated Corporate & Other: |
|
|
|
|
|
|
|
|
|
Eliminations |
$ |
(721 |
) |
|
$ |
(1,320 |
) |
|
$ |
(1,411 |
) |
|
$ |
(2,178 |
) |
|
|
|
$ |
(721 |
) |
|
$ |
(1,320 |
) |
|
$ |
(1,411 |
) |
|
$ |
(2,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
$ |
273,535 |
|
|
$ |
322,893 |
|
|
$ |
535,451 |
|
|
$ |
589,933 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes the net
sales from the acquisition of LMI of $17.8 million and $34.2
million for the three and six months ended April 30, 2023,
respectively. |
|
(2) Reflects a
reduction of $4.8 million and $10.8 million in revenue associated
with foreign currency exchange rate impacts for the three and six
months ended April 30, 2023, respectively. |
|
|
|
|
|
|
|
|
|
|
|
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