Investor Press Release

<< Back

Quanex Building Products Announces Fourth Quarter and Fiscal Year 2017 Results

Over $45 Million of Bank Debt Paid Down in 2017
Growth and Margin Expansion Expected in 2018

HOUSTON, Dec. 11, 2017 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the quarter and fiscal year ended October 31, 2017.

Bill Griffiths, Chairman, President and Chief Executive Officer, commented, “Fiscal 2017 was a year with a lot of moving parts related to eliminating low margin business from the portfolio, consolidating facilities and redeploying assets; however, we are now well positioned for growth and margin expansion in 2018.  The hurricanes that hit Texas and Florida in August and September created some softness and inefficiencies during the fourth quarter, mostly in our North American Cabinet Components segment, but we anticipate incremental demand for our products in the coming months and years as rebuilding efforts continue.  Looking past the noise, the underlying growth rate for our legacy fenestration business in the U.S. was 6.1% in fiscal 2017, which is more than double Ducker’s latest window shipment estimate of 2.9% growth for the twelve months ended September 30, 2017.  Free cash flow continued to be strong in fiscal 2017, which allowed us to repay more than $45 million of bank debt.  Looking ahead, we will continue to focus on generating cash and deleveraging the balance sheet.”

Fourth Quarter and Fiscal Year 2017 Results Summary   

Quanex reported the following selected financial results:

         
    Three Months Ended October 31,   Twelve Months Ended October 31,
    2017   2016   2017   2016
Net Sales   $233.0   $249.2   $866.6   $928.2
Net Income (loss)   $10.7   $5.4   $18.7   ($1.9)
Diluted EPS   $0.31   $0.16   $0.54   ($0.05)
                 
Adjusted Net Income   $13.1   $15.7   $27.0   $27.7
Adjusted Diluted EPS   $0.37   $0.45   $0.77   $0.82
Adjusted EBITDA   $33.3   $34.6   $99.0   $110.3
(See Non-GAAP Terminology Definitions and Disclaimers section, Non-GAAP Financial Measure Disclosure table and Selected Segment Data table for additional information) 
                 

The decreases in net sales were largely driven by the Company’s decision to exit business that does not meet its financial objectives. (See Sales Analysis table for additional information)

The decreases in adjusted earnings were primarily attributable to lower volumes and short-term inefficiencies related to transitioning away from less profitable business throughout the year coupled with the impact of hurricanes in the U.S. during the fourth quarter.  (See Non-GAAP Terminology Definitions and Disclaimers section, Non-GAAP Financial Measure Disclosure table and Selected Segment Data table for additional information)

As of October 31, 2017, Quanex’s leverage ratio of Net Debt to LTM Adjusted EBITDA was 2.3x.  The Company remains focused on generating Free Cash Flow to pay down debt and expects to end fiscal 2018 with a leverage ratio below 2.0x.  (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

Business Update

Quanex divested its non-core wood flooring business, Owens Flooring, on October 31, 2017.  Owens Flooring contributed $9.4 million of revenue and net income of less than $0.1 million, excluding the loss on the sale of the plant, in fiscal 2017.

Outlook

Bill Griffiths, Chairman, President and Chief Executive Officer, stated, “We continue to be encouraged by the macro indicators that impact our business and believe this housing cycle has several years to run at low-to-mid single-digit growth rates for Quanex as a whole.  In fact, after adjusting for the foreign exchange impact, the divestiture of the wood flooring business and other business we consciously shed, the consolidated business grew at 4.4% in 2017.  We anticipate a similar growth rate in 2018.  As a result, we expect to generate net sales of $890 million to $900 million and Adjusted EBITDA* of $103 million to $108 million.”    

*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 Tuesday, December 12, 2017, 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 5996538, 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 19, 2017.  To access the replay dial (855) 859-2056 for domestic callers and (404) 537-3406 for international callers, in both cases referencing conference passcode 5996538. 

About Quanex

Quanex Building Products Corporation is an industry-leading manufacturer of components sold to Original Equipment Manufacturers (OEMs) in the building products industry.  Quanex designs and produces energy-efficient fenestration products in addition to kitchen and bath cabinet components.

For more information contact Scott Zuehlke, Vice President, Investor Relations & Treasurer, at 713-877-5327 or scott.zuehlke@quanex.com.

Non-GAAP Terminology Definitions and Disclaimers

Adjusted Net Income (Loss) (defined as net income further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, gain/loss on the sale of fixed assets, one-time employee benefit adjustment, restructuring charges, adjustments related to accelerated depreciation and amortization for restructured PP&E and intangible assets, interest expense adjustments related to the write off of deferred loan costs, unamortized original issuance discount and prepayment call premium related to debt refinance, other net adjustments related to foreign currency transaction gain/loss and effective tax rates reflecting impacts of adjustments on a with and without basis) and Adjusted EPS are non-GAAP financial measures that Quanex believes provide a consistent basis for comparison between periods and more accurately reflects operational performance, as they are not influenced by certain income or expense items not affecting ongoing operations. EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) and Adjusted EBITDA (defined as EBITDA further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, gain/loss on the sale of fixed assets, one-time employee benefit adjustment and restructuring charges) are non-GAAP financial measures that the Company uses to measure operational performance and assist with financial decision-making.  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 Quanex believes is useful to investors and financial analysts in evaluating the Company’s leverage.  In addition, with certain limited adjustments, this leverage ratio is the basis for a key covenant in Quanex’s credit agreement.  Free Cash Flow is a non-GAAP measure calculated using cash provided by operating activities less capital expenditures.   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 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, 2016, 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,
      2017       2016       2017       2016  
                 
Net sales   $ 232,959     $ 249,171     $ 866,555     $ 928,184  
Cost of sales     178,325       188,168       672,162       710,644  
Selling, general and administrative     23,142       26,480       97,981       114,910  
Restructuring charges     1,467       529       4,550       529  
Depreciation and amortization     13,794       13,387       57,495       53,146  
Asset impairment charges     -       12,602       -       12,602  
Operating income     16,231       8,005       34,367       36,353  
Interest expense     (2,469 )     (2,174 )     (9,595 )     (36,498 )
Other, net     158       (1,443 )     730       (5,479 )
Income (loss) before income taxes     13,920       4,388       25,502       (5,624 )
Income tax (expense) benefit     (3,188 )     1,043       (6,819 )     3,765  
Net income (loss)   $ 10,732     $ 5,431     $ 18,683     $ (1,859 )
                 
Income (loss) per common share, basic   $ 0.31     $ 0.16     $ 0.55     $ (0.05 )
Income (loss) per common share, diluted   $ 0.31     $ 0.16     $ 0.54     $ (0.05 )
                 
Weighted average common shares outstanding:                
Basic     34,493       33,953       34,230       33,876  
Diluted     35,169       34,536       34,837       33,876  
                 
Cash dividends per share   $ 0.04     $ 0.04     $ 0.16     $ 0.16  
                 


             
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
         
    October 31, 2017   October 31, 2016
ASSETS        
Current assets:        
Cash and cash equivalents   $ 17,455     $ 25,526  
Accounts receivable, net     79,411       83,625  
Inventories, net     87,529       84,335  
Prepaid and other current assets     7,406       10,488  
Total current assets     191,801       203,974  
Property, plant and equipment, net     211,131       198,497  
Goodwill     222,194       217,035  
Intangible assets, net     139,778       154,180  
Other assets     8,975       6,667  
Total assets   $ 773,879     $ 780,353  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 44,150     $ 47,781  
Accrued liabilities     38,871       55,101  
Income taxes payable     2,192       732  
Current maturities of long-term debt     21,242       10,520  
Total current liabilities     106,455       114,134  
Long-term debt     218,184       259,011  
Deferred pension and postretirement benefits     4,433       8,167  
Deferred income taxes     21,960       18,322  
Other liabilities     16,000       12,888  
Total liabilities     367,032       412,522  
Stockholders’ equity:        
Common stock     375       376  
Additional paid-in-capital     255,719       254,540  
Retained earnings     225,704       214,047  
Accumulated other comprehensive loss     (25,076 )     (38,765 )
Treasury stock at cost     (49,875 )     (62,367 )
Total stockholders’ equity     406,847       367,831  
Total liabilities and stockholders' equity   $ 773,879     $ 780,353  
         


           
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
       
  Twelve Months Ended October 31,
    2017       2016  
Operating activities:      
Net income (loss) $ 18,683     $ (1,859 )
Adjustments to reconcile net income (loss)' to cash provided by operating activities:    
Depreciation and amortization   57,495       53,146  
Stock-based compensation   5,189       6,089  
Deferred income tax   (112 )     (8,469 )
Excess tax benefit from share-based compensation   (248 )     (136 )
Loss (gain) on the disposition of capital assets   1,528       (20 )
Charge for deferred loan costs and debt discount   -       16,022  
Asset impairment charge   -       12,602  
Gain on involuntary conversion   -       -  
Other, net   1,741       339  
Changes in assets and liabilities, net of effects from acquisitions:      
Decrease in accounts receivable   5,378       796  
(Increase) decrease in inventory   (3,240 )     5,346  
Increase in other current assets   186       2,503  
Decrease in accounts payable   (4,893 )     (2,273 )
(Decrease) increase in accrued liabilities   (8,497 )     1,246  
Increase (decrease) in income taxes   4,670       (365 )
(Decrease) increase in deferred pension and postretirement benefits   (271 )     588  
Increase in other long-term liabilities   1,382       956  
Other, net   (437 )     (93 )
Cash provided by operating activities   78,554       86,418  
Investing activities:      
Acquisitions, net of cash acquired   (8,497 )     (245,904 )
Capital expenditures   (34,564 )     (37,243 )
Proceeds from disposition of capital assets   1,937       1,044  
Cash used for investing activities   (41,124 )     (282,103 )
Financing activities:      
Borrowings under credit facilities   53,500       634,800  
Repayments of credit facility borrowings   (98,875 )     (422,875 )
Debt issuance costs   -       (11,435 )
Repayments of other long-term debt   (2,722 )     (2,185 )
Common stock dividends paid   (5,516 )     (5,470 )
Issuance of common stock   7,953       3,400  
Excess tax benefit from share-based compensation   248       136  
Cash (used for) provided by financing activities   (45,412 )     196,371  
Effect of exchange rate changes on cash and cash equivalents   (89 )     1,715  
(Decrease) increase in cash and cash equivalents   (8,071 )     2,401  
Cash and cash equivalents at beginning of period   25,526       23,125  
Cash and cash equivalents at end of period $ 17,455     $ 25,526  
       


                                                 
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 Ended
October 31, 2017
    Three Months Ended
October 31, 2016
    Twelve Months Ended
October 31, 2017
    Twelve Months Ended
October 31, 2016
 
    Net
Income
  Diluted
EPS
    Net
Income
  Diluted
EPS
    Net
Income
  Diluted
EPS
    Net
Income
  Diluted
EPS
 
Net income (loss) as reported   $ 10,732     $ 0.31       $ 5,431     $ 0.16       $ 18,683     $ 0.54       $ (1,859 )   $ (0.05 )  
Reconciling items from below     2,337       0.06         10,214       0.29         8,303       0.23         29,551       0.87    
Adjusted Net income and Adjusted EPS   $ 13,069     $ 0.37       $ 15,645     $ 0.45       $ 26,986     $ 0.77       $ 27,692     $ 0.82    
                                         
Reconciliation of Adjusted EBITDA   Three Months Ended
October 31, 2017
    Three Months Ended
October 31, 2016
    Twelve Months Ended
October 31, 2017
    Twelve Months Ended
October 31, 2016
 
    Reconciliation         Reconciliation         Reconciliation         Reconciliation      
Net income (loss) as reported   $ 10,732           $ 5,431           $ 18,683           $ (1,859 )      
Income tax (expense) benefit     3,188             (1,043 )           6,819             (3,765 )      
Other, net     (158 )           1,443             (730 )           5,479        
Interest expense     2,469             2,174             9,595             36,498        
Depreciation and amortization     13,794             13,387             57,495             53,146        
EBITDA     30,025             21,392             91,862             89,499        
Reconciling items from below     3,263             13,164             7,156             20,790        
Adjusted EBITDA   $ 33,288           $ 34,556           $ 99,018           $ 110,289        
                                         
Reconciling Items   Three Months Ended
October 31, 2017
    Three Months Ended
October 31, 2016
    Twelve Months Ended
October 31, 2017
    Twelve Months Ended
October 31, 2016
 
    Income
Statement
  Reconciling
Items
    Income
Statement
  Reconciling
Items
    Income
Statement
  Reconciling
Items
    Income
Statement
  Reconciling
Items
 
Net sales   $ 232,959     $ -       $ 249,171     $ -       $ 866,555     $ -       $ 928,184     $ -    
Cost of sales     178,325       -         188,168       (32 )  (1 )     672,162       (104 )  (1 )     710,644       (2,671 )  (1 )
Selling, general and administrative     23,142       (1,796 )  (2 )     26,480       (1 )  (2 )     97,981       (2,502 )  (2 )     114,910       (4,988 )  (2 )
Restructuring charges     1,467       (1,467 )  (3 )     529       (529 )  (3 )     4,550       (4,550 )  (3 )     529       (529 )  (3 )
EBITDA     30,025       3,263         33,994       562         91,862       7,156         102,101       8,188    
Asset impairment charges     -             12,602       (12,602 )  (4 )     -             12,602       (12,602 )  (4 )
Depreciation and amortization     13,794       (731 )  (5 )     13,387       (1,295 )  (5 )     57,495       (6,233 )  (4 )     53,146       (1,295 )  (5 )
Operating income (loss)     16,231       3,994         8,005       14,459         34,367       13,389         36,353       22,085    
Interest expense     (2,469 )     -         (2,174 )     -         (9,595 )     -         (36,498 )     16,677    (5 )
Other, net     158       (111 )  (6 )     (1,443 )     1,501    (6 )     730       (625 )  (6 )     (5,479 )     5,380    (6 )
Income (loss) before income taxes     13,920       3,883         4,388       15,960         25,502       12,764         (5,624 )     44,142    
Income tax (expense) benefit     (3,188 )     (1,546 )  (7 )     1,043       (5,746 )  (7 )     (6,819 )     (4,461 )  (7 )     3,765       (14,591 )  (7 )
Net income (loss)   $ 10,732     $ 2,337       $ 5,431     $ 10,214       $ 18,683     $ 8,303       $ (1,859 )   $ 29,551    
                                         
Diluted earnings (loss) per share   $ 0.31           $ 0.16           $ 0.54           $ (0.05 )      
                                         
(1) Relates solely to purchase price accounting inventory step-up impact from HL Plastics acquisition.
(2) Acquisition related transaction costs, and the loss on the sale of plant in 4Q17.
(3) Restructuring charges relate to the closure of several manufacturing plant facilities.
(4) Impairment of goodwill at United States vinyl business in 2016.
(5) Accelerated depreciation and amortization for restructured PP&E and intangible assets.
(6) Foreign currency transaction (gains) losses.
(7) Impact on a with and without basis.
                                         


                           
QUANEX BUILDING PRODUCTS CORPORATION
Segment Reconciliation
(In thousands)
(Unaudited)
                     
The following tables reconcile the Company's segment presentation to account for the transfer of operating facilities from the North American Engineered Components segment to the Cabinet Components segment, as previously reported in our earnings release for the three-months and twelve-months ended October 31, 2016, to the current presentation:
                     
    NA Engineered
Components
  EU Engineered
Components
  NA Cabinet
Components
  Unallocated
Corp & Other
  Total
Three months ended October 31, 2016                    
As previously reported                    
Net sales   $ 154,000     $ 39,953   $ 56,485   $ (1,267 )   $ 249,171
Cost of sales     111,491       27,754     49,844     (921 )     188,168
Selling, general and administrative     16,548       5,817     2,554     1,561       26,480
Restructuring costs     387       -     142     -       529
Depreciation and amortization     8,874       2,148     2,239     126       13,387
Asset impairment charges     12,602       -     -     -       12,602
Operating income (loss)   $ 4,098     $ 4,234   $ 1,706   $ (2,033 )   $ 8,005
                     
Reclassification                    
Net sales   $ (6,007 )   $ -   $ 6,598   $ (591 )   $ -
Cost of sales     (4,329 )     -     4,920     (591 )     -
Selling, general and administrative     (237 )     -     194     43       -
Restructuring costs     -       -     -     -       -
Depreciation and amortization     (131 )     -     131     -       -
Asset impairment charges     -       -     -     -       -
Operating income (loss)   $ (1,310 )   $ -   $ 1,353   $ (43 )   $ -
                     
Current presentation                    
Net sales   $ 147,993     $ 39,953   $ 63,083   $ (1,858 )   $ 249,171
Cost of sales     107,162       27,754     54,764     (1,512 )     188,168
Selling, general and administrative     16,311       5,817     2,748     1,604       26,480
Restructuring costs     387       -     142     -       529
Depreciation and amortization     8,743       2,148     2,370     126       13,387
Asset impairment charges     12,602       -     -     -       12,602
Operating income (loss)   $ 2,788     $ 4,234   $ 3,059   $ (2,076 )   $ 8,005
                     
Twelve months ended October 31, 2016                    
As previously reported                    
Net sales   $ 560,029     $ 150,203   $ 223,391   $ (5,439 )   $ 928,184
Cost of sales     415,925       104,452     193,560     (3,293 )     710,644
Selling, general and administrative     62,934       23,187     14,920     13,869       114,910
Restructuring costs     387       -     142     -       529
Depreciation and amortization     30,298       9,339     12,948     561       53,146
Asset impairment charges     12,602       -     -     -       12,602
Operating income (loss)   $ 37,883     $ 13,225   $ 1,821   $ (16,576 )   $ 36,353
                     
Reclassification                    
Net sales   $ (21,780 )   $ -   $ 24,728   $ (2,948 )   $ -
Cost of sales     (16,770 )     -     19,718     (2,948 )     -
Selling, general and administrative     (851 )     -     851     -       -
Restructuring costs     -       -     -     -       -
Depreciation and amortization     (505 )     -     505     -       -
Asset impairment charges     -       -     -     -       -
Operating income (loss)   $ (3,654 )   $ -   $ 3,654   $ -     $ -
                     
Current presentation                    
Net sales   $ 538,249     $ 150,203   $ 248,119   $ (8,387 )   $ 928,184
Cost of sales     399,155       104,452     213,278     (6,241 )     710,644
Selling, general and administrative     62,083       23,187     15,771     13,869       114,910
Restructuring costs     387       -     142     -       529
Depreciation and amortization     29,793       9,339     13,453     561       53,146
Asset impairment charges     12,602       -     -     -       12,602
Operating income (loss)   $ 34,229     $ 13,225   $ 5,475   $ (16,576 )   $ 36,353
                     


QUANEX BUILDING PRODUCTS CORPORATION                
SELECTED SEGMENT DATA              
(In thousands)              
(Unaudited)                    
                     
This table provides operating income (loss), EBITDA, and Adjusted EBITDA by reportable segment.  Non-operating expense and income tax expense are not allocated to the reportable segments. 
 
    NA Engineered
Components
  EU Engineered
Components
  NA Cabinet
Components
  Unallocated
Corp & Other
  Total
Three months ended October 31, 2017                    
Net sales   $   131,380     $   41,830     $   61,110     $   (1,361 )   $   232,959  
Cost of sales       97,523         29,572         52,214         (984 )       178,325  
Selling, general and administrative       14,076         5,449         3,887         (270 )       23,142  
Restructuring charges       1,357         -          110         -          1,467  
Depreciation and amortization       7,932         2,080         3,650         132         13,794  
Operating income (loss)       10,492         4,729         1,249         (239 )       16,231  
Depreciation and amortization       7,932         2,080         3,650         132         13,794  
EBITDA       18,424         6,809         4,899         (107 )       30,025  
Transaction related costs       -          -          -          169         169  
Loss on sale of plant       1,627         -          -          -          1,627  
Restructuring charges       1,357         -          110         -          1,467  
Adjusted EBITDA    $   21,408     $   6,809     $   5,009     $   62     $   33,288  
Adjusted EBITDA Margin %     16.3 %     16.3 %     8.2 %         14.3 %
                     
Three months ended October 31, 2016                    
Net sales   $   147,993     $   39,953     $   63,083     $   (1,858 )   $   249,171  
Cost of sales       107,162         27,754         54,764         (1,512 )       188,168  
Selling, general and administrative       16,311         5,817         2,748         1,604         26,480  
Restructuring charges       387         -          142         -          529  
Depreciation and amortization       8,743         2,148         2,370         126         13,387  
Asset impairment charges       12,602         -          -          -          12,602  
Operating income (loss)       2,788         4,234         3,059         (2,076 )       8,005  
Depreciation and amortization       8,743         2,148         2,370         126         13,387  
EBITDA       11,531         6,382         5,429         (1,950 )       21,392  
Transaction related costs       -          -          -          1         1  
Restructuring charges       387         -          142         -          529  
Asset impairment charges       12,602         -          -          -          12,602  
PPA-Inventory Step-up       -          32         -          -          32  
Adjusted EBITDA    $   24,520     $   6,414     $   5,571     $   (1,949 )   $   34,556  
Adjusted EBITDA Margin %     16.6 %     16.1 %     8.8 %         13.9 %
                     
Twelve months ended October 31, 2017                    
Net sales   $   474,878     $   147,963     $   248,808     $   (5,094 )   $   866,555  
Cost of sales       357,806         104,876         213,257         (3,777 )       672,162  
Selling, general and administrative       52,889         20,581         16,626         7,885         97,981  
Restructuring charges       3,564         -          986         -          4,550  
Depreciation and amortization       34,308         8,833         13,811         543         57,495  
Operating income (loss)       26,311         13,673         4,128         (9,745 )       34,367  
Depreciation and amortization       34,308         8,833         13,811         543         57,495  
EBITDA       60,619         22,506         17,939         (9,202 )       91,862  
Transaction related costs       -          -          -          497         497  
Mexico restructuring, loss on disposal of fixed assets       -          -          190         -          190  
One-time employee benefit adjustment       -          -          188         -          188  
PPA-Inventory Step-up       -          104         -          -          104  
Loss on sale of plant       1,627         -          -          -          1,627  
Restructuring charges       3,564         -          986         -          4,550  
Asset impairment charges       -          -          -          -          -   
Adjusted EBITDA    $   65,810     $   22,610     $   19,303     $   (8,705 )   $   99,018  
Adjusted EBITDA Margin %     13.9 %     15.3 %     7.8 %         11.4 %
                     
Twelve months ended October 31, 2016                    
Net sales   $   538,249     $   150,203     $   248,119     $   (8,387 )   $   928,184  
Cost of sales       399,155         104,452         213,278         (6,241 )       710,644  
Selling, general and administrative       62,083         23,187         15,771         13,869         114,910  
Restructuring charges       387         -          142         -          529  
Depreciation and amortization       29,793         9,339         13,453         561         53,146  
Asset impairment charges       12,602         -          -          -          12,602  
Operating income (loss)       34,229         13,225         5,475         (16,576 )       36,353  
Depreciation and amortization       29,793         9,339         13,453         561         53,146  
EBITDA       64,022         22,564         18,928         (16,015 )       89,499  
Transaction related costs       -          -          -          4,988         4,988  
Restructuring charges       387         -          142         -          529  
Asset impairment charges       12,602         -          -          -          12,602  
PPA-Inventory Step-up       -          384         2,287         -          2,671  
Adjusted EBITDA    $   77,011     $   22,948     $   21,357     $   (11,027 )   $   110,289  
Adjusted EBITDA Margin %     14.3 %     15.3 %     8.6 %         11.9 %


QUANEX BUILDING PRODUCTS CORPORATION                
SALES ANALYSIS                
(In thousands)                
(Unaudited)                
                   
     Three Months Ended    Twelve Months Ended  
    October 31, 2017   October 31, 2016 (1)   October 31, 2017   October 31, 2016 (1)  
                   
NA Engineered Components:                
  United States - fenestration (2) $   110,659     $   124,670     $   399,694     $   444,571    
  International - fenestration     9,334         9,530         34,279         38,439    
  United States - non-fenestration     5,673         8,677         25,263         36,986    
  International - non-fenestration     5,714         5,116         15,642         18,253    
    $   131,380     $   147,993     $   474,878     $   538,249    
EU Engineered Components (3):                
  United States - fenestration $   -     $   159     $   303     $   412    
  International - fenestration     37,015         35,283         129,140         134,631    
  International - non-fenestration     4,815         4,511         18,520         15,160    
    $   41,830     $   39,953     $   147,963     $   150,203    
NA Cabinet Components:                
  United States - fenestration $   5,597     $   3,008     $   17,083     $   21,779    
  United States - non-fenestration (4)     54,977         59,431         229,550         223,664    
  International - non-fenestration     536         644         2,175         2,676    
    $   61,110     $   63,083     $   248,808     $   248,119    
Unallocated Corporate & Other:                
  Eliminations $   (1,361 )   $   (1,858 )   $   (5,094 )   $   (8,387 )  
    $   (1,361 )   $   (1,858 )   $   (5,094 )   $   (8,387 )  
                   
Net Sales $   232,959     $   249,171     $   866,555     $   928,184    
                   
(1) Updated to reflect transfer of operating facilities from NA Engineered Components to NA Cabinet Components.  See Reconciliation for additional details.   
(2) Reflects the loss of revenue associated with eliminated products of $14.5 million and $67.9 million for the three-months and twelve-months ended October 31, 2017, respectively.  
(3) Reflects a gain of $1.0 million, and a loss $10.7 million in revenue associated with foreign currency impacts for the three-months and twelve-months ended October 31, 2017, respectively.  
(4) Reflects the loss of revenue associated with eliminated products of $2.0 million and $10.3 million for the three-months and twelve-months ended October 31, 2017, respectively.  


Primary Logo

Quanex Building Products Corporation

X