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Quanex Building Products Announces Fourth Quarter and Fiscal Year 2019 Results

Significant Margin Expansion
Above Market Growth in NA & EU Fenestration Segments
Repaid $35 Million of Bank Debt in 4Q19 & $52.5 Million in FY19

HOUSTON, Dec. 11, 2019 (GLOBE NEWSWIRE) -- 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 CORPORATION
FREE CASH FLOW RECONCILIATION
(In thousands)
(Unaudited)
                         
The following table reconciles the Company's calculation of Free Cash Flow, a non-GAAP measure, to its most directly comparable GAAP measure. The Company defines Free Cash Flow as cash provided by operating activities less capital expenditures.
                         
    Three Months Ended October 31,   Twelve Months Ended October 31,
    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 Ended
October 31, 2019
    Three Months Ended
October 31, 2018
    Twelve Months Ended
October 31, 2019
    Twelve Months Ended
October 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 Ended
October 31, 2019
    Three Months Ended
October 31, 2018
    Twelve Months Ended
October 31, 2019
    Twelve Months Ended
October 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 Ended
October 31, 2019
    Three Months Ended
October 31, 2018
    Twelve Months Ended
October 31, 2019
    Twelve Months Ended
October 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 Engineered
Components
  EU Engineered
Components
  NA Cabinet
Components
  Unallocated
Corp & 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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Source: Quanex Building Products Corporation

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