Quanex Building Products Announces Third Quarter 2024 Results and Updates Full Year 2024 Guidance
Results Consistent with Expectations
Transformative Tyman Acquisition Closed August 1, 2024
Acquisition Integration Underway
HOUSTON, Sept. 05, 2024 (GLOBE NEWSWIRE) — Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the three months ended July 31, 2024.
The Company reported the following selected financial results:
| Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||
| ($ in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||
| Net Sales | $280.3 | $299.6 | $785.7 | $835.1 | |||||
| Gross Margin | $70.9 | $78.6 | $188.6 | $197.5 | |||||
| Gross Margin % | 25.3% | 26.2% | 24.0% | 23.7% | |||||
| Net Income | $25.4 | $31.7 | $47.0 | $55.1 | |||||
| Diluted EPS | $0.77 | $0.96 | $1.42 | $1.67 | |||||
| Adjusted Net Income | $24.2 | $31.9 | $51.8 | $59.7 | |||||
| Adjusted Diluted EPS | $0.73 | $0.97 | $1.56 | $1.81 | |||||
| Adjusted EBITDA | $42.0 | $48.5 | $101.3 | $108.8 | |||||
| Adjusted EBITDA Margin % | 15.0% | 16.2% | 12.9% | 13.0% | |||||
| Cash Provided by Operating Activities | $46.4 | $64.1 | $83.3 | $102.6 | |||||
| Free Cash Flow | $40.1 | $56.7 | $59.9 | $80.1 | |||||
(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, Chairman, President and Chief Executive Officer, stated, “Overall, the results we reported for the third quarter of 2024 were consistent with our expectations. Consistent with the seasonality of our business, volumes increased across all operating segments in the third quarter of this year when compared to the second quarter. However, when compared to the prior year, demand remained soft, but we believe the building products industry will benefit from pent up demand once interest rates start to trend lower and consumer confidence is restored. All things considered, profitability for the quarter was as expected, but due to the decrease in volumes, coupled with lower operating leverage, margins declined year-over-year. Our continued focus on cash flow and managing working capital enabled us to generate approximately $40 million in free cash flow during the quarter.
“Looking ahead, work on integrating the recently acquired Tyman business and creating something new and special within the building products industry is in progress. Our internal Integration Management Office team is executing on the plan to capture the targeted synergies. In addition, we are working to structure the organization in a manner that will enable us to capitalize on existing commercial opportunities and tap into new innovative solutions. We are excited about creating additional value for our shareholders by realizing the anticipated synergies related to this acquisition and building a stronger, more profitable company over time.”
Third Quarter 2024 Results Summary
Quanex reported net sales of $280.3 million during the three months ended July 31, 2024, which represents a decrease of 6.4% compared to $299.6 million for the same period of 2023. The decrease was mostly attributable to softer market demand across all operating segments. Quanex reported a 3.9% decrease in net sales for the third quarter in its North American Fenestration segment primarily due to lower volume. In its North American Cabinet Components segment, the Company reported a decline of 7.1% in net sales for the third quarter largely because of lower volume. Excluding foreign exchange impact, Quanex realized a decrease in net sales of 10.8% for the third quarter in its European Fenestration segment mainly due to lower volume and pricing pressure. (See Sales Analysis table for additional information)
The decrease in adjusted earnings for the three months ended July 31, 2024 was largely attributable to decreased operating leverage as a result of lower volumes related to softer market demand combined with higher material costs in the Company’s North American Fenestration and North American Cabinet Components segments.
Balance Sheet Update
As of July 31, 2024, prior to the Tyman closing, Quanex had total debt of $55.0 million (primarily finance leases) and the Company was Net Debt free. As of July 31, 2024, the Company’s LTM Net Income was $74.4 million and LTM Adjusted EBITDA was $152.1 million. (See Non-GAAP Terminology Definitions and Disclaimers section, Net Debt Reconciliation table and Last Twelve Months Adjusted EBITDA Reconciliation table for additional information)
Recent Events
As previously disclosed on August 1, 2024, Quanex announced it had closed on its acquisition of Tyman, creating a comprehensive solutions provider in the building products industry. The transaction creates a larger, more diversified supplier of components to OEMs; strengthens brand leadership by adding Tyman’s highly recognizable brands with wide customer bases; and enhances the combined company’s financial profile with the goal of accelerating growth and increasing profitability through greater scale and stronger cash flow. The Company intends to complete approximately 50% of the integration within the first 12 months and expects the acquisition to be accretive to earnings within the first full year after closing.
Outlook
Mr. Wilson commented, “Since we closed on the Tyman acquisition at the beginning of our fourth fiscal quarter, prior guidance for 2024 is no longer valid. While we still feel comfortable with the prior guidance for the legacy Quanex business, we are simply layering in the contribution from the Tyman business for the fourth quarter, which includes the impact related to performing full physical inventory counts at every legacy Tyman location prior to the end of our fiscal year. On a consolidated basis, we now estimate net sales of $1.275 billion to $1.285 billion, which should result in $171 million to $176 million of Adjusted EBITDA* in fiscal 2024.”
*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, September 6, 2024 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/BI899b4025b8dc44e086b54362366d6727
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, custom mixing, building access 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), Adjusted EBITDA and LTM 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) on the economy and the demand for Quanex’s products, timing estimates or any other expectations related to the Acquisition, 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, 2023, 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.
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net sales | $ | 280,345 | $ | 299,640 | $ | 785,701 | $ | 835,091 | ||||||||
| Cost of sales | 209,441 | 221,065 | 597,127 | 637,586 | ||||||||||||
| Selling, general and administrative | 36,509 | 30,516 | 103,579 | 94,631 | ||||||||||||
| Depreciation and amortization | 10,953 | 10,596 | 32,999 | 31,672 | ||||||||||||
| Operating income | 23,442 | 37,463 | 51,996 | 71,202 | ||||||||||||
| Interest expense | (878 | ) | (2,068 | ) | (2,896 | ) | (6,571 | ) | ||||||||
| Other, net | 9,474 | 402 | 10,520 | 591 | ||||||||||||
| Income before income taxes | 32,038 | 35,797 | 59,620 | 65,222 | ||||||||||||
| Income tax expense | (6,688 | ) | (4,099 | ) | (12,644 | ) | (10,103 | ) | ||||||||
| Net income | $ | 25,350 | $ | 31,698 | $ | 46,976 | $ | 55,119 | ||||||||
| Earnings per common share, basic | $ | 0.77 | $ | 0.97 | $ | 1.43 | $ | 1.68 | ||||||||
| Earnings per common share, diluted | $ | 0.77 | $ | 0.96 | $ | 1.42 | $ | 1.67 | ||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 32,876 | 32,716 | 32,857 | 32,841 | ||||||||||||
| Diluted | 33,106 | 32,919 | 33,087 | 33,031 | ||||||||||||
| Cash dividends per share | $ | 0.08 | $ | 0.08 | $ | 0.24 | $ | 0.24 | ||||||||
| QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | ||||||||
| July 31, 2024 | October 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 93,966 | $ | 58,474 | ||||
| Accounts receivable, net | 87,554 | 97,311 | ||||||
| Inventories | 99,127 | 97,959 | ||||||
| Income taxes receivable | 1,447 | 8,298 | ||||||
| Prepaid and other current assets | 19,305 | 11,558 | ||||||
| Total current assets | 301,399 | 273,600 | ||||||
| Property, plant and equipment, net | 251,890 | 250,664 | ||||||
| Operating lease right-of-use assets | 63,642 | 46,620 | ||||||
| Goodwill | 186,195 | 182,956 | ||||||
| Intangible assets, net | 66,606 | 74,115 | ||||||
| Other assets | 2,718 | 3,188 | ||||||
| Total assets | $ | 872,450 | $ | 831,143 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 63,948 | $ | 74,371 | ||||
| Accrued liabilities | 54,796 | 50,319 | ||||||
| Income taxes payable | – | 384 | ||||||
| Current maturities of long-term debt | 2,690 | 2,365 | ||||||
| Current operating lease liabilities | 6,435 | 7,224 | ||||||
| Total current liabilities | 127,869 | 134,663 | ||||||
| Long-term debt | 51,406 | 66,435 | ||||||
| Noncurrent operating lease liabilities | 59,099 | 40,361 | ||||||
| Deferred income taxes | 27,438 | 29,133 | ||||||
| Other liabilities | 12,502 | 14,997 | ||||||
| Total liabilities | 278,314 | 285,589 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 371 | 372 | ||||||
| Additional paid-in-capital | 250,297 | 251,576 | ||||||
| Retained earnings | 448,351 | 409,318 | ||||||
| Accumulated other comprehensive loss | (30,131 | ) | (38,141 | ) | ||||
| Treasury stock at cost | (74,752 | ) | (77,571 | ) | ||||
| Total stockholders’ equity | 594,136 | 545,554 | ||||||
| Total liabilities and stockholders’ equity | $ | 872,450 | $ | 831,143 | ||||
| QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) | |||||||
| Nine Months Ended July 31, | |||||||
| 2024 | 2023 | ||||||
| Operating activities: | |||||||
| Net income | $ | 46,976 | $ | 55,119 | |||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||
| Depreciation and amortization | 32,999 | 31,672 | |||||
| Stock-based compensation | 2,159 | 1,828 | |||||
| Deferred income tax | (2,321 | ) | 177 | ||||
| Gain on deal contingent foreign exchange forward currency contract | (9,200 | ) | – | ||||
| Other, net | 886 | 2,423 | |||||
| Changes in assets and liabilities: | |||||||
| Decrease in accounts receivable | 11,114 | 9,918 | |||||
| (Increase) decrease in inventory | (183 | ) | 23,864 | ||||
| Decrease (increase) in other current assets | 1,646 | (439 | ) | ||||
| Decrease in accounts payable | (9,634 | ) | (15,471 | ) | |||
| Increase (decrease) in accrued liabilities | 948 | (5,152 | ) | ||||
| Decrease (increase) in income taxes receivable | 6,659 | (3,534 | ) | ||||
| Increase in deferred pension benefits | – | 22 | |||||
| Increase in other long-term liabilities | 707 | 609 | |||||
| Other, net | 577 | 1,523 | |||||
| Cash provided by operating activities | 83,333 | 102,559 | |||||
| Investing activities: | |||||||
| Business acquisition | – | (91,302 | ) | ||||
| Capital expenditures | (23,435 | ) | (22,450 | ) | |||
| Proceeds from disposition of capital assets | 115 | 183 | |||||
| Cash used for investing activities | (23,320 | ) | (113,569 | ) | |||
| Financing activities: | |||||||
| Borrowings under credit facilities | – | 102,000 | |||||
| Repayments of credit facility borrowings | (15,000 | ) | (60,000 | ) | |||
| Repayments of other long-term debt | (1,893 | ) | (1,954 | ) | |||
| Common stock dividends paid | (7,943 | ) | (7,952 | ) | |||
| Issuance of common stock | 573 | 753 | |||||
| Payroll tax paid to settle shares forfeited upon vesting of stock | (1,193 | ) | (567 | ) | |||
| Purchase of treasury stock | – | (5,593 | ) | ||||
| Cash (used for) provided by financing activities | (25,456 | ) | 26,687 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 935 | 2,482 | |||||
| Increase in cash and cash equivalents | 35,492 | 18,159 | |||||
| Cash and cash equivalents at beginning of period | 58,474 | 55,093 | |||||
| Cash and cash equivalents at end of period | $ | 93,966 | $ | 73,252 | |||
| QUANEX BUILDING PRODUCTS CORPORATION FREE CASH FLOW AND NET DEBT RECONCILIATION (In thousands) (Unaudited) | |||||||||||||||||
| The following table reconciles the Company’s calculation of Free Cash Flow, a non-GAAP measure, to its most directly comparable GAAP measure. The Company defines Free Cash Flow as cash provided by operating activities less capital expenditures. | |||||||||||||||||
| Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| Cash provided by operating activities | $46,388 | $64,099 | $83,333 | $102,559 | |||||||||||||
| Capital expenditures | (6,252 | ) | (7,376 | ) | (23,435 | ) | (22,450 | ) | |||||||||
| Free Cash Flow | $40,136 | $56,723 | $59,898 | $80,109 | |||||||||||||
| 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 July 31, | |||||||||||||||||
| 2024 | 2023 | ||||||||||||||||
| Revolving credit facility | $0 | $55,000 | |||||||||||||||
| Finance lease obligations (1) | 55,007 | 55,792 | |||||||||||||||
| Total debt (2) | 55,007 | 110,792 | |||||||||||||||
| Less: Cash and cash equivalents | 93,966 | 73,252 | |||||||||||||||
| Net Debt | ($38,959 | ) | $37,540 | ||||||||||||||
| (1) Includes $50.7 million and $52.9 million in real estate lease liabilities considered finance leases under U.S. GAAP as of July 31, 2024 and July 31, 2023, respectively. | |||||||||||||||||
| (2) Excludes outstanding letters of credit. | |||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION NON-GAAP FINANCIAL MEASURE DISCLOSURE LAST TWELVE MONTHS ADJUSTED EBITDA RECONCILIATION (In thousands, except per share data) (Unaudited) | ||||||||||||||||||||
| Reconciliation of Last Twelve Months Adjusted EBITDA | Three Months Ended July 31, 2024 | Three Months Ended April 30, 2024 | Three Months Ended January 31, 2024 | Three Months Ended October 31, 2023 | Total | |||||||||||||||
Reconciliation | Reconciliation | Reconciliation | Reconciliation | Reconciliation | ||||||||||||||||
| Net income as reported | $ | 25,350 | $ | 15,377 | $ | 6,249 | $ | 27,382 | $ | 74,358 | ||||||||||
| Income tax expense | 6,688 | 4,314 | 1,642 | 4,442 | 17,086 | |||||||||||||||
| Other, net | (9,474 | ) | (4 | ) | (1,042 | ) | 6,110 | (4,410 | ) | |||||||||||
| Interest expense | 878 | 950 | 1,068 | 1,565 | 4,461 | |||||||||||||||
| Depreciation and amortization | 10,953 | 10,894 | 11,152 | 11,194 | 44,193 | |||||||||||||||
| EBITDA | 34,395 | 31,531 | 19,069 | 50,693 | 135,688 | |||||||||||||||
| Cost of sales (1),(2) | 1,507 | 631 | – | (35 | ) | 2,103 | ||||||||||||||
| Selling, general and administrative (1),(2),(3) | 6,133 | 7,862 | 205 | 109 | 14,309 | |||||||||||||||
| Adjusted EBITDA | $ | 42,035 | $ | 40,024 | $ | 19,274 | $ | 50,767 | $ | 152,100 | ||||||||||
| (1) Expense related to plant closure. | ||||||||||||||||||||
| (2) Loss on damage to manufacturing facilities caused by weather. | ||||||||||||||||||||
| (3) Transaction and advisory fees. | ||||||||||||||||||||
| 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 July 31, 2024 | Three Months Ended July 31, 2023 | Nine Months Ended July 31, 2024 | Nine Months Ended July 31, 2023 | ||||||||||||||||||||||||||||||
| Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | ||||||||||||||||||||||||||
| Net income as reported | $ | 25,350 | $ | 0.77 | $ | 31,698 | $ | 0.96 | $ | 46,976 | $ | 1.42 | $ | 55,119 | $ | 1.67 | |||||||||||||||||
| Net income reconciling items from below | (1,199 | ) | $ | (0.04 | ) | 201 | $ | 0.01 | 4,775 | $ | 0.14 | 4,550 | $ | 0.14 | |||||||||||||||||||
| Adjusted net income and adjusted EPS | $ | 24,151 | $ | 0.73 | $ | 31,899 | $ | 0.97 | $ | 51,751 | $ | 1.56 | $ | 59,669 | $ | 1.81 | |||||||||||||||||
Reconciliation of Adjusted EBITDA | |||||||||||||||||||||||||||||||||
| Three Months Ended July 31, 2024 | Three Months Ended July 31, 2023 | Nine Months Ended July 31, 2024 | Nine Months Ended July 31, 2023 | ||||||||||||||||||||||||||||||
| Reconciliation | Reconciliation | Reconciliation | Reconciliation | ||||||||||||||||||||||||||||||
| Net income as reported | $ | 25,350 | $ | 31,698 | $ | 46,976 | $ | 55,119 | |||||||||||||||||||||||||
| Income tax expense | 6,688 | 4,099 | 12,644 | 10,103 | |||||||||||||||||||||||||||||
| Other, net | (9,474 | ) | (402 | ) | (10,520 | ) | (591 | ) | |||||||||||||||||||||||||
| Interest expense | 878 | 2,068 | 2,896 | 6,571 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 10,953 | 10,596 | 32,999 | 31,672 | |||||||||||||||||||||||||||||
| EBITDA | 34,395 | 48,059 | 84,995 | 102,874 | |||||||||||||||||||||||||||||
| EBITDA reconciling items from below | 7,640 | 395 | 16,338 | 5,954 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 42,035 | $ | 48,454 | $ | 101,333 | $ | 108,828 | |||||||||||||||||||||||||
| Reconciling Items | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2023 | Nine Months Ended July 31, 2024 | Nine Months Ended July 31, 2023 | |||||||||||||||||||||||||||||
| Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | ||||||||||||||||||||||||||
| Net sales | $ | 280,345 | $ | – | $ | 299,640 | $ | – | $ | 785,701 | $ | – | $ | 835,091 | $ | – | |||||||||||||||||
| Cost of sales | 209,441 | (1,507 | ) | (1) | 221,065 | – | 597,127 | (2,138 | ) | (1) | 637,586 | (48 | ) | (2) | |||||||||||||||||||
| Selling, general and administrative | 36,509 | (6,133 | ) | (1),(3) | 30,516 | (395 | ) | (3) | 103,579 | (14,200 | ) | (1),(3) | 94,631 | (5,906 | ) | (2),(3) | |||||||||||||||||
| EBITDA | 34,395 | 7,640 | 48,059 | 395 | 84,995 | 16,338 | 102,874 | 5,954 | |||||||||||||||||||||||||
| Depreciation and amortization | 10,953 | – | 10,596 | – | 32,999 | – | 31,672 | – | |||||||||||||||||||||||||
| Operating income | 23,442 | 7,640 | 37,463 | 395 | 51,996 | 16,338 | 71,202 | 5,954 | |||||||||||||||||||||||||
| Interest expense | (878 | ) | – | (2,068 | ) | – | (2,896 | ) | – | (6,571 | ) | – | |||||||||||||||||||||
| Other, net | 9,474 | (9,162 | ) | (4) | 402 | (126 | ) | (4) | 10,520 | (10,009 | ) | (4) | 591 | (36 | ) | (4) | |||||||||||||||||
| Income before income taxes | 32,038 | (1,522 | ) | 35,797 | 269 | 59,620 | 6,329 | 65,222 | 5,918 | ||||||||||||||||||||||||
| Income tax expense | (6,688 | ) | 323 | (5) | (4,099 | ) | (68 | ) | (5) | (12,644 | ) | (1,554 | ) | (5) | (10,103 | ) | (1,368 | ) | (4) | ||||||||||||||
| Net income | $ | 25,350 | $ | (1,199 | ) | $ | 31,698 | $ | 201 | $ | 46,976 | $ | 4,775 | $ | 55,119 | $ | 4,550 | ||||||||||||||||
| Diluted earnings per share | $ | 0.77 | $ | 0.96 | $ | 1.42 | $ | 1.67 | |||||||||||||||||||||||||
| (1) Expense related to plant closure. | |||||||||||||||||||||||||||||||||
| (2) Loss on damage to manufacturing facilities caused by weather. | |||||||||||||||||||||||||||||||||
| (3) Transaction and advisory fees. | |||||||||||||||||||||||||||||||||
| (4) Pension settlement (refund) expense, gain on foreign exchange forward currency contract and foreign currency transaction losses (gains). | |||||||||||||||||||||||||||||||||
| (5)Tax impact of net income reconciling items. | |||||||||||||||||||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION SELECTED SEGMENT DATA (In thousands) (Unaudited) | ||||||||||||||||||||
| This table provides gross margin, operating income (loss), EBITDA, and Adjusted EBITDA by reportable segment. Non-operating expense and income tax expense are not allocated to the reportable segments. | ||||||||||||||||||||
| NA Fenestration | EU Fenestration | NA Cabinet Components | Unallocated Corp & Other | Total | ||||||||||||||||
| Three months ended July 31, 2024 | ||||||||||||||||||||
| Net sales | $ | 170,258 | $ | 59,617 | $ | 51,448 | $ | (978 | ) | $ | 280,345 | |||||||||
| Cost of sales | 130,301 | 36,930 | 42,911 | (701 | ) | 209,441 | ||||||||||||||
| Gross Margin | 39,957 | 22,687 | 8,537 | (277 | ) | 70,904 | ||||||||||||||
| Gross Margin % | 23.5 | % | 38.1 | % | 16.6 | % | 25.3 | % | ||||||||||||
| Selling, general and administrative (1) | 16,918 | 7,390 | 5,162 | 7,039 | 36,509 | |||||||||||||||
| Depreciation and amortization | 5,194 | 2,609 | 3,093 | 57 | 10,953 | |||||||||||||||
| Operating income (loss) | 17,845 | 12,688 | 282 | (7,373 | ) | 23,442 | ||||||||||||||
| Depreciation and amortization | 5,194 | 2,609 | 3,093 | 57 | 10,953 | |||||||||||||||
| EBITDA | 23,039 | 15,297 | 3,375 | (7,316 | ) | 34,395 | ||||||||||||||
| Expense related to plant closure (Cost of sales) | 1,507 | – | – | – | 1,507 | |||||||||||||||
| Expense related to plant closure (SG&A) | 125 | – | – | – | 125 | |||||||||||||||
| Transaction and advisory fees | – | – | – | 6,008 | 6,008 | |||||||||||||||
| Adjusted EBITDA | $ | 24,671 | $ | 15,297 | $ | 3,375 | $ | (1,308 | ) | $ | 42,035 | |||||||||
| Adjusted EBITDA Margin % | 14.5 | % | 25.7 | % | 6.6 | % | 15.0 | % | ||||||||||||
| Three months ended July 31, 2023 | ||||||||||||||||||||
| Net sales | $ | 177,081 | $ | 67,889 | $ | 55,385 | $ | (715 | ) | $ | 299,640 | |||||||||
| Cost of sales | 135,126 | 41,266 | 44,935 | (262 | ) | 221,065 | ||||||||||||||
| Gross Margin | 41,955 | 26,623 | 10,450 | (453 | ) | 78,575 | ||||||||||||||
| Gross Margin % | 23.7 | % | 39.2 | % | 18.9 | % | 26.2 | % | ||||||||||||
| Selling, general and administrative (1) | 14,254 | 8,039 | 5,095 | 3,128 | 30,516 | |||||||||||||||
| Depreciation and amortization | 5,033 | 2,434 | 3,084 | 45 | 10,596 | |||||||||||||||
| Operating income | 22,668 | 16,150 | 2,271 | (3,626 | ) | 37,463 | ||||||||||||||
| Depreciation and amortization | 5,033 | 2,434 | 3,084 | 45 | 10,596 | |||||||||||||||
| EBITDA | 27,701 | 18,584 | 5,355 | (3,581 | ) | 48,059 | ||||||||||||||
| Transaction and advisory fees | – | – | – | 395 | 395 | |||||||||||||||
| Adjusted EBITDA | $ | 27,701 | $ | 18,584 | $ | 5,355 | $ | (3,186 | ) | $ | 48,454 | |||||||||
| Adjusted EBITDA Margin % | 15.6 | % | 27.4 | % | 9.7 | % | 16.2 | % | ||||||||||||
| Nine months ended July 31, 2024 | ||||||||||||||||||||
| Net sales | $ | 478,027 | $ | 165,637 | $ | 145,663 | $ | (3,626 | ) | $ | 785,701 | |||||||||
| Cost of sales | 370,930 | 104,327 | 124,278 | (2,408 | ) | 597,127 | ||||||||||||||
| Gross Margin | 107,097 | 61,310 | 21,385 | (1,218 | ) | 188,574 | ||||||||||||||
| Gross Margin % | 22.4 | % | 37.0 | % | 14.7 | % | 24.0 | % | ||||||||||||
| Selling, general and administrative (1) | 46,558 | 23,008 | 15,354 | 18,659 | 103,579 | |||||||||||||||
| Depreciation and amortization | 15,887 | 7,705 | 9,240 | 167 | 32,999 | |||||||||||||||
| Operating income (loss) | 44,652 | 30,597 | (3,209 | ) | (20,044 | ) | 51,996 | |||||||||||||
| Depreciation and amortization | 15,887 | 7,705 | 9,240 | 167 | 32,999 | |||||||||||||||
| EBITDA | 60,539 | 38,302 | 6,031 | (19,877 | ) | 84,995 | ||||||||||||||
| Expense related to plant closure (Cost of sales) | 2,138 | – | – | – | 2,138 | |||||||||||||||
| Expense related to plant closure (SG&A) | 1,103 | – | – | – | 1,103 | |||||||||||||||
| Transaction and advisory fees | – | – | – | 13,097 | 13,097 | |||||||||||||||
| Adjusted EBITDA | $ | 63,780 | $ | 38,302 | $ | 6,031 | $ | (6,780 | ) | $ | 101,333 | |||||||||
| Adjusted EBITDA Margin % | 13.3 | % | 23.1 | % | 4.1 | % | 12.9 | % | ||||||||||||
| Nine months ended July 31, 2023 | ||||||||||||||||||||
| Net sales | $ | 487,036 | $ | 186,604 | $ | 163,577 | $ | (2,126 | ) | $ | 835,091 | |||||||||
| Cost of sales | 382,315 | 119,421 | 136,722 | (872 | ) | 637,586 | ||||||||||||||
| Gross Margin | 104,721 | 67,183 | 26,855 | (1,254 | ) | 197,505 | ||||||||||||||
| Gross Margin % | 21.5 | % | 36.0 | % | 16.4 | % | 23.7 | % | ||||||||||||
| Selling, general and administrative (1) | 41,707 | 23,996 | 15,939 | 12,989 | 94,631 | |||||||||||||||
| Depreciation and amortization | 15,328 | 7,135 | 8,988 | 221 | 31,672 | |||||||||||||||
| Operating income (loss) | 47,686 | 36,052 | 1,928 | (14,464 | ) | 71,202 | ||||||||||||||
| Depreciation and amortization | 15,328 | 7,135 | 8,988 | 221 | 31,672 | |||||||||||||||
| EBITDA | 63,014 | 43,187 | 10,916 | (14,243 | ) | 102,874 | ||||||||||||||
| 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 | – | – | – | 5,706 | 5,706 | |||||||||||||||
| Adjusted EBITDA | $ | 63,049 | $ | 43,187 | $ | 11,129 | $ | (8,537 | ) | $ | 108,828 | |||||||||
| Adjusted EBITDA Margin % | 12.9 | % | 23.1 | % | 6.8 | % | 13.0 | % | ||||||||||||
| (1) Includes stock-based compensation expense for the three and nine months ended July 31, 2024 of $1.3 million and $2.5 million, respectively, and $5.3 million and $7.6 million for the comparable prior year periods. | ||||||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION SALES ANALYSIS (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| NA Fenestration: | ||||||||||||||||
| United States – fenestration | $ | 131,394 | $ | 138,090 | $ | 362,674 | $ | 379,613 | ||||||||
| International – fenestration | 6,950 | 8,542 | 20,559 | 22,019 | ||||||||||||
| United States – non-fenestration | 27,873 | 26,423 | 81,196 | 73,823 | ||||||||||||
| International – non-fenestration | 4,041 | 4,026 | 13,598 | 11,581 | ||||||||||||
| $ | 170,258 | $ | 177,081 | $ | 478,027 | $ | 487,036 | |||||||||
| EU Fenestration: (1) | ||||||||||||||||
| International – fenestration | $ | 50,551 | $ | 51,752 | $ | 139,270 | $ | 142,009 | ||||||||
| International – non-fenestration | 9,066 | 16,137 | 26,367 | 44,595 | ||||||||||||
| $ | 59,617 | $ | 67,889 | $ | 165,637 | $ | 186,604 | |||||||||
| NA Cabinet Components: | ||||||||||||||||
| United States – fenestration | $ | 3,791 | $ | 4,486 | $ | 11,203 | $ | 12,613 | ||||||||
| United States – non-fenestration | 47,287 | 50,199 | 133,456 | 148,774 | ||||||||||||
| International – non-fenestration | 370 | 700 | 1,004 | 2,190 | ||||||||||||
| $ | 51,448 | $ | 55,385 | $ | 145,663 | $ | 163,577 | |||||||||
| Unallocated Corporate & Other: | ||||||||||||||||
| Eliminations | $ | (978 | ) | $ | (715 | ) | $ | (3,626 | ) | $ | (2,126 | ) | ||||
| $ | (978 | ) | $ | (715 | ) | $ | (3,626 | ) | $ | (2,126 | ) | |||||
| Net Sales | $ | 280,345 | $ | 299,640 | $ | 785,701 | $ | 835,091 | ||||||||
| (1) Reflects a decrease of $0.9 million and an increase $0.7 million in revenue associated with foreign currency exchange rate impacts for the three and nine months ended July 31, 2024, respectively. | ||||||||||||||||
