UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): June 4, 2019
Quanex Building Products Corporation
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-33913 | 26-1561397 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 1800 West Loop South, Suite 1500, Houston, Texas 77027 |
| (Address of Principal Executive Offices) (Zip Code) |
713-961-4600
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | NX | NYSE |
Item 2.02. Results of Operations and Financial Condition.
On June 4, 2019, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On June 4, 2019, the Registrant issued a press release announcing that the Board had declared a quarterly cash dividend of $0.08 per share of common stock, payable on June 28, 2019, to stockholders of record on June 14, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Quanex Building Products Corporation | ||
| Date: June 4, 2019 | By: | /s/ Brent L. Korb |
| Brent L. Korb | ||
| Senior Vice President - Finance and Chief Financial Officer | ||
EXHIBIT 99.1
Quanex Building Products Announces Second Quarter 2019 Results
Margin Expansion in All Operating Segments
Strong Growth Continues in EU Fenestration Segment
Solid Free Cash Flow Generation
Continue to Target Fiscal Year-End 2019 Leverage Ratio of 1.5x - 2.0x
HOUSTON, June 04, 2019 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the three months ended April 30, 2019.
Bill Griffiths, Chairman, President and Chief Executive Officer, stated, “We performed well during the second quarter from an operational standpoint and realized margin expansion in all segments, including an almost 400 basis point increase in our European Fenestration segment. On a consolidated basis, we realized margin expansion of approximately 70 basis points. On the revenue side, solid growth of more than 15%, excluding foreign exchange impact, in our European Fenestration segment was somewhat offset by softer sales in the U.S., mainly due to inclement weather and customer inventory destocking. Despite this softness in the U.S., sales in our North American Fenestration segment grew at 1.0% during the quarter, which compares favorably to Ducker’s latest window shipment estimate of negative 4.0% growth for the three months ended March 31, 2019. We also more than doubled the amount of free cash flow generated during the quarter, which allowed us to pay down $5 million in bank debt and buyback approximately $2.7 million in stock.
“We continue to expect margin expansion on a consolidated basis for the full year as operational efficiency gains continue, volume ramps into the selling season and we benefit from pricing actions that were implemented early this year. Going forward, our intention is to continue deleveraging the balance sheet while opportunistically repurchasing stock. Our growth expectations for the full year haven’t materially changed with respect to our North American and European Fenestration segments; however, top line results in our North American Cabinet Components segment have been weaker than expected, but consistent with the latest industry data. As such, we now expect full year 2019 consolidated revenue growth of 2% to 3%, but we are converting well and are maintaining our Adjusted EBITDA guidance of $97 million to $107 million.” (See Forward Looking Statements and Non-GAAP Terminology Definitions and Disclaimers sections for additional information)
Second Quarter 2019 Results Summary
The Company reported the following selected financial results:
| Three Months Ended April 30, | |||||
| 2019 | 2018 | ||||
| Net Sales | $218.2 | $214.2 | |||
| Net (Loss) Income | ($24.0) | $4.1 | |||
| Diluted EPS | ($0.73) | $0.12 | |||
| Adjusted Net Income | $6.3 | $4.8 | |||
| Adjusted Diluted EPS | $0.19 | $0.14 | |||
| Adjusted EBITDA | $23.4 | $21.3 | |||
| Cash provided by operating activities | $20.4 | $13.4 | |||
| Free Cash Flow | $13.6 | $6.0 | |||
| (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) | |||||
The increase in net sales during the second quarter of 2019 was largely due to above market growth in the European Fenestration segment coupled with price increases related to raw material inflation recovery. (See Sales Analysis table for additional information)
The decrease in reported earnings was primarily the result of a $30.0 million, or $0.91 per diluted share, non-cash goodwill impairment in the North American Cabinet Components segment, mostly due to softer than expected sales. The increase in adjusted earnings was mainly attributable to operational efficiency gains and the successful implementation of pricing initiatives.
As of April 30, 2019, Quanex’s leverage ratio of Net Debt to LTM Adjusted EBITDA decreased to 2.3x. Quanex continues to expect to end fiscal 2019 with a leverage ratio between 1.5x and 2.0x. (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)
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. During the three months ended April 30, 2019, Quanex repurchased 171,016 shares of common stock for approximately $2.7 million at an average price of $15.71 per share. As of April 30, 2019, approximately $23.3 million remained under the existing share repurchase authorization.
Recent Events
The Company’s Board of Directors declared a quarterly cash dividend of $0.08 per share on Quanex’s common stock, payable June 28, 2019, to shareholders of record on June 14, 2019.
Conference Call and Webcast Information
The Company has scheduled a conference call for Wednesday, June 5, 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 4390268, 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 June 12, 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 4390268.
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, restructuring 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, gain/loss on the sale of fixed assets, and restructuring 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 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 NET (LOSS) INCOME | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
| 2019 | 2018 (1) | 2019 | 2018 (1) | |||||||||||||
| Net sales | $ | 218,203 | $ | 214,212 | $ | 415,011 | $ | 405,878 | ||||||||
| Cost of sales | 171,378 | 169,030 | 329,935 | 323,546 | ||||||||||||
| Selling, general and administrative | 23,722 | 23,863 | 51,748 | 47,971 | ||||||||||||
| Restructuring charges | 84 | 242 | 187 | 608 | ||||||||||||
| Depreciation and amortization | 12,404 | 13,310 | 24,976 | 26,583 | ||||||||||||
| Asset impairment charges | 29,978 | - | 29,978 | - | ||||||||||||
| Operating (loss) income | (19,363 | ) | 7,767 | (21,813 | ) | 7,170 | ||||||||||
| Interest expense | (2,602 | ) | (2,502 | ) | (5,044 | ) | (4,943 | ) | ||||||||
| Other, net | (54 | ) | 264 | 202 | 689 | |||||||||||
| (Loss) income before income taxes | (22,019 | ) | 5,529 | (26,655 | ) | 2,916 | ||||||||||
| Income tax (expense) benefit | (1,955 | ) | (1,393 | ) | (968 | ) | 6,167 | |||||||||
| Net (loss) income | $ | (23,974 | ) | $ | 4,136 | $ | (27,623 | ) | $ | 9,083 | ||||||
| (Loss) income per common share, basic | $ | (0.73 | ) | $ | 0.12 | $ | (0.84 | ) | $ | 0.26 | ||||||
| (Loss) income per common share, diluted | $ | (0.73 | ) | $ | 0.12 | $ | (0.84 | ) | $ | 0.26 | ||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 32,951 | 34,796 | 33,026 | 34,731 | ||||||||||||
| Diluted | 32,951 | 35,115 | 33,026 | 35,166 | ||||||||||||
| Cash dividends per share | $ | 0.08 | $ | 0.04 | $ | 0.16 | $ | 0.08 | ||||||||
| (1) Updated to reflect adoption of ASU 2017-07. | ||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| April 30, 2019 | October 31, 2018 (1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,262 | $ | 29,003 | ||||
| Accounts receivable, net | 80,646 | 84,014 | ||||||
| Inventories, net | 86,581 | 70,730 | ||||||
| Prepaid and other current assets | 8,458 | 7,296 | ||||||
| Total current assets | 195,947 | 191,043 | ||||||
| Property, plant and equipment, net | 197,182 | 201,370 | ||||||
| Goodwill | 190,638 | 219,627 | ||||||
| Intangible assets, net | 114,921 | 121,919 | ||||||
| Other assets | 8,354 | 9,255 | ||||||
| Total assets | $ | 707,042 | $ | 743,214 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 48,743 | $ | 52,389 | ||||
| Accrued liabilities | 31,554 | 45,968 | ||||||
| Income taxes payable | 2,971 | 2,780 | ||||||
| Current maturities of long-term debt | 1,082 | 1,224 | ||||||
| Total current liabilities | 84,350 | 102,361 | ||||||
| Long-term debt | 224,743 | 209,332 | ||||||
| Deferred pension and postretirement benefits | 5,797 | 4,218 | ||||||
| Deferred income taxes | 16,417 | 17,510 | ||||||
| Other liabilities | 14,847 | 14,571 | ||||||
| Total liabilities | 346,154 | 347,992 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 374 | 374 | ||||||
| Additional paid-in-capital | 253,679 | 254,678 | ||||||
| Retained earnings | 210,406 | 243,904 | ||||||
| Accumulated other comprehensive loss | (28,127 | ) | (30,705 | ) | ||||
| Treasury stock at cost | (75,444 | ) | (73,029 | ) | ||||
| Total stockholders’ equity | 360,888 | 395,222 | ||||||
| Total liabilities and stockholders' equity | $ | 707,042 | $ | 743,214 | ||||
| (1) Updated to reflect accounting change to FIFO cost method. | ||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended April 30, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities: | ||||||||
| Net (loss) income | $ | (27,623 | ) | $ | 9,083 | |||
| Adjustments to reconcile net (loss) income to cash provided by operating activities: | ||||||||
| Depreciation and amortization | 24,976 | 26,583 | ||||||
| Stock-based compensation | 1,043 | 211 | ||||||
| Deferred income tax | (1,256 | ) | (8,087 | ) | ||||
| Asset impairment charges | 29,978 | - | ||||||
| Other, net | 1,078 | (321 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Decrease in accounts receivable | 3,479 | 3,357 | ||||||
| Increase in inventory | (15,522 | ) | (4,623 | ) | ||||
| Decrease in other current assets | (681 | ) | (1,047 | ) | ||||
| (Decrease) increase in accounts payable | (2,617 | ) | 378 | |||||
| Decrease in accrued liabilities | (14,716 | ) | (5,220 | ) | ||||
| Increase in income taxes payable | 183 | 25 | ||||||
| Increase in deferred pension and postretirement benefits | 1,567 | 1,457 | ||||||
| Decrease in other long-term liabilities | (131 | ) | (38 | ) | ||||
| Other, net | 385 | (143 | ) | |||||
| Cash provided by operating activities | 143 | 21,615 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (13,022 | ) | (15,213 | ) | ||||
| Proceeds from disposition of capital assets | 298 | 180 | ||||||
| Cash used for investing activities | (12,724 | ) | (15,033 | ) | ||||
| Financing activities: | ||||||||
| Borrowings under credit facilities | 57,500 | 21,500 | ||||||
| Repayments of credit facility borrowings | (42,500 | ) | (34,000 | ) | ||||
| Repayments of other long-term debt | (784 | ) | (442 | ) | ||||
| Common stock dividends paid | (5,335 | ) | (2,800 | ) | ||||
| Issuance of common stock | 27 | 2,564 | ||||||
| Payroll tax paid to settle shares forfeited upon vesting of stock | (322 | ) | (706 | ) | ||||
| Purchase of treasury stock | (4,702 | ) | - | |||||
| Cash provided by (used for) financing activities | 3,884 | (13,884 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (44 | ) | (55 | ) | ||||
| Decrease in cash and cash equivalents | (8,741 | ) | (7,357 | ) | ||||
| Cash and cash equivalents at beginning of period | 29,003 | 17,455 | ||||||
| Cash and cash equivalents at end of period | $ | 20,262 | $ | 10,098 | ||||
| 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 April 30, | Six Months Ended April 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Cash provided by operating activities | $ | 20,386 | $ | 13,423 | $ | 143 | $ | 21,615 | ||||||||
| Capital expenditures | (6,751 | ) | (7,402 | ) | (13,022 | ) | (15,213 | ) | ||||||||
| Free Cash Flow | $ | 13,635 | $ | 6,021 | $ | (12,879 | ) | $ | 6,402 | |||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||||||||||||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURE DISCLOSURE | ||||||||||||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| Reconciliation of Adjusted Net Income and Adjusted EPS | April 30, 2019 | April 30, 2018 | April 30, 2019 | April 30, 2018 | ||||||||||||||||||||||||||||||||
| Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||||||||||||||||||||
| Net (loss) income as reported | $ | (23,974 | ) | $ | (0.73 | ) | $ | 4,136 | $ | 0.12 | $ | (27,623 | ) | $ | (0.84 | ) | $ | 9,083 | $ | 0.26 | ||||||||||||||||
| Reconciling items from below | 30,250 | 0.92 | 665 | 0.02 | 31,584 | 0.96 | (5,555 | ) | (0.16 | ) | ||||||||||||||||||||||||||
| Adjusted net income and adjusted EPS | $ | 6,276 | $ | 0.19 | $ | 4,801 | $ | 0.14 | $ | 3,961 | $ | 0.12 | $ | 3,528 | $ | 0.10 | ||||||||||||||||||||
| Reconciliation of Adjusted EBITDA | Three Months Ended April 30, 2019 | Three Months Ended April 30, 2018 | Six Months Ended April 30, 2019 | Six Months Ended April 30, 2018 | ||||||||||||||||||||||||||||||||
| Reconciliation | Reconciliation | Reconciliation | Reconciliation | |||||||||||||||||||||||||||||||||
| Net (loss) income as reported | $ | (23,974 | ) | $ | 4,136 | $ | (27,623 | ) | $ | 9,083 | ||||||||||||||||||||||||||
| Income tax expense (benefit) | 1,955 | 1,393 | 968 | (6,167 | ) | |||||||||||||||||||||||||||||||
| Other, net | 54 | (264 | ) | (202 | ) | (689 | ) | |||||||||||||||||||||||||||||
| Interest expense | 2,602 | 2,502 | 5,044 | 4,943 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 12,404 | 13,310 | 24,976 | 26,583 | ||||||||||||||||||||||||||||||||
| EBITDA | (6,959 | ) | 21,077 | 3,163 | 33,753 | |||||||||||||||||||||||||||||||
| Reconciling items from below | 30,311 | 244 | 32,282 | 622 | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 23,352 | $ | 21,321 | $ | 35,445 | $ | 34,375 | ||||||||||||||||||||||||||||
| Reconciling Items | Three Months Ended April 30, 2019 | Three Months Ended April 30, 2018 | Six Months Ended April 30, 2019 | Six Months Ended April 30, 2018 | ||||||||||||||||||||||||||||||||
| Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | |||||||||||||||||||||||||||||
| Net sales | $ | 218,203 | $ | - | $ | 214,212 | $ | - | $ | 415,011 | $ | - | $ | 405,878 | $ | - | ||||||||||||||||||||
| Cost of sales | 171,378 | - | 169,030 | - | 329,935 | - | 323,546 | - | ||||||||||||||||||||||||||||
| Selling, general and administrative | 23,722 | (249 | ) | (1) | 23,863 | (2 | ) | (1) | 51,748 | (2,117 | ) | (1) | 47,971 | (14 | ) | (1) | ||||||||||||||||||||
| Restructuring charges | 84 | (84 | ) | (2) | 242 | (242 | ) | (2) | 187 | (187 | ) | (2) | 608 | (608 | ) | (2) | ||||||||||||||||||||
| Asset impairment charges | 29,978 | (29,978 | ) | (3) | - | - | 29,978 | (29,978 | ) | (3) | - | - | ||||||||||||||||||||||||
| EBITDA | (6,959 | ) | 30,311 | 21,077 | 244 | 3,163 | 32,282 | 33,753 | 622 | |||||||||||||||||||||||||||
| Depreciation and amortization | 12,404 | - | 13,310 | (504 | ) | (4) | 24,976 | - | 26,583 | (852 | ) | (4) | ||||||||||||||||||||||||
| Operating loss | (19,363 | ) | 30,311 | 7,767 | 748 | (21,813 | ) | 32,282 | 7,170 | 1,474 | ||||||||||||||||||||||||||
| Interest expense | (2,602 | ) | - | (2,502 | ) | - | (5,044 | ) | - | (4,943 | ) | - | ||||||||||||||||||||||||
| Other, net | (54 | ) | 24 | (5) | 264 | 132 | (5) | 202 | 45 | (5) | 689 | (167 | ) | (5) | ||||||||||||||||||||||
| (Loss) income before income taxes | (22,019 | ) | 30,335 | 5,529 | 880 | (26,655 | ) | 32,327 | 2,916 | 1,307 | ||||||||||||||||||||||||||
| Income tax (expense) benefit | (1,955 | ) | (85 | ) | (6) | (1,393 | ) | (215 | ) | (6) | (968 | ) | (743 | ) | (6) | 6,167 | (6,862 | ) | (6) | |||||||||||||||||
| Net (loss) income | $ | (23,974 | ) | $ | 30,250 | $ | 4,136 | $ | 665 | $ | (27,623 | ) | $ | 31,584 | $ | 9,083 | $ | (5,555 | ) | |||||||||||||||||
| Diluted (loss) earnings per share | $ | (0.73 | ) | $ | 0.12 | $ | (0.84 | ) | $ | 0.26 | ||||||||||||||||||||||||||
| (1) Transaction and advisory fees, and in the six months ended April 30,2019, $1.2 million of severance related to a reorganization. | ||||||||||||||||||||||||||||||||||||
| (2) Restructuring charges relate to the closure of several manufacturing plant facilities. | ||||||||||||||||||||||||||||||||||||
| (3) Asset impairment charges relate to a goodwill impairment in the North American Cabinet Components segment. | ||||||||||||||||||||||||||||||||||||
| (4) Accelerated depreciation for plant re-layout in the North American Cabinet Components segment. | ||||||||||||||||||||||||||||||||||||
| (5) Foreign currency transaction losses (gains). | ||||||||||||||||||||||||||||||||||||
| (6) Impact on a with and without basis. Six months ended April 30, 2019 and 2018 include $0.2 million and $6.5 million, respectively, adjustment related to the Tax Cuts and Jobs Act. | ||||||||||||||||||||||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||||||||||||||
| SELECTED SEGMENT DATA | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| This table provides operating (loss) income, EBITDA, and Adjusted EBITDA by reportable segment. Non-operating expense and income tax expense are not allocated to the reportable segments. | ||||||||||||||||||||
| NA Fenestration (1) | EU Fenestration (1) | NA Cabinet Components | Unallocated Corp & Other | Total | ||||||||||||||||
| Three months ended April 30, 2019 | ||||||||||||||||||||
| Net sales | $ | 115,346 | $ | 41,623 | $ | 62,836 | $ | (1,602 | ) | $ | 218,203 | |||||||||
| Cost of sales | 90,031 | 28,906 | 53,699 | (1,258 | ) | 171,378 | ||||||||||||||
| Selling, general and administrative | 12,213 | 5,696 | 4,505 | 1,308 | 23,722 | |||||||||||||||
| Restructuring charges | 84 | - | - | - | 84 | |||||||||||||||
| Depreciation and amortization | 6,758 | 2,219 | 3,305 | 122 | 12,404 | |||||||||||||||
| Asset impairment charges | - | - | 29,978 | - | 29,978 | |||||||||||||||
| Operating income (loss) | 6,260 | 4,802 | (28,651 | ) | (1,774 | ) | (19,363 | ) | ||||||||||||
| Depreciation and amortization | 6,758 | 2,219 | 3,305 | 122 | 12,404 | |||||||||||||||
| EBITDA | 13,018 | 7,021 | (25,346 | ) | (1,652 | ) | (6,959 | ) | ||||||||||||
| Asset impairment charges | - | - | 29,978 | - | 29,978 | |||||||||||||||
| Transaction and advisory fees | - | - | - | 249 | 249 | |||||||||||||||
| Restructuring charges | 84 | - | - | - | 84 | |||||||||||||||
| Adjusted EBITDA | $ | 13,102 | $ | 7,021 | $ | 4,632 | $ | (1,403 | ) | $ | 23,352 | |||||||||
| Adjusted EBITDA Margin % | 11.4 | % | 16.9 | % | 7.4 | % | 10.7 | % | ||||||||||||
| Three months ended April 30, 2018 (2) | ||||||||||||||||||||
| Net sales | $ | 114,157 | $ | 38,824 | $ | 62,668 | $ | (1,437 | ) | $ | 214,212 | |||||||||
| Cost of sales | 88,385 | 27,589 | 54,135 | (1,079 | ) | 169,030 | ||||||||||||||
| Selling, general and administrative (3) | 13,343 | 6,178 | 4,454 | (112 | ) | 23,863 | ||||||||||||||
| Restructuring charges | 238 | - | 4 | - | 242 | |||||||||||||||
| Depreciation and amortization | 6,808 | 2,527 | 3,839 | 136 | 13,310 | |||||||||||||||
| Operating income (loss) | 5,383 | 2,530 | 236 | (382 | ) | 7,767 | ||||||||||||||
| Depreciation and amortization | 6,808 | 2,527 | 3,839 | 136 | 13,310 | |||||||||||||||
| EBITDA | 12,191 | 5,057 | 4,075 | (246 | ) | 21,077 | ||||||||||||||
| Transaction and advisory fees | - | - | - | 2 | 2 | |||||||||||||||
| Restructuring charges | 238 | - | 4 | - | 242 | |||||||||||||||
| Adjusted EBITDA | $ | 12,429 | $ | 5,057 | $ | 4,079 | $ | (244 | ) | $ | 21,321 | |||||||||
| Adjusted EBITDA Margin % | 10.9 | % | 13.0 | % | 6.5 | % | 10.0 | % | ||||||||||||
| Six months ended April 30, 2019 | ||||||||||||||||||||
| Net sales | $ | 224,395 | $ | 76,877 | $ | 116,688 | $ | (2,949 | ) | $ | 415,011 | |||||||||
| Cost of sales | 177,184 | 53,431 | 101,555 | (2,235 | ) | 329,935 | ||||||||||||||
| Selling, general and administrative | 25,290 | 11,406 | 9,430 | 5,622 | 51,748 | |||||||||||||||
| Restructuring charges | 187 | - | - | - | 187 | |||||||||||||||
| Depreciation and amortization | 13,630 | 4,456 | 6,644 | 246 | 24,976 | |||||||||||||||
| Asset impairment charges | - | - | 29,978 | - | 29,978 | |||||||||||||||
| Operating income (loss) | 8,104 | 7,584 | (30,919 | ) | (6,582 | ) | (21,813 | ) | ||||||||||||
| Depreciation and amortization | 13,630 | 4,456 | 6,644 | 246 | 24,976 | |||||||||||||||
| EBITDA | 21,734 | 12,040 | (24,275 | ) | (6,336 | ) | 3,163 | |||||||||||||
| Asset impairment charges | - | - | 29,978 | - | 29,978 | |||||||||||||||
| Transaction and advisory fees | - | - | - | 2,117 | 2,117 | |||||||||||||||
| Restructuring charges | 187 | - | - | - | 187 | |||||||||||||||
| Adjusted EBITDA | $ | 21,921 | $ | 12,040 | $ | 5,703 | $ | (4,219 | ) | $ | 35,445 | |||||||||
| Adjusted EBITDA Margin % | 9.8 | % | 15.7 | % | 4.9 | % | 8.5 | % | ||||||||||||
| Six months ended April 30, 2018 (2) | ||||||||||||||||||||
| Net sales | $ | 216,883 | $ | 72,820 | $ | 118,590 | $ | (2,415 | ) | $ | 405,878 | |||||||||
| Cost of sales | 168,482 | 52,421 | 104,351 | (1,708 | ) | 323,546 | ||||||||||||||
| Selling, general and administrative (3) | 26,845 | 11,506 | 9,088 | 532 | 47,971 | |||||||||||||||
| Restructuring charges | 489 | - | 119 | - | 608 | |||||||||||||||
| Depreciation and amortization | 13,819 | 4,976 | 7,525 | 263 | 26,583 | |||||||||||||||
| Operating income (loss) | 7,248 | 3,917 | (2,493 | ) | (1,502 | ) | 7,170 | |||||||||||||
| Depreciation and amortization | 13,819 | 4,976 | 7,525 | 263 | 26,583 | |||||||||||||||
| EBITDA | 21,067 | 8,893 | 5,032 | (1,239 | ) | 33,753 | ||||||||||||||
| Transaction related costs | - | - | - | 14 | 14 | |||||||||||||||
| Restructuring charges | 489 | - | 119 | - | 608 | |||||||||||||||
| Adjusted EBITDA | $ | 21,556 | $ | 8,893 | $ | 5,151 | $ | (1,225 | ) | $ | 34,375 | |||||||||
| Adjusted EBITDA Margin % | 9.9 | % | 12.2 | % | 4.3 | % | 8.5 | % | ||||||||||||
| (1) NA Fenestration and EU Fenestration were previously named "NA Engineered Components" and "EU Engineered Components," respectively. | ||||||||||||||||||||
| (2) Updated to reflect the adoption of ASU 2017-07. | ||||||||||||||||||||
| (3) Updated to reflect a reduction in corporate allocations of $0.3 and $0.9 million during the three and six months ended April 30, 2018 due to a change in allocation methodology during the fourth quarter of 2018. | ||||||||||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||||||||||
| SALES ANALYSIS | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| April 30, 2019 | April 30, 2018 | April 30, 2019 | April 30, 2018 | |||||||||||||
| NA Fenestration: | ||||||||||||||||
| United States - fenestration | $ | 99,144 | $ | 97,005 | $ | 193,029 | $ | 184,787 | ||||||||
| International - fenestration | 8,096 | 8,897 | 16,302 | 15,906 | ||||||||||||
| United States - non-fenestration | 4,803 | 4,697 | 8,308 | 8,843 | ||||||||||||
| International - non-fenestration | 3,303 | 3,558 | 6,756 | 7,347 | ||||||||||||
| $ | 115,346 | $ | 114,157 | $ | 224,395 | $ | 216,883 | |||||||||
| EU Fenestration (1): | ||||||||||||||||
| International - fenestration | $ | 34,973 | $ | 32,847 | $ | 65,696 | $ | 62,716 | ||||||||
| International - non-fenestration | 6,650 | 5,977 | 11,181 | 10,104 | ||||||||||||
| $ | 41,623 | $ | 38,824 | $ | 76,877 | $ | 72,820 | |||||||||
| NA Cabinet Components: | ||||||||||||||||
| United States - fenestration | $ | 2,997 | $ | 3,403 | $ | 6,349 | $ | 6,850 | ||||||||
| United States - non-fenestration | 59,220 | 58,698 | 109,181 | 110,703 | ||||||||||||
| International - non-fenestration | 619 | 567 | 1,158 | 1,037 | ||||||||||||
| $ | 62,836 | $ | 62,668 | $ | 116,688 | $ | 118,590 | |||||||||
| Unallocated Corporate & Other: | ||||||||||||||||
| Eliminations | $ | (1,602 | ) | $ | (1,437 | ) | $ | (2,949 | ) | $ | (2,415 | ) | ||||
| $ | (1,602 | ) | $ | (1,437 | ) | $ | (2,949 | ) | $ | (2,415 | ) | |||||
| Net Sales | $ | 218,203 | $ | 214,212 | $ | 415,011 | $ | 405,878 | ||||||||
| (1) Reflects reductions of $2.8 million and $4.4 million in revenue associated with foreign currency exchange rate impacts for the three and six months ended April 30, 2019. | ||||||||||||||||