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CURRENT REPORT
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On December 11, 2019, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Exhibit 99.1. Press release dated December 11, 2019
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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: December 11, 2019 | By: | /s/ SCOTT ZUEHLKE |
| Scott Zuehlke | ||
| Vice President, Investor Relations & Treasurer and Interim Chief Financial Officer | ||
EXHIBIT 99.1
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. | |||||||||||||||