UNITED STATES
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FORM
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CURRENT REPORT
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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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. ☐
On December 10, 2020, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On December 10, 2020, the Registrant issued a press release announcing its results for the three months and twelve months ended October 31, 2020. A copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Exhibit 99.1. Press release dated December 10, 2020
Exhibit 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 10, 2020 | By: | /s/ SCOTT ZUEHLKE |
| Scott Zuehlke | ||
| SVP, CFO and Treasurer | ||
EXHIBIT 99.1
Quanex Building Products Announces Fourth Quarter and Fiscal Year 2020 Results
Margin Expansion Realized Across All Segments in 4Q20
Balance Sheet & Liquidity Continue to Improve and Remain Strong
~5% Increase in Cash Provided by Operating Activities in FY20
Repaid $35 Million of Bank Debt in 4Q20
HOUSTON, Dec. 10, 2020 (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, 2020.
The Company reported the following selected financial results:
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Net Sales | $255.4 | $240.4 | $851.6 | $893.8 | ||||
| Gross Margin | $66.2 | $57.2 | $192.8 | $199.4 | ||||
| Gross Margin % | 25.9% | 23.8% | 22.6% | 22.3% | ||||
| Net Income (Loss) | $22.2 | ($30.9) | $38.5 | ($46.7) | ||||
| Diluted EPS | $0.68 | ($0.94) | $1.17 | ($1.42) | ||||
| Adjusted Net Income | $22.0 | $14.0 | $40.7 | $31.4 | ||||
| Adjusted Diluted EPS | $0.67 | $0.42 | $1.24 | $0.95 | ||||
| Adjusted EBITDA | $39.4 | $34.4 | $104.5 | $102.7 | ||||
| Adjusted EBITDA Margin % | 15.4% | 14.3% | 12.3% | 11.5% | ||||
| Cash Provided by Operating Activities | $53.2 | $66.3 | $100.8 | $96.4 | ||||
| Free Cash Flow | $48.2 | $58.4 | $75.1 | $71.5 | ||||
| (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) | ||||||||
George Wilson, President and Chief Executive Officer, commented, “Our business performed extremely well in the fourth quarter as we continued to effectively navigate the complications and uncertainty of a COVID-19 world. Demand for our products remained strong throughout the quarter, with consolidated net sales increasing 6.3% year-over-year as compared to the fourth quarter of 2019. Volumes during the quarter were especially strong in Europe, and we remain optimistic on the global economic outlook despite the recent worldwide surge in COVID-19 cases.
“In addition to the lift provided by strong demand during the fourth quarter, our relentless focus on managing working capital and generating cash continued to bear fruit throughout the fiscal year. As a result, we achieved $100.8 million in cash provided by operating activities in 2020, representing an increase of 4.6% as compared to 2019. We generated Free Cash Flow of $75.1 million in 2020, representing a year-over-year increase of over 5%. We also repaid $35 million of bank debt during the fourth quarter, which allowed us to improve our leverage ratio of Net Debt to LTM Adjusted EBITDA to a level well below our original goal of exiting 2020 at 1.0x. Overall, I am extremely pleased with our ability to successfully manage both the challenges and the opportunities presented by the pandemic. Our balance sheet is stronger now than it was prior to COVID-19, and we are well positioned to benefit from future tailwinds in the residential housing industry.” (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)
Fourth Quarter and Fiscal 2020 Results Summary
The increase in net sales during the three months ended October 31, 2020 was largely due to increased demand for the Company’s products across all operating segments. Conversely, Quanex reported a decrease in net sales for the twelve months ended October 31, 2020, which was primarily attributable to the negative impact of the COVID-19 pandemic on the Company’s results during the second and third quarters of 2020. More specifically, in addition to softer demand in North America and continental Europe during the early stages of the pandemic, Quanex’s two manufacturing facilities in the UK were shut down in compliance with government orders in late March, and manufacturing operations at those plants did not restart until mid-to-late May. However, volume across all segments increased significantly in June, and net sales in July through October exceeded prior year on a consolidated basis. (See Sales Analysis table for additional information)
The increases in earnings for the three months ended October 31, 2020 were mainly due to higher volumes, improved operating leverage and lower raw material costs. The increases in earnings for the twelve months ended October 31, 2020 were primarily driven by a decrease in selling, general and administrative expenses.
Balance Sheet & Liquidity Update
As of October 31, 2020, the Company’s leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 0.6x. (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)
The Company’s liquidity increased to $268.8 million as of October 31, 2020, consisting of $51.6 million in cash on hand plus availability under its Senior Secured Revolving Credit Facility due 2023, less letters of credit outstanding.
Share Repurchases
Quanex’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. The Company repurchased 30,201 shares of common stock for approximately $0.5 million at an average price of $17.89 per share during the three months ended October 31, 2020, and 450,000 shares of common stock for approximately $7.2 million at an average price of $16.07 per share during the twelve months ended October 31, 2020. As of October 31, 2020, approximately $11.2 million remained under the existing share repurchase authorization.
Outlook
George Wilson, President and Chief Executive Officer, stated, “We continue to be optimistic about the economic recovery and our current outlook is positive, especially as regards our end markets. Based on conversations with our customers, the latest macro data, and our research into current market trends, we expect mid-to-high single-digit sales growth in our North American Fenestration segment, low single-digit sales growth in our North American Cabinet Components segment, and mid-single-digit sales growth in our European Fenestration segment. Overall, on a consolidated basis and assuming there is no adverse impact from the ongoing pandemic, we believe this will equate to net sales of approximately $900 million to $920 million, which we expect will generate between $108 million and $118 million in Adjusted EBITDA* in fiscal 2021. Our balance sheet is strong and we intend to concentrate on executing our plan with a continued focus on creating shareholder value.”
*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 Friday, December 11, 2020, 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 4046353, 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 18, 2020. To access the replay dial (855) 859-2056 for domestic callers and (404) 537-3406 for international callers, in both cases referencing conference passcode 4046353.
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, 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 (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. 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 following: impacts from public health issues (including pandemics, such as the recent COVID-19 pandemic) on the economy and the demand for Quanex’s products, 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, 2019, 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.
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net sales | $ | 255,405 | $ | 240,369 | $ | 851,573 | 893,841 | |||||||||
| Cost of sales | 189,164 | 183,128 | 658,750 | 694,420 | ||||||||||||
| Selling, general and administrative | 26,889 | 23,826 | 89,707 | 101,292 | ||||||||||||
| Restructuring charges | 145 | 89 | 622 | 370 | ||||||||||||
| Depreciation and amortization | 11,378 | 12,428 | 47,229 | 49,586 | ||||||||||||
| Asset impairment charges | - | 44,622 | - | 74,600 | ||||||||||||
| Operating income (loss) | 27,829 | (23,724 | ) | 55,265 | (26,427 | ) | ||||||||||
| Interest expense | (935 | ) | (2,029 | ) | (5,245 | ) | (9,643 | ) | ||||||||
| Other, net | 164 | (345 | ) | 280 | 116 | |||||||||||
| Income (loss) before income taxes | 27,058 | (26,098 | ) | 50,300 | (35,954 | ) | ||||||||||
| Income tax expense | (4,906 | ) | (4,850 | ) | (11,804 | ) | (10,776 | ) | ||||||||
| Net income (loss) | $ | 22,152 | $ | (30,948 | ) | $ | 38,496 | $ | (46,730 | ) | ||||||
| Earnings (loss) per common share, basic | $ | 0.68 | $ | (0.94 | ) | $ | 1.18 | $ | (1.42 | ) | ||||||
| Earnings (loss) per common share, diluted | $ | 0.68 | $ | (0.94 | ) | $ | 1.17 | $ | (1.42 | ) | ||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 32,608 | 32,893 | 32,689 | 32,960 | ||||||||||||
| Diluted | 32,811 | 32,893 | 32,821 | 32,960 | ||||||||||||
| Cash dividends per share | $ | 0.08 | $ | 0.08 | $ | 0.32 | $ | 0.32 | ||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| October 31, 2020 | October 31, 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 51,621 | $ | 30,868 | ||||
| Accounts receivable, net | 88,287 | 82,946 | ||||||
| Inventories, net | 61,181 | 67,159 | ||||||
| Prepaid and other current assets | 6,217 | 9,353 | ||||||
| Total current assets | 207,306 | 190,326 | ||||||
| Property, plant and equipment, net | 184,104 | 193,600 | ||||||
| Operating lease right-of-use assets | 51,824 | - | ||||||
| Goodwill | 146,154 | 145,563 | ||||||
| Intangible assets, net | 93,068 | 107,297 | ||||||
| Other assets | 9,129 | 8,324 | ||||||
| Total assets | $ | 691,585 | $ | 645,110 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 77,335 | $ | 63,604 | ||||
| Accrued liabilities | 38,289 | 39,221 | ||||||
| Income taxes payable | 6,465 | 6,183 | ||||||
| Current maturities of long-term debt | 692 | 746 | ||||||
| Current operating lease liabilities | 7,459 | - | ||||||
| Total current liabilities | 130,240 | 109,754 | ||||||
| Long-term debt | 116,728 | 156,414 | ||||||
| Noncurrent operating lease liabilities | 44,873 | - | ||||||
| Deferred pension and postretirement benefits | 10,923 | 13,322 | ||||||
| Deferred income taxes | 19,116 | 19,363 | ||||||
| Liabilities for uncertain tax positions | 522 | 556 | ||||||
| Other liabilities | 13,424 | 15,514 | ||||||
| Total liabilities | 335,826 | 314,923 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 373 | 374 | ||||||
| Additional paid-in-capital | 253,458 | 254,673 | ||||||
| Retained earnings | 213,517 | 185,703 | ||||||
| Accumulated other comprehensive loss | (33,024 | ) | (33,817 | ) | ||||
| Treasury stock at cost | (78,565 | ) | (76,746 | ) | ||||
| Total stockholders’ equity | 355,759 | 330,187 | ||||||
| Total liabilities and stockholders' equity | $ | 691,585 | $ | 645,110 | ||||
| QUANEX BUILDING PRODUCTS CORPORATION | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| Twelve Months Ended October 31, | |||||||
| 2020 | 2019 | ||||||
| Operating activities: | |||||||
| Net income (loss) | $ | 38,496 | $ | (46,730 | ) | ||
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||
| Depreciation and amortization | 47,229 | 49,586 | |||||
| Stock-based compensation | 879 | 2,045 | |||||
| Deferred income tax | (189 | ) | 3,260 | ||||
| Loss on the disposition of capital assets | - | 732 | |||||
| Asset impairment charge | - | 74,600 | |||||
| Other, net | 1,689 | 2,176 | |||||
| Changes in assets and liabilities: | |||||||
| (Increase) decrease in accounts receivable | (5,766 | ) | 574 | ||||
| Decrease in inventory | 6,119 | 3,797 | |||||
| Decrease (increase) in other current assets | 2,896 | (2,014 | ) | ||||
| Increase in accounts payable | 15,922 | 8,124 | |||||
| Decrease in accrued liabilities | (3,156 | ) | (6,760 | ) | |||
| Increase in income taxes payable | 237 | 3,416 | |||||
| (Decrease) increase in deferred pension and postretirement benefits | (2,775 | ) | 2,531 | ||||
| (Decrease) increase in other long-term liabilities | (236 | ) | 513 | ||||
| Other, net | (549 | ) | 522 | ||||
| Cash provided by operating activities | 100,796 | 96,372 | |||||
| Investing activities: | |||||||
| Capital expenditures | (25,726 | ) | (24,883 | ) | |||
| Proceeds from disposition of capital assets | 502 | 1,324 | |||||
| Cash used for investing activities | (25,224 | ) | (23,559 | ) | |||
| Financing activities: | |||||||
| Borrowings under credit facilities | 114,500 | 83,500 | |||||
| Repayments of credit facility borrowings | (154,000 | ) | (136,000 | ) | |||
| Repayments of other long-term debt | (1,027 | ) | (1,526 | ) | |||
| Common stock dividends paid | (10,534 | ) | (10,644 | ) | |||
| Issuance of common stock | 3,626 | 3,287 | |||||
| Payroll tax paid to settle shares forfeited upon vesting of stock | (454 | ) | (330 | ) | |||
| Purchase of treasury stock | (7,233 | ) | (9,551 | ) | |||
| Cash used for financing activities | (55,122 | ) | (71,264 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | 303 | 316 | |||||
| Increase in cash and cash equivalents | 20,753 | 1,865 | |||||
| Cash and cash equivalents at beginning of period | 30,868 | 29,003 | |||||
| Cash and cash equivalents at end of period | $ | 51,621 | $ | 30,868 | |||
| 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, | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Cash provided by operating activities | 53,235 | $66,336 | $100,796 | $96,372 | ||||
| Capital expenditures | (5,053) | (7,899) | (25,726) | (24,883) | ||||
| Free Cash Flow | $48,182 | $58,437 | $75,070 | $71,489 | ||||
| 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, 2020 | Three Months Ended October 31, 2019 | Twelve Months Ended October 31, 2020 | Twelve Months Ended October 31, 2019 | ||||||||||||||||||||||||||||||||
| Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | Net (Loss) Income | Diluted EPS | |||||||||||||||||||||||||||||
| Net income (loss) as reported | $ | 22,152 | $ | 0.68 | $ | (30,948 | ) | $ | (0.94 | ) | $ | 38,496 | $ | 1.17 | $ | (46,730 | ) | $ | (1.42 | ) | ||||||||||||||||
| Reconciling items from below | (168 | ) | (0.01 | ) | 44,963 | 1.36 | 2,218 | 0.07 | 78,155 | 2.37 | ||||||||||||||||||||||||||
| Adjusted net income and adjusted EPS | $ | 21,984 | $ | 0.67 | $ | 14,015 | $ | 0.42 | $ | 40,714 | $ | 1.24 | $ | 31,425 | $ | 0.95 | ||||||||||||||||||||
| Reconciliation of Adjusted EBITDA | Three Months Ended October 31, 2020 | Three Months Ended October 31, 2019 | Twelve Months Ended October 31, 2020 | Twelve Months Ended October 31, 2019 | ||||||||||||||||||||||||||||||||
| Reconciliation | Reconciliation | Reconciliation | Reconciliation | |||||||||||||||||||||||||||||||||
| Net income (loss) as reported | $ | 22,152 | $ | (30,948 | ) | $ | 38,496 | $ | (46,730 | ) | ||||||||||||||||||||||||||
| Income tax expense | 4,906 | 4,850 | 11,804 | 10,776 | ||||||||||||||||||||||||||||||||
| Other, net | (164 | ) | 345 | (280 | ) | (116 | ) | |||||||||||||||||||||||||||||
| Interest expense | 935 | 2,029 | 5,245 | 9,643 | ||||||||||||||||||||||||||||||||
| Depreciation and amortization | 11,378 | 12,428 | 47,229 | 49,586 | ||||||||||||||||||||||||||||||||
| EBITDA | 39,207 | (11,296 | ) | 102,494 | 23,159 | |||||||||||||||||||||||||||||||
| Reconciling items from below | 145 | 45,727 | 2,020 | 79,504 | ||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 39,352 | $ | 34,431 | $ | 104,514 | $ | 102,663 | ||||||||||||||||||||||||||||
| Reconciling Items | Three Months Ended October 31, 2020 | Three Months Ended October 31, 2019 | Twelve Months Ended October 31, 2020 | Twelve Months Ended October 31, 2019 | ||||||||||||||||||||||||||||||||
| Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | Income Statement | Reconciling Items | |||||||||||||||||||||||||||||
| Net sales | $ | 255,405 | $ | - | $ | 240,369 | $ | - | $ | 851,573 | $ | - | $ | 893,841 | $ | - | ||||||||||||||||||||
| Cost of sales | 189,164 | - | 183,128 | - | 658,750 | - | 694,420 | - | ||||||||||||||||||||||||||||
| Selling, general and administrative | 26,889 | - | 23,826 | (1,016 | ) | (1) | 89,707 | (1,398 | ) | (1) | 101,292 | (4,534 | ) | (1) | ||||||||||||||||||||||
| Restructuring charges | 145 | (145 | ) | (2) | 89 | (89 | ) | (2) | 622 | (622 | ) | (2) | 370 | (370 | ) | (2) | ||||||||||||||||||||
| Asset impairment charges | - | - | 44,622 | (44,622 | ) | - | - | 74,600 | (74,600 | ) | (3) | |||||||||||||||||||||||||
| EBITDA | 39,207 | 145 | (11,296 | ) | 45,727 | 102,494 | 2,020 | 23,159 | 79,504 | |||||||||||||||||||||||||||
| Depreciation and amortization | 11,378 | - | 12,428 | (192 | ) | 47,229 | (968 | ) | (4) | 49,586 | (192 | ) | ||||||||||||||||||||||||
| Operating income (loss) | 27,829 | 145 | (23,724 | ) | 45,919 | 55,265 | 2,988 | (26,427 | ) | 79,696 | ||||||||||||||||||||||||||
| Interest expense | (935 | ) | - | (2,029 | ) | - | (5,245 | ) | - | (9,643 | ) | - | ||||||||||||||||||||||||
| Other, net | 164 | (333 | ) | (5) | (345 | ) | 451 | (5) | 280 | 57 | (5) | 116 | 384 | (5) | ||||||||||||||||||||||
| Income (loss) before income taxes | 27,058 | (188 | ) | (26,098 | ) | 46,370 | 50,300 | 3,045 | (35,954 | ) | 80,080 | |||||||||||||||||||||||||
| Income tax expense | (4,906 | ) | 20 | (6) | (4,850 | ) | (1,407 | ) | (6) | (11,804 | ) | (827 | ) | (6) | (10,776 | ) | (1,925 | ) | (6) | |||||||||||||||||
| Net income (loss) | $ | 22,152 | $ | (168 | ) | $ | (30,948 | ) | $ | 44,963 | $ | 38,496 | $ | 2,218 | $ | (46,730 | ) | $ | 78,155 | |||||||||||||||||
| Diluted earnings (loss) per share | $ | 0.68 | $ | (0.94 | ) | $ | 1.17 | $ | (1.42 | ) | ||||||||||||||||||||||||||
| (1) Transaction and advisory fees, $1.4 million related to executive severance charges in the twelve months ended 2020, $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 manufacturing plant facilities. | ||||||||||||||||||||||||||||||||||||
| (3) Asset impairment charges relate to goodwill impairment in the North American Cabinet Components segment. | ||||||||||||||||||||||||||||||||||||
| (4) Accelerated depreciation related to the closure of a North American Cabinet Components plant. | ||||||||||||||||||||||||||||||||||||
| (5) Foreign currency transaction losses (gains). | ||||||||||||||||||||||||||||||||||||
| (6) Impact on a with and without basis. | ||||||||||||||||||||||||||||||||||||
| 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 October 31, 2020 | ||||||||||||||||||||
| Net sales | $ | 141,983 | $ | 56,823 | $ | 57,465 | $ | (866 | ) | $ | 255,405 | |||||||||
| Cost of sales | 105,323 | 36,725 | 47,546 | (430 | ) | 189,164 | ||||||||||||||
| Gross Margin | 36,660 | 20,098 | 9,919 | (436 | ) | 66,241 | ||||||||||||||
| Gross Margin % | 25.8 | % | 35.4 | % | 17.3 | % | 25.9 | % | ||||||||||||
| Selling, general and administrative | 12,883 | 6,739 | 5,270 | 1,997 | 26,889 | |||||||||||||||
| Restructuring charges | 67 | - | 78 | - | 145 | |||||||||||||||
| Depreciation and amortization | 5,243 | 2,423 | 3,593 | 119 | 11,378 | |||||||||||||||
| Operating income (loss) | 18,467 | 10,936 | 978 | (2,552 | ) | 27,829 | ||||||||||||||
| Depreciation and amortization | 5,243 | 2,423 | 3,593 | 119 | 11,378 | |||||||||||||||
| EBITDA | 23,710 | 13,359 | 4,571 | (2,433 | ) | 39,207 | ||||||||||||||
| Restructuring charges | 67 | - | 78 | - | 145 | |||||||||||||||
| Adjusted EBITDA | $ | 23,777 | $ | 13,359 | $ | 4,649 | $ | (2,433 | ) | $ | 39,352 | |||||||||
| Adjusted EBITDA Margin % | 16.7 | % | 23.5 | % | 8.1 | % | 15.4 | % | ||||||||||||
| 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 | |||||||||||||||
| LIFO inventory reserve adjustment | - | - | - | 250 | 250 | |||||||||||||||
| Transaction and advisory fees | - | - | - | 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 | % | ||||||||||||
| Twelve months ended October 31, 2020 | ||||||||||||||||||||
| Net sales | $ | 483,415 | $ | 161,054 | $ | 210,099 | $ | (2,995 | ) | $ | 851,573 | |||||||||
| Cost of sales | 371,811 | 108,781 | 179,804 | (1,646 | ) | 658,750 | ||||||||||||||
| Gross Margin | 111,604 | 52,273 | 30,295 | (1,349 | ) | 192,823 | ||||||||||||||
| Gross Margin % | 23.1 | % | 32.5 | % | 14.4 | % | 22.6 | % | ||||||||||||
| Selling, general and administrative | 47,845 | 22,729 | 18,738 | 395 | 89,707 | |||||||||||||||
| Restructuring charges | 295 | - | 327 | - | 622 | |||||||||||||||
| Depreciation and amortization | 23,555 | 9,468 | 13,732 | 474 | 47,229 | |||||||||||||||
| Operating income (loss) | 39,909 | 20,076 | (2,502 | ) | (2,218 | ) | 55,265 | |||||||||||||
| Depreciation and amortization | 23,555 | 9,468 | 13,732 | 474 | 47,229 | |||||||||||||||
| EBITDA | 63,464 | 29,544 | 11,230 | (1,744 | ) | 102,494 | ||||||||||||||
| Transaction and advisory fees | - | - | - | 55 | 55 | |||||||||||||||
| Executive severance charges | - | - | - | 1,343 | 1,343 | |||||||||||||||
| Restructuring charges | 295 | - | 327 | - | 622 | |||||||||||||||
| Adjusted EBITDA | $ | 63,759 | $ | 29,544 | $ | 11,557 | $ | (346 | ) | $ | 104,514 | |||||||||
| Adjusted EBITDA Margin % | 13.2 | % | 18.3 | % | 5.5 | % | 12.3 | % | ||||||||||||
| 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 | |||||||||||||||
| Reorganization and executive severance | - | - | - | 2,301 | 2,301 | |||||||||||||||
| Loss on sale of plant | - | - | - | 766 | 766 | |||||||||||||||
| 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 | % | ||||||||||||
| QUANEX BUILDING PRODUCTS CORPORATION | |||||||||||||||
| SALES ANALYSIS | |||||||||||||||
| (In thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| October 31, 2020 | October 31, 2019 | October 31, 2020 | October 31, 2019 | ||||||||||||
| NA Fenestration: | |||||||||||||||
| United States - fenestration | $ | 125,522 | $ | 127,027 | $ | 427,616 | $ | 439,536 | |||||||
| International - fenestration | 9,301 | 7,631 | 28,585 | 31,106 | |||||||||||
| United States - non-fenestration | 5,500 | 4,771 | 19,279 | 17,061 | |||||||||||
| International - non-fenestration | 1,660 | 3,754 | 7,935 | 16,134 | |||||||||||
| $ | 141,983 | $ | 143,183 | $ | 483,415 | $ | 503,837 | ||||||||
| EU Fenestration (1): | |||||||||||||||
| International - fenestration | $ | 46,699 | 37,599 | $ | 134,432 | 139,638 | |||||||||
| International - non-fenestration | 10,124 | 6,195 | 26,622 | 25,359 | |||||||||||
| $ | 56,823 | $ | 43,794 | $ | 161,054 | $ | 164,997 | ||||||||
| NA Cabinet Components: | |||||||||||||||
| United States - fenestration | $ | 3,381 | $ | 3,235 | $ | 11,842 | $ | 13,144 | |||||||
| United States - non-fenestration | 53,641 | 50,516 | 196,479 | 214,211 | |||||||||||
| International - non-fenestration | 443 | 515 | 1,778 | 2,289 | |||||||||||
| $ | 57,465 | $ | 54,266 | $ | 210,099 | $ | 229,644 | ||||||||
| Unallocated Corporate & Other: | |||||||||||||||
| Eliminations | $ | (866 | ) | $ | (874 | ) | $ | (2,995 | ) | $ | (4,637 | ) | |||
| $ | (866 | ) | $ | (874 | ) | $ | (2,995 | ) | $ | (4,637 | ) | ||||
| Net Sales | $ | 255,405 | $ | 240,369 | $ | 851,573 | $ | 893,841 | |||||||
| (1) Reflects $2.2 million and $0.6 million gains in revenue associated with foreign currency exchange rate impacts for the three and twelve months ended October 31, 2020, respectively. | |||||||||||||||