Quanex Building Products Announces Second Quarter 2021 Results and Increases Full Year 2021 Guidance Again

Quanex Building Products Corporation (“Quanex” or the “Company”) announced its results for the three months ended April 30, 2021.

The Company reported the following selected financial results:

			Three Months Ended April 30,								Six Months Ended April 30,
($ in millions, except per share data)				2021				2020				2021				2020
Net Sales			$270.4				$187.5				$500.5				$384.1
Gross Margin			$61.9				$37.7				$115.6				$76.9
Gross Margin %				22.9%				20.1%				23.1%				20.0%
Net Income			$14.5				$5.5				$22.4				$5.5
Diluted EPS			$0.43				$0.17				$0.67				$0.17
Adjusted Net Income			$14.6				$6.4				$23.6				$7.6
Adjusted Diluted EPS			$0.43				$0.19				$0.70				$0.23
Adjusted EBITDA			$32.2				$21.8				$56.6				$37.5
Adjusted EBITDA Margin %				11.9%				11.6%				11.3%				9.8%
Cash Provided by Operating Activities			$32.4				$6.1				$29.0				$2.5
Free Cash Flow			$27.8					($0.9)			$19.2					($13.8)

George Wilson, President and Chief Executive Officer, commented, “Demand for our products remained high throughout the second quarter of 2021 and as a result we posted another very solid quarter. On a consolidated basis, net sales increased by 44.2% and Adjusted EBITDA margin improved by approximately 30 basis points year-over-year as compared to the second quarter of 2020. Our balance sheet is strong, and we were able to repay $25.0 million in bank debt during the quarter while also repurchasing approximately $2.0 million of our common stock. We will continue to focus on generating cash and paying down debt. Despite inflationary headwinds and labor challenges, we remain optimistic on the global economic outlook and overall trends within the residential housing industry. Our business is performing well, and we are confident in our ability to continue creating value for shareholders.”

Second Quarter 2021 Results Summary
The robust net sales growth during the three months ended April 30, 2021 was mainly the result of increased demand for the Company’s products across all product lines and operating segments coupled with increased pricing mostly related to raw material cost inflation. More specifically, Quanex posted net sales growth of 34.6% in its North American Fenestration segment, 25.5% in its North American Cabinet Components segment and 92.1% in its European Fenestration segment, excluding the foreign exchange impact. As a reminder, both of the Company’s manufacturing facilities in the U.K. were shut down in late March of 2020 and did not resume operations until mid-to-late May last year.

The increase in earnings for the second quarter of 2021 was mostly due to higher volumes and improved operating leverage. The increase in earnings was somewhat offset by inflationary pressures and an increase in selling, general and administrative expenses, which was largely attributable to more normalized medical costs combined with an increase in stock-based compensation expense that resulted from the shareholder value created by the further appreciation of Quanex’s stock price during the period.

Balance Sheet & Liquidity Update

As of April 30, 2021, Quanex had total debt of $88.7 million and its leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 0.3x.

The Company’s liquidity increased to $296.8 million as of April 30, 2021, consisting of $49.3 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 80,556 shares of common stock for approximately $2.0 million at an average price of $25.33 per share during the three months ended April 30, 2021. As of April 30, 2021, approximately $7.2 million remained under the existing share repurchase authorization.

Outlook

George Wilson, President and Chief Executive Officer, stated, “Our outlook for the balance of the year remains positive and we continue to be optimistic about the economic recovery. We do anticipate ongoing inflationary pressure and challenges with our supply chain and labor. However, based on our strong first half results, ongoing conversations with our customers and the latest macroeconomic indicators for the residential housing industry, we are again raising our expectations for the year. We now expect approximately 20% sales growth in our North American Fenestration segment, approximately 15% sales growth in our North American Cabinet Components segment, and approximately 40% sales growth in our European Fenestration segment. In summary, on a consolidated basis, we now believe we can achieve net sales of approximately $1.04 billion to $1.06 billion, which we expect will generate approximately $125 million to $130 million in Adjusted EBITDA* in fiscal 2021.”

*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.

For the complete press release, click here.

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.

Source: Quanex Building Products Corporation