Quanex Building Products Announces Second Quarter 2022 Results and Increases Full Year 2022 Guidance

Quanex Building Products Corporation (“Quanex” or the “Company”) announced its results for the three months ended April 30, 2022.

George Wilson, President and Chief Executive Officer, commented, “We reported a record quarter despite ongoing challenges related to inflation and the supply chain. Demand for our products was better than expected during the second quarter, and we started to see the benefit of our pass-through pricing strategy, which drove revenue growth and improved profitability. Inflationary pressures are ongoing, but we still expect further margin expansion in the second half of our fiscal year.

“Managing working capital continues to be a challenge in this inflationary environment as the value of our inventory continues to increase, but overall, our balance sheet and liquidity remain strong. We will be focused on generating cash, paying down debt and opportunistically repurchasing our stock in the second half of this year.” (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

Second Quarter 2022 Results Summary

The Company reported net sales of $322.9 million during the three months ended April 30, 2022, which represents growth of 19.4% compared to $270.4 million for the same period of 2021. The increase was largely attributable to higher prices related to the pass through of raw material cost inflation. More specifically, Quanex realized net sales growth of 21.7% in its North American Fenestration segment, 14.7% in its North American Cabinet Components segment and 13.0% in its European Fenestration segment, excluding the foreign exchange impact. (See Sales Analysis table for additional information)

The increase in earnings for the three months ended April 30, 2022 was mostly due to increased pricing related to the pass through of raw material cost inflation, higher volumes, and a decrease in SG&A expense, mainly due to lower stock-based compensation.

Balance Sheet & Liquidity Update

As of April 30, 2022, Quanex had total debt of $77.0 million and its leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 0.3x. (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

The Company’s liquidity increased to $296.5 million as of April 30, 2022, consisting of $38.9 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 authorized a $75 million share repurchase program in December of 2021. 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 Company repurchased 75,000 shares of common stock for approximately $1.6 million at an average price of $20.92 per share during the three months ended April 30, 2022. As of April 30, 2022, approximately $73.4 million remained under the existing share repurchase authorization.

Outlook

Mr. Wilson stated, “We are increasing guidance for fiscal 2022 based on our strong second quarter results combined with the successful implementation of our pass-through pricing strategy and ongoing conversations with our customers. We are very cognizant of the current macro related uncertainties, but we continue to believe that the underlying fundamentals for residential housing are positive and demand for our products remains healthy. For the second half of our fiscal year, we now expect low double-digit revenue growth in our North American Fenestration segment and mid-single digit revenue growth in our North American Cabinet Components and European Fenestration segments. Overall, on a consolidated basis and assuming the current inflation and supply chain challenges do not worsen materially, we estimate this will equate to net sales of $1.18 billion to $1.2 billion, which we expect will generate approximately $150 million to $155 million in Adjusted EBITDA* in fiscal 2022.”

*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 full second quarter results, 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.

Contact:

Scott Zuehlke – Senior Vice President, Chief Financial Officer & Treasurer – scott.zuehlke@quanex.com – (713) 877-5327

Source: Quanex Building Products Corporation