Quanex Building Products Announces Second Quarter 2020 Results

Quanex Building Products Corporation (“Quanex” or the “Company”) announced its results for the three months ended April 30, 2020.

George Wilson, President and Chief Executive Officer, commented, “The first two months of our second quarter were very solid, but, as expected, April proved to be a challenge due to the ongoing COVID-19 pandemic. Despite the volume decline in April, we were able to realize Adjusted EBITDA margin expansion in our North American Fenestration segment and on a consolidated basis.

“As previously disclosed, due to the uncertainty related to the COVID-19 pandemic, we withdrew guidance for 2020 and borrowed against our revolving credit facility as a precautionary measure. Our variable cost structure enables us to flex down as volume dictates to protect margins. As such, we implemented furloughs, reduced shift patterns, suspended all near-term non-essential capital requirements and we are engaged in ongoing discussions with our customers and suppliers with respect to managing working capital. As of today, all of our plants are operational, we have started to recall furloughed employees, our balance sheet and liquidity remain very strong, our dividend is currently safe and volume in May was not as soft as anticipated. We are optimistic about the recovery ahead, but we understand that challenges will persist in the near-term. We have worked hard over the past few years to make sure we have a flexible capital structure and a balance sheet that is strong enough to weather the challenges we are currently facing. As a result of these actions, we believe our Company is well positioned to take advantage of any opportunities that may arise as a result of this pandemic.” (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

Second Quarter 2020 Results Summary

The decrease in net sales during the second quarter of 2020 was primarily attributable to softer demand in April related to the COVID-19 pandemic. Volume started to decline in all of Quanex’s manufacturing facilities in late March and the Company’s two manufacturing facilities in the UK were shut down completely on March 25, 2020 in compliance with government orders. (See Sales Analysis table for additional information)

The increase 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 during the second quarter of 2019. The increase in adjusted earnings was driven by lower selling, general and administrative expense.

Balance Sheet & Liquidity Update

As of April 30, 2020, Quanex’s leverage ratio of Net Debt to LTM Adjusted EBITDA was unchanged at 1.4x. (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

The Company’s liquidity was $189.3 million as of April 30, 2020, consisting of $80.2 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 149,937 shares of common stock for approximately $2.1 million at an average price of $13.70 per share during the three months ended April 30, 2020. As of April 30, 2020, approximately $11.7 million remained under the existing share repurchase authorization.

Recent Events

Quanex’s Board of Directors declared a quarterly cash dividend of $0.08 per share on the Company’s common stock, payable June 30, 2020, to shareholders of record on June 15, 2020.

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, CFO & Treasurer – scott.zuehlke@quanex.com – (713) 877-5327

Source: Quanex Building Products Corporation