Quanex Building Products Announces Fourth Quarter and Fiscal Year 2021 Results

Quanex Building Products Corporation (“Quanex” or the “Company”) announced its results for the three months and twelve months ended October 31, 2021. The Company also announced that its Board of Directors (the “Board) has authorized a new $75 million share repurchase program to return capital to shareholders.

George Wilson, President and Chief Executive Officer, commented, “Demand for the products we manufacture remained strong throughout our fiscal year and that continues today. Despite challenges related to the supply chain and inflation, we reported record revenue growth and record earnings for the year.

“Our liquidity position has improved meaningfully over the past year, and our balance sheet is strong. We were able to pay down $65 million of bank debt in fiscal 2021, and we are very close to being net debt free. We are focused on closing the valuation gap that currently exists between us and our peers. As such, the Board has authorized a new $75 million share repurchase program, which reflects our strong balance sheet, commitment to returning capital to shareholders and overall confidence in the ability of the Company to continue to grow and create value for shareholders over time.” (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

Fourth Quarter and Fiscal 2021 Results Summary

Quanex reported net sales growth of 14.2% and 25.9% during the three months and twelve months ended October 31, 2021, respectively. The increases were mostly due to improved demand across all product lines and operating segments combined with higher prices primarily related to the pass through of raw material cost inflation. More specifically, for the fourth quarter and full year, the Company posted net sales growth of 10.1% and 19.6%, respectively, in its North American Fenestration segment, 15.9% and 17.1%, respectively, in its North American Cabinet Components segment and 17.6% and 45.6%, respectively, 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. (See Sales Analysis table for additional information)

The decrease in earnings for the three months ended October 31, 2021 was driven by inflationary pressures and supply chain challenges. The increase in earnings for the twelve months ended October 31, 2021 was largely due to higher volumes, improved operating leverage and better pricing. This increase was somewhat offset by higher raw material costs and an increase in selling, general and administrative expenses.

Balance Sheet & Liquidity Update

As of October 31, 2021, Quanex had total debt of $53.5 million and its leverage ratio of Net Debt to LTM Adjusted EBITDA improved to 0.1x. (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

The Company’s liquidity increased to $322.6 million as of October 31, 2021, consisting of $40.1 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 $60 million share repurchase program in September of 2018, which is now complete. Repurchases under this program were made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements, and other relevant factors. The Company repurchased 247,003 shares of common stock for approximately $5.4 million at an average price of $22.03 per share during the three months ended October 31, 2021.

Quanex’s Board recently authorized a new $75 million share repurchase program. 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.

Outlook

George Wilson, President and Chief Executive Officer, stated, “Demand remains strong, but ongoing supply chain disruptions continue to create day-to-day operational challenges and ultimately reduce our visibility in the near-term. Based on current fundamentals, trends, and recent conversations with our customers, we are taking a measured approach to 2022 guidance. As such, we believe it would be premature to give guidance at this time. However, we feel confident in our ability to realize margin expansion on a consolidated basis in fiscal 2022, second half weighted, and we remain cautiously optimistic for the year. We intend to re-visit guidance when we report earnings for the first quarter of 2022.”

For the full fourth 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