Quanex Building Products Announces Fourth Quarter and Fiscal Year 2022 Results

Quanex Building Products Corporation (“Quanex” or the “Company”) today announced its results for the three months and twelve months ended October 31, 2022.  

The Company reported the following selected financial results:

		Three Months Ended October 31,		Twelve Months Ended October 31,
($ in millions, except per share data)		2022		2021		2022		2021
Net Sales		$307.5		$291.8		$1,221.5		$1,072.1
Gross Margin		$67.5		$65.0		$268.5		$240.6
Gross Margin %		21.9%		22.3%		22.0%		22.4%
Net Income		$24.7		$20.9		$88.3		$57.0
Diluted EPS		$0.75		$0.62		$2.66		$1.70
Adjusted Net Income		$25.0		$20.8		$88.9		$58.6
Adjusted Diluted EPS		$0.75		$0.62		$2.68		$1.75
Adjusted EBITDA		$38.7		$37.3		$152.5		$126.8
Adjusted EBITDA Margin %		12.6%		12.8%		12.5%		11.8%
Cash Provided by Operating Activities		$48.1		$31.2		$98.0		$78.6
Free Cash Flow		$34.5		$23.2		$64.8		$54.6

(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, “We reported another year of record revenue and earnings. Our employees stepped up and performed extremely well throughout the year, despite having to navigate challenges related to the supply chain, inflation, and labor. Overall, our solid results for the fourth quarter and full year reflected the benefit from our pass-through pricing strategy. Volumes increased in our North American Fenestration segment during the fourth quarter, but volumes decreased in our other operating segments and foreign exchange had a negative impact.  

“Free Cash Flow increased significantly during the fourth quarter of this year compared to the same period last year. We were able to repay $25 million of bank debt during the quarter and our balance sheet remains strong.” (See Non-GAAP Terminology Definitions and Disclaimers section and the reconciliation of Free Cash Flow to cash provided by operating activities for additional information)

Fourth Quarter and Fiscal 2022 Results Summary   

Quanex reported net sales of $307.5 million during the three months ended October 31, 2022, which represents growth of 5.4% compared to $291.8 million for the same period of 2021. The Company reported net sales of $1.22 billion during the twelve months ended October 31, 2022, which represents growth of 13.9% compared to $1.07 billion for the same period of 2021. The increases were primarily attributable to higher prices related to the pass through of raw material cost inflation. The Company realized net sales growth of 14.0% for the fourth quarter of 2022 and 18.9% for the full year in its North American Fenestration segment. In its North American Cabinet Components segment, Quanex reported net sales growth of 2.1% for the fourth quarter and 12.0% for the full year. Excluding the foreign exchange impact, the Company realized 5.2% and 14.2% net sales growth for the fourth quarter and full year, respectively, in its European Fenestration segment. (See Sales Analysis table for additional information)

The increase in earnings for the three months and twelve months ended October 31, 2022 was mostly due to increased pricing and surcharges related to the pass through of raw material cost inflation and higher volumes in the North American Fenestration segment. In addition, because of updates to taxable differences for Global Intangible Low-Taxed Income (GILTI), non-cash compensation, and bonus depreciation, the Company had a return to provision tax benefit of approximately $6 million in fiscal 2022.

Balance Sheet & Liquidity Update

As of October 31, 2022, Quanex had total debt of $13.0 million and its leverage ratio of Net Debt to LTM Adjusted EBITDA improved to (0.2x), or net debt free.   (See Non-GAAP Terminology Definitions and Disclaimers section for additional information)

The Company’s liquidity increased to $362.0 million as of October 31, 2022, consisting of $55.1 million in cash on hand plus availability under its new Amended and Restated Senior Secured Revolving Credit Facility due 2027, 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 was in possession of material non-public information related to the previously disclosed acquisition of LMI Custom Mixing, LLC assets and therefore was not able to repurchase any shares of common stock during the three months ended October 31, 2022. As of October 31, 2022, approximately $68.4 million remained under the existing share repurchase authorization.

Outlook        

Mr. Wilson stated, “As previously disclosed, we acquired the assets of LMI Custom Mixing, LLC on November 1, 2022 for $92 million in cash. This acquisition fits the profitable growth strategy we unveiled when we reported earnings for the third quarter, and we look forward to realizing the related synergies. Our balance sheet remains strong even after accounting for the recent acquisition, and we are committed to executing on our plan and creating further value for shareholders.   

Our long-term view continues to be optimistic as the underlying fundamentals for the residential housing market remain positive. However, like last year, based on current macro indicators and recent conversations with our customers, we are taking a measured approach to 2023 guidance. As such, we believe it would be premature to give guidance at this time. We intend to re-visit guidance when we report earnings for the first quarter.”

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