Post Earnings Coverage as Quanex Revenue Surged 27 Percent for Q4 FY16 and 44 Percent for FY16

Upcoming AWS Coverage on NCI Building Systems Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 23, 2016 / Active Wall St. announces its post-earnings coverage on Quanex Building Products Corp. (NYSE: NX). The Company released its fourth quarter and fiscal 2016 financial results on December 15, 2016. The housing material maker’s net income improved 15% and topped market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Quanex Building Products’ competitors within the General Building Materials space, NCI Building Systems, Inc. (NYSE: NCS), reported on December 08, 2016, its financial results for the fourth fiscal quarter and fiscal year ended October 30, 2016. AWS will be initiating a research report on NCI Building Systems in the coming days.

Today, AWS is promoting its earnings coverage on NX; touching on NCS. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=NX

http://www.activewallst.com/registration-3/?symbol=NCS

Earnings Reviewed

For the three months and fiscal year ended on October 31, 2016, Quanex reported that consolidated net sales increased 27% and 44% to $249 million and $928 million respectively compared to Q4 FY15 and FY15. The increase in revenue was driven by contributions from the HL Plastics and Woodcraft acquisitions.

The Company reported income from continuing operations of $5.4 million and a loss from continuing operations of $1.9 million for the three months and 12 months ended October 31, 2016, respectively, compared to income from continuing operations of $9.9 million and $15.6 million for the comparable periods in 2015.

Quanex’s adjusted net income from continuing operations was $15.6 million, $0.45 per share during Q4 FY16, compared to $13.4 million, or $0.39 per share, in Q4 FY15. The Company’s earnings results exceeded Wall Street’s expectations for adjusted earnings of $0.39 per share. For FY16, adjusted net income from continuing operations was $27.7 million, or $0.80 per share, compared to $23.7 million, or $0.69 per share, for FY15.

Operational Metrics

On a consolidated basis, the Company’s EBITDA was $21.4 million during Q4 FY16 compared to $27.5 million during Q4 FY15. For FY16, the Company’s EBITDA was $89.5 million compared to $59.9 million for FY15. After adjustments related to transaction costs, inventory step-up, restructuring charges and the goodwill impairment adjusted EBITDA increased by 14% to $34.6 million during the reported quarter compared to $30.4 million in the year ago comparable quarter. For FY16, Quanex’s adjusted EBITDA increased by 58% to $110.3 million compared to $68.7 million in FY15.

Quanex’s consolidated adjusted EBITDA margin improved by approximately 110 basis points during FY16, attributed to the successful implementation of ongoing operational initiatives. For its “legacy” US windows components business, the Company realized an adjusted EBITDA margin improvement of approximately 45 basis points during Q4 FY16, and approximately 225 basis points during FY16.

Business Update

Quanex stated that in order to protect margins and free up capacity to reduce further investment, the Company is willing to divest less profitable business. The Company has initiated the process of reducing volumes manufactured for a large US vinyl profiles customer and expects the process to be carried out in a phased manner throughout 2017 and into 2018. Similarly, Quanex has decided to discontinue manufacturing certain low-margin cabinet component products and continues to explore additional opportunities to improve margins in this business. In total, the Company shed approximately $15 million of business in FY16 as part of this initiative while expanding margins. The Company expects to shed a further $50 million to $70 million of business in FY17, which it expects to have a positive impact on its margin percentages.

Balance Sheet

Quanex’s cash provided by operating activities increased 29% to $86.4 million in FY16. The Company stated that as a result of generating strong cash flow it was able to reduce bank debt by approximately $52 million throughout FY16, approximately $32 million of which was repaid during Q4 FY16.

Stock Performance

At the closing bell, on Thursday, December 22, Quanex Building Products’ stock closed the trading session at $21.00, slightly up 0.24% from its previous closing price of $20.95. A total volume of 163.98 thousand shares have exchanged hands, which was higher than the 3-month average volume of 161.35 thousand shares. The Company’s stock price advanced 5.73% in the last month, 19.89% in the past three months, and 14.80% in the previous six months. The stock currently has a market cap of $713.03 million. The company’s shares are trading at P/E of 283.78 and have a dividend yield of 0.76%.

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