Quanex Building Products Corporation · NYSE:NX
Quanex Building Products — Investor Presentation (June 2018)
16 slides from Quanex Building Products's investor presentation, June 2018
Slide 1: Investor Presentation
Investor Presentation June 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Note on Forward Looking Statements: Statements that use the words “estimated,” “expect,” “could,” “should,” “believe,” “will,” “might,” or similar words reflecting future expectations or beliefs are forward-looking statements. The forward-looking statements include, but are not
Slide 3: Quanex: A Compelling Investment Opportunity
Quanex: A Compelling Investment Opportunity EXECUTING ON STRATEGIC PRIORITIES TO DRIVE SHAREHOLDER VALUE CREATION Achieving organic growth with profitable customers/products with opportunity to drive above market growth in key categories Delivering sustainable free cash flow and margin expansion
Slide 4: Quanex At-A-Glance
Quanex At-A-Glance Industry-Leading, “Pure Play” Building Products Manufacturer Quanex is the largest supplier of components to OEMs in the building products sector. OEMs’ customer ~55% IG SPACERS SCREENS & OTHER 55% NA ENGINEERED 15% base predominately focused on serving new COMPONENTS construction
Slide 5: Geographic Footprint
Geographic Footprint FACILITIES STRATEGICALLY LOCATED TO BETTER SERVE CUSTOMERS • Facilities feature efficient plant design and flexible manufacturing processes, enabling 31 U.S. 2 U.K. 1 Germany • Quanex to produce a wide variety of custom engineered products and components Quanex maintains minimal
Slide 6: Solid Track Record of Performance
Solid Track Record of Performance SIGNIFICANT IMPROVEMENT IN PROFITABILITY OVER THE LAST 5 YEARS FISCAL 2013 (1) FISCAL 2017 • In 2013, began a transformation into a “pure play” supplier of components Adj. EBITDA Margin (2) 4.6% 11.4% to OEMs Diluted EPS ($0.34) $0.54 • Implemented portfolio rationa
Slide 7: Q2 2018 Earnings & 2018 Guidance
Q2 2018 Earnings & 2018 Guidance Q2 2018 Earnings Highlights Reaffirmed 2018 Guidance • Strong underlying growth in NA and EU Engineered Components Segments $890-$900M Topline Growth ~4.5% Y/Y to the Midpoint of Guidance (1) - NA & EU Engineered Components Segments: Net Sales Sales growth of ~9% in
Slide 8: Favorable Free Cash Flow Trend – 2H Weighted
Favorable Free Cash Flow Trend – 2H Weighted IMPROVING FREE CASH FLOW PROFILE IS TOP PRIORITY FREE CASH FLOW HISTORY & FORECAST (1) $50 $30 ($ in Millions) $10 2013 2014 2015 2016 2017 2018E ($10) ($30) ($50) 1st Half 2nd Half Total (1) Free cash flow defined as cash provided by operations less capi
Slide 9: Solid Balance Sheet with Flexible Capital Structure
Solid Balance Sheet with Flexible Capital Structure FOCUSED ON DELEVERAGING TO ACHIEVE LEVERAGE RATIO BELOW 2.0x BY YEAR -END 2018 NX Capitalization ($ in thousands) 4.30.18 Cash & Cash Equivalents $10,098 Senior Secured Term Loan A Facility due 2021 131,250 Senior Secured Revolving Credit Facility
Slide 10: Clear Roadmap to Margin Expansion
Clear Roadmap to Margin Expansion WOODCRAFT INDUSTRIES: NA CABINET COMPONENTS SEGMENT Quality & Established Analyze Raw Efficiency a Focused & Re-layout of Material Price Pass Improvements Experienced Manufacturing Through Through Management Process in Select Mechanisms/ Automation & Team Now in Pla
Slide 11: Compelling End Market Dynamics
Compelling End Market Dynamics EXPECT MID-SINGLE DIGIT MARKET GROWTH FOR FORESEEABLE FUTURE U.S. HOUSING STARTS U.S. R&R SPENDING 2,500 CAGR $250 ~5% 2,000 $225 CAGR ~3% $200 # Starts in Thousands $ in Billions $175 1,500 $150 $125 1,000 $100 $75 500 $50 $25 0 $0 Source: NAHB - Jun 2018 Source: Metr
Slide 12: Executing on Strategic Priorities to Drive & Unlock Value
Executing on Strategic Priorities to Drive & Unlock Value Drive Continued Free Cash Flow & ROIC Top Line Growth Improvement • Margin expansion via operational efficiency • Market growth of ~4-5% per year improvements • Potential for above market growth: • Accelerate productivity improvements and - O
Slide 13: Appendix
APPENDIX Quanex building products
Slide 14: Executive Compensation
Executive Compensation Performance-based compensation philosophy (~73% variable) • Base salary targeted at market 50th percentile (~27% of Total Direct Compensation (TDC) • Annual incentive award based on specific metrics (~21% of TDC) • Long-term incentives (~52% of TDC) 2018 Annual Incentive Award
Slide 15: GAAP/Non-GAAP Reconciliation (Unaudited)
GAAP/Non-GAAP Reconciliation (Unaudited) FREE CASH FLOW ($ in thousands) Q1 Q2 Q3 Q4 Fiscal 2013 Cash provided by operating activities ($30,340) $9,557 $27,360 $36,942 $43,519 Capital expenditures ($11,500) ($10,596) ($12,421) ($3,414) ($37,931) Free Cash Flow ($41,840) ($1,039) $14,939 $33,528 $5,5
Slide 16: Investor Contact
Investor Contact: Scott Zuehlke VP, Investor Relations & Treasurer 1800 West Loop South, Suite 1500 Houston, TX 77027 (713) 877-5327 scott.zuehlke@quanex.com WWW.QUANEX.COM
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