Quanex Building Products Corporation · NYSE:NX
Quanex Building Products — Investor Presentation (September 2019)
15 slides from Quanex Building Products's investor presentation, September 2019
Slide 1: Investor Presentation
Investor Presentation September 2019
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: Evolution of Quanex
Evolution of Quanex SIGNIFICANT IMPROVEMENT IN PROFITABILITY Quanex Corporation 2Q14: Divested Nichols Aluminum 3Q15: Acquired HL Plastics $2,500 Pre 2008 16.0% Spin/Sale 1Q16: Acquired Woodcraft ~14% Acquired 14.0% Aluminite 1Q13 $2,000 Acquired ~11.5% 12.0% Edgetech 2Q11 ~10% Net Sales ($ in Milli
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 IG SPACERS SCREENS & OTHER OEMs in the building products sector. OEMs’ customer ~55% NA FENESTRATION 15% base predominately focused on serving new construction and R&R mark
Slide 5: Geographic Footprint
Geographic Footprint FACILITIES STRATEGICALLY LOCATED TO BETTER SERVE CUSTOMERS • Facilities feature efficient plant design and flexible manufacturing processes, enabling Quanex to produce a wide variety of custom engineered products and components with 31 U.S. 2 U.K. 1 Germany • short lead times Qu
Slide 6: Outsourcing Trends to Benefit Quanex
Outsourcing Trends to Benefit Quanex DOMESTIC WINDOW OEMs ANTICIPATED TO FAVOR COMPONENT OUTSOURCING GOING FORWARD Rationale for Expected Growth in Outsourcing Includes: Current Market Conditions Impact on Outsourcing Trends Outsourcing Allows OEM Labor Labor Continues To Be A Major Force To Focus O
Slide 7: Favorable Free Cash Flow Trend – 2H Weighted
Favorable Free Cash Flow Trend – 2H Weighted FREE CASH FLOW GENERATION IS TOP PRIORITY FREE CASH FLOW HISTORY (1) $70 $50 ($ in Millions) $30 $10 2013 2014 2015 2016 2017 2018 YTD 2019 ($10) ($30) ($50) 1st Half 3rd Quarter 4th Quarter Fiscal Year Note: Please reference slide 14 in the Appendix for
Slide 8: Q3 2019 Earnings & 2019 Guidance
Q3 2019 Earnings & 2019 Guidance Q3 2019 Earnings Highlights 2019 Guidance • Above market sales growth in NA & EU ~$890M Topline Flat Y/Y Fenestration segments Net Sales • Consolidated margin expansion of ~100 basis points ~$100 - $105M Margin Expansion ~130bps Y/Y to the Midpoint of • Free Cash Flo
Slide 9: Quanex: A Compelling Investment Opportunity
Quanex: A Compelling Investment Opportunity EXECUTING ON STRATEGIC PRIORITIES TO DRIVE SHAREHOLDER VALUE CREATION Favorable components outsourcing trend supports opportunity to drive above market growth in key categories Solid balance sheet…expect to exit FY 2019 with Leverage Ratio(1) of ~1.5x
Slide 10: Appendix
APPENDIX building products
Slide 11: Solid Balance Sheet with Flexible Capital Structure
Solid Balance Sheet with Flexible Capital Structure RENEWED FOCUS ON RETURNING CAPITAL TO SHAREHOLDERS NX Capitalization ($ in thousands) 7.31.19 Cash & Cash Equivalents $10,651 Senior Secured Revolving Credit Facility due 2023 (1) 177,500 Capital Leases and Other 15,742 Total Debt $193,242 Net Debt
Slide 12: End Market Dynamics
End Market Dynamics EXPECT LOW-SINGLE DIGIT CONSOLIDATED MARKET GROWTH FOR FORESEEABLE FUTURE U.S. HOUSING STARTS U.S. R&R SPENDING 2,500 CAGR $250 ~5% 2,000 $225 CAGR $200 # Starts in Thousands $ in Billions ~3% $175 1,500 $150 $125 1,000 $100 $75 500 $50 $25 0 $0 Source: NAHB - Jun 2019 Source: Me
Slide 13: Executive Compensation
Executive Compensation Aligned with Shareholders Performance-based compensation philosophy (~73% variable) at target • Base salary targeted at market 50th percentile (~27% of Total Direct Compensation (TDC)) • Annual incentive award based on specific metrics (~21% of TDC) • Long-term incentives (~53
Slide 14: GAAP/Non-GAAP Reconciliation (Unaudited)
GAAP/Non-GAAP Reconciliation (Unaudited) FREE CASH FLOW ($ 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 15: 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
Quanex Building Products — Investor Presentation (September 2019) on 6ix