Quanex Building Products Corporation · NYSE:NX
Quanex Building Products — Investor Presentation (January 2019)
16 slides from Quanex Building Products's investor presentation, January 2019
Slide 1: Investor Presentation
Investor Presentation January 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: Quanex: A Compelling Investment Opportunity
Quanex: A Compelling Investment Opportunity EXECUTING ON STRATEGIC PRIORITIES TO DRIVE SHAREHOLDER VALUE CREATION ~6% underlying growth in FY 2018 with profitable customers/products Favorable components outsourcing trend supports opportunity to drive above market growth in key categories ~70%
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: Favorable Outsourcing Trends to Benefit Quanex
Favorable Outsourcing Trends to Benefit Quanex DOMESTIC OEMs ANTICIPATED TO FAVOR COMPONENT OUTSOURCING GOING FORWARD Rationale for Expected Growth in Outsourcing Includes: Current Market Conditions Impact on Outsourcing Trends OEM Struggles To Find And Outsourcing Allows OEM Labor Retain Labor Are
Slide 7: Solid Track Record of Performance
Solid Track Record of Performance SIGNIFICANT IMPROVEMENT IN PROFITABILITY OVER THE LAST 5 YEARS FISCAL 2013 (1) FISCAL 2018 • In 2013, began a transformation into a “pure play” supplier of components Adj. EBITDA Margin (2) 4.6% 10.2% to OEMs • Implemented portfolio rationalization, Diluted EPS ($0.
Slide 8: 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 ($10) ($30) ($50) 1st Half 2nd Half Total (1) Free Cash Flow defined as cash provided by operating activities less capital e
Slide 9: Solid Balance Sheet with Flexible Capital Structure
Solid Balance Sheet with Flexible Capital Structure RENEWED FOCUS ON RETURNING CAPITAL TO SHAREHOLDERS NX Capitalization ($ in thousands) 10.31.18 Cash & Cash Equivalents $29,003 Senior Secured Revolving Credit Facility due 2023 (1) 195,000 Capital Leases and Other 17,043 Total Debt $212,043 Net Deb
Slide 10: Q4/Fiscal 2018 Earnings & 2019 Guidance
Q4/Fiscal 2018 Earnings & 2019 Guidance Q4/Fiscal 2018 Earnings Highlights 2019 Guidance • Strong free cash flow profile - Generated Free Cash Flow (1) of $50.8 million $925-$945M Topline Growth ~5% Y/Y to the Midpoint of Guidance in Q4 & $78.1 million in FY 2018…+96% & Net Sales 73% Y/Y, respective
Slide 11: 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 • Maintain focus on improving returns via • Market volume growth of ~3-4% per year operational efficiency gains • Capitalize on increased outsourcing due to • Accelerate produc
Slide 12: Appendix
APPENDIX Quanex building products
Slide 13: Compelling End Market Dynamics
Compelling End Market Dynamics EXPECT LOW/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 $200 # Starts in Thousands $ in Billions ~2% $175 1,500 $150 $125 1,000 $100 $75 500 $50 $25 0 $0 Source: NAHB - Jan 2019 Source:
Slide 14: Executive Compensation
Executive Compensation Performance-based compensation philosophy (~73% variable) at target • Base salary targeted at market 50th percentile (~27% of Total Direct Compensation (TDC) • Annual incentive award based on specific metrics (~21% of TDC) • Long-term incentives (~53% of TDC) 2019 Annual Incen
Slide 15: GAAP/Non-GAAP Reconciliation (Unaudited)
GAAP/Non-GAAP Reconciliation (Unaudited) FREE CASH FLOW ($ 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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