Quanex Building Products Corporation · NYSE:NX

Quanex Building Products — Investor Presentation (February 2018)

17 slides from Quanex Building Products's investor presentation, February 2018

  1. Slide 1: Investor Presentation

    Investor Presentation February 2018

  2. 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

  3. Slide 3: Quanex At-A-Glance

    Quanex At-A-Glance Industry Leading, “Pure Play” Building Products Manufacturer  Quanex is the largest supplier of components NA Engineered EU Engineered NA Cabinet Unallocated to OEMs in the building products sector Components Components Components Corporate & Other  OEMs’ customer base predomina

  4. Slide 4: Evolution of Quanex

    Evolution of Quanex Significant Improvement in Profitability – “Pure Play” Building Products Manufacturer Acquired Acquired Aluminite 1Q13 Divested Nichols Woodcraft 1Q16 Aluminum 2Q14 Portfolio Acquired HL Rationalization (1) $1,000 Plastics 3Q15 14.0% 11.9% ~12% 12.0% $800 10.8% 11.4% Net Sales ($

  5. Slide 5: Seasonality

    Seasonality Fiscal 2H Historically Stronger 1st Half 2nd Half 2018E ~35% Annual Divisional EBITDA 2018E ~65% Annual Divisional EBITDA Quarterly Divisional EBITDA $45 $40 $35 $30 * $ in Millions $25 ** $20 $15 $10 $5 $0 Q1 Q2 Q3 Q4 2015 2016 2017 Note: Divisional EBITDA only, excludes Nichols, corpor

  6. Slide 6: Favorable Free Cash Flow Trend – 2H Weighted

    Favorable Free Cash Flow Trend – 2H Weighted Continuing to Improve Free Cash Flow Profile is Top Priority Free Cash Flow History & Forecast (1) $60 $50 $40 $30 $ in Millions $20 $10 $0 2015 * 2016** 2017 2018E ($10) ($20) 1st Half 2nd Half Total (1) Free cash flow defined as cash provided by operati

  7. Slide 7: Healthy Balance Sheet w/ Flexible Capital Structure

    Healthy Balance Sheet w/ Flexible Capital Structure Remain Focused on Deleveraging NX Capitalization ($ in thousands) 10.31.17 Cash & Cash Equivalents $17,455 Senior Secured Term Loan A Facility due 2021 138,750 Current Interest Rate: LIBOR +200bps Senior Secured Revolving Credit Facility due 2021 (

  8. Slide 8: Roadmap to Margin Expansion

    Roadmap to Margin Expansion N.A. Cabinet Components Segment Complete Focused & Experienced Ongoing Management Team Now in Place 2018 Re-layout of Divestiture of Manufacturing Non-Value Process in Added & Low Selected Margin Plants Business Analyze Raw Price Material Price Realization for Pass Throug

  9. Slide 9: Strategic Priorities to Drive and Unlock Value

    Strategic Priorities to Drive and Unlock Value Strategic Themes Continued Margin Expansion and Organic Growth with Profitable Improved Cash Flow Generation Customers/Products Top Priorities ~15% EBITDA Margins & ROIC >12% Top Line Growth  Accelerate productivity improvements  Market growth of ~4-5

  10. Slide 10: Appendix

    Quanex building products

  11. Slide 11: Guidance

    Guidance Topline Growth ~4.5% Y/Y to ($ in million) Fiscal 2018E the Midpoint of Guidance (1) Net Sales $890 - $900 Adjusted EBITDA $103 - $108 Margin Expansion Capex ~$35 ~30bps Y/Y to (1) Y/Y net sales growth calculated after adjusting for the sale of Owens Flooring effective 10.31.17. the Midpoin

  12. Slide 12: Attractive Valuation

    Attractive Valuation 2018E EV/EBITDA 20.0x 18.0x 16.0x 14.0x 12.0x Comp Average 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 2018E EV/Sales 4.0x 3.0x 2.0x Comp Average 1.0x 0.0x Notes: Consensus estimates per Nasdaq IR Insight as of 1.31.18. 12 Comp Group – AAON, AMWD, APOG, CBPX, DOOR, GFF, IIIN, LCII, LPX, NCS,

  13. Slide 13: Geographic Footprint

    Geographic Footprint Facilities Strategically Located to Better Serve Customers  31 facilities located in the U.S., 2 facilities in the U.K. and 1 facility in Germany  Facilities feature efficient plant design and flexible manufacturing processes, enabling Quanex to produce a wide variety of custo

  14. Slide 14: 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 $250 $225 # Starts in Thousands 2,000 $200 $175 $ in Billions 1,500 $150 $125 $100 1,000 $75 $50 500 $25 $0 0 2017E 2108E 2019E 2002 2003 2004 2005 2006 2007 2008 2

  15. Slide 15: 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)  Annual Incentive Award

  16. Slide 16: GAAP/Non-GAAP Reconciliation (Unaudited)

    GAAP/Non-GAAP Reconciliation (Unaudited) Net Income from Continuing Operations to Divisional EBITDA ($ in thousands) Q1 Q2 Q3* Q4 Fiscal 2015 Q1** Q2 Q3 Q4 Fiscal 2016 Net income (loss) from continuing operations $621 $6,487 $12,674 $17,663 $37,443 $4,434 $13,284 $20,046 $19,241 $57,005 Interest exp

  17. Slide 17: 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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