Quanex Building Products Corporation · NYSE:NX

Quanex Building Products — Investor Presentation (May 2019)

15 slides from Quanex Building Products's investor presentation, May 2019

  1. Slide 1: Investor Presentation

    Investor Presentation May 2019

  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: 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 $2,000 Acquired 12.0% Edgetech 2Q11 ~11% ~10% Net Sales ($ in Million

  4. 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 FENESTRATION 15% base predominately focused on serving new (~60% R&R) constructi

  5. 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

  6. 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

  7. 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 ($10) ($30) ($50) 1st Half 2nd Half Total (1) Free Cash Flow defined as cash provided by operating activities less capital e

  8. Slide 8: Q1 2019 Earnings & 2019 Guidance

    Q1 2019 Earnings & 2019 Guidance Q1 2019 Earnings Highlights 2019 Guidance $925 - $945M (2) • Solid growth: Topline Growth ~5% Y/Y to the Midpoint of Guidance • >6% in NA Fenestration segment Net Sales (1) • >10% in EU Fenestration segment • Margin expansion in EU $97 - $107M Margin Expansion ~70bps

  9. 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  ~70% of revenues weighted to Repair & Remodel (R&R) segment  Solid balance

  10. Slide 10: Appendix

    APPENDIX Quanex building products

  11. 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) 1.31.19 Cash & Cash Equivalents $17,456 Senior Secured Revolving Credit Facility due 2023 (1) 215,000 Capital Leases and Other 17,096 Total Debt $232,096 Net Debt

  12. Slide 12: 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 - Mar 2019 Source:

  13. 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

  14. 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

  15. 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

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