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Quanex (NX) Stock Up on Q4 Earnings, Sales Beat, Margin Down
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Quanex Building Products Corporation (NX - Free Report) reported better-than-expected results for fourth-quarter fiscal 2021 (ended Oct 31, 2021). Its earnings and net sales surpassed the Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite a sales gain.
Nonetheless, shares of the company rose 2.2% in the after-hours trading session on Dec 16 after the news release. Improved demand across the product lines and operating segments as well as higher prices primarily related to the pass through of raw material cost inflation benefited the top line.
George Wilson, president and chief executive officer, said, “Based on current fundamentals, trends, and recent conversations with our customers, we are taking a measured approach to 2022 guidance. As such, we believe it would be premature to give guidance at this time. However, we feel confident in our ability to realize margin expansion on a consolidated basis in fiscal 2022, second half weighted, and we remain cautiously optimistic for the year. We intend to re-visit guidance when we report earnings for the first quarter of 2022.”
Inside the Headlines
Adjusted earnings of 62 cents per share surpassed the consensus estimate of 51 cents by 21.6%. Yet, the bottom line declined 8.8% from the year-ago period due to inflationary pressures and supply chain challenges.
Quanex Building Products Corporation Price, Consensus and EPS Surprise
Quanex reported net sales of $291.8 million, which topped the consensus mark of $292 million by 6.1% and grew 14.2% from the year-ago period.
Gross margin for the quarter was 22.3%, which contracted 360 basis points (bps) from the prior-year period. Adjusted EBITDA margin came in at 12.8%, reflecting a 260-bps decrease from the year-ago figure of 15.4%.
Segmental Information
North American Fenestration: For the reported quarter, net sales in the segment increased 10.1% from the prior-year period to $156.3 million. Adjusted EBITDA margin was down 380 bps from a year ago to 12.9%.
European Fenestration: The segment’s sales rose 17.6% year over year to $69.7 million. Yet, adjusted EBITDA margin fell 630 bps year over year to 17.2%.
North American Cabinet Components: Net sales in the segment were $66.6 million, up 15.9% from $133.4 million reported a year ago. Adjusted EBITDA margin of 8.1% was in line with the prior-year quarter.
Sales in Unallocated Corp & Other were $0.8 million.
Financial Update
At October-end, Quanex had cash and cash equivalents of $40.1 million compared with $51.6 million at fiscal 2020-end. At fiscal 2021-end, it had total liquidity of $322.6 million, of which $282.5 million was available under the Senior Secured Revolving Credit Facility due 2023, less letters of credit outstanding.
Long-term debt was $52.1 million at fiscal 2021-end compared with $116.7 million at fiscal 2020-end. Cash provided by operations was $78.6 million in fiscal 2021 compared with $100.8 million recorded in the comparable prior-year period. Free cash flow was $54.6 million for fiscal 2021, down from $75.1 million a year ago.
In the fiscal fourth quarter, the company repurchased 247,003 shares of common stock for nearly $5.4 million, at an average price of $22.03 per share. Recently, its board authorized a new $75-million share repurchase program.
Fiscal 2021 Highlights
Quanex’s fiscal 2021 adjusted earnings came in at $1.70 per share, which increased 45.3% year over year and surpassed analysts’ expectation by 3.7%. Also, revenues of $1,072.1 million for fiscal 2021 were up 25.9% year over year. The increase was backed by higher volumes, improved operating leverage, and better pricing, partially offset by increased raw material costs and selling, general and administrative expenses. Adjusted EBITDA margin of 11.8%, however, contracted 50 bps from a year ago.
Some Better-Ranked Stocks From the Construction Sector
Beazer Homes USA, Inc. (BZH - Free Report) currently sports a Zacks Rank #1. This Atlanta-based homebuilder continues to gain from strong operational execution and continued strength in the housing market.
Beazer Homes has gained 44.6% year to date (YTD) compared with the Zacks Building Products - Miscellaneous industry's 31.5% rally. Earnings are expected to grow 23.7% in fiscal 2022.
Meritage Homes Corporation (MTH - Free Report) currently sports a Zacks Rank #1. Based in Scottsdale, AZ, Meritage Homes is one of the leading designers and builders of single-family homes. Its focus on entry-level LiVE.NOW homes has been a major driving factor.
Meritage Homes has gained 40.1% YTD. Earnings are expected to grow 74.4% in 2021 and 22.2% in the next.
TRI Pointe Group Inc. (TPH - Free Report) currently carries a Zacks Rank #1. This Irvine, CA-based homebuilder designs, constructs, and sells single-family detached and attached homes in the United States. Robust demand and pricing as well as improved operating leverage have been driving TRI Pointe's performance.
TRI Pointe has gained 53.2% YTD. Earnings for 2021 and 2022 are expected to grow 80.2% and 9.6%, respectively.
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Quanex (NX) Stock Up on Q4 Earnings, Sales Beat, Margin Down
Quanex Building Products Corporation (NX - Free Report) reported better-than-expected results for fourth-quarter fiscal 2021 (ended Oct 31, 2021). Its earnings and net sales surpassed the Zacks Consensus Estimate. On a year-over-year basis, earnings declined despite a sales gain.
Nonetheless, shares of the company rose 2.2% in the after-hours trading session on Dec 16 after the news release. Improved demand across the product lines and operating segments as well as higher prices primarily related to the pass through of raw material cost inflation benefited the top line.
George Wilson, president and chief executive officer, said, “Based on current fundamentals, trends, and recent conversations with our customers, we are taking a measured approach to 2022 guidance. As such, we believe it would be premature to give guidance at this time. However, we feel confident in our ability to realize margin expansion on a consolidated basis in fiscal 2022, second half weighted, and we remain cautiously optimistic for the year. We intend to re-visit guidance when we report earnings for the first quarter of 2022.”
Inside the Headlines
Adjusted earnings of 62 cents per share surpassed the consensus estimate of 51 cents by 21.6%. Yet, the bottom line declined 8.8% from the year-ago period due to inflationary pressures and supply chain challenges.
Quanex Building Products Corporation Price, Consensus and EPS Surprise
Quanex Building Products Corporation price-consensus-eps-surprise-chart | Quanex Building Products Corporation Quote
Quanex reported net sales of $291.8 million, which topped the consensus mark of $292 million by 6.1% and grew 14.2% from the year-ago period.
Gross margin for the quarter was 22.3%, which contracted 360 basis points (bps) from the prior-year period. Adjusted EBITDA margin came in at 12.8%, reflecting a 260-bps decrease from the year-ago figure of 15.4%.
Segmental Information
North American Fenestration: For the reported quarter, net sales in the segment increased 10.1% from the prior-year period to $156.3 million. Adjusted EBITDA margin was down 380 bps from a year ago to 12.9%.
European Fenestration: The segment’s sales rose 17.6% year over year to $69.7 million. Yet, adjusted EBITDA margin fell 630 bps year over year to 17.2%.
North American Cabinet Components: Net sales in the segment were $66.6 million, up 15.9% from $133.4 million reported a year ago. Adjusted EBITDA margin of 8.1% was in line with the prior-year quarter.
Sales in Unallocated Corp & Other were $0.8 million.
Financial Update
At October-end, Quanex had cash and cash equivalents of $40.1 million compared with $51.6 million at fiscal 2020-end. At fiscal 2021-end, it had total liquidity of $322.6 million, of which $282.5 million was available under the Senior Secured Revolving Credit Facility due 2023, less letters of credit outstanding.
Long-term debt was $52.1 million at fiscal 2021-end compared with $116.7 million at fiscal 2020-end. Cash provided by operations was $78.6 million in fiscal 2021 compared with $100.8 million recorded in the comparable prior-year period. Free cash flow was $54.6 million for fiscal 2021, down from $75.1 million a year ago.
In the fiscal fourth quarter, the company repurchased 247,003 shares of common stock for nearly $5.4 million, at an average price of $22.03 per share. Recently, its board authorized a new $75-million share repurchase program.
Fiscal 2021 Highlights
Quanex’s fiscal 2021 adjusted earnings came in at $1.70 per share, which increased 45.3% year over year and surpassed analysts’ expectation by 3.7%. Also, revenues of $1,072.1 million for fiscal 2021 were up 25.9% year over year. The increase was backed by higher volumes, improved operating leverage, and better pricing, partially offset by increased raw material costs and selling, general and administrative expenses. Adjusted EBITDA margin of 11.8%, however, contracted 50 bps from a year ago.
Zacks Rank
Quanex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some Better-Ranked Stocks From the Construction Sector
Beazer Homes USA, Inc. (BZH - Free Report) currently sports a Zacks Rank #1. This Atlanta-based homebuilder continues to gain from strong operational execution and continued strength in the housing market.
Beazer Homes has gained 44.6% year to date (YTD) compared with the Zacks Building Products - Miscellaneous industry's 31.5% rally. Earnings are expected to grow 23.7% in fiscal 2022.
Meritage Homes Corporation (MTH - Free Report) currently sports a Zacks Rank #1. Based in Scottsdale, AZ, Meritage Homes is one of the leading designers and builders of single-family homes. Its focus on entry-level LiVE.NOW homes has been a major driving factor.
Meritage Homes has gained 40.1% YTD. Earnings are expected to grow 74.4% in 2021 and 22.2% in the next.
TRI Pointe Group Inc. (TPH - Free Report) currently carries a Zacks Rank #1. This Irvine, CA-based homebuilder designs, constructs, and sells single-family detached and attached homes in the United States. Robust demand and pricing as well as improved operating leverage have been driving TRI Pointe's performance.
TRI Pointe has gained 53.2% YTD. Earnings for 2021 and 2022 are expected to grow 80.2% and 9.6%, respectively.