Quanex Building Products Corporation (NX Quick QuoteNX - Free Report) reported first-quarter fiscal 2022 (ended Jan 31, 2022) results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics improved year over year. Following the results, shares of the company increased 1.8% in the after-hours trading session on Mar 3.

Improved demand across the product lines, volume increases in the fenestration segments and higher prices primarily related to the pass-through of raw material cost inflation benefited the top line.

George Wilson, president and CEO, said, “Overall, we are pleased with our results for the first quarter of 2022, especially considering the challenges related to inflation and the supply chain. Demand was healthy during the quarter and we were able to report solid revenue growth. Labor absenteeism, caused by the Omicron variant, and supply chain challenges impacted the quarter, but these issues have started to stabilize.”

Inside the Headlines

Adjusted earnings of 34 cents per share outpaced the consensus mark of 28 cents by 21.4%. The bottom line improved 25.9% from the year-ago period.
Quanex reported net sales of $267 million, which topped the consensus mark of $244 million by 9.6% and increased 16% from the year-ago period.

Gross margin for the quarter was 20.7%, which contracted 270 basis points (bps) from the prior-year period. Adjusted EBITDA margin was 9.1%, reflecting a 150-bps decrease from the year-ago figure of 10.6%

Segmental Information

North American Fenestration: For the reported quarter, net sales in the segment increased 14.5% from the prior-year period to $146.6 million. Adjusted EBITDA margin was down 170 bps from a year ago to 11.1%.

European Fenestration: The segment’s sales climbed 20% year over year to $58.9 million. However, the adjusted EBITDA margin fell 420 bps year over year to 17.6%.

North American Cabinet Components: Net sales in the segment were $62.4 million, up 15.5% from $62.4 million reported a year ago. Adjusted EBITDA margin of 3.2% declined 280 bps year over year.

Sales in Unallocated Corp & Other were ($0.9) million.

Financial Update

At January-end, Quanex had cash and cash equivalents of $31.7 million compared with $40.1 million at the end of Oct 31, 2021. Long-term debt was $76.7 million at the end of the fiscal first quarter compared with $52.1 million at the end of Oct 31, 2021. Cash provided by operations was ($21.7) million in the fiscal first quarter compared with ($3.4) million in the prior-year period. Free cash flow was ($29) million for the fiscal first quarter, compared with ($8.6) at the end of Jan 31, 2021.

Zacks Rank & Peer Releases

Quanex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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