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Quanex Building (NX) Q3 Earnings Miss Estimates, Up Y/Y

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Quanex Building Products Corporation (NX - Free Report) reported third-quarter fiscal 2017 (ended Jul 31, 2017) adjusted earnings per share of 33 cents, up 22% from 27 cents recorded in the year-ago quarter. Earnings, however, missed the Zacks Consensus Estimate by a penny.

Including one-time items, the company reported earnings per share of 29 cents in the quarter compared with a loss of 12 cents reported in the year-ago quarter.

Operational Update

Quanex reported revenues of $229.4 million, which dipped 7.5% year over year. Revenues also lagged the Zacks Consensus Estimate of $234 million.  Revenues were affected due to the company’s prior decision to exit certain product lines and less profitable business which were not in sync with its objectives.

Cost of sales during the quarter declined 5.3% to $176.8 million from $186.6 million in the prior-year quarter. Gross profit declined 14.4% year over year to $52.6 million, while gross margin contracted 180 basis points to 23%.

Selling, general and administrative expenses plunged 28% year over year to $20.5 million. Quanex Building reported adjusted operating profit of $19.5 million, down 2.9% from $20.1 million recorded in the year-ago quarter. Adjusted EBITDA marginally went down to $32.2 million for the quarter from $33.1 million witnessed in the prior-year quarter.

Financial Update

As of Jul 31, 2017, Quanex had cash and cash equivalents of $15.8 million compared with $25.5 million as of Oct 31, 2016. The company generated $45.3 million in cash from operating activities in the nine-month period ending Jul 31, 2017, compared with $49 million in the prior-year period. Long-term debt was $238 million as of Jul 31, 2017, compared with $259 million as of Oct 31, 2016.

Quanex’s Board of Directors announced a quarterly cash dividend of 4 cents per share. The dividend will be paid on Sep 29 to shareholders of record on Sep 18, 2017.

During the fiscal third quarter, Quanex transferred operating responsibility of two wood-based accessory plants from the North American Engineered Components segment to the North American Cabinet Components segment.  

Share Price Performance

Quanex has outperformed the industry over the past year. The company’s shares have gained 9.8% compared with 8.3% growth registered by the industry.

Quanex currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector are Owens Corning (OC - Free Report) , MasTec, Inc. (MTZ - Free Report) and NVR, Inc. (NVR - Free Report) . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens Corning has expected long-term earnings growth rate of 14.8%.

MasTec has expected long-term earnings growth rate of 14%.

NVR, Inc. has expected long-term earnings growth rate of 14.9%.

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