Quanex Building Products Announces Second Quarter 2023 Results and Reaffirms Full Year 2023 Guidance

Quanex Building Products Corporation

Margin Expansion in NA Cabinet Components and EU Fenestration Segments 
Repaid $20 Million in Bank Debt 
Balance Sheet and Liquidity Remain Strong 
Significant Improvement in Cash Provided by Operating Activities 
Synergy Target Achieved for LMI Custom Mixing Acquisition 
Return to Normal Seasonality Trending as Expected 
Remain Cautiously Optimistic on Second Half of 2023

HOUSTON, June 01, 2023 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the three months ended April 30, 2023.

The Company reported the following selected financial results:

QUANEX BUILDING PRODUCTS CORPORATION
Q2 2023 Earnings Release
			Three Months Ended April 30,						Six Months Ended April 30,
($ in millions, except per share data)			2023			2022			2023			2022
Net Sales			$273.5			$322.9			$535.5			$589.9
Gross Margin			$67.2			$73.2			$118.9			$128.4
Gross Margin %			24.6%			22.7%			22.2%			21.8%
Net Income			$21.5			$26.5			$23.4			$37.8
Diluted EPS			$0.65			$0.80			$0.71			$1.13
Adjusted Net Income			$21.7			$26.5			$27.8			$37.8
Adjusted Diluted EPS			$0.66			$0.80			$0.84			$1.14
Adjusted EBITDA			$39.9			$45.2			$60.4			$69.6
Adjusted EBITDA Margin %			14.6%			14.0%			11.3%			11.8%
Cash Provided by (Used For) Operating Activities			$35.3			$19.8			$38.5			($1.9)
Free Cash Flow			$27.8			$13.4			$23.4			($15.7)

(See Non-GAAP Terminology Definitions and Disclaimers section, Non-GAAP Financial Measure Disclosure table, Selected Segment Data table and reconciliation tables for additional information)

George Wilson, President and Chief Executive Officer, commented, “We are pleased with the results we reported for the second quarter of 2023, and we are now more confident in our belief that we are seeing a return to normal seasonality in our business. Demand improved across all product lines during the second quarter of this year compared to the first quarter of this year, and we executed well from an operational standpoint. The customer inventory rebalancing initiatives that impacted results in our fenestration segments in the first quarter also impacted results in the second quarter, albeit to a lesser degree. However, based on ongoing conversations with our customers, coupled with recent order trends, we do not anticipate a meaningful impact from customer inventory rebalancing initiatives for the remainder of the year. The LMI Custom Mixing business we acquired on November 1, 2022 continues to perform well and we have already achieved our synergy target.  

“When compared to the second quarter of 2022, which was a record quarter, revenue declined in the second quarter of 2023 across all operating segments as ongoing macroeconomic challenges spurred continued market volume declines and some pricing pressure, mostly due to surcharge rollbacks and index pricing mechanism triggers in North America as raw material costs decline. Despite the pressure on revenue, we converted well operationally and realized margin expansion in our North American Cabinet Components and European Fenestration segments. We controlled the things we can control, and we will continue to focus on operational efficiency and flexing our cost structure accordingly.

“Our continued focus on managing working capital is serving us well and we were able to generate enough free cash to buyback $5.6 million of our stock and pay down our bank debt by $20 million during the second quarter. Our balance sheet remains strong, and our leverage ratio improved versus the first quarter of this year.”

Second Quarter 2023 Results Summary

The Company reported net sales of $273.5 million during the three months ended April 30, 2023, which represents a decrease of 15.3% compared to $322.9 million for the same period of 2022. The decrease was mostly attributable to softer demand, caused in part by customer inventory rebalancing initiatives, lower pricing in North America, and foreign exchange translation impact. Quanex realized a decline in net sales of 11.8% for the second quarter of 2023 in its North American Fenestration segment. Excluding LMI, net sales in the North American Fenestration segment would have declined by approximately 21.8% year-over-year. The Company reported a decline in net sales of 26.6% in its North American Cabinet Components segment and a decline of 7.1% in net sales in its European Fenestration segment, excluding foreign exchange impact. (See Sales Analysis table for additional information)

The decrease in earnings for the three months ended April 30, 2023 was mostly attributable to lower volumes, decreased pricing mainly due to surcharge rollbacks and raw material index pricing mechanisms in North America, foreign exchange translation, and higher interest expense.

Balance Sheet Update

As of April 30, 2023, Quanex had total debt of $135.6 million ($82.5 million excluding real-estate leases that are considered “finance” leases under U.S. GAAP) and the Company’s leverage ratio of Net Debt to LTM Adjusted EBITDA decreased to 0.6x (0.3x excluding these real-estate leases). As of April 30, 2023, Quanex’s LTM Adjusted EBITDA was $143.3 million and LTM Net Income, the most directly comparable GAAP measure, was $74.0 million.   (See Non-GAAP Terminology Definitions and Disclaimers section, Net Debt Reconciliation table and Last Twelve Months Adjusted EBITDA Reconciliation table for additional information)

Outlook

Mr. Wilson stated, “We continue to be cautiously optimistic for the second half of our fiscal year, especially as we gain confidence from recent results and our belief that we are seeing a return to normal seasonality. In addition, the long-term underlying fundamentals for the residential housing market remain positive. Based on conversations with our customers and recent demand trends, we are reaffirming prior guidance for fiscal 2023. On a consolidated basis, we continue to estimate that we will generate net sales of $1.12 billion to $1.16 billion, which we expect will yield approximately $130 million to $142 million in Adjusted EBITDA* in fiscal 2023.

Our capital allocation priorities continue to be generating cash, paying down debt, evaluating growth opportunities and opportunistically buying back our stock.”

*When Quanex provides expectations for Adjusted EBITDA on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and corresponding GAAP measures is generally not available without unreasonable effort. Certain items required for such a reconciliation are outside of the Company’s control and/or cannot be reasonably predicted or estimated, such as the provision for income taxes.

Conference Call and Webcast Information

The Company has also scheduled a conference call for Friday, June 2, 2023 at 11:00 a.m. ET (10:00 a.m. CT) to discuss the release. A link to the live audio webcast will be available on Quanex’s website at http://www.quanex.com in the Investors section under Presentations & Events.

Participants can pre-register for the conference call using the following link: https://register.vevent.com/register/BI63b3d21eb76d4b8ba3f1693da2ce90ac

Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, it is recommended that participants dial into the conference call ten minutes ahead of the scheduled start time. A replay will be available for a limited time on the Company’s website at http://www.quanex.com in the Investors section under Presentations & Events.

About Quanex

Quanex is a global manufacturer with core capabilities and broad applications across various end markets. The Company currently collaborates and partners with leading OEMs to provide innovative solutions in the window, door, vinyl fencing, solar, refrigeration and cabinetry markets.  Looking ahead, Quanex plans to leverage its material science expertise and process engineering to expand into adjacent markets.

For more information contact Scott Zuehlke, Senior Vice President, Chief Financial Officer & Treasurer, at 713-877-5327 or scott.zuehlke@quanex.com.

Non-GAAP Terminology Definitions and Disclaimers

Adjusted Net Income (defined as net income further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, certain severance charges, gain/loss on the sale of certain fixed assets, restructuring charges, asset impairment charges, other net adjustments related to foreign currency transaction gain/loss and effective tax rates reflecting impacts of adjustments on a with and without basis) and Adjusted EPS are non-GAAP financial measures that Quanex believes provide a consistent basis for comparison between periods and more accurately reflects operational performance, as they are not influenced by certain income or expense items not affecting ongoing operations. EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) and Adjusted EBITDA (defined as EBITDA further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, certain severance charges, gain/loss on the sale of certain fixed assets, restructuring charges and asset impairment charges) are non-GAAP financial measures that the Company uses to measure operational performance and assist with financial decision-making.  Net Debt is defined as total debt (outstanding balance on the revolving credit facility plus financial lease obligations) less cash and cash equivalents. The leverage ratio of Net Debt to LTM Adjusted EBITDA is a financial measure that the Company believes is useful to investors and financial analysts in evaluating Quanex’s leverage. In addition, with certain limited adjustments, this leverage ratio is the basis for a key covenant in the Company’s credit agreement. Free Cash Flow is a non-GAAP measure calculated using cash provided by operating activities less capital expenditures. Quanex uses the Free Cash Flow metric to measure operational and cash management performance and assist with financial decision-making. Free Cash Flow is measured before application of certain contractual commitments (including capital lease obligations), and accordingly is not a true measure of the Company’s residual cash flow available for discretionary expenditures. Quanex believes Free Cash Flow is useful to investors in understanding and evaluating the Company’s financial and cash management performance. Quanex believes that the presented non-GAAP measures provide a consistent basis for comparison between periods and will assist investors in understanding the Company’s financial performance when comparing results to other investment opportunities. The presented non-GAAP measures may not be the same as those used by other companies. Quanex does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with U.S. GAAP.

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 limited to, the following: impacts from public health issues (including pandemics, such as the recent COVID-19 pandemic) on the economy and the demand for Quanex’s products, the Company’s future operating results, future financial condition, future uses of cash and other expenditures, expenses and tax rates, expectations relating to Quanex’s industry, and the Company’s future growth, including any guidance discussed in this press release. The statements and guidance set forth in this release are based on current expectations. Actual results or events may differ materially from this release. For a complete discussion of factors that may affect Quanex’s future performance, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2022, and the Company’s Quarterly Reports on Form 10-Q under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”. Any forward-looking statements in this press release are made as of the date hereof, and Quanex undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(In thousands, except per share data)
(Unaudited)
		Three Months Ended April 30,								Six Months Ended April 30,
			2023				2022				2023				2022
Net sales		$	273,535			$	322,893			$	535,451			$	589,933
Cost of sales			206,372				249,651				416,521				461,485
Selling, general and administrative			27,371				28,129				64,115				58,952
Depreciation and amortization			10,456				10,563				21,076				20,820
Operating income			29,336				34,550				33,739				48,676
Interest expense			(2,244	)			(602	)			(4,503	)			(1,125	)
Other, net			(29	)			453				189				507
Income before income taxes			27,063				34,401				29,425				48,058
Income tax expense			(5,551	)			(7,879	)			(6,004	)			(10,297	)
Net income		$	21,512			$	26,522			$	23,421			$	37,761
Earnings per common share, basic		$	0.65			$	0.80			$	0.71			$	1.14
Earnings per common share, diluted		$	0.65			$	0.80			$	0.71			$	1.13
Weighted average common shares outstanding:
Basic			32,858				33,157				32,905				33,140
Diluted			33,017				33,291				33,070				33,292
Cash dividends per share		$	0.08			$	0.08			$	0.16			$	0.16

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		April 30, 2023				October 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	43,496			$	55,093
Accounts receivable, net			94,038				96,018
Inventories, net			114,015				120,890
Prepaid and other current assets			12,210				8,664
Total current assets			263,759				280,665
Property, plant and equipment, net			242,521				180,400
Operating lease right-of-use assets			45,725				56,000
Goodwill			185,224				137,855
Intangible assets, net			80,981				65,035
Other assets			3,902				4,662
Total assets		$	822,112			$	724,617
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	64,477			$	77,907
Accrued liabilities			44,655				52,114
Income taxes payable			-				1,049
Current maturities of long-term debt			2,113				1,046
Current operating lease liabilities			7,403				7,727
Total current liabilities			118,648				139,843
Long-term debt			132,150				29,628
Noncurrent operating lease liabilities			39,215				49,286
Deferred pension benefits			-				3,917
Deferred income taxes			23,396				22,277
Other liabilities			15,976				14,831
Total liabilities			329,385				259,782
Stockholders’ equity:
Common stock			372				372
Additional paid-in-capital			250,427				251,947
Retained earnings			355,557				337,456
Accumulated other comprehensive loss			(34,968	)			(49,422	)
Treasury stock at cost			(78,661	)			(75,518	)
Total stockholders’ equity			492,727				464,835
Total liabilities and stockholders' equity		$	822,112			$	724,617

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
	Six Months Ended April 30,
		2023				2022
Operating activities:
Net income	$	23,421			$	37,761
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Depreciation and amortization		21,076				20,820
Loss on the disposition of capital assets
Stock-based compensation		1,398				1,124
Deferred income tax		97				583
Other, net		982				1,534
Changes in assets and liabilities:
Decrease (increase) in accounts receivable		11,564				(13,008	)
Decrease (increase) in inventory		14,799				(39,771	)
Increase in other current assets		(1,746	)			(3,541	)
(Decrease) increase in accounts payable		(19,825	)			7,381
Decrease in accrued liabilities		(14,407	)			(15,984	)
(Decrease) increase in income taxes payable		(1,754	)			1,679
Increase (decrease) in deferred pension benefits		17				(159	)
Increase in other long-term liabilities		1,808				443
Other, net		1,030				(743	)
Cash provided by (used for) operating activities		38,460				(1,881	)
Investing activities:
Business acquisition		(91,302	)			-
Capital expenditures		(15,074	)			(13,785	)
Proceeds from disposition of capital assets		101				36
Cash used for investing activities		(106,275	)			(13,749	)
Financing activities:
Borrowings under credit facilities		102,000				70,500
Repayments of credit facility borrowings		(35,000	)			(45,500	)
Repayments of other long-term debt		(1,306	)			(432	)
Common stock dividends paid		(5,320	)			(5,258	)
Issuance of common stock		99				173
Payroll tax paid to settle shares forfeited upon vesting of stock		(567	)			(1,412	)
Purchase of treasury stock		(5,593	)			(1,569	)
Cash used for financing activities		54,313				16,502
Cash provided by financing activities		1,905				(2,033	)
Decrease in cash and cash equivalents		(11,597	)			(1,161	)
Cash and cash equivalents at beginning of period		55,093				40,061
Cash and cash equivalents at end of period	$	43,496			$	38,900

QUANEX BUILDING PRODUCTS CORPORATION
Reconciliations of Free Cash Flow and Net Debt
(In thousands)
(Unaudited)
The following table reconciles the Company's calculation of Free Cash Flow, a non-GAAP measure, to its most directly comparable GAAP measure. The Company defines Free Cash Flow as cash provided by operating activities less capital expenditures.
			Three Months Ended April 30,				Six Months Ended April 30,
			2023		2022		2023		2022
Cash provided by (used for) operating activities			$35,325		$19,770		$38,460		($1,881)
Capital expenditures			(7,492)		(6,415)		(15,074)		(13,785)
Free Cash Flow			$27,833		$13,355		$23,386		($15,666)
The following table reconciles the Company's Net Debt which is defined as total debt principal of the Company plus finance lease obligations minus cash.
			As of April 30,
			2023		2022
Revolving credit facility			$80,000		$63,000
Finance lease obligations (1)			55,626		13,971
Total debt (2)			135,626		76,971
Less: Cash and cash equivalents			43,496		38,900
Net Debt			$92,130		$38,071
(1) Includes $53.1 million and $12.7 million in real estate lease liabilities considered finance leases under U.S. GAAP as of April, 30 2023 and April 30, 2022, respectively.
(2) Excludes outstanding letters of credit.

QUANEX BUILDING PRODUCTS CORPORATION
NON-GAAP FINANCIAL MEASURE DISCLOSURE
(In thousands)
(Unaudited)
Reconciliation of Last Twelve Months Adjusted EBITDA		Three Months Ended April 30, 2023			Three Months Ended January 31, 2023				Three Months Ended October 31, 2022				Three Months Ended July 31, 2022				Total
		Reconciliation			Reconciliation				Reconciliation				Reconciliation				Reconciliation
Net income as reported		$	21,512		$	1,909			$	24,667			$	25,908			$	73,996
Income tax expense			5,551			453				3,329				7,801				17,134
Other, net			29			(218	)			(136	)			(398	)			(723	)
Interest expense			2,244			2,259				710				724				5,937
Depreciation and amortization			10,456			10,620				9,555				9,734				40,365
EBITDA			39,792			15,023				38,125				43,769				136,709
Cost of sales (1)			48			-				-				-				48
Selling, general and administrative (1),(2)			63			5,448				564				419				6,494
Adjusted EBITDA		$	39,903		$	20,471			$	38,689			$	44,188			$	143,251
(1) Loss on damage to manufacturing facilities caused by weather.
(2) Transaction and advisory fees.

QUANEX BUILDING PRODUCTS CORPORATION
NON-GAAP FINANCIAL MEASURE DISCLOSURE
(In thousands, except per share data)
(Unaudited)
		Three Months Ended				Three Months Ended				SIx Months Ended				SIx Months Ended
Reconciliation of Adjusted Net Income and Adjusted EPS		April 30, 2023				April 30, 2022				April 30, 2023				April 30, 2022
		Net Income		Diluted EPS		Net Income		Diluted EPS		Net Income		Diluted EPS		Net Income		Diluted EPS
Net income as reported		$ 21,512		$ 0.65		$ 26,522		$ 0.80		$ 23,421		$ 0.71		$ 37,761		$ 1.13
Net income reconciling items from below		195		$ 0.01		1		$ -		4,349		$ 0.13		34		$ 0.01
Adjusted net income and adjusted EPS		$ 21,707		$ 0.66		$ 26,523		$ 0.80		$ 27,770		$ 0.84		$ 37,795		$ 1.14
Reconciliation of Adjusted EBITDA		Three Months Ended April 30, 2023				Three Months Ended April 30, 2022				Six Months Ended April 30, 2023				Six Months Ended April 30, 2022
		Reconciliation				Reconciliation				Reconciliation				Reconciliation
Net income as reported		$ 21,512				$ 26,522				$ 23,421				$ 37,761
Income tax expense		5,551				7,879				6,004				10,297
Other, net		29				(453)				(189)				(507)
Interest expense		2,244				602				4,503				1,125
Depreciation and amortization		10,456				10,563				21,076				20,820
EBITDA		39,792				45,113				54,815				69,496
EBITDA reconciling items from below		111				131				5,559				131
Adjusted EBITDA		$ 39,903				$ 45,244				$ 60,374				$ 69,627
Reconciling Items		Three Months Ended April 30, 2023				Three Months Ended April 30, 2022				Six Months Ended April 30, 2023				Six Months Ended April 30, 2022
		Income Statement		Reconciling Items		Income Statement		Reconciling Items		Income Statement		Reconciling Items		Income Statement		Reconciling Items
Net sales		$ 273,535		$ -		$ 322,893		$ -		$ 535,451		$ -		$ 589,933		$ -
Cost of sales		206,372		(48)	(1)	249,651		-		416,521		(48)	(1)	461,485		-
Selling, general and administrative		27,371		(63)	(1),(2)	28,129		(131)	(2)	64,115		(5,511)	(1),(2)	58,952		(131)	(2)
EBITDA		39,792		111		45,113		131		54,815		5,559		69,496		131
Depreciation and amortization		10,456		-		10,563		-		21,076		-		20,820		-
Operating income		29,336		111		34,550		131		33,739		5,559		48,676		131
Interest expense		(2,244)		-		(602)		-		(4,503)		-		(1,125)		-
Other, net		(29)		132	(3)	453		(123)	(3)	189		90	(3)	507		(82)	(3)
Income before income taxes		27,063		243		34,401		8		29,425		5,649		48,058		49
Income tax expense		(5,551)		(48)	(4)	(7,879)		(7)	(4)	(6,004)		(1,300)	(4)	(10,297)		(15)	(4)
Net income		$ 21,512		$ 195		$ 26,522		$ 1		$ 23,421		$ 4,349		$ 37,761		$ 34
Diluted earnings per share		$ 0.65				$ 0.80				$ 0.71				$ 1.13
(1) Loss on damage to manufacturing facilities caused by weather.
(2) Transaction and advisory fees.
(3) Foreign currency transaction losses (gains).
(4) Tax impact of net income reconciling items.

QUANEX BUILDING PRODUCTS CORPORATION
SELECTED SEGMENT DATA
(In thousands)
(Unaudited)
This table provides gross margin, operating (loss) income, EBITDA, and Adjusted EBITDA by reportable segment. Non-operating expense and income tax expense are not allocated to the reportable segments.
		NA Fenestration				EU Fenestration				NA Cabinet Components				Unallocated Corp & Other				Total
Three months ended April 30, 2023
Net sales		$	156,975			$	63,763			$	53,518			$	(721	)		$	273,535
Cost of sales			122,472				40,452				43,731				(283	)			206,372
Gross Margin			34,503				23,311				9,787				(438	)			67,163
Gross Margin %			22.0%				36.6%				18.3%								24.6%
Selling, general and administrative			14,158				8,452				5,971				(1,210	)			27,371
Depreciation and amortization			5,050				2,353				2,970				83				10,456
Operating income			15,295				12,506				846				689				29,336
Depreciation and amortization			5,050				2,353				2,970				83				10,456
EBITDA			20,345				14,859				3,816				772				39,792
Loss on damage to manufacturing facilities (Cost of sales)			35				-				13				-				48
Loss on damage to manufacturing facilities (SG&A)			-				-				200				-				200
Transaction and advisory fees			-				-				-				(137	)			(137	)
Adjusted EBITDA		$	20,380			$	14,859			$	4,029			$	635			$	39,903
Adjusted EBITDA Margin %			13.0%				23.3%				7.5%								14.6%
Three months ended April 30, 2022
Net sales		$	177,908			$	73,427			$	72,878			$	(1,320	)		$	322,893
Cost of sales			137,571				49,708				63,175				(803	)			249,651
Gross Margin			40,337				23,719				9,703				(517	)			73,242
Gross Margin %			22.7%				32.3%				13.3%								22.7%
Selling, general and administrative			14,078				8,601				5,218				232				28,129
Depreciation and amortization			4,038				2,522				3,917				86				10,563
Operating income (loss)			22,221				12,596				568				(835	)			34,550
Depreciation and amortization			4,038				2,522				3,917				86				10,563
EBITDA			26,259				15,118				4,485				(749	)			45,113
Transaction and advisory fees			-				-				-				131				131
Adjusted EBITDA		$	26,259			$	15,118			$	4,485			$	(618	)		$	45,244
Adjusted EBITDA Margin %			14.8%				20.6%				6.2%								14.0%
Six months ended April 30, 2023
Net sales		$	309,955			$	118,715			$	108,192			$	(1,411	)		$	535,451
Cost of sales			247,189				78,155				91,787				(610	)			416,521
Gross Margin			62,766				40,560				16,405				(801	)			118,930
Gross Margin %			20.3%				34.2%				15.2%								22.2%
Selling, general and administrative			27,453				15,957				10,844				9,861				64,115
Depreciation and amortization			10,295				4,701				5,904				176				21,076
Operating income (loss)			25,018				19,902				(343	)			(10,838	)			33,739
Depreciation and amortization			10,295				4,701				5,904				176				21,076
EBITDA			35,313				24,603				5,561				(10,662	)			54,815
Loss on damage to manufacturing facilities (Cost of sales)			35				-				13				-				48
Loss on damage to manufacturing facilities (SG&A)			-				-				200				-				200
Transaction and advisory fees			-				-				-				5,311				5,311
Adjusted EBITDA		$	35,348			$	24,603			$	5,774			$	(5,351	)		$	60,374
Adjusted EBITDA Margin %			11.4%				20.7%				5.3%								11.3%
Six months ended April 30, 2022
Net sales		$	324,539			$	132,341			$	135,231			$	(2,178	)		$	589,933
Cost of sales			253,535				90,935				118,248				(1,233	)			461,485
Gross Margin			71,004				41,406				16,983				(945	)			128,448
Gross Margin %			21.9%				31.3%				12.6%								21.8%
Selling, general and administrative			28,455				15,904				10,488				4,105				58,952
Depreciation and amortization			8,177				5,091				7,380				172				20,820
Operating income (loss)			34,372				20,411				(885	)			(5,222	)			48,676
Depreciation and amortization			8,177				5,091				7,380				172				20,820
EBITDA			42,549				25,502				6,495				(5,050	)			69,496
Transaction and advisory fees			-				-				-				131				131
Adjusted EBITDA		$	42,549			$	25,502			$	6,495			$	(4,919	)		$	69,627
Adjusted EBITDA Margin %			13.1%				19.3%				4.8%								11.8%

QUANEX BUILDING PRODUCTS CORPORATION
SALES ANALYSIS
(In thousands)
(Unaudited)
		Three Months Ended April 30,								Six Months Ended April 30,
			2023				2022				2023				2022
NA Fenestration:(1)
	United States - fenestration	$	120,756			$	156,843			$	241,523			$	285,210
	International - fenestration		8,350				11,094				13,477				20,230
	United States - non-fenestration		24,334				7,077				47,400				13,793
	International - non-fenestration		3,535				2,894				7,555				5,306
		$	156,975			$	177,908			$	309,955			$	324,539
EU Fenestration:(2)
	International - fenestration	$	47,903			$	54,863			$	90,257			$	99,484
	International - non-fenestration		15,860				18,564				28,458				32,857
		$	63,763			$	73,427			$	118,715			$	132,341
NA Cabinet Components:
	United States - fenestration	$	4,219			$	4,666			$	8,127			$	8,431
	United States - non-fenestration		48,526				67,383				98,575				125,150
	International - non-fenestration		773				829				1,490				1,650
		$	53,518			$	72,878			$	108,192			$	135,231
Unallocated Corporate & Other:
	Eliminations	$	(721	)		$	(1,320	)		$	(1,411	)		$	(2,178	)
		$	(721	)		$	(1,320	)		$	(1,411	)		$	(2,178	)
Net Sales		$	273,535			$	322,893			$	535,451			$	589,933
(1) Includes the net sales from the acquisition of LMI of $17.8 million and $34.2 million for the three and six months ended April 30, 2023, respectively.
(2) Reflects a reduction of $4.8 million and $10.8 million in revenue associated with foreign currency exchange rate impacts for the three and six months ended April 30, 2023, respectively.