Quanex Building Products Corporation recently announced its results for the three months ended April 30, 2021.
The company posted net sales growth of 34.6% in its North American Fenestration segment and 92.1% in its European Fenestration segment, excluding the foreign exchange impact. The company attributes the net sales growth during those three months to the result of increased demand for products across all product lines and operating segments, coupled with increased pricing mostly related to raw material cost inflation. However, both of the company’s manufacturing facilities in the U.K. were shut down in late March of 2020 and did not resume operations until mid-to-late May last year.
The company statement indicates the that increase in earnings for the second quarter of 2021 was mostly due to higher volumes and improved operating leverage, though the increase in earnings was offset by inflationary pressures and an increase in selling, general and administrative expenses—largely attributable to more normalized medical costs combined with an increase in stock-based compensation expense that resulted from the shareholder value created by the further appreciation of Quanex’s stock price during the period.
“Demand for our products remained high throughout the second quarter of 2021 and as a result we posted another very solid quarter,” said George Wilson, president and CEO. “We will continue to focus on generating cash and paying down debt. Despite inflationary headwinds and labor challenges, we remain optimistic on the global economic outlook and overall trends within the residential housing industry. Our business is performing well, and we are confident in our ability to continue creating value for shareholders.”
Wilson also said that, on a consolidated basis, the 44.2% increase in net sales and adjusted EBITDA margin improved by approximately 30 basis points year-over-year as compared to the second quarter of 2020.
“Our balance sheet is strong, and we were able to repay $25.0 million in bank debt during the quarter while also repurchasing approximately $2.0 million of our common stock,” Wilson added.
Looking forward, Wilson said, “Our outlook for the balance of the year remains positive and we continue to be optimistic about the economic recovery. We do anticipate ongoing inflationary pressure and challenges with our supply chain and labor. However, based on our strong first half results, ongoing conversations with our customers and the latest macroeconomic indicators for the residential housing industry, we are again raising our expectations for the year. We now expect approximately 20% sales growth in our North American Fenestration segment … and approximately 40% sales growth in our European Fenestration segment.”