Quanex Building Products Corporation (NYSE:NX) Q4 2017 Earnings Conference Call Transcript

Dec 12, 2017 • 11:00 am ET

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Quanex Building Products Corporation (NYSE:NX) Q4 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Quanex Building Products Corporation Q4 and Full Fiscal Year 2017 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Scott Zuehlke, Vice President, Investor Relations and Treasurer. Sir, you may begin.

Executive
Scott M. Zuehlke

Thanks for joining the call this morning. On the call with me today is Bill Griffiths, our Chairman, President and Chief Executive Officer; Brent Korb, our Chief Financial Officer; and George Wilson, our Chief Operating Officer.

(Forward-Looking Cautionary Statements)

I will now turn the call over to Brent to discuss the financial results.

Executive
Brent L. Korb

Thanks, Scott. I'll start with the income statement followed by comments on our balance sheet and cash flow. Consolidated net sales during the fourth quarter and full fiscal year of 2017 decreased to $233 million and $867 million, respectively, compared to $249 million and $928 million for the same period of fiscal 2016. As discussed throughout the year, the decreases were largely driven by the decision to exit business that does not meet our financial objectives.

We reported net income of $10.7 million or $0.31 per diluted share for the three months ended October 31, 2017, compared to $5.4 million or $0.16 per diluted share during the same period of 2016. For fiscal 2017, net income increased to $18.7 million or $0.54 per diluted share compared to a net loss of $1.9 million, $0.05 per diluted share for fiscal 2016. Adjusted net income decreased to $13.1 million or $0.37 per diluted share during the fourth quarter of 2017 compared to $15.7 million or $0.45 per diluted share during the fourth quarter of 2016.

Adjusted net income decreased to $27 million or $0.77 per diluted share for fiscal 2017 compared to $27.7 million or $0.82 per diluted share for fiscal 2016. The adjustments being made for earnings per share are as follows; acquisition-related transaction costs, purchase price inventory step-up recognition, restructuring charges related to the previously announced closure of several manufacturing plants, accelerated depreciation and amortization for equipment and intangible assets related to these facility consolidations, impairment of goodwill at our US vinyl profiles business in 2016 and foreign currency impacts, primarily related to an intercompany note with HL Plastics.

On an adjusted basis, EBITDA decreased to $33.3 million during the quarter compared to $34.6 million in last year's fourth quarter. For the full year 2017, adjusted EBITDA was $99.0 million compared to $110.3 million in 2016. The decreases in adjusted EBITDA were primarily attributable to lower volumes and short-term inefficiencies related to transitioning away from less profitable business throughout the year, coupled with the impact of the hurricanes in the US during the fourth quarter, which was most notable in our North American Cabinet Components segment.

Before I continue, I want to highlight a few 2017-specific items. First,