Quanex Building Products Corporation (NYSE:NX) Q3 2019 Earnings Conference Call Transcript
Sep 06, 2019 • 11:00 am ET
Good day, ladies and gentlemen, and welcome to the Third Quarter 2019 Quanex Building Products Corporation Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to introduce your host for today's conference, Mr. Scott Zuehlke, VP, Investor Relations and Treasurer and Interim CFO. Sir, you may begin.
Thanks for joining the call this morning. On the call with me today is Bill Griffiths, our Chairman, President and Chief Executive Officer; and George Wilson, our Chief Operating Officer.
This conference call will contain forward-looking statements and some discussion of non-GAAP measures. Forward-looking statements and guidance discussed on this call and in our earnings release are based on current expectations. Actual results or events may differ materially from such statements and guidance and Quanex undertakes no obligation to update or revise any forward-looking statement to reflect new information or events. For more detailed description of our forward-looking statement disclaimer and a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, please see our earnings release issued yesterday and posted to our website.
I will now discuss the financial results. We generated net sales of $238.5 million during the three months ended July 31, 2019, compared to $239.8 million for the three months ended July 31, 2018. The decrease was primarily attributable to a weaker demand environment, mainly in our North American Cabinet Components segment and inclement weather in the US.
However, our European and North American Fenestration segments continued to generate net sales growth above that of their respective markets, largely due to price increases related to raw material inflation recovery. We reported net income of 11.8% million or $0.36 per diluted share for the third quarter of 2019, compared to net income of $10.8 million or $0.31 per diluted share during the same period of 2018.
On an adjusted basis, net income increased by 18% to $13.7 million or $0.41 per diluted share during the third quarter of 2019, compared to $11.6 million or $0.33 per diluted share during the third quarter of 2018. The adjustments being made to EPS are for restructuring charges, certain executive severance charges, non-cash asset impairment charges, foreign currency transaction impacts, transaction and advisory fees and adjustments related to the Tax Cuts and Jobs Act.
On an adjusted basis, EBITDA for the quarter increased by 8% to $32.8 million, compared to $30.5 million in the third quarter of last year. The year-over-year increase in adjusted earnings was largely due to the successful implementation of pricing initiatives combined with operational efficiency gains.
Moving on to cash flow and the balance sheet. Cash provided by operating activities was $29.9 million for the three months ended July 31, 2019, compared to cash provided by operating activities of $26.8 million for the three months ended July 31, 2018. Free cash flow generation was strong during the quarter. As such, we generated free cash flow of $25.9 million in the third quarter of 2019, compared to the $21 million we generated