Continued Demand Equals Increase in Net Sales for QuanexSeptember 3rd, 2021 by Tara Taffera
Solid net sales growth and a repayment of bank dept to the tune of $15 million were just some of the highlights from the third quarter financial results released yesterday by Quanex Building Products Corp.
The company reported net sales of $279.9 million during the three months ended July 31, 2021, which represents growth of 32% compared to $212.1 million for the same period of 2020. The increase was largely due to increased demand across all product lines and operating segments, combined with increased pricing mostly related to the pass through of raw material cost inflation, officials said. The company posted net sales growth of 20.8% in its North American Fenestration segment and 85.8% in its European Fenestration segment, excluding the foreign exchange impact and despite the challenges presented by flooding in Germany.
The increase in earnings for the third quarter of 2021 was mainly due to higher volumes and improved operating leverage, the company reported. The company’s liquidity increased to $306.2 million as of July 31, 2021, consisting of $43.7 million in cash on hand plus availability under its senior secured revolving credit facility due 2023, less letters of credit outstanding.
“Demand for our products remained robust across all of our product lines throughout the third quarter of 2021,” said George Wilson, president and CEO. “On a consolidated basis, net sales increased by approximately 32% year-over-year as compared to the third quarter of 2020.” Wilson added that general inflation, time lag for index pricing, supply chain challenges and labor constraints all continue to have negative impacts on margins.
“Our balance sheet continues to strengthen, and we were able to repay $15 million in bank debt during the quarter while also repurchasing approximately $1.8 million of our common stock. We will remain focused on generating cash and paying down debt in the near-term.”
Wilson also remains optimistic on the demand outlook for the company’s products, but does expect inflation, labor costs, and supply chain challenges to continue pressuring margins throughout the fourth quarter of this year, he said.
“We continue to pass these incremental costs along to our customers through indexes, surcharges, and price increases; however, there are time lags in each case,” he said. “With this backdrop, on a consolidated basis, we are reaffirming net sales guidance of approximately $1.04 billion to $1.06 billion.”