INVESTOR PRESENTATION

M A R C H 2 0 2 4

© 2023 Quanex | Q U A N E X . C O M

SAFE HARBOR STATEMENT

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 presentation. The statements and guidance set forth in this release are based on current expectations. These forward-looking statements involve significant risks and uncertainties that could cause the actual results or events to differ materially from this presentation. Many of these factors are outside Quanex's control and are difficult to predict. 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, 2023, and Quanex'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 presentation are made as of the date hereof, and the Company undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

Non-GAAPTerminology 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. Return on Invested Capital (ROIC) is defined as Adjusted EBIT*(1 - Tax Rate) / (Average Shareholders' Equity + Average Net Debt). Adjusted EBIT is calculated as Adjusted EBITDA - D&A. Average Shareholders' Equity and Average Net Debt is calculated as average of beginning and ending balances of the period. Quanex uses the ROIC metric to measure the Company's effectiveness in allocating capital and assist with capital deployment decision-making. Quanex believes ROIC is useful to investors in analyzing the efficiency of the Company's deployment of capital. Return on Equity (ROE) is defined as Adjusted Net Income / Average Shareholders' Equity. Average Shareholders' Equity is calculated as the average of beginning and ending balances of the period. The Company uses the ROE metric to evaluating how much profit Quanex generates on the shareholders' equity in the Company. Quanex believes ROE is useful to investors in analyzing the profitability of companies in the same industry. 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.

2 © 2023 Quanex | Q U A N E X . C O M

QUANEX AT A GLANCE

C O M P A N Y O V E R V I E W

F Y 2 0 2 3 R E V E N U E B R E A K D O W N

  • Largest domestic manufacturer and supplier of components to window and cabinet OEMs
    - 85-year legacy of market leadership and consistent growth

35%

  • Diversified business operating through three segments with a portfolio of strong brand names:
  • NA Fenestration: IG Spacers, Homeshield (screens and accessories), [……………](vinyl extrusions) & custom mixing

- EU Fenestration: […………….](vinyl extrusions), [………… …] (IG spacers)

  • NA Cabinet Components

• Extensive plant network and extruding capabilities contributing to leading positions across product lines

22%

65%

Repair & Remodel

New Construction

19%

NA Fenestration

EU Fenestration

22% 59%

NA Cabinet Components

North America

    • Widely recognized parent brand associated with differentiated products, quality and customer service
    • Broadest portfolio of product systems in the industry, enhanced by customizable solutions
  • Core manufacturing capabilities with broad applications
  • Headquartered in Houston, Texas

78%

Europe

K E Y S T A T I S T I C S

2 0 2 3 S A L E S : $ 1 . 1 3 B

N E T L E V E R A G E : 0 . 1 x ( 2 )

T o t a l L i q u i d i t y o f $ 3 5 9 . 4 M (3)

2 0 2 3 N E T I N C O M E : $ 8 2 . 5 M

2 0 2 3 A D J . N E T I N C O M E : $ 9 0 . 9 M(1)

N E T W O R K O F 3 0 P L A N T S

2 7 U . S . a n d 3 I n t l

2 0 2 3 A D J . E B I T D A : $ 1 5 9 . 6 M

~ 1 4 . 1 % M a r g i n

E M P L O Y E E S : ~ 4 , 0 0 0

~ 8 0 % U . S . a n d ~ 2 0 % I n t l

Note: EBITDA adjusted to exclude non-recurring items referenced in Safe Harbor Statement on slide 2. Please reference the Appendix for a reconciliation of Net Income to Adjusted EBITDA and a reconciliation of Net Leverage.

  1. Please reference the Appendix for a reconciliation of Net Income to Adjusted Net Income.
  2. As of 1.31.24. Net Leverage Ratio defined as Net Debt/LTM Adjusted EBITDA. Total Debt includes $51.7 million in real-estate lease liabilities considered "finance" leases under U.S. GAAP. Please reference the Appendix for a reconciliation of Net Debt and Net Leverage Ratio.
  3. As of 1.31.24. Excludes outstanding letters of credit and deferred financing fees; includes cash on balance sheet and availability under current credit facilities.

3 © 2023 Quanex | Q U A N E X . C O M

ROBUST PORTFOLIO OF CURRENT PRODUCT OFFERINGS

T O P S U P P L I E R T O O E M S A C R O S S A B R O A D R A N G E O F P R O D U C T C A T E G O R I E S

n t s

1

1

I n s u l a t i n g G l a s s S p a c e r s

2

W i n d o w & P a t i o S c r e e n s

3

D o o r C o m p o n e n t s

d o w , P a t i o h e r C o m p o n e

2

3

4

Enhance durability, condensation resistance and thermal performance

W i n d o w C o m p o n e n t s

Largest selection of screen solutions and components

5 W i n d o w & P a t i o P r o f i l e s

Door Seals Thresholds

Door Jambs

6 O t h e r C o m p o n e n t s

W i n O t

6

Full system solutions or custom designs for residential

C a b i n e t C o m p o n e n t s D o o r &

2

Window Grills

Cladding

4

5

Bow and Bay Windows

Muntin Bars

1

C a b i n e t D o o r s

2 3

1

1and commercial markets

Provide superior energy efficiency and durability

2

D r a w e r F r o n t s

Custom Mixing

Solar Sealant

Vinyl Fencing

(PSET)

Flashing Tape

3 F a c e F r a m e s & C o m p o n e n t s

4 © 2023 Quanex | Q U A N E X . C O M

LEADING COMPONENT SUPPLIER TO OEMs

I G S P A C E R S

U . K . V I N Y L

C U S T O M

S C R E E N S A N D

U . S . V I N Y L

E X T R U S I O N S

M I X I N G

A C C E S S O R I E S

E X T R U S I O N S

C A B I N E T

C O M P O N E N T S

Market

A global market leader

Position

Top 5 manufacturer in U.K.

A market leader in the U.S.

A market leader in U.S.

Top 5 manufacturer in U.S.

A market leader in U.S.

Highly engineered products

Segment

focused on improving

Overview

window and patio door

thermal and energy

efficiency

Key

✓Mission-critical,low-cost

Strengths

window component

✓Diverse customer base

generating cross-selling

opportunities

✓Significant economies of

scale in North America

✓Differentiated energy-

efficient solutions

preferred by OEMs

✓Shifting consumer

sustainability preferences

multiplying TAM

✓Strong brand synonymous

with quality and service

✓Lowest total cost platform

Branded PVC profiles used in

the assembly of windows,

patio doors and

conservatories, fencing,

decking, piling and exterior

building products

  • Fastest-growingvinyl window profile extruder in U.K.
  • Most energy-efficient profile systems in U.K.
  • State-of-the-artmanufacturing capabilities
  • Strong brand recognition through the "Liniar" line of products

Technically advanced rubber

compounding facility supporting niche and specialized products for the custom mixing market

  • Diverse market and customer base
  • Strategic focus on innovation and new product development
  • Unique strength and expertise in sponge compounding
  • Highly automated and controlled manufacturing processes.
  • State-of-the-artmixing equipment and controls
  • Strong supplier and customer relationships

Largest portfolio of screen

solutions for windows and patio doors, as well as exterior and patio door thresholds and other precision products

  • Highly integrated in customer supply chain
  • Customizable manufacturing and best-in-class lead times
  • Strong relationships with largest OEMs across sectors
  • Increasingly outsourced product by window manufacturers
  • Automation opportunities to unlock significant margin expansion

Vinyl and composite profiles

engineered for increased durability and superior energy performance

  • Expertise in vinyl extrusion
  • Manufacturing footprint with capacity to grow
  • Opportunity for market consolidation and margin improvement
  • Ability to leverage existing asset base in new fenestration businesses

Single-source supplier of high-

quality hardwood and

engineered wood cabinet and drawer fronts and components for kitchen and bath OEMs

  • Target goal of low double- digit "normalized" Adj.
    EBITDA margin profile
  • Close working relationship with top cabinet OEMs
  • Best-in-classservice levels
  • Unrivaled breadth of product
  • Opportunity to expand into adjacent wood product categories

Note: Please refer to the Safe Harbor Statement on slide 2 for further information regarding Adjusted EBITDA.

5 © 2023 Quanex | Q U A N E X . C O M

DIFFERENTIATED MANUFACTURING FOOTPRINT

1

2

3

4

5

Extensive coast to coast

Domestic footprint supports

Ideally positioned to

Efficient design allowing for

Differentiated just-in-time,

handle international supply

text

local customer base

flexible manufacturing

customized product runs

manufacturing capacity

chain disruptions

D O M E S T I C F O O T P R I N T

Corporate Headquarters

Vinyl Profiles

Insulating Glass Spacers/Custom Mixing

Screens & Other Fenestration Components

Cabinet Components

I N T E R N A T I O N A L F O O T P R I N T

Vinyl Profiles

Insulating Glass Spacers

6 © 2023 Quanex | Q U A N E X . C O M

CORE MANUFACTURING CAPABILITIES WITH BROAD APPLICATIONS

D I F F E R E N T I A T E D , G L O B A L M A N U F A C T U R I N G F O O T P R I N T - P O S I T I O N E D T O E X P A N D O F F E R I N G S

Rubber

Extrusion

Plastic

Extrusion

The continuous process in which rubber and other additive compounds are softened through a heated screw and barrel that forces the melted compound through shaping dies, downstream tooling, and cooling / curing baths to obtain an array of profiles

  • Operates 20 extrusion lines in the U.S., 5 in Germany and 2 in the U.K.

PVC resin, impact modifiers, UV and heat stabilizers as well as flow agents are melted and forced through shaping dies, downstream tooling and cooling baths resulting in rigid profiles that are then cut to specified lengths

  • Operates 94 extruders in the U.S. and 34 in the U.K.

Woodwork

Interior wood components are created through a process of chopping, planing, cutting and finishing of multiple species of lumber

  • Operates 5 rough mills and 6 production plants across the U.S.

Compound &

Sealant Mixing

Metal

Rollforming

Numerous raw materials are combined according to a "recipe" and mixed per time and temperature parameters to create a new final compound

  • Operates 14 mixers in the U.S., 1 in Germany and 1 in the U.K.

Through a series of pressure points and bend angles / rollers, intricate profiles and fenestration components that are too complicated to extrude are produced in steel and aluminum

  • Operates 63 rollformers in the U.S.

7 © 2023 Quanex | Q U A N E X . C O M

ACCELERATING ESG TRENDS ALIGNED WITH QUANEX IDENTITY

E S G W O V E N I N T O C O R P O R AT E C U LT U R E

Continuous focus on driving improvement across the organization to create value for all key constituents including:

Initiatives in process in each business segment already yielding substantial benefits:

  • Committing to enhancing diversity, equity and inclusion throughout the business
  • Eliminating waste in production, using recycled resin and reusing scrap
  • Focusing on new product development to enhance energy and thermal efficiency of homes
    • Expanding portfolio of award winning or certified spacers, profiles and thresholds that offer improved performance and reduce carbon footprints of end users

Source: Freightos, Statista and NAHB.

8 © 2023 Quanex | Q U A N E X . C O M

GROWTH WITH PURPOSE

© 2022 Quanex | Q U A N E X . C O M

JOURNEY TO BECOMING:

B

I

G

G

E

R

Boldacquisition

Innovativeproduct

Growth-focused

Globally-oriented

Engagedto maximize

Responsiveto ideas

strategy targeting

development driving

strategy incorporating

approach that leverages

positive impact on all

and opportunities

existing and new lines

consistent growth in

technology across the

reach while supporting

stakeholders

identified across the

of business

core segments

platform

international divisions

organization

•

Explore markets that are

• Split innovation and NPD

synergistic with existing

from product

manufacturing

management and

capabilities

technical support

•

Expand product

•

Identify future market

portfolio, and approach

drivers, determine

"complete solution

priorities and resource

provider" status

allocation

•

Bolster human capital,

•

Create new-to-market,

purchasing power or

patentable products

manufacturing

capabilities

•

Develop collaborative

partnerships

  • Capitalize on existing market opportunities
  • Adopt global and regional approach to product management
  • Utilize current technology know-how
  • Identify gaps in existing markets
  • Leverage existing manufacturing capacity to enter adjacent markets
  • Expand global manufacturing footprint
  • Risk mitigation to improve competitiveness
  • Defined growth strategy for IG International in Europe and Asia
  • Explore international acquisition potential
  • Strategic research on specific emerging markets
  • Focus on reducing carbon footprint across business operations
  • Create long-term value for shareholders through good governance
  • Deliver best-in-class service to our customers
  • Build an inclusive and supportive culture
  • Remain committed to doing good in our community
  • Utilize technology to improve efficiency and automation
  • Clarify and streamline processes to enable quick decision-making
  • Improve speed to market by empowering teams to act on new opportunities
  • Create an entrepreneurial environment that rewards innovation rather than a risk-averse mentality

10 © 2023 Quanex | Q U A N E X . C O M

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Quanex Building Products Corporation published this content on 08 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 March 2024 14:13:10 UTC.