Consolidated Net Income of $5.0 Million or $0.13 Per Diluted Share
EPG Net Sales Increase 17.0%; Operating Income Improves to $18.6 Million
ERP Project Stopped; Company to Focus on Revenue and Profit Growth Initiatives
HOUSTON, Sept. 4, 2013 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE: NX ), a leading manufacturer of fenestration products for the global window and door industry, today released fiscal 2013 third quarter results for the period ended July 31, 2013.
- Consolidated third quarter 2013 net sales increased 8.9 percent to $259.2 million, compared to $237.9 million a year ago.
- Third quarter 2013 net income was $5.0 million, or $0.13 per diluted share compared to net income of $1.5 million, or $0.04 per diluted share in the year ago quarter.
- Consolidated third quarter EBITDA, a non-GAAP measure, was $19.3 million, compared to $10.6 million a year ago.
- Year-to-date consolidated 2013 net sales were $677.3 million, compared to $593.9 million a year ago.
- Year-to-date consolidated net loss was $10.5 million compared to a loss of $17.5 million a year ago.
- Consolidated year-to-date EBITDA, a non-GAAP measure, was $17.4 million, compared to $2.5 million a year ago.
The 2013 year-to-date results, when measured against comparable prior year periods, benefitted from the inclusion of sales related to the Aluminite acquisition completed in December 2012 and the elimination of 2012 strike-related costs at Nichols Aluminum. Adjusting for these items, third quarter and year-to-date results improved as a result of higher sales across all divisions under the Engineered Products Group (EPG) segment and cost savings associated with the company's insulating glass systems facility consolidation that occurred in 2012. This was partially offset by higher information technology and Enterprise Resource Planning (ERP) implementation costs.
Dividend Declared
On August 29, 2013, the Board of Directors declared a quarterly cash dividend of $0.04 per share on the company's common stock, payable September 30, 2013, to shareholders of record on September 16, 2013.
Engineered Products Group (EPG) is focused on providing window and door OEMs with fenestration components, products, and systems. Key end markets are residential repair & remodel (R&R) and new home construction.
| (in millions) | ||||
| Q3 2013 | Q3 2012 | YTD 2013 | YTD 2012 | |
| Net sales | $156.8 | $134.1 | $388.1 | $342.2 |
| Operating income | 18.6 | 13.1 | 27.3 | 14.9 |
| EBITDA | 26.6 | 20.0 | 50.9 | 35.9 |
- Global EPG sales for the 12 months ended July 31, 2013 were up 11.2%. EPG's North American domestic fenestration sales, the most comparable sales figure to those reported by Ducker, increased 11.5% (3.4% excluding Aluminite) from the previous 12 months.
- Preliminary U.S. window shipments as reported by Ducker increased 10.1% over the 12 months ended June 30, 2013, driven by a 27.6% increase in new construction units. U.S. window shipments to the residential R&R market as reported by Ducker increased 1.3% for the 12 month period ended June 30, 2013. A greater portion of EPG's sales are tied to R&R versus new construction.
- EPG sales results continue to be negatively impacted by lower vinyl pricing, higher industry sales of lower performance windows typically installed in new construction and continued weak R&R sales.
Aluminum Sheet Products Group is a leading provider of aluminum sheet coil through its Nichols Aluminum operation. Key end markets are residential R&R, new home construction and transportation.
| (in millions, except for spread) | ||||
| Q3 2013 | Q3 2012 | YTD 2013 | YTD 2012 | |
| Net sales | $105.2 | $107.0 | $299.5 | $261.0 |
| Operating loss | (0.5) | (3.2) | (5.2) | (16.2) |
| EBITDA | 1.3 | (1.5) | (0.0) | (10.1) |
| Shipped pounds | 77 | 75 | 213 | 180 |
| Spread per pound | 0.39 | 0.38 | ||
- The improvement in shipped pounds was primarily due to increased seasonal demand for aluminum sheet product.
- Profitability was negatively impacted by product mix, with increased demand for mill finished product, which commands a lower price when compared to painted sheet.
- Spread improved $0.01 per pound to $0.39 per pound compared to $0.38 per pound in the year ago quarter, but was down sequentially when compared to the $0.42 per pound result achieved in the second quarter of 2013.
- Spread at Nichols remains challenging primarily due to a larger reduction in aluminum prices compared to the reduction in scrap aluminum prices, as well as a tight scrap supply market.
- Nichols Aluminum's shipments for the 12 months ended July 31, 2013, increased 16.5%.
- Industry shipments as reported by the Aluminum Association decreased 0.6% over the same period.
Corporate and Other Items
- Corporate expenses in the quarter were $11.0 million compared to $8.4 million in the year ago quarter primarily due to higher ERP expenses of $2.0 million, (including $1.7 million of higher depreciation) and $1.1 million in higher IT-related costs, partially offset by $0.6 million in lower stock-based compensation costs.
- In August 2013, following a management recommendation, the company's board of directors voted to cease the implementation of the ERP project. The proposal was made based on management's belief that investments made in initiatives that will drive greater revenue growth and profitability will be more impactful to increasing shareholder value than continuing to invest in the ERP system.
- Total cash of $16.1 million.
- No outstanding borrowings against the revolving credit facility.
- Cash provided by operating activities for the first nine months of 2013 was $6.6 million.
- Available capacity under the company's revolving credit facility was approximately $82.5 million.
Conference Call Information
Quanex will host its conference call today, September 4, 2013 at 9:00 a.m. (Eastern) to discuss its results and outlook. The call will be available via webcast at www.quanex.com in the Investors section.
Forward Looking Statement
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, future operating results of Quanex, the financial condition of Quanex, future uses of cash and other expenditures, expenses and tax rates, expectations relating to the company's ERP project, expectations relating to the company's industry, and the company's future growth. The statements in this release are based on current expectations. Actual results or events may differ materially from this release. Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, the availability and cost of raw materials, and customer demand. For a more complete discussion of factors that may affect the company's future performance, please refer to the company's Form 10-K filing on December 31, 2012, under the Securities Exchange Act of 1934 ("Exchange Act"), in particular the section titled, "Private Securities Litigation Reform Act" contained therein.
For additional information, please visit www.quanex.com
| QUANEX BUILDING PRODUCTS CORPORATION | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
| (In thousands, except per share data) | ||||
| (Unaudited) | ||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| $ 259,174 | $ 237,905 | Net sales | $ 677,345 | $ 593,928 |
| 215,182 | 200,663 | Cost of sales | 576,835 | 510,542 |
| 24,683 | 26,659 | Selling, general and administrative | 83,063 | 80,936 |
| 12,193 | 9,131 | Depreciation and amortization | 33,389 | 28,381 |
| 7,116 | 1,452 | Operating income (loss) | (15,942) | (25,931) |
| (182) | (108) | Interest expense | (495) | (348) |
| (46) | 21 | Other, net | (128) | 199 |
| 6,888 | 1,365 | Income (loss) before income taxes | (16,565) | (26,080) |
| (1,919) | 166 | Income tax benefit (expense) | 6,068 | 8,578 |
| $ 4,969 | $ 1,531 | Net income (loss) | $ (10,497) | $ (17,502) |
| Earnings (loss) per common share: | ||||
| $ 0.13 | $ 0.04 | Basic | $ (0.28) | $ (0.48) |
| $ 0.13 | $ 0.04 | Diluted | $ (0.28) | $ (0.48) |
| Weighted average common shares outstanding: | ||||
| 36,856 | 36,637 | Basic | 36,838 | 36,584 |
| 37,413 | 37,163 | Diluted | 36,838 | 36,584 |
| $ 0.04 | $ 0.04 | Cash dividends per share | $ 0.12 | $ 0.12 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| (Unaudited) | ||
| July 31, 2013 | October 31, 2012 | |
| Assets | ||
| Cash and equivalents | $ 16,073 | $ 71,255 |
| Accounts receivable, net | 99,051 | 85,644 |
| Inventories, net | 67,839 | 65,904 |
| Deferred income taxes | 24,497 | 20,439 |
| Prepaid and other current assets | 6,592 | 7,628 |
| Total current assets | 214,052 | 250,870 |
| Property, plant and equipment, net | 176,033 | 168,877 |
| Deferred income taxes | 12,381 | 8,911 |
| Goodwill | 71,302 | 68,331 |
| Intangible assets, net | 80,757 | 78,380 |
| Other assets | 17,036 | 14,169 |
| Total assets | $ 571,561 | $ 589,538 |
| Liabilities and stockholders' equity | ||
| Accounts payable | $ 78,479 | $ 80,985 |
| Accrued liabilities | 45,357 | 46,459 |
| Current maturities of long-term debt | 375 | 368 |
| Total current liabilities | 124,211 | 127,812 |
| Long-term debt | 753 | 1,033 |
| Deferred pension and postretirement benefits | 5,862 | 6,873 |
| Liability for uncertain tax positions | 5,416 | 6,736 |
| Non-current environmental reserves | 9,037 | 9,827 |
| Other liabilities | 13,008 | 15,430 |
| Total liabilities | 158,287 | 167,711 |
| Total stockholders' equity | 413,274 | 421,827 |
| Total liabilities and stockholders' equity | $ 571,561 | $ 589,538 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||
| (In thousands) | ||
| (Unaudited) | ||
| Nine Months Ended July 31, | ||
| 2013 | 2012 | |
| Operating activities: | ||
| Net loss | $ (10,497) | $ (17,502) |
| Adjustments to reconcile net loss to cash provided by operating activities: | ||
| Depreciation and amortization | 33,389 | 28,381 |
| Stock-based compensation | 3,856 | 3,180 |
| Deferred income tax benefit | (6,862) | (9,437) |
| Excess tax benefit from share-based compensation | (172) | (413) |
| Restructuring charges | — | 1,206 |
| Other, net | 698 | 2,133 |
| Changes in assets and liabilities, net of effects from acquisitions and dispositions: | ||
| Increase in accounts receivable | (9,642) | (7,114) |
| Decrease (increase) in inventory | 3,095 | (7,515) |
| Decrease (increase) in other current assets | 241 | (757) |
| Increase (decrease) in accounts payable | (2,990) | 10,242 |
| Increase (decrease) in accrued liabilities | (6,883) | 5,789 |
| Increase (decrease) in income taxes | 1,622 | (771) |
| Decrease in deferred pension and postretirement benefits | (1,011) | (1,572) |
| Increase in other long-term liabilities | 1,229 | 488 |
| Other, net | 504 | (351) |
| Cash provided by operating activities | 6,577 | 5,987 |
| Investing activities: | ||
| Acquisitions, net of cash acquired | (22,096) | — |
| Capital expenditures | (34,517) | (31,710) |
| Proceeds from disposition of capital assets | 335 | 36 |
| Proceeds from property insurance claim | — | 479 |
| Cash used for investing activities | (56,278) | (31,195) |
| Financing activities: | ||
| Borrowings under credit facility | 23,500 | — |
| Repayments of credit facility borrowings | (23,500) | — |
| Repayments of other long-term debt | (364) | (339) |
| Common stock dividends paid | (4,446) | (4,413) |
| Issuance of common stock | 909 | 2,501 |
| Excess tax benefit from share-based compensation | 172 | 413 |
| Debt issuance costs | (1,163) | — |
| Purchase of treasury stock | — | (1,284) |
| Cash used for financing activities | (4,892) | (3,122) |
| Effect of exchange rate changes on cash and equivalents | (589) | 1,003 |
| Decrease in cash and equivalents | (55,182) | (27,327) |
| Cash and equivalents at beginning of period | 71,255 | 89,619 |
| Cash and equivalents at end of period | $ 16,073 | $ 62,292 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||||
| SEGMENT INFORMATION | ||||
| (In thousands) | ||||
| (Unaudited) | ||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Net Sales: | ||||
| $ 156,823 | $ 134,060 | Engineered Products | $ 388,099 | $ 342,223 |
| 105,198 | 107,024 | Aluminum Sheet Products | 299,493 | 261,017 |
| 262,021 | 241,084 | Building Products | 687,592 | 603,240 |
| (2,847) | (3,179) | Eliminations | (10,247) | (9,312) |
| $ 259,174 | $ 237,905 | Net Sales | $ 677,345 | $ 593,928 |
| Operating Income (Loss) | ||||
| $ 18,561 | $ 13,063 | Engineered Products | $ 27,303 | $ 14,949 |
| (490) | (3,162) | Aluminum Sheet Products | (5,187) | (16,213) |
| 18,071 | 9,901 | Building Products | 22,116 | (1,264) |
| (10,955) | (8,449) | Corporate & Other | (38,058) | (24,667) |
| $ 7,116 | $ 1,452 | Operating Income (Loss) | $ (15,942) | $ (25,931) |
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| NON-GAAP FINANCIAL MEASURE DISCLOSURE | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| EBITDA is a non-GAAP financial measure that Quanex management uses to measure its operational performance and assist with financial decision-making. We believe this non-GAAP measure provides a consistent basis for comparison between periods, and will assist investors in understanding our financial performance, including under market conditions outlined in our forward-looking guidance. The company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP. | ||||||||
| Three Months Ended July 31, 2013 | Nine Months Ended July 31, 2013 | |||||||
| Engineered Products | Aluminum Sheet Products | Corporate & Other | Quanex | Engineered Products | Aluminum Sheet Products | Corporate & Other | Quanex | |
| $ 4,969 | Net income (loss) | $ (10,497) | ||||||
| 1,919 | Income tax expense (benefit) | (6,068) | ||||||
| 46 | Other, net | 128 | ||||||
| 182 | Interest expense | 495 | ||||||
| 18,561 | (490) | (10,955) | 7,116 | Operating income (loss) | 27,303 | (5,187) | (38,058) | (15,942) |
| 8,067 | 1,820 | 2,306 | 12,193 | Depreciation and amortization | 23,637 | 5,173 | 4,579 | 33,389 |
| 26,628 | 1,330 | (8,649) | 19,309 | EBITDA | 50,940 | (14) | (33,479) | 17,447 |
| Three Months Ended July 31, 2012 | Nine Months Ended July 31, 2012 | |||||||
| Engineered Products | Aluminum Sheet Products | Corporate & Other | Quanex | Engineered Products | Aluminum Sheet Products | Corporate & Other | Quanex | |
| $ 1,531 | Net income (loss) | $ (17,502) | ||||||
| (166) | Income tax expense (benefit) | (8,578) | ||||||
| (21) | Other, net | (199) | ||||||
| 108 | Interest expense | 348 | ||||||
| 13,063 | (3,162) | (8,449) | 1,452 | Operating income (loss) | 14,949 | (16,213) | (24,667) | (25,931) |
| 6,911 | 1,697 | 523 | 9,131 | Depreciation and amortization | 20,961 | 6,154 | 1,266 | 28,381 |
| 19,974 | (1,465) | (7,926) | 10,583 | EBITDA | 35,910 | (10,059) | (23,401) | 2,450 |
| Financial Statistics as of July 31, 2013 | ||||||||
| Book value per common share: | $11.15 | |||||||
| Total debt to capitalization: | 0.3% | |||||||
| Return on invested capital: | (2.2%) | |||||||
| Actual number of common shares outstanding: | 37,049,551 | |||||||
Financial Contact: Marty Ketelaar, 713-877-5402; Media Contact: Valerie Calvert, 713-877-5305
