2010 Earnings from Continuing
Operations were $0.64 per Diluted Share
Fourth Quarter Earnings from
Continuing Operations were $0.22 per Diluted Share
2010 Cash Provided by Operating
Activities from Continuing Operations of $90 million
$187 Million Cash and Equivalents at
Year End
Repurchased $2.1 million of Common
Stock in the Quarter
Quanex Building Products Corporation (NYSE:NX)
today released fiscal 2010 fourth quarter and annual results for
the period ending October 31, 2010. The company's 2010 sales and
operating income at its two business segments - Engineered Products
and Aluminum Sheet Products - were both substantially better than
2009 results. Engineered Products benefitted from new products,
customer-driven market share gains, and price realization. Aluminum
Sheet Products benefitted from a recovery in demand and market
share gains, an improved aluminum spread (sales less material
costs) and industry-wide capacity reductions. Quanex outperformed
its end markets (residential remodeling activity and housing
starts) in 2010.
In the fourth quarter 2010 versus the year ago quarter, Quanex's
sales were up, primarily at Aluminum Sheet Products, while its
operating income was down, primarily due to lower profitability at
Engineered Products, in part the result of higher material costs
and product mix issues, and higher corporate expenses.
2010 net sales were $798.3 million compared to $585.0 million a
year ago; fourth quarter net sales were $222.3 million compared to
$194.9 million in the year ago quarter. 2010 income from continuing
operations was $24.2 million versus a 2009 loss from continuing
operations of $136.1 million; fourth quarter 2010 income from
continuing operations was $8.3 million compared to fourth quarter
2009 income from continuing operations of $15.8 million.
Highlights
- 2010 diluted earnings per share from continuing operations were
$0.64 which included $0.06 of LIFO expense, compared to a 2009 loss
of $3.64 per diluted share from continuing operations which
included $3.79 of impairment charges and $0.13 of LIFO income.
- 2010 capital expenditures were $14.7 million compared to $15.7
million in 2009.
- 2010 cash provided by operating activities from continuing
operations was $89.6 million compared to $61.3 million in
2009.
- Cash and equivalents at year end totaled $187.2 million.
- Fourth quarter earnings per diluted share from continuing
operations were $0.22 which included $0.03 of LIFO expense,
compared to $0.42 in the year ago quarter which included $0.02 of
LIFO income.
- Fourth quarter operating margins at Engineered Products and
Aluminum Sheet Products were 11.1% and 8.5%, respectively.
- Repurchased 125,000 common shares ($2.1 million) in the fourth
quarter for a total of 250,000 common shares ($4.3 million) in
2010.
Segment Commentary
Engineered Products is focused on providing OEM
window and door customers with value-added fenestration components,
products, and systems. Key markets are residential remodeling
activity (approx. 60% of sales) and housing starts (approx. 40% of
sales).
Engineered Products
results (in millions) |
|
4th qtr 2010 |
4th qtr 2009 |
FY 2010 |
FY 2009 |
Net sales |
$101.8 |
$99.9 |
$361.1 |
$323.3 |
Operating income |
$11.3 |
$15.4 |
$34.3 |
$(140.4) (1) |
|
(1) Fiscal 2009 operating
income includes non-cash impairment charges of $162.2 million. |
"We outperformed the market for the year with sales for fiscal
2010 of $361 million, up 12% over last year, while our blended
market was relatively flat. For the fourth quarter, our market
drivers were estimated to be up 9% on a blended basis compared to a
year ago, most of that on the reported strength in R&R
activity, while Engineered Products sales were up 2% over the same
period," said David D. Petratis, president and chief executive
officer of Quanex Building Products. "On slightly higher
fourth quarter sales, operating income was down 27% over the year
ago quarter, which reflected product mix changes and higher
material costs at our sealant business. In response to these
higher costs, we announced a price increase effective November 15,
2010. Operating income was also impacted by costs associated
with building consolidations at our vinyl extrusion business, and
segment expenses associated with the launch of Nexus," Petratis
added.
"Our Nexus leadership team is now in place, including key sales
and marketing leaders. Twenty nine of our planned thirty one
professionals are in place, incentivized, and are working to drive
organic growth," said Petratis.
Aluminum Sheet Products is a leading provider
of common alloy aluminum sheet through its Nichols Aluminum
operation and primarily serves residential remodeling activity and
housing starts (approx. 70% of sales), and the transportation
(approx. 20% of sales) markets.
Aluminum Sheet Products
results (in millions) |
|
4th qtr 2010 |
4th qtr 2009 |
FY 2010 |
FY 2009 |
Net sales |
$123.3 |
$98.3 |
$449.5 |
$273.7 |
Operating income |
$10.5 |
$9.9 |
$30.2 |
$(26.4) (1) |
Shipped pounds |
88 |
78 |
323 |
223 |
|
(1) Fiscal 2009 operating
income includes non-cash impairment charges of $20.4 million. |
"We outperformed the market for the year at Nichols with
shipments for fiscal 2010 at 323 million pounds, up 45% compared to
last year while the industry was up 24% over the same
period. Shipments for our fourth quarter were 88 million
pounds, up 13% compared to the fourth quarter of 2009, so we were
sold out in the quarter. Comparable industry shipments were up
14% over the same period. Our sales in the quarter were $123
million, 25% higher than a year ago, due to better shipments and
higher average aluminum prices. Our aluminum spread (sales
less material costs) was flat compared to the year ago quarter but
up 7% from the sequential third quarter due to rising aluminum
prices and a modest improvement in scrap costs," Petratis said.
Cash Position
"We had a cash balance of $187 million and our total debt
outstanding stood at $1.9 million," Petratis continued. "Cash
provided by operating activities from continuing operations in 2010
was $90 million. Our $270 million revolving credit facility
remains untapped. Possible uses of cash will be to fund
organic growth initiatives, fund the common stock dividend, make
acquisitions, and repurchase outstanding shares. During the
quarter, we repurchased $2.1 million of common stock at an average
price of $16.84 per share."
2011 Business Outlook
"Relative to a U.S. residential building and construction market
that remained incredibly weak in 2010, Quanex turned in a solid
performance this year, earning an adjusted $0.70 per diluted share
(see reconciliation) compared to an adjusted $0.02 per diluted
share in 2009. We know programs like the expired $8,000 first
time homebuyers' tax credit, the $1,500 tax credit for energy
efficient windows, which expires at the end of the month, and
customer restocking in the first half of the year helped in 2010.
As we look to 2011, we do not expect another round of
government sponsored incentives, so the industry is on its own,"
said Petratis. "With no catalyst to provide a surge in market
activity, together with a large inventory of homes available for
sale, we expect a challenging environment in 2011, with sales flat
to slightly down from 2010, along with tough quarter to quarter
comparisons, particularly in the first half of the year."
"While we expect the company to outperform its end markets in
2011, our operating plan is built on market assumptions that new
construction window shipments will be flat to 2010, while R&R
window shipments will be down 2.5%. Our R&R window
estimate is significantly lower than the more commonly cited
forecasts that represent the broader R&R market, as we believe
R&R window activity has not recovered as quickly as the broader
market, coupled with some demand pull-forward effect of the $1,500
window tax credit that expires 12/31/10," Petratis said.
"Given our outlook, we expect Engineered Products in 2011 to
earn about $35 million of operating income, essentially flat to
2010. We expect to see slightly higher sales for the segment
in 2011 compared to 2010 because of ongoing R&R share gains by
our large window and door customers, and to a lesser extent, gains
we will make with national and regional customers through our
organic growth initiatives. However, along with slightly
better expected sales, we will see higher operating expenses as we
invest to expand our organic growth initiatives. Assuming a
reasonable recovery in the housing market, the potential of these
initiatives is expected to be about $150 million of annualized
sales in 5 years, and while they will likely be back end loaded,
would represent about 40% growth at today's sales. Annual
incremental operating expenses and capital expenditures necessary
to achieve this growth will be approximately $4 million and $3
million, respectively," said Petratis.
"At Aluminum Sheet Products, we expect to earn about $25 million
of operating income in 2011, compared to the $30 million we earned
in 2010. The $25 million is based primarily on lower sales as
we do not expect to see the level of restocking activity that was
present in the first half of 2010 repeated in the first half of
2011. Our guidance is based on ongoing capacity constraints in
the aluminum sheet market, a tight aluminum scrap market, and no
material change in our value-added product mix," Petratis said.
"Guidance excludes estimated 2011 corporate expenses of $26
million and any impact from LIFO. 2011 estimates for capital
expenditures and depreciation & amortization are $30 million
and $29 million, respectively. Corporate expenses and capital
expenditures reflect costs (about $2.5 million and $9 million,
respectively, in 2011) associated with the launch of our Enterprise
Resource Program, which when completed in 2014, will greatly
enhance and streamline our back office processes, improve data
collection and provide a foundation to support future growth
opportunities," concluded Petratis.
Nexus
Nexus is the company's long term organic growth program that is
focused on connecting its Engineered Products Group (EPG)
businesses: Mikron, Truseal and Homeshield. The sales and
marketing teams of the three businesses, each of which operated
independently in the past, have been combined to utilize their
capabilities to expand sales opportunities. Nexus activities
are focused on an existing customer base that traditionally had
been national window and door OEM's, and now includes more diverse
regional OEM opportunities. EPG engineering teams are also
working together to develop products and systems that provide
customers with the latest innovations in technology and energy
efficiency.
Other
The company reported fiscal fourth quarter 2010 blended market
demand (residential remodeling activity and housing starts) was up
an estimated 9% over the fiscal fourth quarter of 2009. The
company calculated the change using data from external sources:
Harvard University's Joint Center for Housing Studies for
residential remodeling activities and IHS Global Insight for
housing starts.
Non-GAAP Financial Measures
Income from Continuing Operations before LIFO and
Impairment Charge
Income from continuing operations before LIFO and impairment
charge is a non-GAAP financial measure. The Company believes
this non-GAAP financial measure provides a consistent basis for
comparison between periods and enhances the understanding of the
performance of its operations.
Set forth below is a reconciliation of reported income from
continuing operations and reported diluted earnings per share from
continuing operations to income from continuing operations before
LIFO and impairment charge and diluted earnings per share from
continuing operations before LIFO and impairment charge. 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
October 31 |
Twelve months ended
October 31, |
|
2010 |
2009 |
2010 |
2009 |
(in millions except diluted
EPS) |
Income |
Diluted EPS |
Income |
Diluted EPS |
Income |
Diluted EPS |
Income |
Diluted EPS |
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations, as reported |
$ 8.3 |
$ 0.22 |
$ 15.8 |
$ 0.42 |
$ 24.2 |
$ 0.64 |
$(136.1) |
$ (3.64) |
|
|
|
|
|
|
|
|
|
After tax Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
LIFO charge (income) |
$ 1.0 |
$ 0.03 |
$ (0.7) |
$ (0.02) |
$ 2.4 |
$ 0.06 |
$ (4.8) |
$ (0.13) |
Impairment of goodwill and
intangibles |
$ -- |
$ -- |
$ -- |
$ -- |
$ -- |
$ -- |
$ 141.4 |
$ 3.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations,
excluding special items |
$ 9.3 |
$ 0.25 |
$ 15.1 |
$ 0.40 |
$ 26.6 |
$ 0.70 |
$ 0.5 |
$ 0.02 |
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares outstanding (in thousands) |
37,667 |
|
37,698 |
|
37,671 |
|
37,335 |
Dividend Declared
The Board of Directors declared a quarterly cash dividend of
$0.04 per share on the company's common stock, payable December 30,
2010, to shareholders of record on December 15, 2010.
Corporate Profile
Quanex Building Products Corporation is an industry-leading
manufacturer of engineered materials, components and systems
serving the U.S. residential window and door markets. It is a
ROIC-driven company that grows shareholder returns through a
combination of organic growth via new products and new programs
like Nexus, and strategic acquisitions.
The Quanex Building Products Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=1117
Financial Statistics as of 10/31/10
Book value per common share: $11.77; Total debt to
capitalization: 0.4%; Return on invested capital: 5.4%; Actual
number of common shares outstanding: 37,510,815.
Definitions
Book value per common share – calculated as
total stockholders' equity as of balance sheet date divided by
actual number of common shares outstanding;
Total debt to capitalization – calculated as
the sum of both the current and long-term portion of debt, as of
balance sheet date, divided by the sum of both the current and
long-term portion of debt plus total stockholders' equity as of
balance sheet date;
Return on invested capital – calculated as the
total of the prior 12 months net income plus prior 12 months
after-tax interest expense and capitalized interest, the sum of
which is divided by the trailing five quarters average total debt
(current and long term) and total stockholders' equity.
Statements that use the words "expect," "should," "believe,"
"will," "might," or similar words reflecting future expectations or
beliefs are forward-looking statements. The statements found
above 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, and the availability and cost
of raw materials. For a more complete discussion of factors
that may affect the company's future performance, please refer to
the company's 10-K filing on December 18, 2009, under the
Securities Exchange Act of 1934, in particular the section titled,
"Private Securities Litigation Reform Act" contained therein.
For additional information, visit the
company's website at www.quanex.com
QUANEX BUILDING PRODUCTS
CORPORATION |
INDUSTRY SEGMENT
INFORMATION |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three months
ended October 31, |
|
Twelve months
ended October 31, |
2010 |
2009 |
|
2010 |
2009 |
|
|
Net Sales: |
|
|
$ 101,789 |
$ 99,900 |
Engineered Products |
$ 361,062 |
$ 323,319 |
123,278 |
98,309 |
Aluminum Sheet Products |
449,529 |
273,728 |
225,067 |
198,209 |
Building Products |
810,591 |
597,047 |
|
|
|
|
|
(2,764) |
(3,270) |
Eliminations |
(12,277) |
(12,037) |
|
|
|
|
|
$ 222,303 |
$194,939 |
Net Sales |
$ 798,314 |
$ 585,010 |
|
|
|
|
|
|
|
Operating Income (1): |
|
|
$ 11,310 |
$ 15,442 |
Engineered Products |
$ 34,278 |
$(140,378) |
10,490 |
9,879 |
Aluminum Sheet Products |
30,223 |
(26,416) |
21,800 |
25,321 |
Building Products |
64,501 |
(166,794) |
|
|
|
|
|
(8,228) |
(4,769) |
Corporate and Other (2) |
(27,204) |
(12,304) |
|
|
|
|
|
$ 13,572 |
$ 20,552 |
Operating Income
(Loss) |
$ 37,297 |
$(179,098) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 2009 Operating income
(loss) reflects non-cash impairment charges of $0 and $182,562 (in
thousands): |
|
|
Period Ending October 31,
2009 |
|
|
|
Three Months |
Twelve Months |
|
|
|
(In Thousands) |
|
Engineered Products |
|
$ -- |
$ (162,173) |
|
Aluminum Sheet Products |
|
-- |
(20,389) |
|
Total impairment
loss |
|
$ -- |
$ (182,562) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Corporate and Other for
the three and twelve months ended October 31, 2010 includes $1.6
million and $3.8 million of LIFO expense while the three and
twelve months ended October 31, 2009 includes $1.1 million
and $7.8 million, respectively of LIFO income. |
QUANEX BUILDING PRODUCTS
CORPORATION |
CONSOLIDATED STATEMENTS
OF INCOME |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three months
ended October 31, |
|
Twelve months
ended October 31, |
2010 |
2009 |
|
2010 |
2009 |
|
|
|
|
|
$ 222,303 |
$ 194,939 |
Net sales |
$ 798,314 |
$ 585,010 |
182,290 |
149,285 |
Cost of sales (exclusive of items shown
separately below) |
660,849 |
489,328 |
19,235 |
17,098 |
Selling, general and administrative |
71,954 |
59,765 |
-- |
-- |
Impairment of goodwill and intangibles |
-- |
182,562 |
7,206 |
8,004 |
Depreciation and amortization |
28,214 |
32,453 |
13,572 |
20,552 |
Operating income (loss) |
37,297 |
(179,098) |
(107) |
(92) |
Interest expense |
(440) |
(452) |
143 |
80 |
Other, net |
2,645 |
405 |
13,608 |
20,540 |
Income (loss) from continuing
operations before income taxes |
39,502 |
(179,145) |
(5,303) |
(4,722) |
Income tax benefit (expense) |
(15,301) |
43,066 |
8,305 |
15,818 |
Income (loss) from continuing
operations |
24,201 |
(136,079) |
5 |
(487) |
Income (loss) from discontinued operations,
net of taxes |
(1,103) |
(1,012) |
$ 8,310 |
$ 15,331 |
Net income (loss) |
$ 23,098 |
$ (137,091) |
|
|
|
|
|
|
|
Basic earnings per common
share: |
|
|
$ 0.22 |
$ 0.42 |
Earnings (loss) from continuing
operations |
$ 0.65 |
$ (3.64) |
$ -- |
$ (0.01) |
Income (loss) from discontinued
operations |
$ (0.03) |
$ (0.03) |
$ 0.22 |
$ 0.41 |
Basic earnings (loss) per common
share |
$ 0.62 |
$ (3.67) |
|
|
|
|
|
|
|
Diluted earnings per common
share: |
|
|
$ 0.22 |
$ 0.42 |
Earnings (loss) from continuing
operations |
$ 0.64 |
$ (3.64) |
$ -- |
$ (0.01) |
Income (loss) from discontinued
operations |
$ (0.03) |
$ (0.03) |
$ 0.22 |
$ 0.41 |
Diluted earnings (loss) per share |
$ 0.61 |
$ (3.67) |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
37,147 |
37,338 |
Basic |
37,220 |
37,335 |
37,667 |
37,698 |
Diluted |
37,671 |
37,335 |
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
October 31,
2010 |
|
October 31,
2009 |
|
Assets |
|
$ 187,178 |
Cash and equivalents |
$ 123,499 |
87,007 |
Accounts receivable, net |
80,171 |
45,200 |
Inventories |
46,515 |
10,547 |
Deferred income taxes |
20,611 |
8,229 |
Prepaid and other current assets |
5,177 |
462 |
Current assets of discontinued
operations |
232 |
338,623 |
Total current
assets |
276,205 |
135,517 |
Property, plant and equipment, net |
141,286 |
30,563 |
Deferred income taxes |
42,923 |
25,189 |
Goodwill |
25,189 |
44,668 |
Intangible assets, net |
47,359 |
16,690 |
Other assets |
9,114 |
-- |
Assets of discontinued operations |
1,524 |
$ 591,250 |
Total
assets |
$ 543,600 |
|
Liabilities and stockholders'
equity |
|
$ 70,986 |
Accounts payable |
$ 67,010 |
43,447 |
Accrued liabilities |
30,320 |
327 |
Current maturities of long-term debt |
323 |
30 |
Current liabilities of discontinued
operations |
9 |
114,790 |
Total current
liabilities |
97,662 |
1,616 |
Long-term debt |
1,943 |
3,667 |
Deferred pension and postretirement
benefits |
6,655 |
12,027 |
Non-current environmental reserves |
1,767 |
17,718 |
Other liabilities |
13,047 |
149,818 |
Total
liabilities |
121,074 |
441,432 |
Total
stockholders' equity |
422,526 |
$ 591,250 |
Total liabilities
and stockholders' equity |
$ 543,600 |
QUANEX BUILDING PRODUCTS
CORPORATION |
CONSOLIDATED STATEMENTS
OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
Twelve months
ended October 31, |
|
2010 |
2009 |
Operating activities: |
|
|
Net income (loss) |
$ 23,098 |
$ (137,091) |
(Income) loss from discontinued
operations |
1,103 |
1,012 |
Income (loss) from continuing
operations |
24,201 |
(136,079) |
Adjustments to reconcile net
income (loss) to cash provided by operating activities: |
|
|
Depreciation and
amortization |
28,283 |
32,523 |
Gain on bargain
purchase |
(1,272) |
-- |
Impairment of goodwill and
intangibles |
-- |
182,562 |
Deferred income taxes |
12,294 |
(43,609) |
Stock-based compensation |
4,456 |
3,429 |
Changes in assets and
liabilities, net of effects from acquisitions and
dispositions: |
|
|
Decrease (Increase) in accounts
receivable |
(6,365) |
18,636 |
Decrease (Increase) in
inventory |
3,142 |
16,503 |
Decrease (Increase) in other
current assets |
(510) |
(122) |
Increase (Decrease) in accounts
payable |
4,572 |
(12,306) |
Increase (Decrease) in accrued
liabilities |
9,509 |
(3,119) |
Increase (Decrease) in income
taxes payable |
9,599 |
(922) |
Increase (Decrease) in deferred
pension and postretirement benefits |
(1,846) |
(407) |
Other, net |
3,499 |
4,213 |
Cash provided by (used for)
operating activities from continuing operations |
89,562 |
61,302 |
Cash provided by (used for) operating
activities from discontinued operations |
(430) |
(811) |
Cash provided by (used for) operating
activities |
89,132 |
60,491 |
Investing activities: |
|
|
Acquisitions, net of cash
acquired |
(1,590) |
-- |
Capital expenditures |
(14,720) |
(15,696) |
Proceeds from property
insurance claim |
392 |
1,400 |
Other, net |
43 |
(57) |
Cash provided by (used for)
investing activities from continuing operations |
(15,875) |
(14,353) |
Cash provided by (used for)
investing activities from discontinued operations |
90 |
(457) |
Cash provided by (used for) investing
activities |
(15,785) |
(14,810) |
Financing activities: |
|
|
Repayments of long-term
debt |
(323) |
(363) |
Common stock dividends
paid |
(5,275) |
(4,519) |
Issuance of common stock from
stock option exercises, including related tax benefits |
502 |
-- |
Funding from Separation |
-- |
15,401 |
Purchase of treasury stock |
(4,274) |
-- |
Other, net |
(665) |
(876) |
Cash provided by (used for)
financing activities from continuing operations |
(10,035) |
9,643 |
Cash provided by (used for)
financing activities from discontinued operations |
665 |
865 |
Cash provided by (used for) financing
activities |
(9,370) |
10,508 |
Effect of exchange rate changes on cash and
equivalents |
27 |
36 |
LESS: (Increase) Decrease in cash and
equivalents from discontinued operations |
(325) |
403 |
Increase (Decrease) in cash and equivalents
from continuing operations |
63,679 |
56,628 |
Beginning of period cash and equivalents |
123,499 |
66,871 |
End of period cash and equivalents |
$ 187,178 |
$ 123,499 |
CONTACT: Quanex Building Products Corporation
Financial Contact:
Jeff Galow
713-877-5327
Media Contact:
Valerie Calvert
713-877-5305
Quanex (NYSE:NX)
Historical Stock Chart
From Jul 2024 to Aug 2024
Quanex (NYSE:NX)
Historical Stock Chart
From Aug 2023 to Aug 2024