Reported Net Loss of $8.1 million or $0.22 per
Diluted Share Nichols Aluminum Net Sales Increase 29%; Shipped
Volume Increases 33% Acquisition of Aluminite Completed December
31, 2012
Quanex Building Products Corporation (NYSE:NX), a
leading manufacturer of engineered materials, components and
systems serving domestic and international window and door OEMs
through its Engineered Products and Aluminum Sheet Products Groups,
today released fiscal 2013 first quarter results for the period
ended January 31, 2013.
Consolidated first quarter 2013 net sales were $185.7 million,
compared to $161.6 million a year ago. First quarter 2013 net loss
was $8.1 million, or $0.22 per diluted share compared to loss of
$6.7 million, or $0.18 per diluted share in the year ago quarter.
Consolidated EBITDA, a non-GAAP measure, was a loss of $4.0
million, compared to a loss of $1.6 million a year ago.
The increased first quarter net loss per share was due primarily
to higher corporate expenses from acquisition-related transaction
costs and ongoing ERP implementation costs. Quanex's two business
segments are highly cyclical with the building and construction
market and as a result, Quanex typically reports a loss during its
first quarter when building and construction activity is
reduced.
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.
EPG's first quarter 2013 net sales were $106.1 million compared
to $99.4 million a year ago. The 6.7% improvement was primarily
related to higher vinyl extrusion sales and $3.7 million of sales
from the acquisition of Aluminite. Excluding Aluminite, net sales
improved 3.1%.
EPG's first quarter 2013 operating income was $2.8 million
compared to $1.8 million a year ago. While higher than first
quarter 2012 results, EPG's profitability was negatively impacted
by lower solar edge tape sales and an unfavorable product mix.
Engineered Products
Group (in millions, except for spread) |
|
Q1
2013 |
Q1
2012 |
Net sales |
$106.1 |
$99.4 |
Operating income |
$2.8 |
$1.8 |
EBITDA |
$10.3 |
$8.8 |
Quanex believes there is value in measuring its sales
performance against industry-related metrics and compares EPG's
sales results to U.S. window shipments as reported by Ducker
Worldwide, a market intelligence firm. EPG sales for the 12 months
ended January 31, 2013 were up 11.4%. Domestic fenestration
sales, which is the most comparable sales figure to those reported
by Ducker, increased 7.9% from the previous 12 months. U.S. window
shipments as reported by Ducker increased 5.8% over the 12 months
ended December 31, 2012. U.S. window shipments to the residential
R&R market as reported by Ducker declined 2.7% for the 12 month
period ended December 31, 2012.
EPG's improved sales performance can be attributed to higher
vinyl extrusion sales due to increased demand from one of its top
customers and increased vinyl sales to new customers, partially
offset by pricing pressures driven by excess capacity in the vinyl
window profile business, reduced sales of solar product and
sluggish sales in the residential R&R markets.
Aluminum Sheet Products Group is a leading
provider of aluminum sheet through its Nichols Aluminum
operation. Key end markets are residential R&R, new home
construction and transportation.
Nichols Aluminum has made significant operational improvements
during the first quarter, including improvements in equipment
reliability and on-time delivery of aluminum sheet to
customers. During the fiscal first quarter of 2013, Nichols
took advantage of the planned shutdowns of facilities to accelerate
preventative maintenance procedures. Shipped pounds increased
nearly 33% from the year ago quarter due primarily to increased
equipment reliability resulting from a greater focus on and
investment in preventative maintenance, standardized work
procedures, improved labor efficiency and continued demand.
Nichols' profitability was negatively impacted by higher planned
repair and maintenance expense compared to the year ago
quarter. Additionally, the spread was down $0.04 per pound, or
7% from the year ago quarter, due to a larger reduction in aluminum
prices compared to the reduction in scrap aluminum prices.
Aluminum Sheet
Products (in millions, except for spread) |
|
Q1
2013 |
Q1
2012 |
Net sales |
$ 84.6 |
$ 65.7 |
Operating loss |
$ (4.2) |
$ (5.5) |
EBITDA |
$ (2.6) |
$ (3.1) |
Shipped pounds |
59 |
44 |
Spread per pound |
$ 0.44 |
$ 0.48 |
Nichols Aluminum's shipments for the 12 months ended January 31,
2013, decreased approximately one percent, primarily due to the
impact of the 2012 strike. Industry shipments as reported by the
Aluminum Association were up 7.7% over the same period.
Nichols Aluminum's new operating principles are focused on
significantly improving quality and on-time delivery through
process improvements and a proactive maintenance program that
requires additional capital investment. As a result, Nichols
Aluminum estimates annual capital expenditures in a range of $10
million to $13 million over the next several years.
Corporate and Other Items
Corporate expenses in the quarter were $12.3 million compared to
$7.6 million in the year ago quarter. The increase in
corporate expenses was primarily due to higher enterprise resource
planning (ERP) expenses of $1.3 million and transaction-related
expenses of $1.0 million. The remaining $2.4 million of items
negatively impacting corporate expense include higher workers
compensation, group medical and stock-based compensation
expense.
In 2011, Quanex launched a multi-year, company-wide program to
transform business processes, including the transition to a single
ERP software system, which is expected to improve accessibility and
consistency of information, enable standardized business
activities, help deliver business process improvements and support
business growth. To date, the company has spent $31.3
million. A key phase of the project went live during the
second quarter of fiscal 2013. Depreciation expense associated
with the ERP system is expected to be $2.1 million per quarter
until the completion of the next phase of the ERP rollout. The
spending run rate is expected to decrease throughout the remainder
of the project.
At quarter end, Quanex had a cash balance of $4.6 million and
total debt outstanding of $1.5 million. Cash used by operating
activities for first quarter 2013 was $30.3 million. The
decrease in cash balances was due to the $22.4 million acquisition
of Aluminite, $11.5 million in capital expenditures and $40.7
million of working capital commitments. As of January 31,
2013, the company had no borrowings under its revolving credit
facility, and available capacity due to the facility's EBITDA
covenant requirements was approximately $81 million. The company
currently has $10 million outstanding under its revolving credit
facility.
During the first quarter, Quanex renewed its revolving credit
facility. The renewed facility is a $150 million unsecured
revolving credit facility with a $100 million accordion feature
that expires in January 2018.
Aluminite Acquisition
On December 31, 2012, Quanex completed the acquisition of the
assets of Alumco, Inc. and its subsidiaries in a cash transaction
valued at $22.4 million. Alumco, Inc., which operated under
the Aluminite brand, markets and produces window and door screens
to original equipment manufacturers (OEM) of vinyl windows and
doors and had $47 million in sales during calendar year
2012. With nine production facilities strategically located
near its customer base, Aluminite has the capacity to produce
95,000 window screens and 17,500 door screens per day. Quanex
did not serve the screen market for vinyl windows prior to the
acquisition of Alumco, Inc. With the addition of Aluminite,
Quanex becomes one of the leading producers of window and door
screens in North America.
Business Outlook
Improved housing starts, driven primarily by multi-family unit
growth, stagnant residential R&R growth, high unemployment and
tight credit conditions will continue to present challenges to the
residential window market during 2013. Quanex expects calendar year
2013 U.S. window shipments to be approximately 42 million units, a
5% increase above 2012 levels but nearly 10% below Ducker's
forecasted shipments of 46 million. The company believes the
majority of the improvement in U.S. window shipments will come from
new construction and R&R window shipments will be relatively
flat in 2013 when compared to 2012 shipments. Quanex remains
very positive on the long-term growth prospects of its residential
and commercial markets and expects to continue to invest for its
future growth, through both organic growth initiatives and
acquisitions. For 2013, Quanex estimates capital expenditures
of $40 million (inclusive of the $10-$13 million guidance
previously given for Nichols Aluminum), depreciation and
amortization expense of $46 million (including $6.2 million of
ERP-related depreciation).
Dividend Declared
As previously announced, on February 28, 2013, the Board of
Directors declared a quarterly cash dividend of $0.04 per share on
the company's common stock, payable March 29, 2013, to shareholders
of record on March 15, 2013.
Financial Statistics as of 01/31/13
Book value per common share: $11.20; Total debt to
capitalization: 0.4%; Return on invested capital: (4.2%); Actual
number of common shares outstanding: 37,057,040.
Non-GAAP Financial Measures
EBITDA, diluted loss per share as adjusted and net loss as
adjusted are non-GAAP financial measures that Quanex management
uses to measure its operational performance and assist with
financial decision-making. We believe these non-GAAP measures
provide 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.
Non-GAAP
Reconciliations |
|
|
Q1 2013 |
Q1 2013 |
Q1 2012 |
Q1 2012 |
|
Segment |
$ EPS |
$ mil |
$ EPS |
$ mil |
Net loss as reported |
|
(0.22) |
(8.1) |
(0.18) |
(6.7) |
Benefit to EPS: |
|
|
|
|
|
Transaction related |
Corp. |
0.02 |
0.6 |
-- |
-- |
ERP implementation |
Corp. |
0.03 |
1.2 |
0.01 |
0.5 |
Net loss as adjusted |
|
(0.17) |
(6.3) |
(0.17) |
(6.2) |
|
|
|
|
|
|
|
Three
Months Ended January 31, 2013 |
(in thousands) |
Engineered
Products |
Aluminum Sheet
Products |
Corporate &
Other |
Quanex |
Net income (loss) |
- |
- |
- |
$ (8,118) |
Income tax expense (benefit) |
- |
- |
- |
(5,797) |
Other, net |
- |
- |
- |
91 |
Interest expense |
- |
- |
- |
139 |
|
|
|
|
|
Operating income (loss) |
2,833 |
(4,229) |
(12,289) |
(13,685) |
Depreciation and
amortization |
7,473 |
1,627 |
557 |
9,657 |
|
|
|
|
|
EBITDA |
$ 10,306 |
$ (2,602) |
$ (11,732) |
$ (4,028) |
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended January 31, 2012 |
(in thousands) |
Engineered
Products |
Aluminum Sheet
Products |
Corporate &
Other |
Quanex |
Net income (loss) |
- |
- |
- |
$ (6,748) |
Income tax expense (benefit) |
- |
- |
- |
(4,465) |
Other, net |
- |
- |
- |
(217) |
Interest expense |
- |
- |
- |
126 |
|
|
|
|
|
Operating income (loss) |
1,803 |
(5,518) |
(7,589) |
(11,304) |
Depreciation and
amortization |
7,012 |
2,460 |
217 |
9,689 |
|
|
|
|
|
EBITDA |
$ 8,815 |
$ (3,058) |
$ (7,372) |
$ (1,615) |
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;
EBITDA – calculated as earnings before
interest, taxes, depreciation and amortization and impairment
charges;
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.
The Quanex Building Products Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=1117
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, expectations relating to the consolidation of
the company's IG spacer manufacturing facilities, expectations
relating to 2013 expenditures, expenses and tax rates, 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 |
|
January
31, |
|
2013 |
2012 |
|
|
|
Net sales |
$ 185,713 |
$ 161,579 |
|
|
|
Cost of sales (exclusive of items shown
separately below) |
162,690 |
138,042 |
Selling, general and administrative |
27,051 |
25,152 |
Depreciation and amortization |
9,657 |
9,689 |
Operating income (loss) |
(13,685) |
(11,304) |
Interest expense |
(139) |
(126) |
Other, net |
(91) |
217 |
Income (loss) before income
taxes |
(13,915) |
(11,213) |
Income tax benefit (expense) |
5,797 |
4,465 |
Net income (loss) |
$ (8,118) |
$ (6,748) |
|
|
|
Earnings (loss) per common
share: |
|
|
Basic |
$ (0.22) |
$ (0.18) |
Diluted |
$ (0.22) |
$ (0.18) |
|
|
|
Weighted average common shares
outstanding: |
|
|
Basic |
36,809 |
36,547 |
Diluted |
36,809 |
36,547 |
|
|
|
Cash dividends per share |
$ 0.04 |
$ 0.04 |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME |
(In thousands) |
(Unaudited) |
|
|
|
Three Months
Ended |
|
January
31, |
|
2013 |
2012 |
Net income (loss) |
$ (8,118) |
$ (6,748) |
Other comprehensive income
(loss) - foreign currency translation adjustments (pretax) |
901 |
(1,971) |
Other comprehensive income
(loss) - foreign currency translation adjustments tax benefit |
125 |
137 |
Other comprehensive income (loss), net of
tax |
1,026 |
(1,834) |
Comprehensive income (loss) |
$ (7,092) |
$ (8,582) |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
January 31,
2013 |
|
October 31,
2012 |
|
Assets |
|
$ 4,558 |
Cash and equivalents |
$ 71,255 |
78,000 |
Accounts receivable, net |
85,644 |
84,563 |
Inventories |
65,904 |
26,865 |
Deferred income taxes |
20,439 |
8,461 |
Prepaid and other current
assets |
7,628 |
202,447 |
Total current assets |
250,870 |
178,788 |
Property, plant and equipment, net |
168,877 |
8,507 |
Deferred income taxes |
8,911 |
71,509 |
Goodwill |
68,331 |
85,763 |
Intangible assets, net |
78,380 |
15,286 |
Other assets |
14,169 |
$ 562,300 |
Total
assets |
$ 589,538 |
|
Liabilities and stockholders'
equity |
|
$ 72,054 |
Accounts payable |
$ 80,985 |
32,796 |
Accrued liabilities |
46,459 |
379 |
Current maturities of
long-term debt |
368 |
105,229 |
Total current
liabilities |
127,812 |
1,088 |
Long-term debt |
1,033 |
7,736 |
Deferred pension and postretirement
benefits |
6,873 |
6,790 |
Liability for uncertain tax positions |
6,736 |
9,480 |
Non-current environmental reserves |
9,827 |
16,877 |
Other liabilities |
15,430 |
147,200 |
Total liabilities |
167,711 |
415,100 |
Total stockholders'
equity |
421,827 |
$ 562,300 |
Total liabilities and
stockholders' equity |
$ 589,538 |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
January
31, |
|
2013 |
2012 |
Operating activities: |
|
|
Net income (loss) |
$ (8,118) |
$ (6,748) |
Adjustments to reconcile net
income (loss) to cash provided by (used for) operating
activities: |
|
|
Depreciation and
amortization |
9,690 |
9,706 |
Restructuring charges |
— |
2,115 |
Deferred income taxes |
(6,499) |
(5,457) |
Stock-based compensation |
2,067 |
1,602 |
|
|
|
Changes in assets and
liabilities, net of effects from acquisitions and
dispositions: |
|
|
Decrease (increase) in accounts
and notes receivable |
10,862 |
21,281 |
Decrease (increase) in
inventory |
(13,417) |
(8,517) |
Decrease (increase) in other
current assets |
(291) |
(1,046) |
Increase (decrease) in accounts
payable |
(11,496) |
(9,582) |
Increase (decrease) in accrued
liabilities |
(15,695) |
(4,482) |
Increase (decrease) in income
taxes |
487 |
346 |
Increase (decrease) in deferred
pension and postretirement benefits |
862 |
967 |
Other, net |
1,208 |
1,888 |
Cash provided by (used for) operating
activities |
(30,340) |
2,073 |
Investing activities: |
|
|
Acquisitions, net of cash
acquired |
(22,449) |
— |
Capital expenditures |
(11,500) |
(8,024) |
Other, net |
16 |
— |
Cash provided by (used for) investing
activities |
(33,933) |
(8,024) |
Financing activities: |
|
|
Repayments of long-term
debt |
(25) |
(20) |
Common stock dividends
paid |
(1,482) |
(1,470) |
Purchase of treasury stock |
— |
(1,284) |
Issuance of common stock from
stock option exercises, including related tax benefits |
677 |
344 |
Debt issuance costs |
(1,070) |
— |
Cash provided by (used for) financing
activities |
(1,900) |
(2,430) |
Effect of exchange rate changes
on cash and equivalents |
(524) |
484 |
Increase (decrease) in cash and
equivalents |
(66,697) |
(7,897) |
Cash and equivalents at beginning of
period |
71,255 |
89,619 |
Cash and equivalents at end of period |
$ 4,558 |
$ 81,722 |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
INDUSTRY SEGMENT
INFORMATION |
(In thousands) |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
January
31, |
|
2013 |
2012 |
Net Sales: |
|
|
Engineered Products |
$ 106,119 |
$ 99,393 |
Aluminum Sheet Products |
84,603 |
65,700 |
Building Products |
190,722 |
165,093 |
Eliminations |
(5,009) |
(3,514) |
Net Sales |
$ 185,713 |
$ 161,579 |
|
|
|
Operating Income
(Loss): |
|
|
Engineered Products |
$ 2,833 |
$ 1,803 |
Aluminum Sheet Products |
(4,229) |
(5,518) |
Building Products |
(1,396) |
(3,715) |
Corporate and Other |
(12,289) |
(7,589) |
Operating Income (Loss) |
$ (13,685) |
$ (11,304) |
CONTACT: Financial Contact: Marty Ketelaar, 713-877-5402;
Media Contact: Valerie Calvert, 713-877-5305
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