Net Loss of $7.3 million or $0.20 per Diluted
Share
EPG Net Sales Increase 15%; Operating Income
Improves to $5.9 million
Nichols Aluminum Net Sales Increase 24%; Shipped
Volume Increases 27%
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 second quarter results for the period
ended April 30, 2013.
Consolidated second quarter 2013 net sales were $232.5 million,
compared to $194.4 million a year ago. Second quarter 2013 net loss
was $7.3 million, or $0.20 per diluted share compared to net loss
of $12.3 million, or $0.34 per diluted share in the year ago
quarter. Consolidated EBITDA, a non-GAAP measure, was $2.2 million,
compared to a loss of $6.5 million a year ago.
Fiscal year-to-date consolidated 2013 net sales were $418.2
million, compared to $356.0 million a year ago. Year-to-date
consolidated net loss was $15.5 million compared to a loss of $19.0
million a year ago, which included $9 million of strike-related
costs at Nichols Aluminum. Consolidated fiscal year-to-date EBITDA,
a non-GAAP measure, was a loss of $1.9 million, compared to a loss
of $8.1 million a year ago.
The 2013 second quarter and year-to-date results, when measured
against comparable prior year periods, benefitted from the
elimination of strike-related costs at Nichols Aluminum. Adjusting
for strike-related costs, second quarter and year-to-date results
were negatively impacted by lower spread at Nichols resulting from
lower aluminum prices and higher corporate expenses from Enterprise
Resource Planning (ERP) implementation costs.
Quanex's two business segments are highly cyclical with the
building and construction market and the impact of adverse winter
weather. As a result, Quanex typically reports lower revenue and
operating income results during the first half of its fiscal year
when building and construction activity is reduced compared to the
second half of its fiscal year.
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 second quarter 2013 net sales were $125.2 million compared
to $108.8 million a year ago. The 15.1% improvement was primarily
related to the acquisition of Aluminite as well as higher sales
across the segment's products. Aluminite contributed 11.4% of the
improvement to net sales.
EPG's second quarter 2013 EBITDA was $14.0 million compared to
$7.1 million a year ago, driven by the benefits from last year's
insulating glass spacer facility consolidation as well as higher
sales results. This was partially offset by pricing concessions and
higher material costs. EPG's second quarter 2012 results were
negatively impacted by $3.7 million of IG facility consolidation
expenses.
Engineered Products
Group (in millions) |
|
Q2
2013 |
Q2
2012 |
YTD
2013 |
YTD
2012 |
Net sales |
125.2 |
108.8 |
231.3 |
208.1 |
Operating income |
5.9 |
0.1 |
8.7 |
1.9 |
EBITDA |
14.0 |
7.1 |
24.3 |
15.9 |
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. Global EPG sales for the 12
months ended April 30, 2013 were up 8.6%. EPG's North American
domestic fenestration sales, which is the most comparable sales
figure to those reported by Ducker, increased 9.1% (4.9% excluding
Aluminite) from the previous 12 months. U.S. window shipments as
reported by Ducker increased 7.5% over the 12 months ended March
31, 2013, driven by a 27.7% increase in new construction units.
U.S. window shipments to the residential R&R market as reported
by Ducker declined 2.0% for the 12 month period ended March 31,
2013. A greater portion of EPG's sales are tied to R&R
versus new construction.
EPG experienced above market growth for the period, although
they are being negatively impacted by lower vinyl pricing, sales of
low performance windows and reduced volumes from a few national
accounts due to seasonality and 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.
Nichols Aluminum continued to make operational improvements
during the second quarter, including equipment reliability and
on-time delivery to customers. Shipped pounds increased more
than 27% from the year ago quarter due primarily to increased
equipment reliability, standardized work procedures and improved
labor efficiency.
Nichols second quarter 2013 EBITDA was $1.3 million compared to
a loss of $5.5 million a year ago. The improved results were
primarily due to the non-recurrence of 2012 strike-related
costs. Nichols' 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 $0.05 per pound to $0.42 per pound compared to $0.37 per
pound in the year ago quarter. The year ago quarter spread
included $4.3 million, or $0.06 per pound of strike-related costs.
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.
Aluminum Sheet
Products (in millions, except for spread) |
|
Q2 2013 |
Q2 2012 |
YTD 2013 |
YTD 2012 |
Net sales |
109.7 |
88.3 |
194.3 |
154 |
Operating loss |
(0.5) |
(7.5) |
(4.7) |
(13.1) |
EBITDA |
1.3 |
(5.5) |
(1.3) |
(8.6) |
Shipped pounds |
78 |
61 |
137 |
105 |
Spread per pound |
0.42 |
0.37 |
|
|
Nichols Aluminum's shipments for the 12 months ended April 30,
2013, increased 13.2% primarily due to the operational improvements
previously mentioned, as well as the impact of the strike on 2012
sales volumes. Industry shipments as reported by the Aluminum
Association increased 3.1% 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. In May
2013, Nichols completed the installation of a new paint oven in its
Decatur, Alabama, facility at a cost of approximately $9.0
million. The installation is complete and the oven has been
returned to operation. The new paint oven should significantly
improve product quality and on-time delivery of painted aluminum
sheet product to customers and allow Nichols to compete in the
higher margin painted flat rolled aluminum sheet market.
Corporate and Other Items
Corporate expenses in the quarter were $14.8 million compared to
$8.7 million in the year ago quarter. The increase in
corporate expenses was primarily due to higher ERP expenses of $3.6
million, (including $1.1 million of depreciation), $1 million of
higher information technology and infrastructure-related costs and
$0.9 million of project-related costs. The remaining $0.6
million of higher expense is largely due to stock based
compensation and workers compensation costs.
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 $37.8
million. The initial 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.
ERP-related costs are expected to be lower during the third
quarter of 2013, with a further decline taking place during the
fourth quarter of 2013.
At quarter end, Quanex had total cash of $9.6 million and total
debt outstanding of $11.4 million. Cash used by operating
activities for the first six months of 2013 was $20.8
million. The use of cash from operating activities was
primarily due to the reported net loss and working capital
needs. As of April 30, 2013, the company had $10 million in
borrowings under its revolving credit facility, and available
capacity due to the facility's EBITDA covenant requirements was
approximately $59.4 million.
Business Outlook and Second Half Guidance
The key economic indicators that drive our results are mixed:
new housing starts have increased, with growth currently driven
primarily by multi-family units, but the R&R window market
remains challenging. Quanex is pleased to see a rebound in new
construction and believes that growth will continue. New home
construction, the R&R market and prime window demand remain low
when compared to historical growth figures, and present a
challenging environment, as does unemployment and tight credit
conditions. Additionally, increased global supply of aluminum
product, coupled with tight regional aluminum scrap supply,
continue to create a challenging spread environment for Nichols
Aluminum. Quanex expects calendar year 2013 U.S. window
shipments to be approximately 42 million units, a 5% increase above
2012 levels but nearly 12% below Ducker's current forecasted
shipments of 47 million. The company believes the majority of
the improvement in U.S. window shipments will come from new
construction (primarily multi-family units, where Quanex has less
exposure) and R&R window shipments will be relatively flat in
2013 when compared to 2012 shipments.
With the spring building season underway, EPG is expected to
report net sales during the second half of 2013 of about $315
million and operating income of about $35-$38 million. EPG's
depreciation and amortization for the second half of 2013 is
expected to be about $16 million.
For the second half of 2013, Nichols Aluminum is expected to
ship about 160 million pounds at an estimated spread of $0.41 per
pound, and generate operating income of about $3.5
million. Nichols' depreciation and amortization for the second
half of 2013 is expected to be $3 million.
Corporate expenses during the second half of 2013 are expected
to total $24 million, including $4.8 million of depreciation and
amortization expense. Total second half 2013 corporate
expenses include ERP-related expense of $1.5 million and
ERP-related depreciation and amortization of $4.3 million.
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 through both organic growth initiatives
and acquisitions.
Dividend Declared
On June 6, 2013, the Board of Directors declared a quarterly
cash dividend of $0.04 per share on the company's common stock,
payable June 28, 2013, to shareholders of record on June 17,
2013.
Financial Statistics as of 04/30/13
Book value per common share: $10.98; Total debt to
capitalization: 2.7%;
Return on invested capital: (3.0%); Actual number of common
shares outstanding: 37,062,915.
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.
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, expectations relating
EPG and Nichols Aluminum financial performance for the second half
of 2013, expectations relating to 2013 expenditures, expenses and
tax rates, expectations relating to the company's ERP
implementation, 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 |
|
Six Months
Ended |
April
30, |
|
April
30, |
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
$232,458 |
$194,444 |
Net sales |
$418,171 |
$356,023 |
198,963 |
171,837 |
Cost of sales (exclusive of items shown
separately below) |
361,653 |
309,879 |
31,329 |
29,125 |
Selling, general and administrative |
58,380 |
54,277 |
11,539 |
9,561 |
Depreciation and amortization |
21,196 |
19,250 |
(9,373) |
(16,079) |
Operating income
(loss) |
(23,058) |
(27,383) |
(174) |
(114) |
Interest expense |
(313) |
(240) |
9 |
(39) |
Other, net |
(82) |
178 |
(9,538) |
(16,232) |
Income (loss) before income
taxes |
(23,453) |
(27,445) |
2,190 |
3,947 |
Income tax benefit (expense) |
7,987 |
8,412 |
$(7,348) |
$(12,285) |
Net income (loss) |
$(15,466) |
$(19,033) |
|
|
|
|
|
|
|
Earnings (loss) per common
share: |
|
|
$(0.20) |
$(0.34) |
Basic |
$(0.42) |
$(0.52) |
$(0.20) |
$(0.34) |
Diluted |
$(0.42) |
$(0.52) |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
36,850 |
36,567 |
Basic |
36,830 |
36,557 |
36,850 |
36,567 |
Diluted |
36,830 |
36,557 |
|
|
|
|
|
$0.04 |
$0.04 |
Cash dividends per share |
$0.08 |
$0.08 |
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME |
(In thousands) |
(Unaudited) |
|
Three Months
Ended |
|
Six Months
Ended |
April
30, |
|
April
30, |
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
$(7,348) |
$(12,285) |
Net income (loss) |
$(15,466) |
$(19,033) |
|
|
Other comprehensive income (loss): |
|
|
(1,227) |
876 |
Foreign currency translation adjustments
(pretax) |
(326) |
(1,094) |
148 |
(203) |
Foreign currency translation adjustments
tax benefit |
273 |
(66) |
(1,079) |
673 |
Other comprehensive income (loss), net of
tax |
(53) |
(1,160) |
$(8,427) |
$(11,612) |
Comprehensive income (loss) |
$(15,519) |
$(20,193) |
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
April 30,
2013 |
|
October 31,
2012 |
|
Assets |
|
$9,628 |
Cash and equivalents |
$71,255 |
95,584 |
Accounts receivable, net |
85,644 |
77,208 |
Inventories, net |
65,904 |
27,163 |
Deferred income taxes |
20,439 |
5,576 |
Prepaid and other current
assets |
7,628 |
215,159 |
Total current
assets |
250,870 |
179,041 |
Property, plant and equipment, net |
168,877 |
10,808 |
Deferred income taxes |
8,911 |
71,003 |
Goodwill |
68,331 |
82,970 |
Intangible assets, net |
78,380 |
15,677 |
Other assets |
14,169 |
$574,658 |
Total
assets |
$589,538 |
|
Liabilities and stockholders'
equity |
|
$77,628 |
Accounts payable |
$80,985 |
39,980 |
Accrued liabilities |
46,459 |
278 |
Current maturities of
long-term debt |
368 |
117,886 |
Total current
liabilities |
127,812 |
11,072 |
Long-term debt |
1,033 |
5,398 |
Deferred pension and postretirement
benefits |
6,873 |
6,844 |
Liability for uncertain tax
positions |
6,736 |
9,230 |
Non-current environmental reserves |
9,827 |
17,154 |
Other liabilities |
15,430 |
167,584 |
Total liabilities |
167,711 |
407,074 |
Total
stockholders' equity |
421,827 |
$574,658 |
Total liabilities
and stockholders' equity |
$589,538 |
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
Six Months
Ended |
|
April
30, |
|
2013 |
2012 |
Operating activities: |
|
|
Net income (loss) |
$(15,466) |
$(19,033) |
Adjustments to reconcile net income
(loss) to cash provided by (used for) operating
activities: |
|
|
Depreciation and amortization |
21,324 |
19,285 |
Restructuring charges |
— |
2,759 |
Deferred income taxes |
(8,740) |
(10,064) |
Stock-based compensation |
3,565 |
2,879 |
Changes in assets and liabilities, net of
effects from acquisitions and dispositions: |
|
|
Decrease (increase) in accounts and notes
receivable |
(6,380) |
111 |
Decrease (increase) in inventory |
(6,267) |
(9,658) |
Decrease (increase) in other current
assets |
1,046 |
(705) |
Increase (decrease) in accounts
payable |
(4,236) |
3,493 |
Increase (decrease) in accrued
liabilities |
(7,039) |
(883) |
Increase (decrease) in income taxes |
1,766 |
425 |
Increase (decrease) in deferred pension
and postretirement benefits |
(1,475) |
(2,453) |
Other, net |
1,119 |
2,054 |
Cash provided by (used for) operating
activities |
(20,783) |
(11,790) |
Investing activities: |
|
|
Acquisitions, net of cash acquired |
(22,096) |
— |
Capital expenditures |
(24,983) |
(21,311) |
Other, net |
22 |
21 |
Cash provided by (used for) investing
activities |
(47,057) |
(21,290) |
Financing activities: |
|
|
Borrowings under credit facility |
14,500 |
— |
Repayments of credit facility
borrowings |
(4,500) |
— |
Repayments of long-term debt |
(142) |
(131) |
Common stock dividends paid |
(2,964) |
(2,939) |
Purchase of treasury stock |
— |
(1,284) |
Issuance of common stock from stock
option exercises, including related tax benefits |
865 |
1,427 |
Debt issuance costs |
(1,163) |
— |
Cash provided by (used for) financing
activities |
6,596 |
(2,927) |
Effect of exchange rate changes on cash
and equivalents |
(383) |
533 |
Increase (decrease) in cash and
equivalents |
(61,627) |
(35,474) |
|
|
|
Cash and equivalents at beginning of
period |
71,255 |
89,619 |
Cash and equivalents at end of period |
$9,628 |
$54,145 |
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
INDUSTRY SEGMENT
INFORMATION |
(In thousands) |
(Unaudited) |
|
Three Months
Ended |
|
Six Months
Ended |
April
30, |
|
April
30, |
2013 |
2012 |
|
2013 |
2012 |
|
|
Net Sales: |
|
|
$125,158 |
$108,770 |
Engineered Products |
$231,277 |
$208,163 |
109,691 |
88,293 |
Aluminum Sheet Products |
194,294 |
153,993 |
234,849 |
197,063 |
Building Products |
425,571 |
362,156 |
|
|
|
|
|
(2,391) |
(2,619) |
Eliminations |
(7,400) |
(6,133) |
|
|
|
|
|
$232,458 |
$194,444 |
Net Sales |
$418,171 |
$356,023 |
|
|
|
|
|
|
|
Operating Income
(Loss): |
|
|
$5,908 |
$83 |
Engineered Products |
$8,741 |
$1,887 |
(468) |
(7,533) |
Aluminum Sheet Products |
(4,698) |
(13,051) |
5,440 |
(7,450) |
Building Products |
4,043 |
(11,164) |
|
|
|
|
|
(14,813) |
(8,629) |
Corporate and Other |
(27,101) |
(16,219) |
|
|
|
|
|
$(9,373) |
$(16,079) |
Operating Income (Loss) |
$(23,058) |
$(27,383) |
|
|
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 |
|
Six Months
Ended |
April 30,
2013 |
|
April 30,
2013 |
|
Aluminum |
|
|
|
|
Aluminum |
|
|
Engineered |
Sheet |
Corporate |
|
|
Engineered |
Sheet |
Corporate |
|
Products |
Products |
& Other |
Quanex |
|
Products |
Products |
& Other |
Quanex |
|
|
|
|
|
|
|
|
|
|
|
|
$(7,348) |
Net income (loss) |
|
|
|
$(15,466) |
|
|
|
(2,190) |
Income tax expense (benefit) |
|
|
|
(7,987) |
|
|
|
(9) |
Other, net |
|
|
|
82 |
|
|
|
174 |
Interest Expense |
|
|
|
313 |
$5,908 |
(468) |
(14,813) |
(9,373) |
Operating income
(loss) |
$8,741 |
(4,698) |
(27,101) |
(23,058) |
8,097 |
1,727 |
1,715 |
11,539 |
Depreciation and amortization |
15,570 |
3,354 |
2,272 |
21,196 |
14,005 |
1,259 |
(13,098) |
2,166 |
EBITDA |
24,311 |
(1,344) |
(24,829) |
(1,862) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
April 30,
2012 |
|
April 30,
2012 |
|
Aluminum |
|
|
|
|
Aluminum |
|
|
Engineered |
Sheet |
Corporate |
|
|
Engineered |
Sheet |
Corporate |
|
Products |
Products |
& Other |
Quanex |
|
Products |
Products |
& Other |
Quanex |
|
|
|
|
|
|
|
|
|
|
|
|
$(12,285) |
Net income (loss) |
|
|
|
$(19,033) |
|
|
|
(3,947) |
Income tax expense (benefit) |
|
|
|
(8,412) |
|
|
|
39 |
Other, net |
|
|
|
(178) |
|
|
|
114 |
Interest Expense |
|
|
|
240 |
$83 |
(7,533) |
(8,629) |
(16,079) |
Operating income (loss) |
$1,887 |
(13,051) |
(16,219) |
(27,383) |
7,038 |
1,997 |
526 |
9,561 |
Depreciation and amortization |
14,050 |
4,457 |
743 |
19,250 |
7,121 |
(5,536) |
(8,103) |
(6,518) |
EBITDA |
15,937 |
(8,594) |
(15,476) |
(8,133) |
CONTACT: Financial Contact:
Marty Ketelaar, 713-877-5402
Media Contact:
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Quanex (NYSE:NX)
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From Jun 2024 to Jul 2024
Quanex (NYSE:NX)
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From Jul 2023 to Jul 2024