Quanex Building Products Corporation Reports Third Quarter 2013 Results
September 04 2013 - 7:00AM
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
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 |
|
|
|
|
|
CONTACT: Financial Contact: Marty Ketelaar,
713-877-5402;
Media Contact: Valerie Calvert,
713-877-5305
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