Quanex Building Products Reports First Quarter 2014 Results
March 06 2014 - 8:00AM
- Record first quarter EPG net sales increased 19% to $126
million vs. $106 million in Q1 2013
- First quarter EBITDA of $5.7 million vs. loss of $4.0 million
in Q1 2013
- First quarter net loss of $3.9 million vs. net loss of $8.1
million in Q1 2013
Quanex Building Products Corporation (NYSE:NX), a
leading supplier of window and door components, today released
results for its first fiscal quarter ended January 31, 2014.
The Engineered Products Group (EPG) reported record first
quarter revenues driven by double-digit year over year growth
rates. "The momentum that we started to see in the fourth quarter
of last year carried over into what is historically our weakest
quarter," Chairman, President and CEO Bill Griffiths said.
"Including Aluminite on a pro-forma basis, we have seen average
growth rates of 13.4% for the last two quarters. While some of
this is attributable to winter inventory builds at our customer's
facilities, it is further evidence of the optimism around a
continued recovery in 2014."
Engineered Products Group
EPG reported first quarter 2014 net sales of $126 million, an
increase of 19.1% compared to $106 million in the first quarter of
2013. First quarter 2014 operating income was $7.5 million
compared to $2.8 million in the first quarter of 2013. EPG's
first quarter 2014 EBITDA was $15.1 million compared to $10.3
million in the first quarter of 2013.
Preliminary U.S. window shipments as reported by Ducker
Worldwide (Ducker), a market intelligence firm, increased 10.1% for
the 12 months ended December 31, 2013. EPG's pro-forma North
American fenestration sales for the 12 month period ended January
31, 2014, the most comparable sales figure to those reported by
Ducker, increased 8.8% over the prior year. Ducker is
forecasting a 12% increase in U.S. window shipments in calendar
2014.
Aluminum Sheet Products Group
(Nichols)
The Aluminum Sheet Products Group reported first quarter 2014
net sales of $80 million, a decrease of 6% compared to $85 million
in the first quarter of 2013. Despite a $5 million reduction
in net sales, the operating loss remained flat as a result of
continuing operating improvements by the Nichols
team. Included in the first quarter 2014 loss is $0.5 million
related to the Decatur Alabama cold mill repair project.
On February 10, 2014, Quanex announced the sale of Nichols to
Aleris for $110 million in an all-cash transaction. The
transaction is expected to close on March 31, 2014.
Corporate and Other Items
First quarter 2014 corporate costs were $8.4 million compared to
$12.3 million in the year ago first quarter. First quarter
2014 corporate expenses included $0.9 million in transaction costs,
deferred compensation expense and external audit fees.
First quarter 2014 cash balances totaled $26 million. For
the quarter, cash used by operating activities was $11.5 million
compared to $30.3 million in the year ago first quarter.
There were no outstanding borrowings against the revolving
credit facility.
Additional information related to first quarter 2014 results,
including a reconciliation of EBITDA (defined as net income or loss
before interest, taxes, depreciation and amortization, impairment
and other, net) to its most comparable US GAAP figure, can be found
in the supplemental schedules accompanying this press release.
Conference Call Information
Quanex will host its conference call today, March 6, 2014 at
11:00 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 Statements
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 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 Annual Report on
Form 10-K for the fiscal year ended October 31, 2013, the section
titled, "Cautionary Note Regarding Forward-Looking Statements"
contained therein.
For additional information, please visit
www.quanex.com.
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS) |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
Three Months
Ended January 31, |
|
2014 |
2013 |
|
|
|
Net sales |
$ 202,362 |
$ 185,713 |
Cost of sales (excluding depreciation and
amortization) |
171,904 |
162,690 |
Selling, general and administrative |
24,767 |
27,051 |
Depreciation and amortization |
10,294 |
9,657 |
Asset impairment charges |
510 |
— |
Operating loss |
(5,113) |
(13,685) |
Interest expense |
(158) |
(139) |
Other, net |
96 |
(91) |
Loss before income
taxes |
(5,175) |
(13,915) |
Income tax benefit |
1,275 |
5,797 |
Net loss |
$ (3,900) |
$ (8,118) |
|
|
|
Loss per common share: |
|
|
Basic |
$ (0.11) |
$ (0.22) |
Diluted |
$ (0.11) |
$ (0.22) |
|
|
|
Weighted average common shares
outstanding: |
|
|
Basic |
37,003 |
36,809 |
Diluted |
37,003 |
36,809 |
|
|
|
Cash dividends per share |
$ 0.04 |
$ 0.04 |
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
January 31,
2014 |
October 31, 2013 |
Assets |
|
|
Cash and cash equivalents |
$ 25,807 |
$ 49,736 |
Accounts receivable, net |
72,459 |
98,833 |
Inventories, net |
74,498 |
58,316 |
Deferred income taxes |
24,769 |
22,786 |
Prepaid and other current assets |
7,352 |
6,612 |
Total current assets |
204,885 |
236,283 |
Property, plant and equipment, net |
160,531 |
157,219 |
Deferred income taxes |
13,277 |
13,444 |
Goodwill |
71,838 |
71,866 |
Intangible assets, net |
76,969 |
78,962 |
Other assets |
13,543 |
14,041 |
Total
assets |
$ 541,043 |
$ 571,815 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Accounts payable |
$ 67,278 |
$ 76,900 |
Accrued liabilities |
29,679 |
44,785 |
Current maturities of long-term debt |
187 |
183 |
Total current liabilities |
97,144 |
121,868 |
Long-term debt |
721 |
752 |
Deferred pension and postretirement
benefits |
4,506 |
3,712 |
Liability for uncertain tax
positions |
5,435 |
5,396 |
Non-current environmental reserves |
8,862 |
9,255 |
Other liabilities |
12,114 |
14,638 |
Total liabilities |
128,782 |
155,621 |
Total stockholders' equity |
412,261 |
416,194 |
Total liabilities
and stockholders' equity |
$ 541,043 |
$ 571,815 |
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
Three Months
Ended January 31, |
|
2014 |
2013 |
Operating activities: |
|
|
Net loss |
$ (3,900) |
$ (8,118) |
Adjustments to reconcile net loss to cash
used for operating activities: |
|
|
Depreciation and amortization |
10,294 |
9,657 |
Stock-based compensation |
1,090 |
1,709 |
Deferred income tax benefit |
(1,885) |
(6,499) |
Excess tax benefit from share-based
compensation |
(1) |
(169) |
Asset impairment charges |
510 |
-- |
Other, net |
728 |
482 |
Changes in assets and liabilities, net of
effects from acquisitions and dispositions: |
|
|
Decrease in accounts receivable |
26,654 |
10,862 |
Increase in inventory |
(15,998) |
(13,417) |
Increase in other current assets |
(594) |
(291) |
Decrease in accounts payable |
(10,894) |
(11,496) |
Decrease in accrued liabilities |
(15,027) |
(15,593) |
Increase in income taxes |
26 |
487 |
Increase in deferred pension and
postretirement benefits |
915 |
862 |
(Decrease) increase in other long-term
liabilities |
(1,087) |
295 |
Other, net |
(2,315) |
889 |
Cash used for operating activities |
(11,484) |
(30,340) |
Investing activities: |
|
|
Acquisitions, net of cash acquired |
(5,161) |
(22,449) |
Capital expenditures |
(6,748) |
(11,500) |
Proceeds from property insurance
claim |
400 |
— |
Proceeds from disposition of capital
assets |
303 |
16 |
Cash used for investing activities |
(11,206) |
(33,933) |
Financing activities: |
|
|
Repayments of other long-term debt |
(26) |
(25) |
Common stock dividends paid |
(1,490) |
(1,482) |
Issuance of common stock |
331 |
508 |
Excess tax benefit from share-based
compensation |
1 |
169 |
Debt issuance costs |
— |
(1,070) |
Cash used for financing activities |
(1,184) |
(1,900) |
|
|
|
Effect of exchange rate changes on cash
and cash equivalents |
(55) |
(524) |
|
|
|
Decrease in cash and cash equivalents |
(23,929) |
(66,697) |
Cash and cash equivalents at beginning of
period |
49,736 |
71,255 |
Cash and cash equivalents at end of
period |
$ 25,807 |
$ 4,558 |
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
SEGMENT
INFORMATION |
(In thousands) |
(Unaudited) |
|
|
|
|
Three Months
Ended January 31, |
|
2014 |
2013 |
Net Sales: |
|
|
Engineered Products |
$ 126,379 |
$ 106,119 |
Aluminum Sheet Products |
79,491 |
84,603 |
Building Products |
205,870 |
190,722 |
|
|
|
Eliminations |
(3,508) |
(5,009) |
|
|
|
Net Sales |
$ 202,362 |
$ 185,713 |
|
|
|
Operating Income (Loss) |
|
|
Engineered Products |
$ 7,491 |
$ 2,833 |
Aluminum Sheet Products |
(4,251) |
(4,229) |
Building Products |
3,240 |
(1,396) |
|
|
|
Corporate & Other |
(8,353) |
(12,289) |
|
|
|
Operating Loss |
$ (5,113) |
$ (13,685) |
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
NON-GAAP FINANCIAL
MEASURE DISCLOSURE |
(In thousands) |
(Unaudited) |
|
|
|
|
|
EBITDA (defined as net income or
loss before interest, taxes, depreciation and
amortization, impairment and other, net) 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 January 31, 2014 |
|
Engineered
Products |
Aluminum Sheet
Products |
Corporate &
Other |
Quanex |
Net loss |
|
|
|
$ (3,900) |
Income tax benefit |
|
|
|
(1,275) |
Other, net |
|
|
|
(96) |
Interest expense |
|
|
|
158 |
Operating income
(loss) |
7,491 |
(4,251) |
(8,353) |
(5,113) |
Asset impairment charges |
5 |
505 |
-- |
510 |
Depreciation and amortization |
7,644 |
1,750 |
900 |
10,294 |
EBITDA |
15,140 |
(1,996) |
(7,453) |
5,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended January 31, 2013 |
|
Engineered
Products |
Aluminum Sheet
Products |
Corporate &
Other |
Quanex |
Net loss |
|
|
|
$ (8,118) |
Income tax benefit |
|
|
|
(5,797) |
Other, net |
|
|
|
91 |
Interest expense |
|
|
|
139 |
Operating income (loss) |
2,833 |
(4,229) |
(12,289) |
(13,685) |
Asset impairment charges |
-- |
-- |
-- |
-- |
Depreciation and amortization |
7,473 |
1,627 |
557 |
9,657 |
EBITDA |
10,306 |
(2,602) |
(11,732) |
(4,028) |
|
|
|
|
|
Financial Statistics as
of January 31, 2014 |
|
|
|
Book value per common share: |
|
|
$11.06 |
|
Total debt to capitalization: |
|
|
0.2% |
|
Return on invested capital: |
|
|
-1.7% |
|
Actual number of common shares
outstanding: |
|
37,259,657 |
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
Supplemental Financial
Disclosures |
(In millions, except spread per
pound) |
(Unaudited) |
|
|
|
|
Engineered Products Group
(EPG) is focused on providing window and door OEMs with
fenestration components, products, and systems. Key end
markets are residential remodeling and replacement (R&R) and
new home construction. |
|
|
|
|
|
|
|
1Q 2014 |
1Q 2013 |
Change |
|
|
Net sales |
$ 126.4 |
$ 106.1 |
$ 20.3 |
Operating income |
$ 7.5 |
$ 2.8 |
$ 4.7 |
EBITDA |
$ 15.1 |
$ 10.3 |
$ 4.8 |
|
|
|
|
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. |
|
|
|
|
|
|
|
1Q 2014 |
1Q 2013 |
Change |
|
|
Net sales |
$ 79.5 |
$ 84.6 |
$ (5.1) |
Operating loss |
(4.3) |
(4.2) |
(0.1) |
EBITDA |
(2.0) |
(2.6) |
0.6 |
Shipped pounds (in millions) |
60 |
59 |
1 |
Spread per pound |
$ 0.40 |
$ 0.44 |
$ (0.04) |
|
|
|
|
Corporate & Other
Items |
|
|
|
|
1Q 2014 |
1Q 2013 |
Change |
|
|
Stock-based compensation cost |
1.1 |
1.7 |
(0.6) |
Transaction costs |
0.4 |
1.0 |
(0.6) |
Other costs |
6.9 |
9.6 |
(2.7) |
Total corporate costs |
$ 8.4 |
$ 12.3 |
$ (3.9) |
|
|
|
|
|
|
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
PRE-TAX & AFTER TAX
PRESENTATION |
(In millions, except per share
data) |
(Unaudited) |
These pre-tax and after-tax
tables include 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. 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. |
|
|
|
|
|
|
|
|
Segment |
Q1 2014 |
|
Q1 2013 |
|
Pre-Tax
Presentation |
|
$MM |
|
$MM |
|
Loss Before Income Taxes As
Reported |
|
$ (5.2) |
|
$ (13.9) |
|
Benefit (Reduction): |
|
|
|
|
|
IG Warranty Reserve Benefit |
EPG |
(2.8) |
|
-- |
|
Asset Impairment Charge |
EPG |
0.5 |
|
-- |
|
Transaction Related Expenses |
Corp |
0.4 |
|
1.0 |
|
Discontinued ERP Expenses* |
Corp |
0.3 |
|
1.6 |
|
Loss Before Income Taxes As
Adjusted |
|
$ (6.8) |
|
$ (11.3) |
|
|
|
Segment |
Q1 2014 |
Q1 2014 |
Q1 2013 |
Q1 2013 |
After-Tax
Presentation |
|
$MM |
EPS |
$MM |
EPS |
Net Loss As
Reported |
|
$ (3.9) |
$ (0.11) |
$ (8.1) |
$ (0.22) |
Benefit (Reduction): |
|
|
|
|
|
IG Warranty Reserve Benefit |
EPG |
(2.1) |
(0.06) |
-- |
-- |
Asset Impairment Charge |
EPG |
0.4 |
0.01 |
-- |
-- |
Transaction Related Expenses |
Corp |
0.3 |
0.01 |
0.6 |
0.02 |
Discontinued ERP Expenses |
Corp |
0.2 |
0.01 |
0.9 |
0.03 |
Net Loss As Adjusted
* |
|
$ (5.1) |
$ (0.14) |
$ (6.6) |
$ (0.17) |
|
* Q1 2014 includes $258K of
depreciation related to the SAP Implementation assets. |
|
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CONTACT: Financial Contact: Marty Ketelaar, 713-877-5402;
Media Contact: Valerie Calvert, 713-877-5305
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