- Net sales increased 8% to $135 million vs. $125 million in Q2
2013
- EBITDA of $5.7 million vs. $1.2 million in Q2 2013
- Net loss from continuing operations of $2.0 million vs. net
loss of $6.9 million in Q2 2013
Quanex Building Products Corporation (NYSE:NX), a
leading supplier of window and door components, today released
results for its second fiscal quarter ended April 30, 2014.
"Despite poor weather throughout much of the second quarter and
recent weakness in housing and construction data, we continued to
enjoy encouraging growth in all of our product lines," Chairman,
President and CEO Bill Griffiths said. "With the seasonally
strongest part of the year ahead of us, Quanex is optimistic that
it can sustain growth rates in the 8-9 percent range for the full
year."
Second quarter 2014 net sales grew to $135 million, an increase
of 8% over the second quarter of 2013. Second quarter 2014
operating loss was $2.8 million compared to an operating loss of
$8.6 million in the second quarter of 2013. Second quarter 2014
EBITDA was $5.7 million compared to $1.2 million in the second
quarter of 2013. Operating loss and EBITDA results were negatively
impacted by the inability to pass through a 12% vinyl resin price
increase on approximately 60 percent of vinyl shipments as a result
of previously agreed to contractual obligations, which will expire
at the end of the calendar year. At the same time, repair and
maintenance costs were abnormally high during the quarter as Quanex
continues to invest in upgrading its vinyl profile equipment and
facilities. This is expected to continue into the 3rd quarter of
2014.
Preliminary U.S. window shipments as reported by Ducker
Worldwide, LLC (Ducker), a market intelligence firm, increased 7.4%
for the twelve months ended March 31, 2014. North American domestic
fenestration sales, the most comparable sales figure to those
reported by Ducker, increased 8.1% from the previous twelve months.
Industry window shipment growth was driven by a 13.3% increase in
new construction units and a 3.7% increase in residential
remodeling and replacement units (R&R).
Corporate and Other Items
Second quarter 2014 corporate costs were $6.8 million compared
to $14.5 million in the year ago second quarter. Second
quarter 2014 results included deferred compensation costs of $0.1
million, compared to a benefit of $0.5 million in the second
quarter of 2013.
Second quarter 2014 cash balances totaled $127 million, which
included the $110 million received for the sale of
Nichols. For the year, cash used by operating activities was
$11 million (inclusive of discontinued operation
results). There were no outstanding borrowings against the
revolving credit facility.
On February 10, 2014, Quanex announced the sale of Nichols to
Aleris for $110 million in an all-cash transaction. The
transaction was completed on April 1, 2014.
Additional information related to second quarter 2014 results,
including a reconciliation of EBITDA (defined as net income or loss
before interest, taxes, depreciation and amortization and other,
net) and to its most comparable GAAP figure, can be found in the
supplemental schedules accompanying this press release.
Dividend Declared
On May 29, 2014, the Board of Directors declared a quarterly
cash dividend of $0.04 per share on the company's common stock,
payable June 30, 2014, to shareholders of record on June 16,
2014.
2014 Guidance
Ducker is currently forecasting calendar year 2014 U.S. window
shipments to increase 7.5%, with new construction increasing 12.5%
and R&R increasing 4.2% when compared to 2013
shipments. For fiscal year 2014, Quanex expects revenue to
grow approximately 8 to 9 percent over 2013 results. Given the
margin headwinds in the vinyl profile business this year, Quanex
expects EBITDA to be in a range of $55-$60 million, rather than the
previously stated guidance of $55 to $65 million, which included
the expected full year results for Nichols Aluminum. The EBITDA
guidance assumes no further increases in resin prices for the
remainder of 2014.
Corporate expenses during 2014 are expected to total $28-$30
million (excluding transaction and deferred compensation-related
costs). Capital expenditures are expected to be $40 million in
2014; $30 million from continuing operations and $10 million from
discontinued operations. All capital expenditures will be focused
on improvements in growth initiatives, operational efficiency and
cost reduction. Depreciation and amortization is expected to
be approximately $34 million during 2014.
Quanex remains very positive on the long-term growth prospects
of its markets and expects to continue to invest for its future
through both organic growth initiatives and acquisitions.
Conference Call Information
Quanex will host its conference call today, June 5, 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, under the
section entitled "Cautionary Note Regarding Forward-Looking
Statements."
For additional information, please visit
www.quanex.com.
QUANEX BUILDING
PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended April 30, |
Six Months Ended
April 30, |
|
2014 |
2013 |
2014 |
2013 |
|
(In thousands, except per share
data) |
Net sales |
$ 135,208 |
$ 125,140 |
$ 261,587 |
$ 231,259 |
Cost and expenses: |
|
|
|
|
Cost of sales (excluding depreciation and
amortization) |
108,649 |
95,730 |
204,838 |
179,025 |
Selling, general and administrative |
20,393 |
28,202 |
42,895 |
52,026 |
Depreciation and amortization |
8,494 |
9,812 |
17,038 |
17,842 |
Asset impairment charges |
500 |
— |
505 |
— |
Operating loss |
(2,828) |
(8,604) |
(3,689) |
(17,634) |
Non-operating income (expense): |
|
|
|
|
Interest expense |
(143) |
(174) |
(284) |
(294) |
Other, net |
(22) |
9 |
74 |
(82) |
Loss from continuing operations before income
taxes |
(2,993) |
(8,769) |
(3,899) |
(18,010) |
Income tax benefit |
963 |
1,906 |
658 |
5,977 |
Loss from continuing operations |
(2,030) |
(6,863) |
(3,241) |
(12,033) |
Income (loss) from discontinued operations,
net of taxes |
22,161 |
(485) |
19,472 |
(3,433) |
Net income (loss) |
$ 20,131 |
$ (7,348) |
$ 16,231 |
$ (15,466) |
|
|
|
|
|
Basic earnings (loss) per common share: |
|
|
|
|
Loss per share from continuing
operations |
$ (0.05) |
$ (0.19) |
$ (0.09) |
$ (0.33) |
Earnings (loss) per share from
discontinued operations |
0.59 |
(0.01) |
0.53 |
(0.09) |
Earnings (loss) per share,
basic |
$ 0.54 |
$ (0.20) |
$ 0.44 |
$ (0.42) |
|
|
|
|
|
Diluted earnings (loss) per common
share: |
|
|
|
|
Loss per share from continuing
operations |
$ (0.05) |
$ (0.19) |
$ (0.09) |
$ (0.33) |
Earnings (loss) per share from
discontinued operations |
0.58 |
(0.01) |
0.52 |
(0.09) |
Earnings (loss) per share,
diluted |
$ 0.53 |
$ (0.20) |
$ 0.43 |
$ (0.42) |
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
Basic |
37,217 |
36,850 |
37,108 |
36,830 |
Diluted |
37,838 |
36,850 |
37,726 |
36,830 |
|
|
|
|
|
Cash dividends per share |
$ 0.04 |
$ 0.04 |
$ 0.08 |
$ 0.08 |
|
QUANEX BUILDING
PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
|
|
|
|
April 30,
2014 |
October 31,
2013 |
|
(In thousands) |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 126,984 |
$ 49,734 |
Accounts receivable, net |
52,335 |
59,460 |
Inventories, net |
54,986 |
41,679 |
Deferred income taxes |
20,502 |
16,348 |
Prepaid and other current
assets |
5,068 |
4,912 |
Current assets of discontinued
operations |
— |
64,151 |
Total current assets |
259,875 |
236,284 |
Property, plant and equipment, net |
111,906 |
106,821 |
Deferred income taxes |
7,004 |
7,030 |
Goodwill |
72,411 |
71,866 |
Intangible assets, net |
75,106 |
78,962 |
Other assets |
5,638 |
5,572 |
Non-current assets of discontinued
operations |
— |
65,283 |
Total assets |
$ 531,940 |
$ 571,818 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 42,134 |
$ 37,533 |
Accrued liabilities |
31,262 |
34,810 |
Income taxes payable |
998 |
— |
Current maturities of long-term
debt |
178 |
162 |
Current liabilities of
discontinued operations |
— |
49,364 |
Total current liabilities |
74,572 |
121,869 |
Long-term debt |
593 |
701 |
Deferred pension and postretirement
benefits |
3,935 |
3,479 |
Liability for uncertain tax positions |
5,481 |
5,396 |
Other liabilities |
11,351 |
14,640 |
Non-current liabilities of discontinued
operations |
— |
9,539 |
Total liabilities |
95,932 |
155,624 |
Stockholders' equity: |
|
|
Common stock |
376 |
377 |
Additional paid-in-capital |
247,695 |
247,642 |
Retained earnings |
190,690 |
177,456 |
Accumulated other comprehensive
loss |
(982) |
(2,400) |
Treasury stock at cost |
(1,771) |
(6,881) |
Total stockholders' equity |
436,008 |
416,194 |
Total liabilities and
stockholders' equity |
$ 531,940 |
$ 571,818 |
|
QUANEX BUILDING
PRODUCTS CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW |
(Unaudited) |
|
|
|
|
Six Months Ended
April 30, |
|
2014 |
2013 |
|
(In thousands) |
Operating activities: |
|
|
Net Income (loss) |
$ 16,231 |
$ (15,466) |
Adjustments to reconcile net
income (loss) to cash used for operating activities: |
|
|
Depreciation and
amortization |
20,078 |
21,196 |
Stock-based compensation |
1,944 |
3,408 |
Deferred income tax provision
(benefit) |
8,128 |
(8,740) |
Excess tax benefit from
share-based compensation |
(639) |
(171) |
Asset impairment charges |
1,007 |
― |
Gain on sale of discontinued
operations |
(39,645) |
― |
Other, net |
1,427 |
778 |
Changes in assets and
liabilities, net of effects from acquisitions and
dispositions: |
|
|
(Increase) decrease in accounts
receivable |
3,964 |
(6,380) |
Increase in inventory |
(22,834) |
(6,267) |
(Increase) decrease in other
current assets |
(583) |
1,046 |
Increase (decrease) in accounts
payable |
10,127 |
(4,236) |
Decrease in accrued
liabilities |
(6,234) |
(7,468) |
Increase in income taxes
payable |
1,667 |
1,766 |
Increase (decrease) in deferred
pension and postretirement benefits |
297 |
(1,475) |
Increase (decrease) in other
long-term liabilities |
(3,539) |
1,066 |
Other, net |
(2,419) |
160 |
Cash used for operating activities |
(11,023) |
(20,783) |
Investing activities: |
|
|
Proceeds from sale of
discontinued operations |
110,000 |
― |
Acquisitions, net of cash
acquired |
(5,161) |
(22,096) |
Capital expenditures |
(18,597) |
(24,983) |
Proceeds from property
insurance claim |
1,400 |
― |
Proceeds from disposition of
capital assets |
304 |
22 |
Cash provided by (used in) investing
activities |
87,946 |
(47,057) |
Financing activities: |
|
|
Borrowings under credit
facility |
― |
14,500 |
Repayments of credit facility
borrowings |
― |
(4,500) |
Repayments of other long-term
debt |
(144) |
(142) |
Common stock dividends
paid |
(2,989) |
(2,964) |
Issuance of common stock |
2,882 |
694 |
Excess tax benefit from
share-based compensation |
639 |
171 |
Debt issuance costs |
― |
(1,163) |
Other |
35 |
― |
Cash provided by financing activities |
423 |
6,596 |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(96) |
(383) |
|
|
|
Increase (decrease) in cash and cash
equivalents |
77,250 |
(61,627) |
Cash and cash equivalents at beginning of
period |
49,734 |
71,255 |
Cash and cash equivalents at end of
period |
$ 126,984 |
$ 9,628 |
|
|
|
NOTE: The cash flow statement
presentation includes the sources and uses of cash for the
discontinued operations as operating, investing and financing cash
flows, as applicable, combined with such cash flows for continuing
operations, as permitted by U.S. GAAP. |
QUANEX BUILDING PRODUCTS
CORPORATION NON-GAAP FINANCIAL MEASURE
DISCLOSURE (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 April 30, |
Six Months Ended
April 30, |
|
2014 |
2013 |
2014 |
2013 |
|
(In thousands) |
(In thousands) |
Loss from continuing operations |
$ (2,030) |
$ (6,863) |
$ (3,241) |
$ (12,033) |
Income tax benefit |
(963) |
(1,906) |
(658) |
(5,977) |
Other, net |
22 |
(9) |
(74) |
82 |
Interest expense |
143 |
174 |
284 |
294 |
Operating loss from continuing
operations |
(2,828) |
(8,604) |
(3,689) |
(17,634) |
Depreciation and amortization |
8,494 |
9,812 |
17,038 |
17,842 |
EBITDA |
$ 5,666 |
$ 1,208 |
$ 13,349 |
$ 208 |
|
|
|
|
|
|
|
|
|
|
Financial Statistics as of April 30,
2014 |
|
|
|
|
Book value per common share: |
$11.62 |
|
|
|
Total debt to capitalization: |
0.2% |
|
|
|
Return on invested capital: |
4.9% |
|
|
|
Actual number of common shares
outstanding: |
37,514,676 |
|
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
PRE-TAX & AFTER TAX
PRESENTATION |
(In millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Pre-Tax
Presentation |
Q2 2014 $MM |
|
Q2 2013 $MM |
|
FY 2014 $MM |
|
FY 2013 $MM |
|
Operating Income (Loss) from
Continuing Operations As Reported |
$ (2.8) |
|
$ (8.6) |
|
$ (3.7) |
|
$ (17.6) |
|
Benefit (Reduction) to Operating Income: |
|
|
|
|
|
|
|
|
IG Warranty Reserve
Benefit |
― |
|
― |
|
(2.8) |
|
― |
|
Asset Impairment Charge |
0.5 |
|
― |
|
0.5 |
|
― |
|
Transaction Related
Expenses |
― |
|
― |
|
0.1 |
|
1.0 |
|
Discontinued ERP Expenses* |
0.3 |
|
3.7 |
|
0.5 |
|
5.3 |
|
Operating Income (Loss) from
Continuing Operations As Adjusted |
$ (2.0) |
|
$ (4.9) |
|
$ (5.4) |
|
$ (11.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-Tax
Presentation |
Q2 2014 $MM |
Q2 2014 EPS |
Q2 2013 $MM |
Q2 2013 EPS |
FY 2014 $MM |
FY 2014 EPS |
FY 2013 $MM |
FY 2013 EPS |
Income (Loss) from Continuing
Operations As Reported |
$ (2.0) |
$ (0.05) |
$ (6.9) |
$ (0.19) |
$ (3.2) |
$ (0.09) |
$ (12.0) |
$ (0.33) |
Benefit (Reduction) to EPS: |
|
|
|
|
|
|
|
|
IG Warranty Reserve
Benefit |
― |
― |
― |
― |
(2.4) |
(0.06) |
― |
― |
Asset Impairment Charge |
0.4 |
0.01 |
― |
― |
0.4 |
0.01 |
― |
― |
Transaction Related
Expenses |
― |
― |
― |
― |
0.1 |
0.00 |
0.7 |
0.02 |
Discontinued ERP Expenses |
0.2 |
0.01 |
3.0 |
0.08 |
0.4 |
0.01 |
3.6 |
0.10 |
Diluted Earnings (Loss) from
Continuing Operations As Adjusted * |
$ (1.4) |
$ (0.04) |
$ (3.9) |
$ (0.11) |
$ (4.7) |
$ (0.12) |
$ (7.7) |
$ (0.21) |
|
|
|
|
|
|
|
|
|
* Q2 2014 and YTD 2014 includes
$258K and $509k, respectively, of depreciation related to the
discontinued SAP project. |
CONTACT: Financial Contact:
Marty Ketelaar, 713-877-5402
Media Contact:
Valerie Calvert, 713-877-5305
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