Quanex Building Products Corporation Fiscal 2013 First Quarter Results
Reported Net Loss of
Nichols Aluminum Net Sales Increase 29%; Shipped Volume Increases 33%
Acquisition of Aluminite Completed
Consolidated first quarter 2013 net sales were
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.
EPG's first quarter 2013 net sales were
EPG's first quarter 2013 operating income was
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
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.
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
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
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
Corporate and Other Items
Corporate expenses in the quarter were
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
At quarter end, Quanex had a cash balance of
During the first quarter, Quanex renewed its revolving credit facility. The renewed facility is a
Aluminite Acquisition
On
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
Dividend Declared
As previously announced, on
Financial Statistics as of
Book value per common share:
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
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
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