Quanex Building Products Corporation Reports Second Quarter 2014 Results
-
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
"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
Second quarter 2014 net sales grew to
Preliminary U.S. window shipments as reported by
Corporate and Other Items
Second quarter 2014 corporate costs were
Second quarter 2014 cash balances totaled
On
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
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
Corporate expenses during 2014 are expected to total
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,
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
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. |
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