UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 6, 2014
Quanex Building Products Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-33913 | 26-1561397 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 1800 West Loop South, Suite 1500, Houston, Texas | 77027 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 713-961-4600
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
On March 6, 2014, Quanex Building Products Corporation issued a press release (the "Press Release") reporting its earnings for the first quarter of fiscal year 2014. The foregoing is qualified by reference to the Press Release which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press Release dated March 6, 2014 announcing the Company's first quarter 2014 earnings results.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Quanex Building Products Corporation
(Registrant) |
||
| March 6, 2014
(Date) |
/s/ BRENT L. KORB
Brent L. Korb Senior Vice President - Finance and Chief Financial Officer |
EXHIBIT 99.1
Quanex Building Products Reports First Quarter 2014 Results
- 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
HOUSTON, March 6, 2014 (GLOBE NEWSWIRE) -- 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. | |||||
CONTACT: Financial Contact: Marty Ketelaar, 713-877-5402;
Media Contact: Valerie Calvert, 713-877-5305