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) December 12, 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.
On December 12, 2014 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated December 12, 2014
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) |
||
| December 12, 2014
(Date) |
/s/ BRENT L. KORB
Brent L. Korb Senior Vice President - Finance and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated December 12, 2014 | |
EXHIBIT 99.1
Quanex Building Products Corporation Reports Full Year 2014 Results
- Net sales increased 7.3% to $595 million vs. $555 million in 2013
- 2014 income from continuing operations of $8.3 million vs. loss of ($12.4) million in 2013
- 2014 diluted EPS from continuing operations of $0.22 vs. loss of ($0.34) in 2013
- 2014 EBITDA increases 38.7% to $48.1 million vs. $34.7 million in 2013
HOUSTON, Dec. 12, 2014 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX), a leading supplier of window and door components, today released results for the fiscal year ended October 31, 2014.
"2014 was a successful year for Quanex. Revenues and EBITDA increased 7.3% and 38.7%, respectively, compared to 2013 results, the highest level since the spin-off of Quanex Building Products Corporation in 2008," Chairman, President and CEO Bill Griffiths said. "Despite a sputtering housing recovery, and a $20 million EBITDA drag on earnings from our vinyl profile business, we made good progress in 2014 and are well positioned for the future. All of our other operations are performing at a high level and managed to offset some of the shortfall in the vinyl business. We are confident that our vinyl business will return to more normalized levels of profitability as we exit 2015 and enter 2016, and will therefore contribute positively to our long-term goal of 14% to 15% total company EBITDA margins," said Griffiths.
2014 income from continuing operations was $8.3 million compared to a loss from continuing operations of $12.4 million in 2013. 2014 EBITDA was $48.1 million compared to $34.7 million in 2013. Additional information related to 2014 results, including a reconciliation of EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) to its most comparable GAAP measure, can be found in the supplemental schedules accompanying this press release.
Quanex believes there is value in measuring its sales performance against industry-related metrics and compares its sales results to U.S. window shipments as reported by Ducker Worldwide, a market intelligence firm. The company's North American fenestration sales for the last 12 months, those most comparable to Ducker Worldwide, have grown 5.4% over the prior year. This growth rate is consistent with preliminary U.S. window shipment growth of 5.3% for the 12 months ended September 30, 2014.
Corporate and Other Items
2014 corporate costs were $28 million compared to $64 million in 2013. The reduction in corporate costs is primarily related to the cessation of the Company's ERP implementation in fiscal 2013. 2014 results included stock-based compensation costs of $5.7 million, compared to $5.5 million in 2013. At year end, cash balances totaled $120.4 million, and there were no outstanding borrowings against the revolving credit facility.
On September 5, 2014, the Board of Directors authorized a new $75 million share repurchase program. Repurchases under the new program are being made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors. During the fiscal year, Quanex repurchased 1,316,326 shares at an average cost of $18.41 per share (inclusive of sales commissions).
Business Outlook and Guidance
"As we have consistently stated, we believe the housing recovery will follow a slow, steady path of mid to high single digit growth rates over an extended period of four to five years," said Griffiths. "This would return U.S. window shipments to a mid-cycle level of approximately 65 million units through a combination of increased housing starts and a recovery in the remodel and replacement market," said Griffiths.
At the mid-cycle U.S. window shipment levels noted above, Quanex expects its revenues, absent any acquisitions, to be $825 to $875 million and total company (inclusive of corporate expenses) EBITDA to be $115 million to $130 million.
For fiscal 2015, Quanex anticipates a slow start, with sluggish growth through the winter months, coupled with a continued drag on earnings from its vinyl business during the first half of 2015. As such, first quarter 2015 is expected to be at breakeven EBITDA on flat sales. For the full year, Quanex expects revenue growth in the 5% to 7% range, with a recovery in the second half of the year in its vinyl profile business, leading to full year EBITDA of $57 to $63 million. Capital expenditures and depreciation and amortization are expected to be $35 million and $36 million, respectively.
Dividend Declared
On December 4, 2014, the Board of Directors declared a quarterly cash dividend of $0.04 per share on the company's common stock, payable December 29, 2014, to shareholders of record on December 15, 2014.
Conference Call Information
Quanex will host its conference call today, December 12, 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 future financial condition of Quanex, future uses of cash and other expenditures, expenses and tax rates, expectations relating to the Company's industry, the Company's future growth, including revenue and EBITDA guidance, and the consummation of any share repurchases. The statements and guidance set forth 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," and in our other documents filed with the Securities and Exchange Commission from time to time. Any forward-looking statements in this press release are made as of the date hereof, and Quanex Building Products Corporation undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.
For additional information, please visit www.quanex.com
| QUANEX BUILDING PRODUCTS CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||
| (In thousands, except per share data) | ||||
| (Unaudited) | ||||
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| $ 163,816 | $ 166,843 | Net sales | $ 595,384 | $ 554,867 |
| 129,040 | 124,682 | Cost of sales | 464,584 | 419,733 |
| 21,158 | 23,944 | Selling, general and administrative | 82,150 | 98,969 |
| 8,319 | 25,305 | Depreciation and amortization | 33,869 | 53,521 |
| -- | 1,465 | Asset impairment charges | 505 | 1,465 |
| 5,299 | (8,553) | Operating income (loss) | 14,276 | (18,821) |
| (143) | (145) | Interest expense | (562) | (621) |
| 26 | 297 | Other, net | 92 | 170 |
| 5,182 | (8,401) | Income (loss) before income taxes | 13,806 | (19,272) |
| (2,170) | 2,924 | Income tax (expense) benefit | (5,468) | 6,888 |
| 3,012 | (5,477) | Income (loss) from continuing operations | 8,338 | (12,384) |
| 1,944 | 4,271 | Income from discontinued operations, net of taxes | 20,896 | 681 |
| $ 4,956 | $ (1,206) | Net income (loss) | $ 29,234 | $ (11,703) |
| Earnings (loss) per common share: | ||||
| $ 0.08 | $ (0.15) | Continuing operations | $ 0.22 | $ (0.34) |
| $ 0.05 | $ 0.12 | Discontinued operations | $ 0.57 | $ 0.02 |
| Diluted earnings (loss) per common share: | ||||
| $ 0.08 | $ (0.15) | Continuing operations | $ 0.22 | $ (0.34) |
| $ 0.05 | $ 0.12 | Discontinued operations | $ 0.56 | $ 0.02 |
| Weighted average common shares outstanding: | ||||
| 37,000 | 36,941 | Basic | 37,128 | 36,864 |
| 37,534 | 36,941 | Diluted | 37,679 | 36,864 |
| $ 0.04 | $ 0.04 | Cash dividends per share | $ 0.16 | $ 0.16 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited) | ||
| October 31, 2014 | October 31, 2013 | |
| (In thousands) | ||
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 120,384 | $ 49,734 |
| Accounts receivable, net | 55,193 | 59,460 |
| Inventories, net | 57,358 | 41,679 |
| Deferred income taxes | 21,442 | 16,348 |
| Prepaid and other current assets | 6,052 | 4,911 |
| Current assets of discontinued operations | -- | 64,151 |
| Total current assets | 260,429 | 236,283 |
| Property, plant and equipment, net | 109,487 | 106,821 |
| Deferred income taxes | 1,545 | 7,030 |
| Goodwill | 70,546 | 71,866 |
| Intangible assets, net | 70,150 | 78,962 |
| Other assets | 4,956 | 5,570 |
| Non-current assets of discontinued operations | -- | 65,283 |
| Total assets | $ 517,113 | $ 571,815 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 41,488 | $ 37,532 |
| Accrued liabilities | 32,482 | 34,810 |
| Income taxes payable | 107 | -- |
| Current maturities of long-term debt | 199 | 162 |
| Current liabilities of discontinued operations | -- | 49,364 |
| Total current liabilities | 74,276 | 121,868 |
| Long-term debt | 586 | 701 |
| Deferred pension and postretirement benefits | 4,818 | 3,479 |
| Liability for uncertain tax positions | 4,626 | 5,396 |
| Other liabilities | 11,887 | 14,638 |
| Non-current liabilities of discontinued operations | -- | 9,539 |
| Total liabilities | 96,193 | 155,621 |
| Stockholders' equity: | ||
| Common stock | 376 | 377 |
| Additional paid-in-capital | 249,600 | 247,642 |
| Retained earnings | 202,319 | 177,456 |
| Accumulated other comprehensive loss | (5,708) | (2,400) |
| Treasury stock at cost | (25,667) | (6,881) |
| Total stockholders' equity | 420,920 | 416,194 |
| Total liabilities and stockholders' equity | $ 517,113 | $ 571,815 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONSOLIDATED STATEMENTS OF CASH FLOW | ||
| (Unaudited) | ||
| Twelve Months Ended October 31, | ||
| 2014 | 2013 | |
| (In thousands) | ||
| Operating activities: | ||
| Net income (loss) | $ 29,234 | $ (11,703) |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
| Depreciation and amortization | 36,910 | 60,504 |
| Loss on disposition of capital assets | 586 | 449 |
| Stock-based compensation | 3,925 | 4,910 |
| Deferred income tax provision (benefit) | 14,246 | (8,288) |
| Excess tax benefit from share-based compensation | (654) | (236) |
| Asset impairment charges | 1,007 | 1,465 |
| Gain on sale of discontinued operations | (39,122) | -- |
| Other, net | (303) | 781 |
| Changes in assets and liabilities, net of effects from acquisitions: | ||
| Decrease (increase) in accounts receivable | 484 | (9,204) |
| (Increase) decrease in inventory | (25,650) | 12,791 |
| (Increase) decrease in other current assets | (1,098) | 1,622 |
| Increase (decrease) in accounts payable | 12,842 | (5,903) |
| Decrease in accrued liabilities | (6,871) | (7,473) |
| Increase in income taxes payable | 866 | 1,708 |
| Decrease in deferred pension and postretirement benefits | (347) | (164) |
| (Decrease) increase in other long-term liabilities | (2,172) | 1,574 |
| Other, net | (3,105) | 686 |
| Cash provided by operating activities | 20,778 | 43,519 |
| Investing activities: | ||
| Net proceeds from sale of discontinued operations | 107,431 | -- |
| Acquisitions, net of cash acquired | (5,161) | (22,096) |
| Capital expenditures | (33,779) | (37,931) |
| Proceeds from property insurance claim | 4,801 | -- |
| Proceeds from disposition of capital assets | 832 | 340 |
| Cash provided by (used in) investing activities | 74,124 | (59,687) |
| Financing activities: | ||
| Borrowings under credit facility | -- | 23,500 |
| Repayments of credit facility borrowings | -- | (23,500) |
| Repayments of other long-term debt | (175) | (557) |
| Common stock dividends paid | (5,992) | (5,931) |
| Issuance of common stock | 3,249 | 2,583 |
| Excess tax benefit from share-based compensation | 654 | 236 |
| Debt issuance costs | -- | (1,200) |
| Purchase of treasury stock | (22,281) | -- |
| Other | 86 | -- |
| Cash used in financing activities | (24,459) | (4,869) |
| Effect of exchange rate changes on cash and cash equivalents | 207 | (484) |
| Increase (decrease) in cash and cash equivalents | 70,650 | (21,521) |
| Cash and cash equivalents at beginning of period | 49,734 | 71,255 |
| Cash and cash equivalents at end of period | $ 120,384 | $ 49,734 |
| 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 |
| (In thousands) |
| (Unaudited) |
| EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) is a non-GAAP financial measure that Quanex management uses to measure its operational performance and assist with financial decision-making. EBITDA is a key metric used by management in determining the value of annual incentive awards for its employees. We believe this non-GAAP measure (included under market conditions outlined in our forward-looking guidance) provides a consistent basis for comparison between periods, and will assist investors in understanding our financial performance when comparing our results to other investment opportunities. EBITDA may not be the same as that used by other companies. 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 October 31, 2014 | Twelve Months Ended October 31, 2014 | |||||
|
Engineered Products |
Corporate & Other |
Quanex | Engineered Products |
Corporate & Other |
Quanex | |
| $ 3,012 | Income (loss) from continuing operations | $ 8,338 | ||||
| 2,170 | Income tax expense (benefit) | 5,468 | ||||
| (26) | Other, net | (92) | ||||
| 143 | Interest expense | 562 | ||||
| 12,525 | (7,226) | 5,299 | Operating income (loss) | 42,270 | (27,994) | 14,276 |
| 7,689 | 630 | 8,319 | Depreciation and amortization | 30,786 | 3,083 | 33,869 |
| $ 20,214 | $ (6,596) | $ 13,618 | EBITDA | $ 73,056 | $ (24,911) | $ 48,145 |
| Three Months Ended October 31, 2013 | Twelve Months Ended October 31, 2013 | |||||
|
Engineered Products |
Corporate & Other |
Quanex | Engineered Products |
Corporate & Other |
Quanex | |
| $ (5,477) | Income (loss) from continuing operations | $ (12,384) | ||||
| (2,924) | Income tax expense (benefit) | (6,888) | ||||
| (297) | Other, net | (170) | ||||
| 145 | Interest expense | 621 | ||||
| 18,019 | (26,572) | (8,553) | Operating income (loss) | 45,318 | (64,139) | (18,821) |
| 7,730 | 17,575 | 25,305 | Depreciation and amortization | 31,368 | 22,153 | 53,521 |
| $ 25,749 | $ (8,997) | $ 16,752 | EBITDA | $ 76,686 | $ (41,986) | $ 34,700 |
| Financial Statistics as of October 31, 2014 | ||||||
| Book value per common share: | $11.18 | |||||
| Total debt to capitalization: | 0.1% | |||||
| Return on invested capital: | 5.5% | |||||
| Actual number of common shares outstanding: | 37,633,932 | |||||
| QUANEX BUILDING PRODUCTS CORPORATION |
| Supplemental Financial Disclosures |
| (In millions) |
| (Unaudited) |
| Engineered Products Group (EPG) is focused on providing window and door OEMs with fenestration components, products, and systems. Key end market are residential remodeling and replacement (R&R) and new home construction. |
| Q4 2014 | Q4 2013 | Change | FY 2014 | FY 2013 | Change | |
| (In millions) | ||||||
| Net sales | $ 163.8 | $ 166.8 | $ (3.0) | $ 595.4 | $ 554.9 | $ 40.5 |
| Operating income | 12.5 | 18.0 | (5.5) | 42.3 | 45.3 | (3.0) |
| EBITDA | $ 20.2 | $ 25.7 | $ (5.5) | $ 73.1 | $ 76.7 | $ (3.6) |
| Corporate & Other Items | ||||||
| Q4 2014 | Q4 2013 | Change | FY 2014 | FY 2013 | Change | |
| (In millions) | ||||||
| ERP implementation costs | $ -- | $ 5.2 | $ (5.2) | $ -- | $ 16.3 | $ (16.3) |
| ERP accelerated depreciation | -- | 15.3 | (15.3) | 0.5 | 15.3 | (14.8) |
| LIFO adjustment | (0.1) | (0.1) | -- | (0.1) | (0.1) | -- |
| Stock-based compensation cost | 1.9 | 1.7 | 0.2 | 5.7 | 5.5 | 0.2 |
| Transaction costs | 0.3 | 0.2 | 0.1 | 0.5 | 1.2 | (0.7) |
| Other costs | 5.1 | 4.3 | 0.8 | 21.4 | 25.9 | (4.5) |
| Operating expense | $ 7.2 | $ 26.6 | $ (19.4) | $ 28.0 | $ 64.1 | $ (36.1) |
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| PRE-TAX & AFTER TAX PRESENTATION | ||||||||
| (In millions, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Q4 2014 | Q4 2013 | FY 2014 | FY 2013 | |||||
| Pre-Tax Presentation | $MM | $MM | $MM | $MM | ||||
| Operating Income (Loss) from Continuing Operations As Reported | $ 5.3 | $ (8.6) | $ 14.3 | $ (18.8) | ||||
| Benefit (Reduction) to Operating Income (Loss): | ||||||||
| IG Warranty Reserve Benefit | -- | -- | (2.8) | -- | ||||
| Asset Impairment Charge | -- | -- | 0.5 | 1.5 | ||||
| Transaction Related Expenses | 0.3 | -- | 0.5 | 1.2 | ||||
| Discontinued ERP Expenses* | -- | 3.2 | 0.5 | 9.2 | ||||
| Operating Income (Loss) from Continuing Operations As Adjusted | $ 5.6 | $ (5.4) | $ 13.0 | $ (6.9) | ||||
| Q4 2014 | Q4 2014 | Q4 2013 | Q4 2013 | FY 2014 | FY 2014 | FY 2013 | FY 2013 | |
| After-Tax Presentation | $MM | EPS | $MM | EPS | $MM | EPS | $MM | EPS |
| Income (Loss) from Continuing Operations As Reported | $ 3.0 | $ 0.08 | $ (5.5) | $ (0.15) | $ 8.3 | $ 0.22 | $ (12.4) | $ (0.34) |
| Benefit (Reduction) to EPS: | ||||||||
| IG Warranty Reserve Benefit | -- | -- | -- | -- | (1.6) | (0.05) | -- | -- |
| Asset Impairment Charge | -- | -- | -- | -- | 0.3 | 0.01 | 1.0 | 0.03 |
| Transaction Related Expenses | 0.2 | -- | -- | -- | 0.3 | 0.01 | 0.8 | 0.02 |
| Discontinued ERP Expenses | -- | -- | 2.0 | 0.06 | 0.3 | 0.01 | 6.1 | 0.17 |
| Diluted Earnings (Loss) from Continuing Operations As Adjusted * | $ 3.2 | $ 0.08 | $ (3.5) | $ (0.09) | $ 7.6 | $ 0.20 | $ (4.5) | $ (0.12) |
| * YTD 2014 includes $509k of depreciation related to the discontinued SAP project. | ||||||||
CONTACT: Financial Contact:
Marty Ketelaar,
713-877-5402;
Media Contact:
Valerie Calvert,
713-877-5305