Quanex Building Products Corporation Fiscal Second Quarter 2009 Results
Loss of$0.38 per Diluted Share from Continuing Operations excluding Special Items Loss of$1.08 per Diluted Share from Continuing Operations Generated$15 Million of Cash from Six Months Operating Activities$85 Million Cash and Equivalents Balance
Quarterly Highlights
* Net sales were$113.2 million . * Operating loss was$16.4 million excluding special items. * Reduced inventories by$21.6 million . * Cash and equivalents totaled$85.4 million . * Recorded a$45.3 million pre-tax true-up impairment charge. * Recorded$4.5 million pre-tax LIFO income. * Capital expenditures were$5.0 million . * Cash provided by operating activities was$14.6 million for the six months.
Quarterly Commentary
ENGINEERED PRODUCTS (in millions) 2nd qtr 2nd qtr 2009 2008 -------- -------- Net sales $ 65.2 $ 92.5 Operating income (loss) excluding special items $ (0.8) $ 5.3
Engineered Products is focused on providing leading window and door customers with value-added fenestration components, products, and systems. Key market drivers are residential housing starts and residential remodeling activity.
"The U.S. residential housing market dropped 49% in our second quarter compared to a year ago, while residential remodeling activity was estimated to be off 10% to 15% over this same timeframe," said David D. Petratis, president and chief executive officer of
ALUMINUM SHEET PRODUCTS (in millions) 2nd qtr 2nd qtr 2009 2008 -------- -------- Net sales $ 50.4 $ 118.3 Operating income (loss) $ (11.6) $ 10.0 Shipped pounds 44 72
Aluminum Sheet Products is a leading provider of common alloy aluminum sheet products for the building & construction, transportation and other consumer durable markets. Key market drivers are residential housing starts and residential remodeling activity.
"London Metal Exchange (LME) aluminum prices in the second quarter fell to a new inflation-adjusted low of
Cash Flow
"Generating good cash flow and carefully watching our spending remain paramount. During the quarter, we reduced company-wide inventories by
Outlook
"Rising unemployment, difficult lending practices, high home inventories and troubling foreclosure rates have resulted in a difficult market environment for
Impairment Charge
"In the first quarter of 2009, we determined there were sufficient indicators to require us to perform an interim goodwill and other intangible asset impairment analysis. As a result, we booked estimated goodwill and other intangible asset impairment charges of
Non-GAAP Financial Measures
Income (loss) from continuing operations excluding special items, diluted earnings (loss) per share from continuing operations excluding special items, and operating income (loss) excluding special items are non-GAAP financial measures.
We believe these non-GAAP financial measures provide a consistent basis for comparison between quarters, and enhance the understanding of the performance of our operations as they are not influenced by certain costs incurred during the periods that are believed to be special and related to specific, infrequent items.
Set forth below is a reconciliation of reported operating income (loss) to operating income (loss) excluding special items; reported income (loss) from continuing operations to income (loss) from continuing operations excluding special items; and reported diluted earnings (loss) per share from continuing operations to diluted earnings (loss) per share from continuing operations excluding special items. We do not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.
GAAP reconciliations
Three months ended April 30, 2009 ------------------------------------------------------ Operating Income (in millions) Aluminum Corporate Engineered Sheet and Products Products Other Consolidated ------------ ------------ ------------ ------------ Operating income (loss), as reported $ (46.1) $ (11.6) $ 0.5 $ (57.2) LIFO charge (income) -- -- (4.5) (4.5) Impairment of goodwill 45.3 -- -- 45.3 Charges associated with the Company's Separation (stock- based compensation, Transaction costs and other) -- -- -- -- ------------ ------------ ------------ ------------ Operating income (loss), excluding special items $ (0.8) $ (11.6) $ (4.0) $ (16.4) ============ ============ ============ ============ Three months ended April 30, 2008 ------------------------------------------------------ (in millions) Aluminum Corporate Engineered Sheet and Products Products Other Consolidated ------------ ------------ ------------ ------------ Operating income (loss), as reported $ 5.3 $ 10.0 $ (31.5) $ (16.2) LIFO charge (income) -- -- -- -- Impairment of goodwill -- -- -- -- Charges associated with the Company's Separation (stock- based compensation, Transaction costs and other) -- -- 25.7 25.7 ------------ ------------ ------------ ------------ Operating income (loss), excluding special items $ 5.3 $ 10.0 $ (5.8) $ 9.5 ============ ============ ============ ============ Net Income Three months ended April 30, (in millions except ------------------------------------- diluted EPS) 2009 2008 ----------------- ------------------ Diluted Diluted Income EPS Income EPS -------- -------- -------- -------- Income (loss) from continuing operations, as reported $ (40.1) $ (1.08) $ (7.3) $ (0.20) LIFO charge (income) (2.9) (0.08) -- -- Impairment of goodwill 29.0 0.78 -- -- Charges associated with the Company's Separation (stock-based compensation, transaction costs and other) -- -- 13.8 0.37 -------- -------- -------- -------- Income (loss) from continuing operations, excluding special items $ (14.0) $ (0.38) $ 6.5 $ 0.17 ======== ======== ======== ======== Diluted weighted average common shares outstanding (in thousands) 37,333 37,265
Dividend Declared
The Board of Directors declared a quarterly cash dividend of
Corporate Profile
The
Financial Statistics as of
Book value per common share:
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;
Statements that use the words "expect," "should," "believe," "will," "might," or similar words reflecting future expectations or beliefs are forward-looking statements. The statements found above 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, and the availability and cost of raw materials. For a more complete discussion of factors that may affect the company's future performance, please refer to the company's 10-K filing on
For additional information, visit the company's website at www.quanex.com.
QUANEX BUILDING PRODUCTS CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) (Unaudited) Three months ended Six months ended April 30, April 30, --------------------- --------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Net Sales: $ 65,249 $ 92,494 Engineered Products $ 130,067 $ 179,770 50,356 118,281 Aluminum Sheet Products 101,164 210,348 ---------- ---------- ---------- ---------- 115,605 210,775 Building Products 231,231 390,118 (2,399) (3,437) Eliminations (5,137) (7,868) ---------- ---------- ---------- ---------- $ 113,206 $ 207,338 Net Sales $ 226,094 $ 382,250 ========== ========== ========== ========== Operating Income*: $ (46,135) $ 5,296 Engineered Products $(167,750) $ 7,190 (11,558) 9,982 Aluminum Sheet Products (39,762) 15,585 ---------- ---------- ---------- ---------- (57,693) 15,278 Building Products (207,512) 22,775 474 (31,500) Corporate and Other (5,268) (40,164) ---------- ---------- ---------- ---------- Operating Income $ (57,219) $ (16,222) (Loss) $(212,780) $ (17,389) ========== ========== ========== ==========
* Operating income reflects non-cash impairment charge of$45.3 million and$182.6 million , respectively:
Period Ending April 30, 2009 ---------------------------- Three Months Six Months ------------ ------------ (In thousands) Engineered Products $ (45,263) $ (162,173) Aluminum Sheet Products -- (20,389) Total impairment loss $ (45,263) $ (182,562)
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three months ended Six months ended April 30, April 30, --------------------- --------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- $ 113,206 $ 207,338 Net sales $ 226,094 $ 382,250 Cost of sales (exclusive of items shown 104,387 170,776 separately below) 211,051 317,853 Selling, general and 12,846 43,637 administrative expense 28,627 63,680 Impairment of goodwill and 45,263 -- intangibles 182,562 -- Depreciation and 7,929 9,147 amortization 16,634 18,106 ---------- ---------- ---------- ---------- (57,219) (16,222) Operating income (loss) (212,780) (17,389) (109) (100) Interest expense (231) (238) 177 4,242 Other, net 299 4,550 ---------- ---------- ---------- ---------- Income (loss) from continuing operations (57,151) (12,080) before income taxes (212,712) (13,077) Income tax benefit 17,005 4,765 (expense) 52,153 5,153 ---------- ---------- ---------- ---------- Income (loss) from (40,146) (7,315) continuing operations (160,559) (7,924) Income (loss) from discontinued operations, -- 1,982 net of taxes -- 5,675 ---------- ---------- ---------- ---------- $ (40,146) $ (5,333) Net income (loss) $(160,559) $ (2,249) ========== ========== ========== ========== Basic and diluted earnings per common share: Earnings (loss) from $ (1.08) $ (0.20) continuing operations $ (4.30) $ (0.21) Income (loss) from discontinued $ -- $ 0.06 operations $ -- $ 0.15 ---------- ---------- ---------- ---------- Basic earnings (loss) $ (1.08) $ (0.14) per common share $ (4.30) $ (0.06) ---------- ---------- ---------- ---------- Weighted average common shares outstanding: 37,333 37,265 Basic and diluted 37,333 37,215
QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) April 30, Oct. 31, 2009 2008 ------------------------------------------------------------------ Assets $ 85,406 Cash and equivalents $ 67,413 52,584 Accounts receivable, net 101,211 36,918 Inventories, net 63,848 9,314 Deferred income taxes 10,932 6,712 Other current assets 6,239 --------- ------------------------------------------ --------- 190,934 Total current assets 249,643 151,639 Property, plant and equipment, net 157,389 58,013 Deferred income taxes 3,875 25,189 Goodwill 196,338 48,868 Intangible assets, net 62,476 10,586 Other assets 11,126 --------- ------------------------------------------ --------- $ 485,229 Total assets $ 680,847 ========= ========================================== ========= Liabilities and stockholders' equity $ 36,402 Accounts payable $ 79,512 28,224 Accrued liabilities 38,316 323 Current maturities of long-term debt 363 --------- ------------------------------------------ --------- 64,949 Total current liabilities 118,191 2,143 Long-term debt 2,188 1,887 Non-current environmental reserves 2,485 14,327 Other liabilities 10,155 --------- ------------------------------------------ --------- 83,306 Total liabilities 133,019 401,923 Total stockholders' equity 547,828 --------- ------------------------------------------ --------- $ 485,229 Total liabilities and stockholders' equity $ 680,847 ========= ========================================== =========
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Six months ended April 30, ---------------------- 2009 2008 ---------- ---------- Operating activities: Net income $(160,559) $ (2,249) Income from discontinued operations -- (5,675) ---------- ---------- Net income from continuing operations (160,559) (7,924) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 16,668 18,111 Impairment of goodwill and intangibles 182,562 -- Deferred income taxes (34,730) 2,999 Stock-based compensation 1,403 24,936 ---------- ---------- 5,344 38,122 Changes in assets and liabilities, net of effects from acquisitions, dispositions and the Separation: Decrease (Increase) in accounts receivable 47,103 (5,896) Decrease (Increase) in inventory 26,913 (3,127) Decrease (Increase) in other current assets (188) (4,872) Increase (Decrease) in accounts payable (43,190) 954 Increase (Decrease) in accrued liabilities (5,522) (2,294) Increase (Decrease) in income taxes (19,729) (646) Other, net 3,869 (2,773) ---------- ---------- Cash provided by (used for) operating activities from continuing operations 14,600 19,468 Cash provided by (used for) operating activities from discontinued operations -- 25,127 ---------- ---------- Cash provided by (used for) operating activities 14,600 44,595 ---------- ---------- Investing activities: Capital expenditures, net of retirements (9,567) (6,941) ---------- ---------- Cash provided by (used for) investing activities from continuing operations (9,567) (6,941) Cash provided by (used for) investing activities from discontinued operations -- 34,113 ---------- ---------- Cash provided by (used for) investing activities (9,567) 27,172 ---------- ---------- Financing activities: Repayments of long-term debt (163) (1,264) Common dividends paid (2,260) -- Funding from Separation 15,401 27,755 Other, net -- (290) ---------- ---------- Cash provided by (used for) financing activities from continuing operations 12,978 26,201 Cash provided by (used for) financing activities from discontinued operations -- (46,183) ---------- ---------- Cash provided by (used for) financing activities 12,978 (19,982) ---------- ---------- Effect of exchange rate changes on cash and equivalents (18) (56) LESS: (Increase) Decrease in cash and equivalents from discontinued operations -- (13,057) ---------- ---------- Increase (Decrease) in cash and equivalents from continuing operations 17,993 38,672 Beginning of period cash and equivalents 67,413 1,778 ---------- ---------- End of period cash and equivalents $ 85,406 $ 40,450 ========== ==========
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