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Quanex Building Products Corporation Fiscal 2012 Fourth Quarter and Year-End Results



Quanex Building Products Corporation Fiscal 2012 Fourth Quarter and Year-End
Results

 Reported Operating Income of $0.03 per Diluted Share for the Quarter; $0.45
                                Loss for 2012
 Nichols Aluminum Davenport Union Approved New 5 Year Contract in the Fourth
                                   Quarter
  Insulating Glass Spacer Facility Consolidation Completed in Fourth Quarter
        Engineered Products Group Outperformed its End Market in 2012

HOUSTON, Dec. 21, 2012 (GLOBE NEWSWIRE) -- Quanex Building Products
Corporation (NYSE:NX), a leading manufacturer of engineered materials,
components and systems serving domestic and international window and door OEMs
through its Engineered Products and Aluminum Sheet Products Groups, today
released fiscal 2012 fourth quarter and year-end results for the period ending
October 31, 2012.

Consolidated fourth quarter 2012 net sales were $235.0 million, compared to
$233.0 million a year ago. Fourth quarter 2012 diluted income from continuing
operations was $0.03 per share compared to diluted income of $0.17 per share
in the year ago quarter.

Consolidated net sales for 2012 were $829.0 million, compared to $848.3
million last year. The decrease in consolidated net sales was primarily
attributable to a $78.2 million decline in net sales at Nichols Aluminum. 2012
diluted loss from continuing operations was $0.45 per share, compared to $0.24
of diluted income per share last year. The 2012 operating loss was due
primarily to the strike-related cost at Nichols, insulating glass (IG)
facility consolidation costs, and on-going ERP implementation costs.

The table below details, on a per-share basis, certain income/expense items
recognized in the fiscal fourth quarter of 2012 and 2011 and fiscal year 2012
and 2011 and computes a non-GAAP figure, called Income As Adjusted, for each
period.

Diluted Earnings (Loss) As Reported  Segment Q4 2012  Q4 2011 FY 2012  FY 2011
(Per Share Basis)                                                       
Income As Reported                           $0.03     $0.17  $(0.45)   $0.24
Benefit (Reduction) to EPS:                                             
 Strike Related                      Nichols     ---    ---     (0.20)   ---
 Facility Consolidations             EPG       0.01     0.01    (0.14)  (0.04)
 IG Warranty Reserve                 EPG       ---      0.01    0.01    (0.03)
 Asset Impairment                    EPG       (0.02)  (0.03)   (0.02)  (0.03)
 Transaction Related                 Corp      ---     (0.01)  ---      (0.09)
 ERP Implementation                  Corp      (0.04)  (0.01)   (0.12)  (0.02)
 LIFO Income (Charge)                Corp      0.03    0.03     0.03    (0.04)
Diluted Earnings (Loss) As Adjusted*         $0.05    $0.17   $(0.01)  $0.49
(Per Share Basis)                                                       

* Please see page 4 of this press release for a discussion of our use of
Non-GAAP Financial Measures.

Engineered Products Group (EPG) is focused on providing window and door OEMs
with fenestration components, products, and systems. Key end markets are
residential repair & remodel (R&R) and new home construction.

EPG's fourth quarter 2012 net sales were $136.4 million compared to $129.6
million a year ago. The 5.2% improvement was predominantly related to higher
vinyl extrusion sales and insulating glass spacer sales.
 
EPG's fourth quarter 2012 operating income was $13.5 million compared to $14.9
million a year ago.  A benefit related to the facility consolidations of $0.7
million was recognized in the quarter compared to a benefit of $0.4 million in
the year-ago quarter.

EPG's 2012 net sales were $478.6 million, compared to $420.3 million last
year, driven primarily by the acquisition of Edgetech and higher vinyl
extrusion sales. Sales on a comparable basis increased 6.3%. 2012 operating
income was $28.5 million compared to operating income of $30.3 million last
year, and included $8.1 million of net expenses for certain items recognized
during the year, compared to $6.5 million of net expenses during 2011.

Engineered Products Group (in millions)
                        Q4 2012       Q4 2011       FY 2012       FY 2011
Net sales               $136.4        $129.6        $478.6        $420.3
Operating income*       $ 13.5        $ 14.9        $ 28.5        $ 30.3

* Please refer to page 5 for additional information of items included in EPG's
reported operating income.

Quanex believes there is value in measuring its sales performance against
industry-related metrics. It 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 October, 2012 were up 13.8% from the previous 12
months (up 6.3% as adjusted for the Edgetech acquisition), compared to total
U.S. window shipments as reported by Ducker Worldwide up 1.5% over the same
period. EPG's improved reported annual sales performance can be attributed
primarily to the acquisition of Edgetech, higher vinyl extrusion sales due to
increased demand from one of its top customers, selective price increases and
modest sales gains in the regional residential repair and remodel (R&R)
markets.

IG Spacer Consolidation Program Completed

On November 7, 2011, Quanex announced a consolidation program for its IG
spacer manufacturing facility in Barbourville, KY, into its IG spacer
manufacturing facility in Cambridge, OH. The cash costs associated with the
program, completed in August 2012, were approximately $16 million through
fiscal year-end, and about $9 million of these costs were expensed. The
Barbourville facility is now closed, and will be listed for sale. Quanex
expects a payback period on its investment of about 2.7 years, based on
annual, pre-tax cash savings of approximately $8.0 million beginning November
1, 2012.

Aluminum Sheet Products Group is a leading provider of aluminum sheet through
its Nichols Aluminum operation. Key end markets are residential R&R and new
home construction.

Nichols Aluminum's fourth quarter 2012 shipments, net sales, operating loss,
and spread (sales less material costs) were 73 million pounds, $101.3 million,
($0.9) million and $0.41 per pound, respectively. Shipments increased modestly
from the year ago quarter due primarily to higher demand and improved
operational efficiency. The spread was down $0.09 per pound, or 18% from the
year ago quarter due to a larger reduction in aluminum prices than a reduction
in material costs. Customer demand remained strong through the quarter.
Compared to the year ago quarter, the operating loss primarily reflected the
impact of a lower spread.

2012 shipments, net sales, operating loss and spread were 253 million pounds,
$362.3 million, ($17.1) million and $0.41 per pound, respectively. 2012
results were negatively impacted by the strike and lower spread.
 

Aluminum Sheet Products (in millions except for spread)
                         Q4 2012 Q4 2011 FY 2012 FY 2011
Net sales                $101.3  $106.2  $362.3  $440.5
Operating income/(loss)*  ($0.9) $ 3.1   ($17.1) $ 17.1
Shipped pounds             73      66       253    277
Spread per pound          $0.41   $0.50   $0.41   $0.49

* Please refer to page 5 for additional information of items included in
Aluminum Sheet Products' reported operating income.

Nichols Aluminum's shipments for the 12 months ended October 31, 2012,
decreased 8.9% compared to the previous 12 months, versus industry shipments
as reported by the Aluminum Association that were up 8.6% over the same
period. This underperformance is primarily attributed to the impact of the
strike, facility performance issues, and weaker residential R&R demand.

We expect Nichols Aluminum's new operating principles to focus on
significantly improving quality and on-time delivery through process
improvements and a proactive maintenance program, requiring additional capital
investment. As a result, Nichols Aluminum estimates annual capital
expenditures in a range of $10 million to $13 million over the next several
years.

Corporate and Other Items

Corporate expenses in the quarter were $11.7 million, including enterprise
resource planning (ERP) expenses of $2.7 million and LIFO income of $1.7
million. For fiscal year 2012, corporate expenses were $36.3 million,
including $6.9 million of ERP expenses and LIFO income of $1.7 million.

In 2011, Quanex launched a multi-year, company-wide program to transform
certain 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 $26.0 million and expects a key phase of the project to go live during
the first half of fiscal year 2013.

2012 Balances

At year-end, Quanex had a cash balance of $71.3 million and total debt
outstanding of $1.4 million. Cash provided by operating activities for fiscal
year 2012 was $26.5 million. At year-end the company had no borrowings under
its $270 million revolving credit facility, however, due to the facility's
EBITDA covenant requirements, the available capacity was approximately $103
million. Quanex is currently in the process of renewing its revolving credit
facility, and expects to have finalized terms and conditions by January 31,
2013. Future uses of cash could be to fund organic growth activities, fund
cash dividends on the company's common stock, make acquisitions, and
repurchase outstanding shares. During the fourth quarter, the company did not
purchase any outstanding common stock. For the year, it purchased 94,337
shares at an average price of $13.61, including commissions.

Business Outlook and 2013 Guidance

The company believes once the economy returns to normal market conditions
(defined by Quanex as 60 million U.S. window shipments as reported by Ducker
and spread at Nichols returning to more normalized levels), earnings before
interest, taxes, depreciation and amortization (EBITDA) will be approximately
$135 million at EPG and $70 million at Aluminum Sheet Products before
deducting corporate expenses.

Non-GAAP Financial Measures

Diluted earnings (loss) per share as adjusted and operating income 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.

Dividend Declared

As previously announced, on December 6, 2012, the Board of Directors declared
a quarterly cash dividend of $0.04 per share on the company's common stock,
payable December 28, 2012, to shareholders of record on December 18, 2012.

Financial Statistics as of 10/31/12

Book value per common share: $11.41; Total debt to capitalization: 0.3%;

Return on invested capital: (3.8%); Actual number of common shares
outstanding: 36,972,502.

Engineered Products Group Operating Income

The following items are included in EPG's reported operating income ($ in
millions):

                                         Q4 2012   Q4 2011 FY 2012 FY 2011
Operating Income As Reported              $13.5     $14.9   $28.5   $30.3
Facility Consolidation Expense (Benefit)  (0.7)     (0.4)   8.0     2.8
IG Warranty Expense (Benefit)               ------   (0.2)   (0.8)  1.9
Operating Income As Adjusted              $12.8     $14.3   $35.7   $35.0

Aluminum Sheet Products Operating Income

The following items are included in Aluminum Sheet Products' reported
operating income ($ in millions):

                                Q4 2012 Q4 2011 FY 2012  FY 2011
Operating Income As Reported     $(0.9)   $3.1   $(17.1)  $17.1
Nichols Strike-Related Expenses   --      --     11.1      --
Operating Income As Adjusted     (0.9)   $3.1    $(6.0)   $17.1

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;

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 Quanex Building Products Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=1117

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 December 20, 2011, under the Securities Exchange Act of 1934 ("Exchange
Act"), in particular the section titled, "Private Securities Litigation Reform
Act" contained therein, and its subsequently filed Form 10-Q filings.

           For additional information, please visit www.quanex.com

                                       

QUANEX BUILDING PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
                                                                     
                                                                     
Three Months Ended                                       Twelve Months Ended
October 31,                                              October 31,
2012       2011                                          2012       2011
                                                                     
 $ 235,048  $ 232,961 Net sales                           $828,976   $ 848,294
                                                                     
193,302    187,257    Cost of sales (exclusive of items  703,844    712,091
                      shown separately below)
30,641     22,764     Selling, general and               111,577    83,994
                      administrative
9,215      9,349      Depreciation and amortization      37,596     33,932
912        1,799      Asset impairment charges           912        1,799
978        11,792     Operating income (loss)            (24,953)   16,478
(106)      (108)      Interest expense                   (454)      (449)
23         (641)      Other, net                         222        (514)
                      Income (loss) from continuing                  
                      operations
895        11,043     before income taxes                (25,185)   15,515
73         (4,864)    Income tax benefit (expense)       8,651      (6,437)
968        6,179      Income (loss) from continuing      (16,534)   9,078
                      operations
—          —          Income (loss) from discontinued    —          (12)
                      operations, net of taxes
 $ 968      $ 6,179   Net income (loss)                  $ (16,534)  $ 9,066
                                                                     
                      Basic earnings per common share:               
 $ 0.03     $ 0.17    Earnings (loss) from continuing    $ (0.45)    $ 0.24
                      operations
—          —          Income (loss) from discontinued    —          —
                      operations
 $ 0.03     $ 0.17    Basic earnings (loss) per share    $ (0.45)    $ 0.24
                                                                     
                      Diluted earnings per common share:             
 $ 0.03     $ 0.17    Earnings (loss) from continuing    $ (0.45)    $ 0.24
                      operations
—          —          Income (loss) from discontinued    —          —
                      operations
 $ 0.03     $ 0.17    Diluted earnings (loss) per share  $ (0.45)    $ 0.24
                                                                     
                      Weighted average common shares                 
                      outstanding:
36,737     36,723     Basic                              36,622     37,007
37,322     37,021     Diluted                            36,622     37,537

                                                               
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                               
                                                               
October 31, 2012                                              October 31, 2011
                 Assets                                        
 $ 71,255        Cash and equivalents                          $ 89,619
85,644           Accounts receivable, net                     81,969
65,904           Inventories                                  55,842
20,439           Deferred income taxes                        11,220
7,628            Prepaid and other current assets             6,423
250,870          Total current assets                         245,073
168,877          Property, plant and equipment, net           158,209
8,911            Deferred income taxes                        7,669
68,331           Goodwill                                     69,432
78,380           Intangible assets, net                       87,943
14,169           Other assets                                 16,603
 $ 589,538       Total assets                                  $ 584,929
                 Liabilities and stockholders' equity          
 $ 80,985        Accounts payable                              $ 66,339
46,459           Accrued liabilities                          38,058
368              Current maturities of long-term debt         352
127,812          Total current liabilities                    104,749
1,033            Long-term debt                               1,314
6,873            Deferred pension and postretirement benefits 7,784
6,736            Liability for uncertain tax positions        8,412
9,827            Non-current environmental reserves           11,221
15,430           Other liabilities                            14,223
167,711          Total liabilities                            147,703
421,827          Total stockholders' equity                   437,226
 $ 589,538       Total liabilities and stockholders' equity    $ 584,929

                                                                      
QUANEX BUILDING PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
                                                          Twelve Months Ended
                                                          October 31,
                                                          2012       2011
Operating activities:                                                 
Net income (loss)                                         $ (16,534)  $ 9,066
Loss (income) from discontinued operations                —          12
Adjustments to reconcile net income (loss) to cash
provided by (used for) operating activities from                      
continuing operations:
Depreciation and amortization                             37,666     34,000
(Gain) loss on disposition of property                    (989)      374
Asset impairment charges                                  912        1,799
Restructuring charges                                     (122)      721
Deferred income taxes                                     (9,843)    3,361
Stock-based compensation                                  5,604      4,852
                                                                      
Changes in assets and liabilities, net of effects from                
acquisitions and dispositions:
Decrease (increase) in accounts and notes receivable      (4,250)    13,761
Decrease (increase) in inventory                          (10,288)   (530)
Decrease (increase) in other current assets               (50)       741
Increase (decrease) in accounts payable                   14,920     (13,349)
Increase (decrease) in accrued liabilities                9,313      (6,952)
Increase (decrease) in income taxes                       (547)      (493)
Increase (decrease) in deferred pension and               (693)      2,768
postretirement benefits
Other, net                                                1,379      2,813
Cash provided by (used for) operating activities from     26,478     52,944
continuing operations
Cash provided by (used for) operating activities from     —          (68)
discontinued operations
Cash provided by (used for) operating activities          26,478     52,876
Investing activities:                                                 
Acquisitions, net of cash acquired                        —          (110,845)
Capital expenditures                                      (42,871)   (25,312)
Proceeds from property insurance claim                    1,123      —
Proceeds from executive life insurance                    —          683
Other, net                                                44         107
Cash provided by (used for) investing activities from     (41,704)   (135,367)
continuing operations
Cash provided by (used for) investing activities from     —          —
discontinued operations
Cash provided by (used for) investing activities from     (41,704)   (135,367)
continuing operations
Financing activities:                                                 
Repayments of long-term debt                              (264)      (340)
Common stock dividends paid                               (5,891)    (5,979)
Purchase of treasury stock                                (1,284)    (10,080)
Issuance of common stock from stock option exercises,     3,511      1,093
including related tax benefits
Other, net                                                —          392
Cash provided by (used for) financing activities from     (3,928)    (14,914)
continuing operations
Cash provided by (used for) financing activities from     —          (392)
discontinued operations
Cash provided by (used for) financing activities          (3,928)    (15,306)
Effect of exchange rate changes on cash and equivalents   790        (222)
LESS: (Increase) decrease in cash and equivalents from    —          460
discontinued operations
Increase (decrease) in cash and equivalents from          (18,364)   (97,559)
continuing operations
                                                                      
Cash and equivalents at beginning of period               89,619     187,178
Cash and equivalents at end of period                      $ 71,255   $ 89,619

                                                          
QUANEX BUILDING PRODUCTS CORPORATION
INDUSTRY SEGMENT INFORMATION
(In thousands)
(Unaudited)
                                                          
                                                          
Three Months Ended                            Twelve Months Ended
October 31,                                   October 31,
2012      2011                                2012       2011
                     Net Sales:                           
 $136,355  $ 129,635 Engineered Products       $478,578   $ 420,258
101,298   106,168    Aluminum Sheet Products  362,315    440,495
237,653   235,803    Building Products        840,893    860,753
                                                          
(2,605)   (2,842)    Eliminations             (11,917)   (12,459)
                                                          
 $235,048  $ 232,961 Net Sales                 $828,976   $ 848,294
                                                          
                     Operating Income (Loss):             
 $ 13,541  $ 14,881  Engineered Products       $ 28,490   $ 30,293
(885)     3,088      Aluminum Sheet Products  (17,098)   17,115
12,656    17,969     Building Products        11,392     47,408
                                                          
(11,678)  (6,177)    Corporate and Other      (36,345)   (30,930)
                                                          
 $ 978     $ 11,792  Operating Income (Loss)  $ (24,953)  $ 16,478

CONTACT: Financial Contact:
         Marty Ketelaar
         713-877-5402
        
         Media Contact:
         Valerie Calvert
         713-877-5305

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