Quanex Building Products Corporation Fiscal 2013 First Quarter Results

Quanex Building Products Corporation Fiscal 2013 First Quarter Results

         Reported Net Loss of $8.1 million or $0.22 per Diluted Share
    Nichols Aluminum Net Sales Increase 29%; Shipped Volume Increases 33%
             Acquisition of Aluminite Completed December 31, 2012

HOUSTON, March 7, 2013 (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 2013 first quarter results for the period ended January 31,
2013.

Consolidated first quarter 2013 net sales were $185.7 million, compared to
$161.6 million a year ago. First quarter 2013 net loss was $8.1 million, or
$0.22 per diluted share compared to loss of $6.7 million, or $0.18 per diluted
share in the year ago quarter. Consolidated EBITDA, a non-GAAP measure, was a
loss of $4.0 million, compared to a loss of $1.6 million a year ago.

The increased first quarter net loss per share was due primarily to higher
corporate expenses from acquisition-related transaction costs and ongoing ERP
implementation costs. Quanex's two business segments are highly cyclical with
the building and construction market and as a result, Quanex typically reports
a loss during its first quarter when building and construction activity is
reduced.

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 first quarter 2013 net sales were $106.1 million compared to $99.4
million a year ago. The 6.7% improvement was primarily related to higher vinyl
extrusion sales and $3.7 million of sales from the acquisition of Aluminite.
Excluding Aluminite, net sales improved 3.1%.

EPG's first quarter 2013 operating income was $2.8 million compared to $1.8
million a year ago. While higher than first quarter 2012 results, EPG's
profitability was negatively impacted by lower solar edge tape sales and an
unfavorable product mix.

Engineered Products Group (in millions, except for spread)
                         Q1 2013          Q1 2012
Net sales                $106.1           $99.4
Operating income          $2.8             $1.8
EBITDA                    $10.3            $8.8

Quanex believes there is value in measuring its sales performance against
industry-related metrics and 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 January 31, 2013 were up 11.4%.Domestic
fenestration sales, which is the most comparable sales figure to those
reported by Ducker, increased 7.9% from the previous 12 months. U.S. window
shipments as reported by Ducker increased 5.8% over the 12 months ended
December 31, 2012. U.S. window shipments to the residential R&R market as
reported by Ducker declined 2.7% for the 12 month period ended December 31,
2012.

EPG's improved sales performance can be attributed to higher vinyl extrusion
sales due to increased demand from one of its top customers and increased
vinyl sales to new customers, partially offset by pricing pressures driven by
excess capacity in the vinyl window profile business, reduced sales of solar
product and sluggish sales in the residential R&R markets.

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

Nichols Aluminum has made significant operational improvements during the
first quarter, including improvements in equipment reliability and on-time
delivery of aluminum sheet to customers.During the fiscal first quarter of
2013, Nichols took advantage of the planned shutdowns of facilities to
accelerate preventative maintenance procedures.Shipped pounds increased
nearly 33% from the year ago quarter due primarily to increased equipment
reliability resulting from a greater focus on and investment in preventative
maintenance, standardized work procedures, improved labor efficiency and
continued demand.

Nichols' profitability was negatively impacted by higher planned repair and
maintenance expense compared to the year ago quarter.Additionally, the spread
was down $0.04 per pound, or 7% from the year ago quarter, due to a larger
reduction in aluminum prices compared to the reduction in scrap aluminum
prices.

Aluminum Sheet Products(in millions, except for spread)
                        Q1 2013         Q1 2012
Net sales               $84.6         $65.7
Operating loss           $(4.2)        $(5.5)
EBITDA                   $(2.6)        $(3.1)
Shipped pounds           59              44
Spread per pound         $0.44         $0.48

Nichols Aluminum's shipments for the 12 months ended January 31, 2013,
decreased approximately one percent, primarily due to the impact of the 2012
strike. Industry shipments as reported by the Aluminum Association were up
7.7% over the same period.

Nichols Aluminum's new operating principles are focused on significantly
improving quality and on-time delivery through process improvements and a
proactive maintenance program that requires 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 $12.3 million compared to $7.6 million
in the year ago quarter.The increase in corporate expenses was primarily due
to higher enterprise resource planning (ERP) expenses of $1.3 million and
transaction-related expenses of $1.0 million.The remaining $2.4 million of
items negatively impacting corporate expense include higher workers
compensation, group medical and stock-based compensation expense.

In 2011, Quanex launched a multi-year, company-wide program to transform
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 $31.3
million.A key phase of the project went live during the second quarter of
fiscal 2013.Depreciation expense associated with the ERP system is expected
to be $2.1 million per quarter until the completion of the next phase of the
ERP rollout. The spending run rate is expected to decrease throughout the
remainder of the project.

At quarter end, Quanex had a cash balance of $4.6 million and total debt
outstanding of $1.5 million.Cash used by operating activities for first
quarter 2013 was $30.3 million. The decrease in cash balances was due to the
$22.4 million acquisition of Aluminite, $11.5 million in capital expenditures
and $40.7 million of working capital commitments.As of January 31, 2013, the
company had no borrowings under its revolving credit facility, and available
capacity due to the facility's EBITDA covenant requirements was approximately
$81 million. The company currently has $10 million outstanding under its
revolving credit facility.

During the first quarter, Quanex renewed its revolving credit facility. The
renewed facility is a $150 million unsecured revolving credit facility with a
$100 million accordion feature that expires in January 2018.

Aluminite Acquisition

On December 31, 2012, Quanex completed the acquisition of the assets of
Alumco, Inc. and its subsidiaries in a cash transaction valued at $22.4
million.Alumco, Inc., which operated under the Aluminite brand, markets and
produces window and door screens to original equipment manufacturers (OEM) of
vinyl windows and doors and had $47 million in sales during calendar year
2012.With nine production facilities strategically located near its customer
base, Aluminite has the capacity to produce 95,000 window screens and 17,500
door screens per day.Quanex did not serve the screen market for vinyl windows
prior to the acquisition of Alumco, Inc.With the addition of Aluminite,
Quanex becomes one of the leading producers of window and door screens in
North America.

Business Outlook

Improved housing starts, driven primarily by multi-family unit growth,
stagnant residential R&R growth, high unemployment and tight credit conditions
will continue to present challenges to the residential window market during
2013. Quanex expects calendar year 2013 U.S. window shipments to be
approximately 42 million units, a 5% increase above 2012 levels but nearly 10%
below Ducker's forecasted shipments of 46 million.The company believes the
majority of the improvement in U.S. window shipments will come from new
construction and R&R window shipments will be relatively flat in 2013 when
compared to 2012 shipments.Quanex remains very positive on the long-term
growth prospects of its residential and commercial markets and expects to
continue to invest for its future growth, through both organic growth
initiatives and acquisitions.For 2013, Quanex estimates capital expenditures
of $40 million (inclusive of the $10-$13 million guidance previously given for
Nichols Aluminum), depreciation and amortization expense of $46 million
(including $6.2 million of ERP-related depreciation).

Dividend Declared

As previously announced, on February 28, 2013, the Board of Directors declared
a quarterly cash dividend of $0.04 per share on the company's common stock,
payable March 29, 2013, to shareholders of record on March 15, 2013.

Financial Statistics as of 01/31/13

Book value per common share: $11.20; Total debt to capitalization: 0.4%;
Return on invested capital: (4.2%); Actual number of common shares
outstanding: 37,057,040.

Non-GAAP Financial Measures

EBITDA, diluted loss per share as adjusted and net loss 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.

Non-GAAP Reconciliations
                           Q1     Q1     Q1     Q1
                             2013   2013   2012   2012
                    Segment $ EPS $ mil $ EPS $ mil
Net loss as reported        (0.22) (8.1)  (0.18) (6.7)
Benefit to EPS:                               
Transaction related  Corp.  0.02   0.6    --     --
ERP implementation   Corp.  0.03   1.2    0.01   0.5
Net loss as adjusted        (0.17) (6.3)  (0.17) (6.2)
                                             

                              Three Months Ended January 31, 2013
                               Engineered Aluminum   Corporate
(in thousands)                 Products   Sheet      & Other     Quanex
                                          Products
Net income (loss)              -          -          -           $(8,118)
Income tax expense (benefit)  -          -          -           (5,797)
Other, net                     -          -          -           91
Interest expense               -          -          -           139
                                                             
Operating income (loss)       2,833      (4,229)    (12,289)    (13,685)
Depreciation and amortization 7,473      1,627      557         9,657
                                                             
EBITDA                       $10,306  $(2,602) $(11,732) $(4,028)
                                                             
                                                             
                              Three Months Ended January 31, 2012
                               Engineered Aluminum   Corporate
(in thousands)                 Products   Sheet      & Other     Quanex
                                          Products
Net income (loss)              -          -          -           $(6,748)
Income tax expense (benefit)  -          -          -           (4,465)
Other, net                     -          -          -           (217)
Interest expense               -          -          -           126
                                                             
Operating income (loss)        1,803      (5,518)    (7,589)     (11,304)
Depreciation and amortization 7,012      2,460      217         9,689
                                                             
EBITDA                       $8,815   $(3,058) $(7,372)  $(1,615)

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 and impairment charges;

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 31, 2012, under the Securities Exchange Act of 1934 ("Exchange
Act"), in particular the section titled, "Private Securities Litigation Reform
Act" contained therein.

           For additional information, please visit www.quanex.com

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
                                                                  
                                                        Three Months Ended
                                                        January 31,
                                                        2013       2012
                                                                  
Net sales                                                $185,713 $161,579
                                                                  
Cost of sales (exclusive of items shown separately       162,690    138,042
below)
Selling, general and administrative                      27,051     25,152
Depreciation and amortization                            9,657      9,689
Operating income (loss)                                  (13,685)   (11,304)
Interest expense                                         (139)      (126)
Other, net                                               (91)       217
Income (loss) before income taxes                        (13,915)   (11,213)
Income tax benefit (expense)                             5,797      4,465
Net income (loss)                                        $(8,118) $(6,748)
                                                                  
Earnings (loss) per common share:                                  
Basic                                                    $(0.22)  $(0.18)
Diluted                                                  $(0.22)  $(0.18)
                                                                  
Weighted average common shares outstanding:                        
Basic                                                    36,809     36,547
Diluted                                                  36,809     36,547
                                                                  
Cash dividends per share                                 $0.04    $0.04


QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
                                                        
                                                        Three Months Ended
                                                        January 31,
                                                        2013       2012
Net income (loss)                                        $(8,118) $(6,748)
Other comprehensive income (loss) - foreign currency     901        (1,971)
translation adjustments (pretax)
Other comprehensive income (loss) - foreign currency     125        137
translation adjustments tax benefit
Other comprehensive income (loss), net of tax            1,026      (1,834)
Comprehensive income (loss)                              $(7,092) $(8,582)


QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                       
January 31,                                             October 31,
2013                                                     2012
           Assets                                       
$ 4,558     Cash and equivalents                         $ 71,255
78,000      Accounts receivable, net                     85,644
84,563      Inventories                                  65,904
26,865      Deferred income taxes                        20,439
8,461       Prepaid and other current assets             7,628
202,447     Total current assets                         250,870
178,788     Property, plant and equipment, net           168,877
8,507       Deferred income taxes                        8,911
71,509      Goodwill                                     68,331
85,763      Intangible assets, net                       78,380
15,286      Other assets                                 14,169
$ 562,300   Total assets                                 $ 589,538
           Liabilities and stockholders' equity         
$ 72,054    Accounts payable                             $ 80,985
32,796      Accrued liabilities                          46,459
379         Current maturities of long-term debt         368
105,229     Total current liabilities                    127,812
1,088       Long-term debt                               1,033
7,736       Deferred pension and postretirement benefits 6,873
6,790       Liability for uncertain tax positions        6,736
9,480       Non-current environmental reserves           9,827
16,877      Other liabilities                            15,430
147,200     Total liabilities                            167,711
415,100     Total stockholders' equity                   421,827
$ 562,300   Total liabilities and stockholders' equity   $ 589,538


QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
                                                                  
                                                        Three Months Ended
                                                        January 31,
                                                        2013       2012
Operating activities:                                              
Net income (loss)                                        $(8,118) $(6,748)
Adjustments to reconcile net income (loss) to cash                 
provided by (used for) operating activities:
Depreciation and amortization                            9,690      9,706
Restructuring charges                                    —          2,115
Deferred income taxes                                    (6,499)    (5,457)
Stock-based compensation                                 2,067      1,602
                                                                  
Changes in assets and liabilities, net of effects from             
acquisitions and dispositions:
Decrease (increase) in accounts and notes receivable     10,862     21,281
Decrease (increase) in inventory                         (13,417)   (8,517)
Decrease (increase) in other current assets              (291)      (1,046)
Increase (decrease) in accounts payable                  (11,496)   (9,582)
Increase (decrease) in accrued liabilities               (15,695)   (4,482)
Increase (decrease) in income taxes                      487        346
Increase (decrease) in deferred pension and              862        967
postretirement benefits
Other, net                                               1,208      1,888
Cash provided by (used for) operating activities         (30,340)   2,073
Investing activities:                                              
Acquisitions, net of cash acquired                       (22,449)   —
Capital expenditures                                     (11,500)   (8,024)
Other, net                                               16         —
Cash provided by (used for) investing activities         (33,933)   (8,024)
Financing activities:                                              
Repayments of long-term debt                             (25)       (20)
Common stock dividends paid                              (1,482)    (1,470)
Purchase of treasury stock                               —          (1,284)
Issuance of common stock from stock option exercises,    677        344
including related tax benefits
Debt issuance costs                                      (1,070)    —
Cash provided by (used for) financing activities         (1,900)    (2,430)
Effect of exchange rate changes on cash and equivalents  (524)      484
Increase (decrease) in cash and equivalents              (66,697)   (7,897)
Cash and equivalents at beginning of period              71,255     89,619
Cash and equivalents at end of period                    $4,558   $81,722


QUANEX BUILDING PRODUCTS CORPORATION
INDUSTRY SEGMENT INFORMATION
(In thousands)
(Unaudited)
                                   
                        Three Months Ended
                        January 31,
                        2013        2012
Net Sales:                          
Engineered Products      $106,119  $99,393
Aluminum Sheet Products  84,603      65,700
Building Products        190,722     165,093
Eliminations             (5,009)     (3,514)
Net Sales                $185,713  $161,579
                                   
Operating Income (Loss):            
Engineered Products      $2,833    $1,803
Aluminum Sheet Products  (4,229)     (5,518)
Building Products        (1,396)     (3,715)
Corporate and Other      (12,289)    (7,589)
Operating Income (Loss)  $(13,685) $(11,304)

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

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