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Quanex Building Products Corporation Fiscal 2013 Second Quarter Results

Quanex Building Products Corporation Fiscal 2013 Second Quarter Results

             Net Loss of $7.3 million or $0.20 per Diluted Share

    EPG Net Sales Increase 15%; Operating Income Improves to $5.9 million

    Nichols Aluminum Net Sales Increase 24%; Shipped Volume Increases 27%

HOUSTON, June 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 second quarter results for the period ended April 30, 2013.

Consolidated second quarter 2013 net sales were $232.5 million, compared to
$194.4 million a year ago. Second quarter 2013 net loss was $7.3 million, or
$0.20 per diluted share compared to net loss of $12.3 million, or $0.34 per
diluted share in the year ago quarter. Consolidated EBITDA, a non-GAAP
measure, was $2.2 million, compared to a loss of $6.5 million a year ago.

Fiscal year-to-date consolidated 2013 net sales were $418.2 million, compared
to $356.0 million a year ago. Year-to-date consolidated net loss was $15.5
million compared to a loss of $19.0 million a year ago, which included $9
million of strike-related costs at Nichols Aluminum. Consolidated fiscal
year-to-date EBITDA, a non-GAAP measure, was a loss of $1.9 million, compared
to a loss of $8.1 million a year ago.

The 2013 second quarter and year-to-date results, when measured against
comparable prior year periods, benefitted from the elimination of
strike-related costs at Nichols Aluminum. Adjusting for strike-related costs,
second quarter and year-to-date results were negatively impacted by lower
spread at Nichols resulting from lower aluminum prices and higher corporate
expenses from Enterprise Resource Planning (ERP) implementation costs.

Quanex's two business segments are highly cyclical with the building and
construction market and the impact of adverse winter weather. As a result,
Quanex typically reports lower revenue and operating income results during the
first half of its fiscal year when building and construction activity is
reduced compared to the second half of its fiscal year.

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 second quarter 2013 net sales were $125.2 million compared to $108.8
million a year ago. The 15.1% improvement was primarily related to the
acquisition of Aluminite as well as higher sales across the segment's
products. Aluminite contributed 11.4% of the improvement to net sales.

EPG's second quarter 2013 EBITDA was $14.0 million compared to $7.1 million a
year ago, driven by the benefits from last year's insulating glass spacer
facility consolidation as well as higher sales results. This was partially
offset by pricing concessions and higher material costs. EPG's second quarter
2012 results were negatively impacted by $3.7 million of IG facility
consolidation expenses.

Engineered Products Group (in millions)
                Q2 2013 Q2 2012 YTD 2013 YTD 2012
Net sales       125.2   108.8   231.3    208.1
Operating income 5.9     0.1     8.7      1.9
EBITDA           14.0    7.1     24.3     15.9

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. Global
EPG sales for the 12 months ended April 30, 2013 were up 8.6%. EPG's North
American domestic fenestration sales, which is the most comparable sales
figure to those reported by Ducker, increased 9.1% (4.9% excluding Aluminite)
from the previous 12 months. U.S. window shipments as reported by Ducker
increased 7.5% over the 12 months ended March 31, 2013, driven by a 27.7%
increase in new construction units. U.S. window shipments to the residential
R&R market as reported by Ducker declined 2.0% for the 12 month period ended
March 31, 2013.A greater portion of EPG's sales are tied to R&R versus new
construction.

EPG experienced above market growth for the period, although they are being
negatively impacted by lower vinyl pricing, sales of low performance windows
and reduced volumes from a few national accounts due to seasonality and weak
R&R sales.

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.

Nichols Aluminum continued to make operational improvements during the second
quarter, including equipment reliability and on-time delivery to
customers.Shipped pounds increased more than 27% from the year ago quarter
due primarily to increased equipment reliability, standardized work procedures
and improved labor efficiency.

Nichols second quarter 2013 EBITDA was $1.3 million compared to a loss of $5.5
million a year ago.The improved results were primarily due to the
non-recurrence of 2012 strike-related costs.Nichols' profitability was
negatively impacted by product mix, with increased demand for mill finished
product, which commands a lower price when compared to painted sheet.Spread
improved $0.05 per pound to $0.42 per pound compared to $0.37 per pound in the
year ago quarter.The year ago quarter spread included $4.3 million, or $0.06
per pound of strike-related costs. Spread at Nichols remains challenging
primarily due to a larger reduction in aluminum prices compared to the
reduction in scrap aluminum prices, as well as a tight scrap supply market.

Aluminum Sheet Products(in millions, except for spread)
                  Q2 2013  Q2 2012  YTD 2013  YTD 2012
Net sales         109.7    88.3     194.3     154
Operating loss     (0.5)    (7.5)    (4.7)     (13.1)
EBITDA             1.3      (5.5)    (1.3)     (8.6)
Shipped pounds     78       61       137       105
Spread per pound   0.42     0.37              

Nichols Aluminum's shipments for the 12 months ended April 30, 2013, increased
13.2% primarily due to the operational improvements previously mentioned, as
well as the impact of the strike on 2012 sales volumes. Industry shipments as
reported by the Aluminum Association increased 3.1% 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.In May 2013, Nichols
completed the installation of a new paint oven in its Decatur, Alabama,
facility at a cost of approximately $9.0 million.The installation is complete
and the oven has been returned to operation.The new paint oven should
significantly improve product quality and on-time delivery of painted aluminum
sheet product to customers and allow Nichols to compete in the higher margin
painted flat rolled aluminum sheet market.

Corporate and Other Items

Corporate expenses in the quarter were $14.8 million compared to $8.7 million
in the year ago quarter.The increase in corporate expenses was primarily due
to higher ERP expenses of $3.6 million, (including $1.1 million of
depreciation), $1 million of higher information technology and
infrastructure-related costs and $0.9 million of project-related costs.The
remaining $0.6 million of higher expense is largely due to stock based
compensation and workers compensation costs.

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 $37.8
million.The initial 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. ERP-related costs are expected to be lower during the
third quarter of 2013, with a further decline taking place during the fourth
quarter of 2013.

At quarter end, Quanex had total cash of $9.6 million and total debt
outstanding of $11.4 million.Cash used by operating activities for the first
six months of 2013 was $20.8 million.The use of cash from operating
activities was primarily due to the reported net loss and working capital
needs.As of April 30, 2013, the company had $10 million in borrowings under
its revolving credit facility, and available capacity due to the facility's
EBITDA covenant requirements was approximately $59.4 million.

Business Outlook and Second Half Guidance

The key economic indicators that drive our results are mixed: new housing
starts have increased, with growth currently driven primarily by multi-family
units, but the R&R window market remains challenging.Quanex is pleased to see
a rebound in new construction and believes that growth will continue.New home
construction, the R&R market and prime window demand remain low when compared
to historical growth figures, and present a challenging environment, as does
unemployment and tight credit conditions. Additionally, increased global
supply of aluminum product, coupled with tight regional aluminum scrap supply,
continue to create a challenging spread environment for Nichols
Aluminum.Quanex expects calendar year 2013 U.S. window shipments to be
approximately 42 million units, a 5% increase above 2012 levels but nearly 12%
below Ducker's current forecasted shipments of 47 million.The company
believes the majority of the improvement in U.S. window shipments will come
from new construction (primarily multi-family units, where Quanex has less
exposure) and R&R window shipments will be relatively flat in 2013 when
compared to 2012 shipments.

With the spring building season underway, EPG is expected to report net sales
during the second half of 2013 of about $315 million and operating income of
about $35-$38 million. EPG's depreciation and amortization for the second
half of 2013 is expected to be about $16 million.

For the second half of 2013, Nichols Aluminum is expected to ship about 160
million pounds at an estimated spread of $0.41 per pound, and generate
operating income of about $3.5 million.Nichols' depreciation and amortization
for the second half of 2013 is expected to be $3 million.

Corporate expenses during the second half of 2013 are expected to total $24
million, including $4.8 million of depreciation and amortization
expense.Total second half 2013 corporate expenses include ERP-related expense
of $1.5 million and ERP-related depreciation and amortization of $4.3 million.

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 through both organic growth initiatives and acquisitions.

Dividend Declared

On June 6, 2013, the Board of Directors declared a quarterly cash dividend of
$0.04 per share on the company's common stock, payable June 28, 2013, to
shareholders of record on June 17, 2013.

Financial Statistics as of 04/30/13

Book value per common share: $10.98; Total debt to capitalization: 2.7%;

Return on invested capital: (3.0%); Actual number of common shares
outstanding: 37,062,915.

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.

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,
expectations relating EPG and Nichols Aluminum financial performance for the
second half of 2013, expectations relating to 2013 expenditures, expenses and
tax rates, expectations relating to the company's ERP implementation,
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                                        Six Months Ended
April 30,                                                 April 30,
2013     2012                                             2013      2012
                                                                 
$232,458 $194,444  Net sales                               $418,171  $356,023
198,963  171,837   Cost of sales (exclusive of items shown 361,653   309,879
                   separately below)
31,329   29,125    Selling, general and administrative     58,380    54,277
11,539   9,561     Depreciation and amortization           21,196    19,250
(9,373)  (16,079)  Operating income (loss)                 (23,058)  (27,383)
(174)    (114)     Interest expense                        (313)     (240)
9        (39)      Other, net                              (82)      178
(9,538)  (16,232)  Income (loss) before income taxes       (23,453)  (27,445)
2,190    3,947     Income tax benefit (expense)            7,987     8,412
$(7,348) $(12,285) Net income (loss)                       $(15,466) $(19,033)
                                                                 
                 Earnings (loss) per common share:                
$(0.20)  $(0.34)   Basic                                   $(0.42)   $(0.52)
$(0.20)  $(0.34)   Diluted                                 $(0.42)   $(0.52)
                                                                 
                 Weighted average common shares                   
                   outstanding:
36,850   36,567    Basic                                   36,830    36,557
36,850   36,567    Diluted                                 36,830    36,557
                                                                 
$0.04    $0.04     Cash dividends per share                $0.08     $0.08



QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

Three Months Ended                                        Six Months Ended
April 30,                                                 April 30,
2013     2012                                             2013      2012
                                                                 
$(7,348) $(12,285) Net income (loss)                       $(15,466) $(19,033)
                 Other comprehensive income (loss):               
(1,227)  876       Foreign currency translation            (326)     (1,094)
                   adjustments (pretax)
148      (203)     Foreign currency translation            273       (66)
                   adjustments tax benefit
(1,079)  673       Other comprehensive income (loss), net  (53)      (1,160)
                   of tax
$(8,427) $(11,612) Comprehensive income (loss)             $(15,519) $(20,193)



QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

April 30,                                             October 31,
2013                                                  2012
         Assets                                       
$9,628    Cash and equivalents                         $71,255
95,584    Accounts receivable, net                     85,644
77,208    Inventories, net                             65,904
27,163    Deferred income taxes                        20,439
5,576     Prepaid and other current assets             7,628
215,159   Total current assets                         250,870
179,041   Property, plant and equipment, net           168,877
10,808    Deferred income taxes                        8,911
71,003    Goodwill                                     68,331
82,970    Intangible assets, net                       78,380
15,677    Other assets                                 14,169
$574,658  Total assets                                 $589,538
         Liabilities and stockholders' equity         
$77,628   Accounts payable                             $80,985
39,980    Accrued liabilities                          46,459
278       Current maturities of long-term debt         368
117,886   Total current liabilities                    127,812
11,072    Long-term debt                               1,033
5,398     Deferred pension and postretirement benefits 6,873
6,844     Liability for uncertain tax positions        6,736
9,230     Non-current environmental reserves           9,827
17,154    Other liabilities                            15,430
167,584   Total liabilities                            167,711
407,074   Total stockholders' equity                   421,827
$574,658  Total liabilities and stockholders' equity   $589,538



QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
                                                          
                                                          Six Months Ended
                                                          April 30,
                                                          2013      2012
Operating activities:                                               
Net income (loss)                                          $(15,466) $(19,033)
Adjustments to reconcile net income (loss) to cash                  
provided by (used for)operating activities:
Depreciation and amortization                              21,324    19,285
Restructuring charges                                      —         2,759
Deferred income taxes                                      (8,740)   (10,064)
Stock-based compensation                                   3,565     2,879
Changes in assets and liabilities, net of effects from              
acquisitions and dispositions:
Decrease (increase) in accounts and notes receivable       (6,380)   111
Decrease (increase) in inventory                           (6,267)   (9,658)
Decrease (increase) in other current assets                1,046     (705)
Increase (decrease) in accounts payable                    (4,236)   3,493
Increase (decrease) in accrued liabilities                 (7,039)   (883)
Increase (decrease) in income taxes                        1,766     425
Increase (decrease) in deferred pension and postretirement (1,475)   (2,453)
benefits
Other, net                                                 1,119     2,054
Cash provided by (used for) operating activities           (20,783)  (11,790)
Investing activities:                                               
Acquisitions, net of cash acquired                         (22,096)  —
Capital expenditures                                       (24,983)  (21,311)
Other, net                                                 22        21
Cash provided by (used for) investing activities           (47,057)  (21,290)
Financing activities:                                               
Borrowings under credit facility                           14,500    —
Repayments of credit facility borrowings                   (4,500)   —
Repayments of long-term debt                               (142)     (131)
Common stock dividends paid                                (2,964)   (2,939)
Purchase of treasury stock                                 —         (1,284)
Issuance of common stock from stock option exercises,      865       1,427
including related tax benefits
Debt issuance costs                                        (1,163)   —
Cash provided by (used for) financing activities           6,596     (2,927)
Effect of exchange rate changes on cash and equivalents    (383)     533
Increase (decrease) in cash and equivalents                (61,627)  (35,474)
                                                                   
Cash and equivalents at beginning of period                71,255    89,619
Cash and equivalents at end of period                      $9,628    $54,145



QUANEX BUILDING PRODUCTS CORPORATION
INDUSTRY SEGMENT INFORMATION
(In thousands)
(Unaudited)

Three Months Ended                         Six Months Ended
April 30,                                  April 30,
2013     2012                              2013      2012
                 Net Sales:                        
$125,158 $108,770  Engineered Products      $231,277  $208,163
109,691  88,293    Aluminum Sheet Products  194,294   153,993
234,849  197,063   Building Products        425,571   362,156
                                                  
(2,391)  (2,619)   Eliminations             (7,400)   (6,133)
                                                  
$232,458 $194,444  Net Sales                $418,171  $356,023
                                                  
                 Operating Income (Loss):          
$5,908   $83       Engineered Products      $8,741    $1,887
(468)    (7,533)   Aluminum Sheet Products  (4,698)   (13,051)
5,440    (7,450)   Building Products        4,043     (11,164)
                                                  
(14,813) (8,629)   Corporate and Other      (27,101)  (16,219)
                                                  
$(9,373) $(16,079) Operating Income (Loss)  $(23,058) $(27,383)



QUANEX BUILDING PRODUCTS CORPORATION
NON-GAAP FINANCIAL MEASURE DISCLOSURE
(In thousands)
(Unaudited)

EBITDA 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                                  Six Months Ended
April30, 2013                                      April30, 2013
          Aluminum                                         Aluminum          
Engineered Sheet    Corporate                      Engineered Sheet    Corporate 
Products   Products & Other   Quanex                Products   Products & Other   Quanex
                                                                           
                           $(7,348)  Net income                              $(15,466)
                                        (loss)
                                        Income tax
                           (2,190)   expense                                 (7,987)
                                        (benefit)
                           (9)       Other, net                              82
                           174       Interest                                313
                                        Expense
                                        Operating
$5,908     (468)    (14,813)  (9,373)   income       $8,741     (4,698)  (27,101)  (23,058)
                                        (loss)
                                        Depreciation
8,097      1,727    1,715     11,539    and          15,570     3,354    2,272     21,196
                                        amortization
14,005     1,259    (13,098)  2,166     EBITDA       24,311     (1,344)  (24,829)  (1,862)
                                                                           
Three Months Ended                                  Six Months Ended
April30, 2012                                      April30, 2012
          Aluminum                                         Aluminum          
Engineered Sheet    Corporate                      Engineered Sheet    Corporate 
Products   Products & Other   Quanex                Products   Products & Other   Quanex
                                                                           
                           $(12,285) Net income                              $(19,033)
                                        (loss)
                                        Income tax
                           (3,947)   expense                                 (8,412)
                                        (benefit)
                           39        Other, net                              (178)
                           114       Interest                                240
                                        Expense
                                        Operating
$83        (7,533)  (8,629)   (16,079)  income       $1,887     (13,051) (16,219)  (27,383)
                                        (loss)
                                        Depreciation
7,038      1,997    526       9,561     and          14,050     4,457    743       19,250
                                        amortization
7,121      (5,536)  (8,103)   (6,518)   EBITDA       15,937     (8,594)  (15,476)  (8,133)

CONTACT: Financial Contact:
         Marty Ketelaar, 713-877-5402

         Media Contact:
         Valerie Calvert, 713-877-5305

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