Quanex Building Products Corporation Reports Second Quarter 2014 Results

Quanex Building Products Corporation Reports Second Quarter 2014 Results

  *Net sales increased 8% to $135 million vs. $125 million in Q2 2013
  *EBITDA of $5.7 million vs. $1.2 million in Q2 2013
  *Net loss from continuing operations of $2.0 million vs. net loss of $6.9
    million in Q2 2013

HOUSTON, June 5, 2014 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation
(NYSE:NX), a leading supplier of window and door components, today released
results for its second fiscal quarter ended April 30, 2014.

"Despite poor weather throughout much of the second quarter and recent
weakness in housing and construction data, we continued to enjoy encouraging
growth in all of our product lines," Chairman, President and CEO Bill
Griffiths said. "With the seasonally strongest part of the year ahead of us,
Quanex is optimistic that it can sustain growth rates in the 8-9 percent range
for the full year."

Second quarter 2014 net sales grew to $135 million, an increase of 8% over the
second quarter of 2013. Second quarter 2014 operating loss was $2.8 million
compared to an operating loss of $8.6 million in the second quarter of 2013.
Second quarter 2014 EBITDA was $5.7 million compared to $1.2 million in the
second quarter of 2013. Operating loss and EBITDA results were negatively
impacted by the inability to pass through a 12% vinyl resin price increase on
approximately 60 percent of vinyl shipments as a result of previously agreed
to contractual obligations, which will expire at the end of the calendar year.
At the same time, repair and maintenance costs were abnormally high during the
quarter as Quanex continues to invest in upgrading its vinyl profile equipment
and facilities. This is expected to continue into the 3^rd quarter of 2014.

Preliminary U.S. window shipments as reported by Ducker Worldwide, LLC
(Ducker), a market intelligence firm, increased 7.4% for the twelve months
ended March 31, 2014. North American domestic fenestration sales, the most
comparable sales figure to those reported by Ducker, increased 8.1% from the
previous twelve months. Industry window shipment growth was driven by a 13.3%
increase in new construction units and a 3.7% increase in residential
remodeling and replacement units (R&R).

Corporate and Other Items

Second quarter 2014 corporate costs were $6.8 million compared to $14.5
million in the year ago second quarter.Second quarter 2014 results included
deferred compensation costs of $0.1 million, compared to a benefit of $0.5
million in the second quarter of 2013.

Second quarter 2014 cash balances totaled $127 million, which included the
$110 million received for the sale of Nichols.For the year, cash used by
operating activities was $11 million (inclusive of discontinued operation
results).There were no outstanding borrowings against the revolving credit
facility.

On February 10, 2014, Quanex announced the sale of Nichols to Aleris for $110
million in an all-cash transaction.The transaction was completed on April 1,
2014.

Additional information related to second quarter 2014 results, including a
reconciliation of EBITDA (defined as net income or loss before interest,
taxes, depreciation and amortization and other, net) and to its most
comparable GAAP figure, can be found in the supplemental schedules
accompanying this press release.

Dividend Declared

On May 29, 2014, the Board of Directors declared a quarterly cash dividend of
$0.04 per share on the company's common stock, payable June 30, 2014, to
shareholders of record on June 16, 2014.

2014 Guidance

Ducker is currently forecasting calendar year 2014 U.S. window shipments to
increase 7.5%, with new construction increasing 12.5% and R&R increasing 4.2%
when compared to 2013 shipments.For fiscal year 2014, Quanex expects revenue
to grow approximately 8 to 9 percent over 2013 results. Given the margin
headwinds in the vinyl profile business this year, Quanex expects EBITDA to be
in a range of $55-$60 million, rather than the previously stated guidance of
$55 to $65 million, which included the expected full year results for Nichols
Aluminum. The EBITDA guidance assumes no further increases in resin prices for
the remainder of 2014.

Corporate expenses during 2014 are expected to total $28-$30 million
(excluding transaction and deferred compensation-related costs).Capital
expenditures are expected to be $40 million in 2014; $30 million from
continuing operations and $10 million from discontinued operations. All
capital expenditures will be focused on improvements in growth initiatives,
operational efficiency and cost reduction.Depreciation and amortization is
expected to be approximately $34 million during 2014.

Quanex remains very positive on the long-term growth prospects of its markets
and expects to continue to invest for its future through both organic growth
initiatives and acquisitions.

Conference Call Information

Quanex will host its conference call today, June 5, 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
financial condition of Quanex, future uses of cash and other 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
Annual Report on Form 10-K for the fiscal year ended October 31, 2013, under
the section entitled "Cautionary Note Regarding Forward-Looking Statements."

           For additional information, please visit www.quanex.com.

QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
                                                             
                          Three Months Ended April Six Months Ended April 30,
                           30,
                          2014         2013        2014         2013
                          (In thousands, except per share data)
Net sales                  $135,208   $125,140  $261,587   $231,259
Cost and expenses:                                            
Cost of sales (excluding
depreciation and           108,649     95,730     204,838     179,025
amortization)
Selling, general and       20,393      28,202     42,895      52,026
administrative
Depreciation and           8,494       9,812      17,038      17,842
amortization
Asset impairment charges   500         —           505         —
Operating loss             (2,828)     (8,604)    (3,689)     (17,634)
Non-operating income                                          
(expense):
Interest expense           (143)       (174)      (284)       (294)
Other, net                 (22)        9          74          (82)
Loss from continuing
operations before income   (2,993)     (8,769)    (3,899)     (18,010)
taxes
Income tax benefit         963         1,906      658         5,977
Loss from continuing       (2,030)     (6,863)    (3,241)     (12,033)
operations
Income (loss) from
discontinued operations,   22,161      (485)      19,472      (3,433)
net of taxes
Net income (loss)          $20,131    $(7,348)  $16,231    $(15,466)
                                                             
Basic earnings (loss) per                                     
common share:
Loss per share from        $(0.05)    $(0.19)   $(0.09)    $(0.33)
continuing operations
Earnings (loss) per share
from discontinued          0.59        (0.01)     0.53        (0.09)
operations
Earnings (loss) per share, $0.54      $(0.20)   $0.44      $(0.42)
basic
                                                             
Diluted earnings (loss)                                       
per common share:
Loss per share from        $(0.05)    $(0.19)   $(0.09)    $(0.33)
continuing operations
Earnings (loss) per share
from discontinued          0.58        (0.01)     0.52        (0.09)
operations
Earnings (loss) per share, $0.53      $(0.20)   $0.43      $(0.42)
diluted
                                                             
Weighted-average common                                       
shares outstanding:
Basic                      37,217      36,850     37,108      36,830
Diluted                    37,838      36,850     37,726      36,830
                                                             
Cash dividends per share   $0.04      $0.04     $0.08      $0.08


QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                            
                                              April 30, 2014 October 31, 2013
                                              (In thousands)
ASSETS                                                       
Current assets:                                              
Cash and cash equivalents                      $126,984     $49,734
Accounts receivable, net                       52,335        59,460
Inventories, net                               54,986        41,679
Deferred income taxes                          20,502        16,348
Prepaid and other current assets               5,068         4,912
Current assets of discontinued operations      —              64,151
Total current assets                           259,875       236,284
Property, plant and equipment, net             111,906       106,821
Deferred income taxes                          7,004         7,030
Goodwill                                       72,411        71,866
Intangible assets, net                         75,106        78,962
Other assets                                   5,638         5,572
Non-current assets of discontinued operations  —              65,283
Total assets                                   $531,940     $571,818
                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                         
Current liabilities:                                         
Accounts payable                               $42,134      $37,533
Accrued liabilities                            31,262        34,810
Income taxes payable                           998           —
Current maturities of long-term debt           178           162
Current liabilities of discontinued operations —              49,364
Total current liabilities                      74,572        121,869
Long-term debt                                 593           701
Deferred pension and postretirement benefits   3,935         3,479
Liability for uncertain tax positions          5,481         5,396
Other liabilities                              11,351        14,640
Non-current liabilities of discontinued        —              9,539
operations
Total liabilities                              95,932        155,624
Stockholders' equity:                                        
Common stock                                   376           377
Additional paid-in-capital                     247,695       247,642
Retained earnings                              190,690       177,456
Accumulated other comprehensive loss           (982)         (2,400)
Treasury stock at cost                         (1,771)       (6,881)
Total stockholders' equity                     436,008       416,194
Total liabilities and stockholders' equity     $531,940     $571,818


QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
                                                          
                                         Six Months Ended April 30,
                                         2014              2013
                                         (In thousands)
Operating activities:                                      
Net Income (loss)                         $16,231         $(15,466)
Adjustments to reconcile net income
(loss) to cash used for operating                          
activities:
Depreciation and amortization             20,078           21,196
Stock-based compensation                  1,944            3,408
Deferred income tax provision (benefit)   8,128            (8,740)
Excess tax benefit from share-based       (639)            (171)
compensation
Asset impairment charges                  1,007            ―
Gain on sale of discontinued operations   (39,645)         ―
Other, net                                1,427            778
Changes in assets and liabilities, net of
effects from acquisitions and                              
dispositions:
(Increase) decrease in accounts           3,964            (6,380)
receivable
Increase in inventory                     (22,834)         (6,267)
(Increase) decrease in other current      (583)            1,046
assets
Increase (decrease) in accounts payable   10,127           (4,236)
Decrease in accrued liabilities           (6,234)          (7,468)
Increase in income taxes payable          1,667            1,766
Increase (decrease) in deferred pension   297              (1,475)
and postretirement benefits
Increase (decrease) in other long-term    (3,539)          1,066
liabilities
Other, net                                (2,419)          160
Cash used for operating activities        (11,023)         (20,783)
Investing activities:                                      
Proceeds from sale of discontinued        110,000          ―
operations
Acquisitions, net of cash acquired        (5,161)          (22,096)
Capital expenditures                      (18,597)         (24,983)
Proceeds from property insurance claim    1,400            ―
Proceeds from disposition of capital      304              22
assets
Cash provided by (used in) investing      87,946           (47,057)
activities
Financing activities:                                      
Borrowings under credit facility          ―                 14,500
Repayments of credit facility borrowings  ―                 (4,500)
Repayments of other long-term debt        (144)            (142)
Common stock dividends paid               (2,989)          (2,964)
Issuance of common stock                  2,882            694
Excess tax benefit from share-based       639              171
compensation
Debt issuance costs                       ―                 (1,163)
Other                                     35               ―
Cash provided by financing activities     423              6,596
                                                          
Effect of exchange rate changes on cash   (96)             (383)
and cash equivalents
                                                          
Increase (decrease) in cash and cash      77,250           (61,627)
equivalents
Cash and cash equivalents at beginning of 49,734           71,255
period
Cash and cash equivalents at end of       $126,984        $9,628
period
                                                          
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
                                 (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 April 30, Six Months Ended April 30,
                      2014           2013          2014         2013
                      (In thousands)               (In thousands)
Loss from continuing   $(2,030)     $(6,863)    $(3,241)   $(12,033)
operations
Income tax benefit     (963)         (1,906)      (658)       (5,977)
Other, net             22            (9)          (74)        82
Interest expense       143           174          284         294
Operating loss from    (2,828)       (8,604)      (3,689)     (17,634)
continuing operations
Depreciation and       8,494         9,812        17,038      17,842
amortization
EBITDA                 $5,666       $1,208      $13,349    $208
                                                             
                                                             
Financial Statistics                                          
as of April 30, 2014
Book value per common  $11.62                                  
share:
Total debt to          0.2%                                    
capitalization:
Return on invested     4.9%                                    
capital:
Actual number of
common shares          37,514,676                              
outstanding:


QUANEX BUILDING PRODUCTS CORPORATION
PRE-TAX & AFTER TAX PRESENTATION
(In millions, except per share data)
(Unaudited)
                                                                        
Pre-Tax      Q2 2014           Q2 2013           FY 2014           FY 2013   
Presentation $MM                $MM                $MM                $MM
Operating
Income
(Loss) from  $(2.8)          $(8.6)          $(3.7)          $(17.6) 
Continuing
Operations
As Reported
Benefit
(Reduction)                                                              
to Operating
Income:
IG Warranty
Reserve      ―                ―               (2.8)            ―         
Benefit
Asset
Impairment   0.5              ―               0.5              ―         
Charge
Transaction
Related      ―               ―               0.1              1.0      
Expenses
Discontinued
ERP          0.3              3.7              0.5              5.3      
Expenses*
Operating
Income
(Loss) from  $(2.0)          $(4.9)          $(5.4)          $(11.3) 
Continuing
Operations
As Adjusted
                                                                        
                                                                        
After-Tax    Q2 2014  Q2 2014   Q2 2013  Q2 2013   FY 2014  FY 2014   FY 2013   FY 2013
Presentation $MM      EPS       $MM      EPS       $MM      EPS       $MM       EPS
Income
(Loss) from
Continuing   $(2.0) $(0.05) $(6.9) $(0.19) $(3.2) $(0.09) $(12.0) $(0.33)
Operations
As Reported
Benefit
(Reduction)                                                              
to EPS:
IG Warranty
Reserve      ―      ―       ―      ―       (2.4)   (0.06)   ―       ―
Benefit
Asset
Impairment   0.4     0.01     ―      ―       0.4     0.01     ―       ―
Charge
Transaction
Related      ―      ―       ―      ―       0.1     0.00     0.7      0.02
Expenses
Discontinued 0.2     0.01     3.0     0.08     0.4     0.01     3.6      0.10
ERP Expenses
Diluted
Earnings
(Loss) from
Continuing   $(1.4) $(0.04) $(3.9) $(0.11) $(4.7) $(0.12) $(7.7)  $(0.21)
Operations
As Adjusted
*
                                                                        
* Q2 2014 and YTD 2014 includes $258K and $509k, respectively, of depreciation related to
the discontinued SAP project.

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

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