Quanex Building Products Corporation Fiscal First Quarter 2009 Results
Loss of
Received Final Cash Payment From Gerdau SA
Booked
Quarterly Highlights
* Net sales were$112.9 million ; operating loss before taxes was$18.3 million before impairment charges. * Received a final cash payment of$15 million fromGerdau SA as a result of theApril 2008 merger withQuanex Corporation . * Cash and equivalents totaled$75.4 million . * Capital expenditures in the quarter were$4.6 million . * Completed consolidation of two facilities at the Engineered Products segment. * To better size its operations to meet demand Nichols Aluminum: idled rolling capacity at two finishing facilities; reduced shifts and days of operation at its casting facility. * Company booked a$137.3 million pre-tax estimated impairment charge.
Quarterly Commentary
ENGINEERED PRODUCTS (in millions) 1st qtr 2009 1st qtr 2008 ------------ ------------ Net sales $64.8 $87.3 Operating income before charges ($4.7) $1.9
Engineered Products is focused on providing window and door customers with value-added fenestration products and components. Key market drivers are housing starts and remodeling activity.
"The U.S. housing market deteriorated 48% in our first quarter compared to a year ago, while residential remodeling activity was estimated to be off some 15% over the same period. Net sales at Engineered Products were down 26%, which put our performance ahead of the overall market," said David D. Petratis, president and chief executive officer of
ALUMINUM SHEET PRODUCTS (in millions) 1st qtr 2009 1st qtr 2008 ------------ ------------ Net sales $50.8 $92.1 Operating income before charges ($7.8) $5.6 Shipped pounds 36 58
Aluminum Sheet Products is a leading provider of common alloy aluminum sheet products for the building and construction, transportation and other consumer durable markets. Key market drivers are housing starts and remodeling activity, which together represent about 65% of the segment's sales.
"London Metal Exchange (LME) aluminum prices fell dramatically during the quarter, down some 32% to an inflation-adjusted record low price of
Cash Flow
"Without question, fiscal 2009 is all about generating good cash flow and spending every dollar wisely, and we were disappointed in our first quarter cash flow performance. To put it simply, our customers' forecasts for the quarter never materialized, and the resulting collapse in demand in both December and January left us with too much inventory, particularly at Nichols Aluminum and
"On a positive note, we did receive our final cash true-up related to the merger of
Outlook
A faltering economy, falling consumer confidence, ongoing bank credit crunch and high residential home inventories has resulted in a more difficult business environment in fiscal 2009 than the company had previously expected. Because of these issues, the company cannot predict with any confidence what the actual fiscal 2009 U.S. residential build rate will be. Consequently, it is suspending all specific financial guidance. Once these market issues become clear, the company will again provide specific financial guidance. The company does expect to report an operating loss for the second quarter and fiscal year.
Impairment Charge
In
Non-GAAP Financial Measures
Income from Continuing Operations before Impairment Charge
Income from continuing operations before impairment charge is a non-GAAP financial measure. The company believes this non-GAAP financial measure provides a consistent basis for comparison between quarters, and enhances the understanding of the performance of its operations as they are not influenced by certain costs incurred during the periods that are believed to be special and related to specific, infrequent items. Set forth below is a reconciliation of reported income from continuing operations and reported diluted earnings per share from continuing operations to income from continuing operations before impairment charge and diluted earnings per share from continuing operations before impairment charge. 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.
GAAP Reconciliation Table Three months ended January 31, -------------------------------------- 2009 2008 ------------------ ------------------ (in millions except Diluted Diluted diluted EPS) Income EPS Income EPS -------- -------- -------- -------- Income (loss) from continuing operations, as reported $(120.4) $ (3.23) $ (0.6) $ (0.02) Impairment of goodwill and intangibles, after-tax 112.4 3.02 -- -- -------- -------- -------- -------- Income from continuing operations, excluding impairment charge $ (8.0) $ (0.21) $ (0.6) $ (0.02) ======== ======== ======== ======== Diluted weighted average common shares outstanding (in thousands) 37,333 37,166
Dividend Declared
The Board of Directors declared a quarterly cash dividend of
Corporate Profile
The
Financial Statistics as of
Book value per common share:
Definitions
Book value per common share - calculated as total stockholders' equity as of balance sheet date divided by actual number of common shares outstanding;
Total debt to capitalization - calculated as the sum of both the current and long term portion of debt, as of balance sheet date, divided by the sum of both the current and long term portion of debt plus total stockholders' equity as of balance sheet date;
Statements that use the words "expect," "should," "believe," "will," "might," or similar words reflecting future expectations or beliefs are forward-looking statements. The statements found above are based on current expectations. Actual results or events may differ materially from this release. Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, and the availability and cost of raw materials. For a more complete discussion of factors that may affect the company's future performance, please refer to the company's 10-K filing on
For additional information, visit the company's website at www.quanex.com.
QUANEX BUILDING PRODUCTS CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) (Unaudited) Three months ended January 31, ---------------------- 2009 2008 --------- --------- Net sales: Engineered Products $ 64,819 $ 87,275 Aluminum Sheet Products 50,808 92,068 --------- --------- Building Products 115,627 179,343 Eliminations (2,739) (4,431) --------- --------- Net sales $ 112,888 $ 174,912 ========= ========= Operating income*: Engineered Products $(121,614) $ 1,895 Aluminum Sheet Products (28,204) 5,602 --------- --------- Building Products (149,818) 7,497 Corporate and Other (5,743) (8,664) --------- --------- Operating Income (Loss) $(155,561) $ (1,167) ========= ========= ------------ * Operating income reflects non-cash impairment charge of$137,299 : Engineered Products $(116,910) Aluminum Sheet Products (20,389) --------- Total impairment loss $(137,299) =========
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three months ended January 31, ---------------------- 2009 2008 --------- --------- Net sales $ 112,888 $ 174,912 Cost of sales (exclusive of items shown separately below) 106,664 147,077 Selling, general and administrative expense 15,781 20,043 Impairment of goodwill and intangibles 137,299 -- Depreciation and amortization 8,705 8,959 --------- --------- Operating income (loss) (155,561) (1,167) Interest expense (122) (138) Other, net 122 308 --------- --------- Income (loss) from continuing operations before income taxes (155,561) (997) Income tax benefit (expense) 35,148 388 --------- --------- Income (loss) from continuing operations (120,413) (609) Income (loss) from discontinued operations, net of taxes -- 3,693 --------- --------- Net income (loss) $(120,413) $ 3,084 ========= ========= Basic earnings per common share: Earnings (loss) from continuing operations $ (3.23) $ (0.02) Income (loss) from discontinued operations $ -- $ 0.10 --------- --------- Basic earnings (loss) per common share $ (3.23) $ 0.08 --------- --------- Diluted earnings per common share: Earnings (loss) from continuing operations $ (3.23) $ (0.02) Income (loss) from discontinued operations $ -- $ 0.10 --------- --------- Diluted earnings (loss) per share $ (3.23) $ 0.08 --------- --------- Weighted average common shares outstanding: Basic 37,333 37,166 Diluted 37,333 37,166
QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) January 31, October 31, 2009 2008 --------------------------------------------------------------------- Assets $ 75,355 Cash and equivalents $ 67,413 40,494 Accounts and notes receivable, net 101,211 58,566 Inventories, net 63,848 10,931 Deferred income taxes 10,932 6,908 Other current assets 6,239 ---------- --------------------------------------------- ---------- 192,254 Total current assets 249,643 153,761 Property, plant and equipment, net 157,389 39,349 Deferred income taxes 3,875 70,455 Goodwill 196,338 49,611 Intangible assets, net 62,476 11,136 Other assets 11,126 ---------- --------------------------------------------- ---------- $ 516,566 Total assets $ 680,847 ========== ============================================= ========== Liabilities and stockholders' equity $ 30,328 Accounts payable $ 79,512 27,132 Accrued liabilities 38,316 362 Current maturities of long-term debt 363 ---------- --------------------------------------------- ---------- 57,822 Total current liabilities 118,191 2,176 Long-term debt 2,188 1,887 Non-current environmental reserves 2,485 12,081 Other liabilities 10,155 ---------- --------------------------------------------- ---------- 73,966 Total liabilities 133,019 442,600 Total stockholders' equity 547,828 ---------- --------------------------------------------- ---------- $ 516,566 Total liabilities and stockholders' equity $ 680,847 ========== ============================================= ==========
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Three months ended January 31, ---------------------- 2009 2008 --------- --------- Operating activities: Net income $(120,413) $ 3,084 Income from discontinued operations -- (3,693) --------- --------- Net income from continuing operations (120,413) (609) Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 8,723 8,961 Impairment of goodwill and intangibles 137,299 -- Deferred income taxes (22,492) 83 Stock-based compensation 818 853 --------- --------- 3,935 9,288 Changes in assets and liabilities, net of effects from acquisitions, dispositions and the Separation: Decrease (Increase) in accounts and notes receivable 58,948 21,360 Decrease (Increase) in inventory 5,259 (4,132) Decrease (Increase) in other current assets (132) 200 Increase (Decrease) in accounts payable (49,239) (14,223) Increase (Decrease) in accrued liabilities (6,979) (8,088) Increase (Decrease) in income taxes (15,013) (372) Increase (Decrease) in deferred pension and postretirement benefits 954 962 Other, net 584 2,907 --------- --------- Cash provided by (used for) operating activities from continuing operations (1,683) 7,902 Cash provided by (used for) operating activities from discontinued operations -- 16,168 --------- --------- Cash provided by (used for) operating activities (1,683) 24,070 --------- --------- Investing activities: Capital expenditures, net of retirements (4,611) (3,413) --------- --------- Cash provided by (used for) investing activities from continuing operations (4,611) (3,413) Cash provided by (used for) investing activities from discontinued operations -- 36,350 --------- --------- Cash provided by (used for) investing activities (4,611) 32,937 --------- --------- Financing activities: Repayments of long-term debt (13) (14) Common dividends paid (1,130) -- Funding from Separation 15,401 20,900 --------- --------- Cash provided by (used for) financing activities from continuing operations 14,258 20,886 Cash provided by (used for) financing activities from discontinued operations -- (40,402) --------- --------- Cash provided by (used for) financing activities 14,258 (19,516) --------- --------- Effect of exchange rate changes on cash and equivalents (22) (55) LESS: (Increase) Decrease in cash and equivalents from discontinued operations -- (12,116) --------- --------- Increase (Decrease) in cash and equivalents from continuing operations 7,942 25,320 Beginning of period cash and equivalents 67,413 1,778 --------- --------- End of period cash and equivalents $ 75,355 $ 27,098 ========= =========
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