News Release Details
Quanex Announces Earnings for Fiscal 2001 Second Quarter; Company Exceeds First Quarter 2001; Engineered Products Group Reports Best-Ever Second Quarter
HOUSTON, May 22 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced fiscal 2001, second quarter results for the period ending April 30. Basic and diluted earnings per share, on income before extraordinary items, were $.32 for the second quarter, compared to $.66 basic and $.61 diluted earnings per share for the same period last year. Second quarter net sales were $214 million compared to $243 million in 2000. Second quarter net income was $4.3 million, compared to $9.4 million reported in 2000.
Fiscal Second Quarter 2001 Versus Fiscal Second Quarter 2000
-- MACSTEEL(R) -- engineered steel bar group
-- Net sales: $76.0 million vs. $88.2 million
-- Operating income: $8.7 million vs. $15.9 million
-- Nichols Aluminum -- aluminum sheet products group
-- Net sales: $90.1 million vs. $111.8 million
-- Operating income: $1.1 million vs. $6.6 million
-- Engineered Products -- formed metal products group
-- Net sales: $31.6 million vs. $22.7 million
-- Operating income: $3.1 million vs. $2.5 million
-- Piper Impact -- impact extrusion products group
-- Net sales: $21.2 million vs. $26.4 million
-- Operating income: $928 thousand vs. a loss of $3.8 million
Statements that use the words "expect," "should," "will," "might," or similar words reflecting future expectations or beliefs are forward-looking statements. The following statements 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 most recent 10-K filing (January 5, 2001) under the Securities Exchange Act of 1934, in particular the sections titled, "Private Securities Litigation Reform Act" contained therein.
Commentary
Regarding the Company's results, Raymond A. Jean, president and chief executive officer of Quanex stated, "Quanex continues to outperform the markets we serve. Manufacturing activity continues to be sluggish and our customers remain cautious with new orders and in the management of their inventory. Quanex's operating groups, MACSTEEL, Nichols Aluminum, and Engineered Products, exceeded first quarter results in both sales and operating income. Engineered Products, due in part from the benefit of acquisitions, and Piper Impact, with the benefits of higher productivity and cost cutting efforts, both reported higher operating income compared to last year's second quarter.
"MACSTEEL continues to profitably manage its business while the severity of the distressed conditions in the steel industry are forcing others to restructure. It is a tough business environment for all steel makers, and our primary markets, namely transportation and capital goods, have certainly been impacted. However, we continue to show solid results and have recently returned to a five-day schedule. We enter our third quarter with a stronger backlog and new programs that are starting to kick in. We fully expect MACSTEEL to continue showing operating improvements as the year progresses.
"Nichols Aluminum continues to experience reduced business activity in the building and construction markets but remains profitable. Sheet pricing is extremely competitive at this time and all mills are aggressively seeking available business, resulting in lower margins. However, second quarter operating income was up significantly from the first quarter and bookings and backlog continue to increase. We expect the results for the second half of 2001 to exceed the first half.
"The Engineered Products Group is experiencing sluggish markets, but managed to outperform last year and last quarter with increases in sales and operating income. Results have benefited from the acquisitions of Imperial Fabricated Products and Temroc Metals and we are also seeing the results of new product development initiatives. We anticipate higher operating results for the third quarter versus last year as these benefits and the seasonal factors impact favorably.
"Piper Impact reported another profitable quarter compared to last year's operating loss. Autoliv and ordnance demand remains good given today's economic environment. Productivity and new product development initiatives have gained momentum and are contributing to the improved results."
Outlook
Ray Jean concluded, "Quanex clearly has businesses with unique processes and market positions that enable it to better compete in today's very difficult environment. We expect our operating income to continue to improve in coming quarters as our new programs ramp up, customer activity increases and markets slowly improve."
For the third quarter of fiscal 2001, operating results are expected to lag last year's comparable quarter but to show significant improvement from the second quarter of 2001. The Company previously indicated in its April 19, 2001 quarterly update that the fiscal year 2001 fully diluted earnings per share are expected to be between $1.75 and $2.00. Based on actual results for the first half of the year and outlook for the second half, the Company continues to support that range.
Growth Strategy
Our strategy for enhancing long-term shareholder value will be accomplished through sales and earnings growth. We will strive to achieve this by focusing on consistently earning a cash return in excess of our cost of capital; by being the low cost / high quality producers in our industries; and by investing in internal capital projects and acquisitions that will provide growth and high cash returns.
Other
During the second quarter, the Company purchased 61,900 shares of its common stock under the company's common stock repurchase program announced in December 1999. Since the program's inception, Quanex has purchased a total of 942,100 shares at a cost of $19.2 million.
Dividend Declared
The Board of Directors declared a regular quarterly dividend of $.16 per share on the company's common stock, payable June 29, 2001 to shareholders of record on June 15, 2001.
Corporate Profile
Quanex is a technological leader in the production of value-added engineered steel bars; aluminum flat-rolled products; and engineered, formed-metal products for customers in the transportation, capital equipment, packaging, homebuilding and remodeling, defense, and other commercial markets.
Latest 12 Months Financial Information
(from continuing operations, excluding unusual charges)
Sales: $899.2 million; EBITDA: $106.5 million; Operating income:
$59.6 million; Net income: $30.6 million; Basic earnings per share: $2.27;
Quarterly common dividend rate (per share): $.16; Book value per common share:
$19.93; Long-term debt to capitalization: 45.4 %; Return on common equity:
10.88 %; Actual number of common shares outstanding: 13,370,302; Common stock
price range (52-week hi - low): $21.15 - $14.375.
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Six months ended
April 30, April 30,
2001 2000 2001 2000
(Unaudited) (Unaudited)
$213,758 $243,271 Net sales $407,583 $442,565
179,761 200,655 Cost of sales 342,428 366,298
Selling, general and
12,968 12,856 administrative expense 24,696 26,138
Depreciation and
11,185 12,909 amortization 22,421 25,071
9,844 16,851 Operating income 18,038 25,058
(4,122) (4,020) Interest expense (8,283) (7,350)
432 647 Capitalized interest 746 1,191
444 307 Other, net 1,767 1,309
Income before income
taxes and extraordinary
6,598 13,785 gain 12,268 20,208
(2,309) (4,756) Income tax expense (4,294) (7,004)
Income before extraordinary
4,289 9,029 gain 7,974 13,204
Extraordinary gain on early
extinguishment of debt,
--- 358 net of income taxes 372 358
$4,289 $9,387 Net income $8,346 $13,562
Weighted average common
shares outstanding:
13,389 13,774 Basic 13,407 13,975
13,481 16,118 Diluted 13,523 16,406
Earnings per common share:
Basic:
Income before
$0.32 $0.66 extraordinary gain $0.59 $0.95
--- 0.02 Extraordinary gain 0.03 0.02
Total basic net
$0.32 $0.68 earnings $0.62 $0.97
Diluted:
Income before
$0.32 $0.61 extraordinary gain $0.59 $0.91
--- 0.02 Extraordinary gain 0.03 0.02
Total diluted net
$0.32 $0.63 earnings $0.62 $0.93
Common stock dividends
$0.16 $0.16 per share $0.32 $0.32
QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION
(In thousands)
Three months ended Six months ended
April 30, April 30,
2001 2000 2001 2000
(Unaudited) (Unaudited)
Engineered Steel Bars:
$76,006 $88,205 Net sales $147,604 $167,947
$8,665 $15,902 Operating income $16,000 $27,737
Aluminum Mill Sheet Products:
$90,144 $111,848 Net sales $168,960 $191,568
$1,144 $6,582 Operating income $1,424 $8,785
Engineered Products:
$31,630 $22,726 Net sales $57,593 $41,144
$3,067 $2,474 Operating income $5,000 $4,321
Piper Impact:
$21,173 $26,389 Net sales $44,022 $53,188
$928 $(3,799) Operating income / (loss) $2,072 $(7,272)
Corporate and Other:
$(5,195) $(5,897) Net sales $(10,596) $(11,282)
$(3,960) $(4,308) Operating loss $(6,458) $(8,513)
Total:
$213,758 $243,271 Net sales $407,583 $442,565
$9,844 $16,851 Operating income $18,038 $25,058
QUANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
April 30, October 31,
2001 2000 2000 1999
(Unaudited) Assets (Audited)
$17,332 $23,340 Cash and equivalents $22,409 $25,874
Accounts and notes receivable,
104,600 115,504 net 98,465 87,204
98,880 104,199 Inventories 101,274 78,463
15,012 13,966 Other current assets 13,798 20,846
235,824 257,009 Total current assets 235,946 212,387
Property, plant and equipment,
348,308 415,984 net 338,248 406,841
60,720 57,895 Goodwill, net 47,539 48,990
25,284 25,443 Other assets 24,126 22,228
$670,136 $756,331 Total assets $645,859 $690,446
Liabilities and stockholders' equity
$74,771 $85,085 Accounts payable $77,339 $70,187
45,735 51,948 Accrued expenses 50,189 54,305
1,815 3,783 Income taxes payable 3,218 1,103
2,153 --- Other current liabilities --- ---
Current portion of long-term
421 9,131 debt 256 10,545
124,895 149,947 Total current liabilities 131,002 136,140
221,578 236,874 Long-term debt 191,657 179,121
5,882 7,217 Deferred pension credits 7,026 6,691
Deferred postretirement welfare
7,701 7,598 benefits 7,634 7,490
26,096 43,540 Deferred income taxes 27,620 43,910
17,544 14,583 Other liabilities 14,423 16,033
403,696 459,759 Total liabilities 379,362 389,385
266,440 296,572 Total stockholders' equity 266,497 301,061
Total liabilities and
$670,136 $756,331 stockholders' equity $645,859 $690,446
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Three months ended Six months ended
April 30, April 30,
2001 2000 2001 2000
(Unaudited) (Unaudited)
Operating activities:
$4,289 $9,387 Net income $8,346 $13,562
Extraordinary gain on
early extinguishment of
--- (358) debt (net of taxes) (372) (358)
Depreciation and
11,313 13,040 amortization 22,675 25,340
(1,760) 129 Deferred income taxes (1,801) 159
Deferred pension and
(726) 363 postretirement benefits (1,077) 636
13,116 22,561 27,771 39,339
Increase in accounts and
(10,021) (22,800) notes receivable (2,811) (21,989)
(Increase) decrease in
4,745 (4,901) inventory 5,037 (11,004)
Increase (decrease) in
5,861 5,484 accounts payable (4,629) 9,634
Increase (decrease) in
3,984 3,312 accrued expenses (5,835) (6,330)
Other, net (including
(363) (240) income tax refund) (1,273) 7,867
Cash provided by operating
17,322 3,416 activities 18,260 17,517
Investment activities:
Acquisition of Golden
Aluminum, net of cash
--- (13,742) acquired --- (20,148)
Acquisition of Temroc
Metals, net of cash
--- --- acquired (17,922) ---
Acquisition of Imperial
Products, net of cash
--- (15,303) acquired --- (15,303)
Capital expenditures,
(14,511) (10,312) net of retirements (26,485) (24,770)
Cash used by other
496 (835) investment activities (1,094) (1,727)
Cash used by investment
(14,015) (40,192) activities (45,501) (61,948)
Financing activities:
(1,000) 60,304 Bank borrowings, net 32,000 69,473
Purchase of subordinated
--- (9,586) debentures (3,942) (9,586)
Purchases of Quanex
(1,626) (10,419) common stock (1,990) (14,204)
(2,155) (2,225) Common dividends paid (4,322) (4,521)
Issuance of common stock,
730 (1) net 1,530 619
Cash used by other
(803) (27) financing activities (1,112) (51)
Cash provided (used) by
(4,854) 38,046 financing activities 22,164 41,730
Effect of exchange rate
changes on cash and
--- 115 equivalents --- 167
Increase (decrease) in
(1,547) 1,385 cash (5,077) (2,534)
Beginning of period cash
18,879 21,955 and equivalents 22,409 25,874
End of period cash and
$17,332 $23,340 equivalents $17,332 $23,340
Financial Contact: Jeff Galow, 713/877-5327
Media Contact: Marianne Gooch, 713/877-5389
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SOURCE Quanex Corporation
Web site: http: //www.quanex.com
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CONTACT: financial, Jeff Galow, 713-877-5327, or media, Marianne Gooch, 713-877-5389, both of Quanex Corporation
CAPTION: NXLOGO QUANEX CORPORATION LOGO Quanex Corporation logo. (PRNewsFoto)[HD] HOUSTON, TX USA 05/17/1999