Quanex Announces Earnings for Fiscal 2001 Third Quarter
Company More Than Doubles Second Quarter Basic Earnings Per Share; Engineered Products Group Reports Best-Ever Quarter
HOUSTON, Aug. 30 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced fiscal 2001, third quarter results for the period ending July 31. Earnings per share for the quarter were $.72 basic and $.67 diluted. This compares to $.74 basic and $.68 diluted earnings per share (excluding the loss on the sale of Piper Europe), for the same period last year. Third quarter net sales were $240 million compared to $254 million in 2000; net income for the quarter was $9.6 million compared to $10.0 million reported last year (excluding the loss on the sale of Piper Europe).
Fiscal Third Quarter 2001 Versus Fiscal Third Quarter 2000 -- MACSTEEL(R) - engineered steel bar group -- Net sales: $84.7 million vs. $89.9 million -- Operating income: $12.2 million vs. $14.5 million -- Nichols Aluminum - aluminum sheet products group -- Net sales: $99.0 million vs. $110.8 million -- Operating income: $2.2 million vs. $6.6 million -- Engineered Products - formed metal products group -- Net sales: $44.1 million vs. $32.3 million -- Operating income: $7.3 million vs. $4.9 million -- Piper Impact - impact extrusion products group -- Net sales: $19.8 million vs. $28.2 million -- Operating income: $700 thousand vs. a loss of $3.9 million (excluding charges)
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, chairman and chief executive officer of Quanex stated, "Quanex again demonstrated its ability to provide solid earnings in this slow business environment. We are encouraged by the ongoing improvements in our bookings, and increased shipments to the vehicular and building products markets. Quanex's operating groups, MACSTEEL, Nichols Aluminum, and Engineered Products, again exceeded their previous quarter results in both sales and operating income. Piper Impact reported another quarter of positive operating income compared to last year's third quarter loss. Overall, we continue to outperform the markets we serve.
"MACSTEEL's aggressive sales efforts helped achieve strong shipments for the quarter at both steel plants. New accounts as well as increasing orders from existing customers have enabled the mill to return to a 6-day schedule and this is expected to continue. Market share improvement at MACSTEEL is coming from the automotive, oil country and defense segments. Cost control initiatives have taken hold and scrap pricing remains in our favor. Fiscal Year 2001 will be a good year for MACSTEEL despite the turmoil being experienced in the steel industry."
Ray Jean added, "In line with MACSTEEL's ongoing strategy to aggressively pursue value-adding capabilities, the Board of Directors has approved a $5.8 million project to build a bar-cutting facility at MACSTEEL's Michigan plant. This project will reduce the current outsourcing of bar cutting, and meet customers' growing requests for 'one stop shopping'. The project will dovetail nicely into the ongoing work of the Phase VI capital project, i.e. the expansion of MACPLUS bright cold finished bar capacity. Having the financial capability to continue funding attractive incremental investments in a difficult environment bodes well for our longer term outlook.
"Nichols Aluminum reported operating income nearly double last quarter results. Although Nichols' distribution and truck-trailer markets remain weak, they have reduced fixed costs and gained share in the more robust building and construction markets. Nichols' reputation for providing quality products and superior service has served them well in this competitive environment. While overall industry demand for aluminum products has declined versus last year, Nichols volumes and market share have steadily increased throughout the year. Capital investments in recent years are paying off. For instance, not only do they utilize lower priced scrap metal in their mix, they can also produce more value-added products.
"Engineered Products achieved all-time quarterly records for sales and operating income during the third quarter. While housing remains somewhat softer than this time last year, attractive interest rates continue to draw buyers into the market, and remodeling spending has held up well. Results have benefited from last year's acquisitions and we are seeing the impact of new product development initiatives.
"Piper Impact reported another profitable quarter compared to last year's third quarter operating loss. They have now delivered three consecutive quarters of profitability. Opportunities are currently being explored to use additional MACSTEEL bars in Piper's processes to manufacture lower cost, high performance components for automotive markets. Piper is accelerating deployment of lean manufacturing practices, and remains focused on reaching closure on numerous business development opportunities."
Outlook
Ray Jean concluded, "In a difficult economic environment, we have clearly outperformed our markets and returned our under-performing unit to profitability. This speaks well for our strong market positions, unique processing capabilities and dedicated employees. The Company typically experiences better operating results as the year progresses and we expect that will be the case this year."
For the fourth quarter of fiscal 2001, operating results are expected to lag last year's comparable quarter but show some improvement from third quarter 2001. The Company previously indicated in its July 24, 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 results year-to-date and slow, but steady improvement in the demand for Quanex's vehicular and building products, the Company expects to earn near the top of 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; and by assuring operating units and future investments meet core business success attributes: customer focus, superior manufacturing process technologies, rigorous management practices, engineered-type products or value added services, and significant competitive position within served markets.
Dividend Declared
The Board of Directors declared a quarterly dividend of $.16 per share on the Company's common stock, payable September 28, 2001 to shareholders of record on September 14, 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 vehicular and building products markets.
Latest 12 Months Financial Information
(from continuing operations, excluding unusual charges)
Sales: $885.4 million; EBITDA: $104.5 million; Operating income: $59.1 million; Net income: $30.2 million; Basic earnings per share: $2.25; Quarterly common dividend rate (per share): $.16; Book value per common share: $20.43; Long-term debt to capitalization: 46.4 %; Return on common equity: 10.66 %; Actual number of common shares outstanding: 13,384,507; Common stock price range (52-week hi - low): $27.55 - $16.38.
For further information visit the Company website at www.quanex.com . Financial Contact: Jeff Galow, 713/877-5327 Media Contact: Valerie Calvert, 713/877-5305 QUANEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three months ended Nine months ended July 31, July 31, 2001 2000 2001 2000 (Unaudited) (Unaudited) $240,332 $254,144 Net sales $647,915 $696,709 197,792 208,874 Cost of sales 540,220 575,172 Selling, general and 13,492 14,113 administrative expense 38,188 40,251 10,695 12,310 Depreciation and amortization 33,116 37,381 --- 14,280 Loss on sale of Piper Impact Europe --- 14,280 18,353 4,567 Operating income 36,391 29,625 (4,129) (4,149) Interest expense (12,412) (11,499) 349 499 Capitalized interest 1,095 1,690 208 289 Other, net 1,975 1,598 Income before income taxes 14,781 1,206 and extraordinary gain 27,049 21,414 (5,173) (491) Income tax expense (9,467) (7,495) 9,608 715 Income before extraordinary gain 17,582 13,919 Extraordinary gain on early extinguishment of debt, net --- --- of income taxes 372 358 $9,608 $715 Net income $17,954 $14,277 Weighted average common shares outstanding: 13,377 13,534 Basic 13,397 13,827 15,428 13,682 Diluted 15,420 13,973 Earnings per common share: Basic: Income before extraordinary $0.72 $0.05 gain $1.31 $1.00 --- --- Extraordinary gain 0.03 0.03 $0.72 $0.05 Total basic net earnings $1.34 $1.03 Diluted: Income before extraordinary $0.67 $0.05 gain $1.28 $1.00 --- --- Extraordinary gain 0.02 0.02 $0.67 $0.05 Total diluted net earnings $1.30 $1.02 $0.16 $0.16 Common stock dividends per share $0.48 $0.48 QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) Three months ended Nine months ended July 31, July 31, 2001 2000 2001 2000 (Unaudited) (Unaudited) Engineered Steel Bars: $84,663 $89,938 Net sales $232,267 $257,885 $12,171 $14,481 Operating income $28,171 $42,218 Aluminum Mill Sheet Products: $98,963 $110,843 Net sales $267,923 $302,411 $2,201 $6,591 Operating income $3,625 $15,376 Engineered Products: $44,062 $32,263 Net sales $101,655 $73,407 $7,325 $4,863 Operating income $12,325 $9,184 Piper Impact: $19,766 $28,173 Net sales $63,788 $81,361 $700 $(18,136) Operating income / (loss) $2,772 $(25,408) Corporate and Other: $(7,122) $(7,073) Net sales $(17,718) $(18,355) $(4,044) $(3,232) Operating loss $(10,502) $(11,745) Total: $240,332 $254,144 Net sales $647,915 $696,709 $18,353 $4,567 Operating income $36,391 $29,625 Note: The one-time loss from the sale of Piper Impact-Europe of $14.3 million is included in Piper Impact's operating loss for the three and nine-months ended July 31, 2000. QUANEX CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) July 31, October 31, 2001 2000 2000 1999 (Unaudited) Assets (Audited) $31,805 $32,552 Cash and equivalents $22,409 $25,874 Accounts and notes 97,999 99,019 receivable, net 98,465 87,204 91,423 96,650 Inventories 101,274 78,463 18,006 12,877 Other current assets 13,798 20,846 239,233 241,098 Total current assets 235,946 212,387 Property, plant and 354,743 394,705 equipment, net 338,248 406,841 60,127 47,795 Goodwill, net 47,539 48,990 44,865 22,895 Other assets 24,126 22,228 $698,968 $706,493 Total assets $645,859 $690,446 Liabilities and stockholders' equity $77,289 $79,593 Accounts payable $77,339 $70,187 48,222 50,842 Accrued expenses 50,189 54,305 3,740 3,025 Income taxes payable 3,218 1,103 3,582 --- Other current liabilities --- --- 420 259 Current portion of long-term debt 256 10,545 133,253 133,719 Total current liabilities 131,002 136,140 236,487 211,505 Long-term debt 191,657 179,121 5,158 6,631 Deferred pension credits 7,026 6,691 Deferred postretirement welfare 7,718 7,634 benefits 7,634 7,490 25,301 38,862 Deferred income taxes 27,620 43,910 17,605 14,423 Other liabilities 14,423 16,033 425,522 412,774 Total liabilities 379,362 389,385 273,446 293,719 Total stockholders' equity 266,497 301,061 Total liabilities and $698,968 $706,493 stockholders' equity $645,859 $690,446 QUANEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) Three months ended Nine months ended July 31, July 31, 2001 2000 2001 2000 (Unaudited) (Unaudited) Operating activities: $9,608 $715 Net income $17,954 $14,277 Extraordinary gain on early extinguishment of debt --- --- (net of taxes) (372) (358) Loss on sale of Piper Impact --- 9,282 Europe (net of taxes of $4,998) --- 9,282 10,779 12,437 Depreciation and amortization 33,454 37,777 (795) (3,036) Deferred income taxes (2,596) (2,877) Deferred pension and (707) (478) postretirement benefits (1,784) 158 18,885 18,920 46,656 58,259 (Increase) decrease in accounts 6,601 13,443 and notes receivable 3,790 (8,546) 7,457 3,126 (Increase) decrease in inventory 12,494 (7,878) Increase (decrease) in 2,518 (1,968) accounts payable (2,111) 7,666 Increase (decrease) in 2,487 669 accrued expenses (3,348) (5,661) Other, net (including income (121) 2,663 tax refund) (1,394) 10,530 Cash provided by operating 37,827 36,853 activities 56,087 54,370 Investment activities: Acquisition of Golden Aluminum, --- --- net of cash acquired --- (20,148) Acquisition of Temroc Metals, --- --- net of cash acquired (17,922) --- Acquisition of Imperial --- --- Products, net of cash acquired --- (15,303) Capital expenditures, net (16,513) (8,598) of retirements (42,998) (33,368) Cash provided (used) by (2,429) 1,158 other investment activities (3,523) (569) Cash used by investment (18,942) (7,440) activities (64,443) (69,388) Financing activities: Bank borrowings 15,000 (16,280) (repayments), net 47,000 53,193 Repayment of borrowings on (17,273) --- insurance policies (17,273) --- Purchase of subordinated --- --- debentures (3,942) (9,586) --- (1,675) Purchases of Quanex common stock (1,990) (15,879) (2,147) (2,190) Common dividends paid (6,469) (6,711) 283 345 Issuance of common stock, net 1,813 964 Cash used by other financing (275) (301) activities (1,387) (352) Cash provided (used) by (4,412) (20,101) financing activities 17,752 21,629 Effect of exchange rate changes --- (100) on cash and equivalents --- 67 14,473 9,212 Increase in cash 9,396 6,678 Beginning of period cash 17,332 23,340 and equivalents 22,409 25,874 End of period cash and $31,805 $32,552 equivalents $31,805 $32,552 MAKE YOUR OPINION COUNT - Click Here http://tbutton.prnewswire.com/prn/11690X47001630
SOURCE Quanex Corporation
Web site: http: //www.quanex.com
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CONTACT: financial, Jeff Galow, +1-713-877-5327, or media, Valerie Calvert, +1-713-877-5305, both of Quanex Corporation
CAPTION: DATU048 QUANEX CORPORATION RAYMOND JEAN Raymond A. Jean, chairman of the board, chief executive officer, Quanex Corporation. (PRNewsFoto)[TC] HOUSTON, TX USA 05/22/2001
CAPTION: NXLOGO QUANEX CORPORATION LOGO Quanex Corporation logo. (PRNewsFoto)[HD] HOUSTON, TX USA 05/17/1999