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Quanex Building Products Corporation Fiscal 2011 Third Quarter Results

   Performance, Before Certain Special Items, In-Line With Prior Year


      Repurchased 169,600 Shares of Common Stock for $2.8 million


         Truseal Instituted an Oil Based Raw Material Surcharge


HOUSTON, Aug. 25, 2011 (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 2011 third quarter results for the period ending July 31, 2011. Net sales were $252.4 million, 12% higher than a year ago, due primarily to the acquisition of Edgetech.

Quanex reported diluted earnings from continuing operations of $0.24 per share, which included $0.01 per share from Edgetech's results. The $0.24 per share also included special expense items totaling $0.06 per share. In the third quarter of 2010, diluted earnings from continuing operations were $0.27 per share, which included special expense items of $0.02 per share. Excluding results of Edgetech and special expense items, third quarter 2011 earnings were even to a year ago.

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. Third quarter net sales were $124.1 million, which included $23.7 million of net sales from Edgetech. Excluding Edgetech, net sales were nearly flat compared to the third quarter of 2010, which had the benefit of a $1500 energy efficient window tax credit program. There were no similar tax credits in the third quarter of 2011.

Third quarter operating income was $14.1 million, which included $1.0 million of operating income from Edgetech. Edgetech's results were negatively impacted in the quarter by a step-up in inventory expense of $0.7 million related to the purchase method of accounting. Excluding Edgetech, operating income was equal to the third quarter of 2010 despite headwinds in the end markets. EPG experienced higher raw material costs in the quarter, which were generally offset by higher prices, surcharges and productivity improvements. Truseal, one of the company's warm edge, insulating glass spacer divisions, initiated an oil based raw material surcharge effective May 1. The surcharge helped Truseal offset the rising cost of butyl, a key raw material of the business.

                          3rd     3rd
                          qtr     qtr
                          2011    2010
                          ------  ------
  Net sales               $124.1  $101.7
  Operating income         $14.1   $13.1
  (in millions)

Quanex believes there is value in measuring its sales performance against industry indexes. EPG compares its sales to US window shipments as reported by Ducker Worldwide, a market intelligence firm. For the 12 months ended July 31, 2011, EPG sales (excluding acquisitions) were down 1% compared to the previous 12 months, versus US window shipments that were down 6%. With the coupling of excellent businesses like Edgetech, the company is confident its long term initiatives will allow EPG to outperform the industry.

Edgetech Integration

With Quanex's purchase of Edgetech, its successful integration into EPG remains a high priority. Excellent progress was made in the quarter and the integration activities remain on schedule. As previously announced, Michael Hovan, Edgetech's past president, assumed the lead role for the sales and marketing team at EPG. A review of that organization's structure was undertaken, and from that evaluation, changes were made to ensure the fullest extent of EPG's value proposition (design/engineering/sales/logistics) is at the disposal of both current and future customers.

Aluminum Sheet Products Group is a leading provider of aluminum sheet through its Nichols Aluminum operation. Key end markets are residential repair & remodel (R&R) and new home construction. Shipments, net sales and operating income in the third quarter were 80 million pounds, $132.1 million and $7.4 million, respectively. Net sales were higher than a year ago due primarily to higher aluminum prices.

Both shipments and operating income were lower compared to the year ago quarter due to weaker demand for residential building & construction sheet. Operating income was further impacted by higher repair & maintenance costs and reduced value-added painted shipments compared to a year ago. Nichols' spread (sales less material costs) was up 13% and 4% from the year ago quarter and the sequential second quarter, respectively, due to aluminum prices that rose faster than material costs.

                       3rd     3rd
                       qtr     qtr
                       2011    2010
                       ------  ------
  Net sales            $132.1  $127.6
  Operating income       $7.4    $8.9
  Shipped pounds           80      90
  (in millions)

Nichols Aluminum compares its shipments to the industry's non-can sheet shipments as reported by the Aluminum Association. In the third quarter, Nichols' shipments were down 11% from a year ago, versus Association shipments that were up 4%. Nichols' underperformance is attributed to weaker building and construction demand, where it has a large presence, compared to stronger distribution and transportation demand, where it has a smaller presence.

Corporate and Other Items

Corporate expenses in the quarter were $6.9 million and included, in part, the following items: acquisition related expenses; ERP program expenses; stock based compensation expenses; LIFO expense.

Cash Position

Quanex had a cash balance of $62.4 million and total debt outstanding stood at $1.7 million at the end of the quarter. Cash provided by operating activities from continuing operations for the nine months ended was $9.9 million. The company's $270 million revolving credit facility remained untapped, but due to the facility's EBITDA covenant requirements, the available capacity at quarter end was approximately $204 million. Future uses of cash could be to fund organic growth activities, pay common stock dividends, make acquisitions, and repurchase outstanding shares. During the third quarter, Quanex purchased 169,600 shares of common stock at an average price of $16.42, including commissions. From the end of the third quarter through August 24, the company purchased an additional 239,050 shares of common stock at an average price of $12.21, including commissions.

Business Outlook

Stagnant home construction and R&R activity, high levels of homes available for sale, high unemployment and a tight credit market continues to create a difficult business environment for Quanex. A case for a lack of recovery in the housing market in 2012 continues to build, and the company now anticipates flat to reduced customer demand in the coming quarters. In light of these new expectations, 2011 segment guidance has been reduced at the Aluminum Sheet Products Group.

For 2011, operating income guidance for the Aluminum Sheet Products Group is estimated at about $22 million, compared to previous guidance of about $25 million. The Group earned $30 million in 2010. Operating income in 2011 is down from 2010 due to reduced mill-finished shipments, reduced painted shipments and higher costs, offset somewhat by a higher spread.

For 2011, operating income guidance for the Engineered Products Group is unchanged at about $30 million (excludes an estimated $2 million from Edgetech's results). The Group earned $34 million in 2010. Operating income in 2011 is down from 2010 due to expenses associated with the Group's long term growth initiatives, and higher raw material costs.

Segment guidance excludes certain 2011 expenses that are detailed in the table below:

                                 Quanex    Acquisition
                               (excluding    Related     Total
  (in millions)                 Edgetech)     Items      Quanex
                               ----------  -----------  -------

  Corporate expenses               $ 24.0        $ 4.0   $ 28.0
  LIFO charge (income)              $ 5.0         $ --    $ 5.0
  Capital expenditures             $ 25.0        $ 2.0   $ 27.0

Corporate expenses and capital expenditures include $2 million and $6 million, respectively, of costs associated with the launch of Quanex's $30 million, multi-year ERP program.

Non-GAAP Financial Measures

Income from Continuing Operations before special items is a non-GAAP financial measure. The company believes this non-GAAP financial measure provides a consistent basis for comparison between periods and enhances the understanding of the performance of its operations.

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 special items and diluted earnings per share from continuing operations before special items. 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 July 31,
                                         ----------------------------------

                                               2011              2010
                                         ----------------  ----------------

                                                                    Diluted
                                                  Diluted
  (in millions except diluted EPS)        Income    EPS     Income    EPS
                                         -------  -------  -------  -------

  Income (loss) from continuing
   operations,
  as reported                              $ 9.0   $ 0.24   $ 10.4   $ 0.27

    After tax Non-GAAP adjustments:
    LIFO charge (income)                   $ 1.2   $ 0.03    $ 0.6   $ 0.02
    Acquisition related costs              $ 0.9   $ 0.02     $ --     $ --

    ERP program costs                      $ 0.2   $ 0.01     $ --     $ --
                                         -------  -------  -------  -------
  Income from continuing operations,
  excluding special items                 $ 11.3   $ 0.30   $ 11.0   $ 0.29
                                         =======  =======  =======  =======

Organic Growth Initiatives

EPG's organic programs are focused on driving profitable growth through one sales and marketing organization, coupled with the engineering collaboration of its family of businesses: Mikron, Homeshield, Truseal and Edgetech. Activities are focused on both national and regional window and door companies. EPG is also collectively working to develop new products and systems that provide its customers with the latest innovations in energy efficiency.

On September 12-14, 2011, Quanex will be exhibiting at GlassBuild America, the largest gathering of glass, window and door components companies in North America. Quanex will be highlighting its components, products, and systems, as well as communicating its new marketing strategy to national and regional window and door companies.

Dividend Declared

The Board of Directors declared a quarterly cash dividend of $0.04 per share on the company's common stock, payable September 30, 2011, to shareholders of record on September 15, 2011.

Financial Statistics as of 07/31/11

Book value per common share: $11.80; Total debt to capitalization: 0.4%; Return on invested capital: 2.6%; Actual number of common shares outstanding: 37,312,532.

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;

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.

The Quanex Building Products Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=1117

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, references to synergies derived from the acquisition of Edgetech, future operating results and financial condition of Quanex and Edgetech and future uses of cash. 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 10-K filing on December 20, 2010, under the Securities Exchange Act of 1934, in particular the section titled, "Private Securities Litigation Reform Act" contained therein.

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



   Three months ended                                 Nine months ended
         July 31,                                          July 31,
  ---------------------                             ---------------------

     2011        2010                                  2011        2010
  ----------  ---------                             ----------  ---------
                         Net Sales:
    $124,119   $101,746   Engineered Products         $290,623   $259,272

     132,130    127,600                                334,328    326,252
  ----------  ---------   Aluminum Sheet Products   ----------  ---------
     256,249    229,346     Building Products          624,951    585,524


     (3,836)    (4,143)                                (9,618)    (9,513)
  ----------  ---------     Eliminations            ----------  ---------


    $252,413   $225,203                               $615,333   $576,011
  ==========  =========       Net Sales             ==========  =========

                         Operating Income (Loss):
    $ 14,146   $ 13,131   Engineered Products         $ 15,411   $ 22,969

       7,417      8,866                                 14,027     19,732
  ----------  ---------   Aluminum Sheet Products   ----------  ---------
      21,563     21,997     Building Products           29,438     42,701


     (6,926)    (5,798)                               (24,752)   (18,976)
  ----------  ---------     Corporate and Other     ----------  ---------


    $ 14,637   $ 16,199       Operating Income         $ 4,686   $ 23,725
  ==========  =========        (Loss)               ==========  =========


  QUANEX BUILDING PRODUCTS CORPORATION
  CONSOLIDATED STATEMENTS OF INCOME
  (In thousands, except per share data)
  (Unaudited)



   Three months ended                                               Nine months ended
         July 31,                                                        July 31,
  ---------------------                                           ---------------------

     2011        2010                                                2011        2010
  ----------  ---------                                           ----------  ---------

    $252,413   $225,203  Net sales                                  $615,333   $576,011
                         Cost of sales (exclusive of items shown
     209,667    184,799   separately below)                          524,834    478,559
      18,912     17,566  Selling, general and administrative          61,230     52,719

       9,197      6,639                                               24,583     21,008
  ----------  ---------  Depreciation and amortization            ----------  ---------
      14,637     16,199  Operating income (loss)                       4,686     23,725
       (110)      (106)  Interest expense                              (341)      (333)

       (311)        997                                                  127      2,502
  ----------  ---------  Other, net                               ----------  ---------
                         Income (loss) from continuing
      14,216     17,090   operations before income taxes               4,472     25,894

     (5,200)    (6,661)                                              (1,573)    (9,998)
  ----------  ---------  Income tax benefit (expense)             ----------  ---------

                         Income (loss) from continuing
       9,016     10,429   operations                                   2,899     15,896


          --      (148)  Income (loss) from discontinued                (12)    (1,108)
  ----------  ---------   operations, net of taxes                ----------  ---------

     $ 9,016   $ 10,281                                              $ 2,887   $ 14,788
  ==========  =========  Net income (loss)                        ==========  =========

                         Basic earnings per common share:
                          Earnings (loss) from continuing
      $ 0.24     $ 0.28    operations                                 $ 0.08     $ 0.43

          --         --   Income (loss) from discontinued                 --     (0.03)
  ----------  ---------    operations                             ----------  ---------

      $ 0.24     $ 0.28                                               $ 0.08     $ 0.40
  ----------  ---------   Basic earnings (loss) per share         ----------  ---------

                         Diluted earnings per common share:
                          Earnings (loss) from continuing
      $ 0.24     $ 0.27    operations                                 $ 0.08     $ 0.42

          --         --   Income (loss) from discontinued                 --     (0.03)
  ----------  ---------    operations                             ----------  ---------

      $ 0.24     $ 0.27                                               $ 0.08     $ 0.39
  ----------  ---------   Diluted earnings (loss) per share       ----------  ---------

                         Weighted average common shares
                          outstanding:
      37,125     37,350   Basic                                       37,103     37,349
      37,684     37,983   Diluted                                     37,710     37,882


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



   July 31,                                     October 31,
     2011                                          2010
  ----------     --------------------------     -----------
                 Assets
    $ 62,420     Cash and equivalents             $ 187,178
     100,829     Accounts receivable, net            87,007
      65,296     Inventories                         45,200
      13,210     Deferred income taxes               10,547
                 Prepaid and other current
       8,916      assets                              8,229

                 Current assets of
          --      discontinued operations               462
  ----------     --------------------------     -----------
     250,671      Total current assets              338,623
                 Property, plant and
     157,118      equipment, net                    135,517
       8,512     Deferred income taxes               30,563
      69,611     Goodwill                            25,189
      91,081     Intangible assets, net              44,668

      17,340     Other assets                        16,690
  ----------     --------------------------     -----------

    $594,333      Total assets                    $ 591,250
  ==========     ==========================     ===========
                 Liabilities and
                  stockholders' equity
    $ 75,586     Accounts payable                  $ 70,986
      36,856     Accrued liabilities                 43,447
         746     Income taxes payable                    --
                 Current maturities of
         352      long-term debt                        327

                 Current liabilities of
          --      discontinued operations                30
  ----------     --------------------------     -----------
     113,540      Total current liabilities         114,790
       1,323     Long-term debt                       1,616
                 Deferred pension and
       4,631      postretirement benefits             3,667
                 Non-current environmental
      11,322      reserves                           12,027

      23,351     Other liabilities                   17,718
  ----------     --------------------------     -----------
     154,167      Total liabilities                 149,818

                  Total stockholders'
     440,166       equity                           441,432
  ----------     --------------------------     -----------

                  Total liabilities and
    $594,333       stockholders' equity           $ 591,250
  ==========     ==========================     ===========


  QUANEX BUILDING PRODUCTS CORPORATION
  CONSOLIDATED STATEMENTS OF CASH FLOW
  (In thousands)
  (Unaudited)


                                                   Nine months ended
                                                       July 31,
                                                ----------------------

                                                   2011        2010
                                                ----------  ----------
  Operating activities:
   Net income (loss)                               $ 2,887    $ 14,788
   (Income) loss from discontinued operations           12       1,108

   Adjustments to reconcile net income (loss)
    to cash provided by (used for) operating
    activities from continuing operations:
     Depreciation and amortization                  24,635      21,060
     Gain on bargain purchase                           --     (1,272)
     Deferred income taxes                           (295)       6,524
     Stock-based compensation                        3,599       3,218

   Changes in assets and liabilities, net of
    effects from acquisitions and
    dispositions:
     Decrease (increase) in accounts
      receivable                                   (4,991)       1,601
     Decrease (increase) in inventory              (9,778)     (5,788)
     Decrease (increase) in other current
      assets                                           244       (889)
     Increase (decrease) in accounts payable       (2,801)       7,961
     Increase (decrease) in accrued
      liabilities                                  (6,879)       5,084
     Increase (decrease) in income taxes
      payable                                      (1,392)      11,934
     Increase (decrease) in deferred pension
      and postretirement benefits                      965     (2,706)

     Other, net                                      3,686       1,533
                                                ----------  ----------

   Cash provided by (used for) operating
    activities from continuing operations            9,892      64,156

   Cash provided by (used for) operating
    activities from discontinued operations           (68)       (415)
                                                ----------  ----------
  Cash provided by (used for) operating
   activities                                        9,824      63,741
                                                ----------  ----------
  Investing activities:
     Acquisitions, net of cash acquired          (110,845)     (1,590)
     Capital expenditures                         (16,969)    (11,779)
     Proceeds from property insurance claim             --         392
     Proceeds from executive life insurance            683          --

     Other, net                                         75          40
                                                ----------  ----------
   Cash provided by (used for) investing
    activities from continuing operations        (127,056)    (12,937)
   Cash provided by (used for) investing
    activities from discontinued operations             --          90
                                                ----------  ----------
  Cash provided by (used for) investing
   activities                                    (127,056)    (12,847)
                                                ----------  ----------
  Financing activities:
     Repayments of long-term debt                    (333)       (319)
     Common stock dividends paid                   (4,500)     (3,775)
     Issuance of common stock from stock
      option exercises, including related tax
      benefits                                       1,089         495
     Purchase of treasury stock                    (4,289)     (2,169)

     Other, net                                        392       (235)
                                                ----------  ----------
   Cash provided by (used for) financing
    activities from continuing operations          (7,641)     (6,003)
   Cash provided by (used for) financing
    activities from discontinued operations          (392)         235
                                                ----------  ----------
  Cash provided by (used for) financing
   activities                                      (8,033)     (5,768)
                                                ----------  ----------
   Effect of exchange rate changes on cash and
    equivalents                                         47          23

  LESS: (Increase) decrease in cash and
   equivalents from discontinued operations            460          90
                                                ----------  ----------
  Increase (decrease) in cash and equivalents
   from continuing operations                    (124,758)      45,239

  Cash and equivalents at beginning of period      187,178     123,499
                                                ----------  ----------

  Cash and equivalents at end of period           $ 62,420   $ 168,738
                                                ==========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Quanex Building Products Corporation

CONTACT: Financial Contact: Jeff Galow, 713-877-5327;
Media Contact: Valerie Calvert, 713-877-5305
www.quanex.com

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