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Quanex Building Products Corporation Fiscal First Quarter 2009 Results

Loss of $0.21 Per Diluted Share From Continuing Operations Before Charges
Received Final Cash Payment From Gerdau SA

$75 Million Cash and Equivalents On Balance Sheet
Booked $137 Million Pre-Tax Estimated Impairment Charge

HOUSTON, Feb. 26, 2009 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal first quarter 2009 results for the period ending January 31. Income from continuing operations and diluted earnings per share from continuing operations were a loss of $8.0 million and a loss of $0.21, respectively, before taking into account a $137.3 million pre-tax, or $3.02 per diluted share, estimated impairment charge.

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 from Gerdau SA as a
   result of the April 2008 merger with Quanex 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 Quanex Building Products. "Customer demand fell dramatically at Engineered Products in the quarter, well beyond anything we had seen historically. In response to the ongoing drop in business, we further reduced our variable costs, which included taking out additional manpower, both hourly and management. We remain very guarded in our outlook for any significant increase in demand for the remainder of fiscal 2009, and therefore, we will continue to size both our structure and inventories accordingly to maximize cash generation," Petratis said.



 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 $0.63 per pound, which in turn compressed our raw material spread during the quarter. Shipments at Nichols Aluminum were approximately 36 million pounds, down 39% from the year ago quarter. Overall spread (sales price less material cost) was down about 30% and 27% from the first quarter 2008 and fourth quarter 2008, respectively. While our selling price remained at reasonable levels during the quarter, Nichols was negatively impacted by very low shipped pounds and a compression in our raw material spread," Petratis said.

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 Mikron. We are attacking this issue during the second quarter, and we expect to have better cash flow news to report to you in the future. As we continue to closely monitor our working capital, we are also paying particular attention to the aging of receivables and the credit quality of our customer base," continued Petratis.

"On a positive note, we did receive our final cash true-up related to the merger of Quanex Corporation with Gerdau SA in the amount of $15 million and our cash balance at the end of the first quarter was a very healthy $75 million," Petratis said.

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 January 2009, the company determined there were sufficient indicators to require it to perform an interim goodwill and other intangible asset impairment analysis. The final analysis has not been completed due to the complexities involved in determining the implied fair value of goodwill. However, based on work performed to date, it has recognized an estimated goodwill and other intangible asset impairment charge of $137.3 million (pre-tax) in the quarter. The company expects to finalize its goodwill impairment analysis during the second quarter, which could result in an additional charge.

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 $0.03 per share on the company's common stock, payable March 31, 2009, to shareholders of record on March 16, 2009.

Corporate Profile

Quanex Building Products Corporation is an industry-leading manufacturer of value-added, engineered materials and components serving the building products markets. It is an ROIC-driven company that grows shareholder returns through a combination of organic growth via new products and programs and strategic acquisitions.

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

Financial Statistics as of 01/31/09

Book value per common share: $11.75; Total debt to capitalization: 0.6%; Actual number of common shares outstanding: 37,670,367.

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 December 18, 2008, under the Securities Exchange Act of 1934, in particular the section titled, "Private Securities Litigation Reform Act" contained therein. The forward-looking statements are intended to express the Company's expectations as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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
                                               =========    =========

CONTACT: Quanex Building Products Corporation
Financial Contact:
Jeff Galow
713-877-5327
Media Contact:
Valerie Calvert
713-877-5305

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