Quanex Building Products Corporation Fiscal Fourth Quarter and Fiscal 2008 Results
4th Quarter EPS From Continuing Operations of $0.32 Before a LIFO Gain
Company's Sales Outperformed the Market for the Quarter and Year
$65 Million Cash and Equivalents Less Debt
HOUSTON, Dec. 4, 2008 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal fourth quarter and fiscal 2008 results for the period ending October 31, 2008. Income from continuing operations for the quarter and year were $11.9 million and $30.8 million, respectively, and diluted earnings per share from continuing operations for the quarter and year were $0.32 and $0.80, respectively, before spinoff related costs and LIFO impact.
Including spinoff related costs and LIFO impact, income from continuing operations for the quarter and year were $15.0 million and $15.9 million, respectively, and diluted earnings per share from continuing operations for the quarter and year were $0.40 and $0.41, respectively.
Fiscal Fourth Quarter and Fiscal 2008 Highlights
* David D. Petratis, the company's president and chief executive
officer, assumed the additional role of chairman of the board
upon the planned retirement of Raymond A. Jean, effective
December 5.
* Jairaj T. Chetnani joined the company as vice president and
treasurer effective December 1.
* Net sales in the quarter were $246.3 million versus $255.5
million in the year ago quarter. 2008 net sales were $868.9
million compared to $964 million in 2007.
* Cash provided by operating activities from continuing operations
in 2008 was $53 million.
* Capital expenditures for the fiscal year were $15.8 million.
* Cash and equivalents less debt totaled $65 million at year end.
* LIFO transactions: recorded a fourth quarter LIFO gain of $5.1
million ($3.1 million after tax, $0.08 per diluted share). For
2008, recorded a LIFO charge of $0.4 million ($0.2 million after
tax, $0.01 per diluted share). LIFO activity in 2008 was
primarily associated with the aluminum sheet business.
* Spinoff related costs: recorded fiscal 2008 costs of $26.5
million ($14.7 million after tax, $0.38 per diluted share).
Fiscal Fourth Quarter and Fiscal 2008 Commentary
ENGINEERED PRODUCTS ($ in millions) 4th qtr 4th qtr FY FY 2008 2007 2008 2007 ------- ------- ------- ------- Net Sales $ 112.9 $ 123.9 $ 407.9 $ 457.8 Operating Inc. $ 10.1 $ 13.2 $ 29.9 $ 43.8
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 35% in our fiscal fourth quarter compared to the year ago quarter, and starts for fiscal 2008 were off 31% compared to a year ago. Residential remodeling activity was estimated to be down 10% in fiscal 2008 compared to last year. Net sales for the quarter and year at our Engineered Products segment were down 9% and 11%, respectively. Our ability to consistently outperform the market, even in this very tough economic environment, is testimony to the market-leading positions our customers hold in the window and door industry, and importantly, our collaboration with them on new product and program initiatives," said David D. Petratis, president and chief executive officer of Quanex Building Products. "We believe Engineered Products has one of the best combinations of engineering and design support, innovative products and components, and logistical support in the industry, all backed by the considerable financial strength of Quanex Building Products," continued Petratis.
ALUMINUM SHEET PRODUCTS (in millions) 4th qtr 4th qtr FY FY 2008 2007 2008 2007 ------- ------- ------- ------- Net Sales $ 139.0 $ 136.1 $ 479.9 $ 524.2 Operating Inc. $ 12.6 $ 18.3 $ 40.3 $ 65.7 Shipped pounds 81 84 285 311
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.
"Shipments at Nichols Aluminum were approximately 81 million pounds in the quarter, down 4% from the year ago quarter. 2008 shipments of 285 million pounds were off 8% from last year. Spread per pound (selling price less material cost) was down 5% from both the fourth quarter 2007 and third quarter of 2008. We were pleased with the spread at Nichols, however, reduced shipments and a lower mix of painted sheet hurt their bottom line," Petratis said.
Cash Flow
"Our cash and equivalents less debt at year end were $65 million. We have one remaining favorable cash true-up item for taxes related to the merger of Quanex Corporation with Gerdau S.A. We currently estimate the true-up to be $15 million, down from the original estimate of $20 million as the various tax returns near completion. We expect to receive this cash in the first calendar quarter of 2009. Operating cash flow from continuing operations in 2008 came in at $53 million. We continue to closely monitor our working capital, and at quarter end, our conversion cycle, the time required to convert a customer order to cash, was approximately 31 days," continued Petratis.
Outlook
The company's fiscal first quarter segment operating income has historically been its lowest when compared to the other quarters of the year as there are fewer production days and a marked decline in residential building and remodeling activity during this time. This seasonality will be exacerbated given today's weak economic conditions. First quarter 2009 expectations indicate the company will report an operating loss of between $7 million to $11 million before taking into account approximately $5.5 million of corporate expenses (excluding any LIFO impact). The majority of the loss is expected to come from Aluminum Sheet Products due to significantly lower shipments and a deteriorating spread. As in most years, the company expects to report improved operating results each sequential quarter of fiscal 2009.
While the company expects to continue to outperform the market, the overall economic volatility and the ongoing uncertainty surrounding 2009 housing starts and residential remodeling activity does not allow it to reasonably predict fiscal 2009 operating income at this time. However, the company does expect to be profitable for the year. The company will continue to monitor and analyze ongoing economic changes and the impact those changes will have on its operating performance throughout the year. Estimates for fiscal 2009 depreciation / amortization, and capital expenditures are $35 million and $18 million, respectively.
Non-GAAP Financial Measures
Income from Continuing Operations Before Spinoff Related Costs and LIFO Impact
Income from continuing operations before spinoff related costs and LIFO impact is a non-GAAP financial measure. The company believes this non-GAAP financial measure provides a consistent basis for comparison between quarters and years, 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 spinoff related costs and LIFO impact and diluted earnings per share from continuing operations before spinoff related costs and LIFO impact. 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 Oct. 31, Twelve months ended Oct. 31, --------------------------------------------------------------------- (in millions except diluted EPS) 2008 2007 2008 2007 ------------------------------------------------------- Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Income EPS ------------- ------------- ------------- ------------- Income from continuing operations, as reported $15.0 $0.40 $17.6 $0.44 $15.9 $0.41 $57.1 $1.45 LIFO charge (income) (3.1) (0.08) (0.3) -- 0.2 0.01 (0.8) (0.03) After-tax reconciling items associated with the company's spinoff: Stock based compensation expense -- -- -- -- 13.7 0.36 -- -- Transaction costs -- -- -- -- 2.9 0.08 -- -- Executive incentives & other benefits -- -- -- -- 0.5 -- -- -- ------------- ------------- ------------- ------------- Selling, general & administrative expense -- -- -- -- 17.1 0.44 -- -- Rabbi trust merger consideration -- -- -- -- (2.4) (0.06) -- -- ------------- ------------- ------------- ------------- Total after-tax spinoff related costs -- -- -- -- 14.7 0.38 -- -- ------------- ------------- ------------- ------------- Income from continuing operations, excluding LIFO & spinoff related costs $11.9 $0.32 $17.3 $0.44 $30.8 $0.80 $56.3 $1.42 ============ ============ ============ ============ Diluted weighted average common shares outstanding (in thousands) 37,466 39,703 38,528 39,509
Dividend Declared
The Board of Directors declared a quarterly cash dividend of $0.03 per share on the company's common stock, payable December 31, 2008, to shareholders of record on December 18, 2008.
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 10/31/08
Book value per common share: $14.55; Total debt to capitalization: 0.5%; Actual number of common shares outstanding: 37,657,891
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;
Operating margin - combined operating income of aluminum sheet products and engineered products divided by combined net sales.
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 Registration Statement on Form 10, filed with the SEC on April 4, 2008 pursuant to the Securities Exchange Act of 1934, in particular the section titled, "Special Note About Forward-Looking Statements" contained therein.
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 Twelve months ended October 31, October 31, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- Net sales: $112,866 $123,866 Engineered Products $407,896 $457,764 139,037 136,123 Aluminum Sheet Products 479,925 524,215 -------- -------- -------- -------- 251,903 259,989 Building Products 887,821 981,979 (5,558) (4,463) Eliminations (18,888) (18,005) -------- -------- -------- -------- $246,345 $255,526 Net sales $868,933 $963,974 ======== ======== ======== ======== Operating income: $ 10,101 $ 13,220 Engineered Products $ 29,881 $ 43,815 12,565 18,330 Aluminum Sheet Products 40,260 65,732 -------- -------- -------- -------- 22,666 31,550 Building Products 70,141 109,547 1,332 (4,152) *Corporate and Other (49,160) (21,378) -------- -------- -------- -------- $ 23,998 $ 27,398 *Operating Income (Loss) $ 20,981 $ 88,169 ======== ======== ======== ======== ------------------ * Corporate and Other and Operating Income for the three and twelve months ended October 31, 2008 include $5.1 million LIFO income and $0.4 million LIFO expense, respectively. In addition, Corporate and Other and Operating Income for the twelve months ended October 31, 2008 include $26.5 million of special charges associated with the spin-off / merger transaction which predominantly occurred in the second quarter of 2008. QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three months ended Twelve months ended October 31, October 31, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- $246,345 $255,526 Net sales $868,933 $963,974 Cost of sales (exclusive of items shown separately 199,080 201,389 below) 717,376 767,138 Selling, general and admini- 14,822 16,325 strative expense 95,504 70,676 8,445 10,414 Depreciation and amortization 35,072 37,991 -------- -------- -------- -------- 23,998 27,398 Operating income (loss) 20,981 88,169 (124) (139) Interest expense (480) (591) 312 124 Other, net 5,188 383 -------- -------- -------- -------- Income (loss) from continuing operations 24,186 27,383 before income taxes 25,689 87,961 (9,176) (9,774) Income tax expense (9,785) (30,830) -------- -------- -------- -------- Income (loss) from 15,010 17,609 continuing operations 15,904 57,131 Income (loss) from discontinued operations, -- 24,470 net of taxes 5,675 77,491 -------- -------- -------- -------- $ 15,010 $ 42,079 Net income (loss) $ 21,579 $134,622 ======== ======== ======== ======== Basic earnings per common share: Earnings (loss) from $ 0.40 $ 0.47 continuing operations $ 0.43 $ 1.54 Income (loss) from $ -- $ 0.66 discontinued operations $ 0.15 $ 2.10 -------- -------- -------- -------- Basic earnings (loss) per $ 0.40 $ 1.13 common share $ 0.58 $ 3.64 -------- -------- -------- -------- Diluted earnings per common share: Earnings (loss) from $ 0.40 $ 0.44 continuing operations $ 0.41 $ 1.45 Income (loss) from $ -- $ 0.62 discontinued operations $ 0.15 $ 1.96 -------- -------- -------- -------- Diluted earnings (loss) per $ 0.40 $ 1.06 share $ 0.56 $ 3.41 -------- -------- -------- -------- Weighted average common shares outstanding: 37,333 37,075 Basic 37,274 36,982 37,466 39,703 Diluted 38,528 39,509 QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) October 31, October 31, 2008 2007 --------------------------------------------------------------------- Assets $ 67,413 Cash and equivalents $ 1,778 101,211 Accounts and notes receivable, net 80,095 63,848 Inventories, net 53,556 10,932 Deferred income taxes 5,370 6,239 Other current assets 4,372 -- Current assets of discontinued operations 431,326 ---------- --------------------------------------------- ---------- 249,643 Total current assets 576,497 157,389 Property, plant and equipment, net 173,590 3,875 Deferred income taxes -- 196,338 Goodwill 196,385 62,476 Intangible assets, net 68,199 11,126 Other assets 9,225 -- Assets of discontinued operations 310,926 ---------- --------------------------------------------- ---------- $ 680,847 Total assets $1,334,822 ========== ============================================= ========== Liabilities and stockholders' equity $ 79,512 Accounts payable $ 68,167 38,316 Accrued liabilities 37,102 -- Income taxes payable -- 363 Current maturities of long-term debt 1,464 -- Current liabilities of discontinued operations 242,570 ---------- --------------------------------------------- ---------- 118,191 Total current liabilities 349,303 2,188 Long-term debt 2,551 -- Deferred income taxes 34,457 2,485 Non-current environmental reserves 4,239 10,155 Other liabilities 13,889 -- Liabilities of discontinued operations 47,234 ---------- --------------------------------------------- ---------- 133,019 Total liabilities 451,673 547,828 Total stockholders' equity 883,149 ---------- --------------------------------------------- ---------- $ 680,847 Total liabilities and stockholders' equity $1,334,822 ========== ============================================= ========== QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Twelve months ended October 31, 2008 2007 -------- -------- Operating activities: Net income $ 21,579 $134,622 Income from discontinued operations (5,675) (77,491) -------- -------- Net income from continuing operations 15,904 57,131 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 35,111 38,000 Deferred income taxes 2,984 796 Stock-based compensation 26,378 4,925 -------- -------- 80,377 100,852 Changes in assets and liabilities, net of effects from acquisitions, dispositions and the Separation: Decrease (Increase) in accounts and notes receivable (21,495) (1,140) Decrease (Increase) in inventory (10,398) 2,012 Decrease (Increase) in other current assets (390) 177 Increase (Decrease) in accounts payable 11,406 (868) Increase (Decrease) in accrued liabilities (3,285) (2,356) Increase (Decrease) in income taxes payable 1,088 (736) Increase (Decrease) in deferred pension and postretirement benefits (2,515) 2,851 Other, net (1,824) 3,518 -------- -------- Cash provided by (used for) operating activities from continuing operations 52,964 104,310 Cash provided by (used for) operating activities from discontinued operations 25,127 119,764 -------- -------- Cash provided by (used for) operating activities 78,091 224,074 -------- -------- Investing activities: Capital expenditures, net of retirements (15,815) (15,904) Other, net (23) -- -------- -------- Cash provided by (used for) investing activities from continuing operations (15,838) (15,904) Cash provided by (used for) investing activities from discontinued operations 34,113 (121,070) -------- -------- Cash provided by (used for) investing activities 18,275 (136,974) -------- -------- Financing activities: Repayments of long-term debt (1,464) (2,721) Common dividends paid (2,258) -- Funding from Separation 32,735 -- Transfers to Quanex Corporation -- (86,312) Other, net (302) -- -------- -------- Cash provided by (used for) financing activities from continuing operations 28,711 (89,033) Cash provided by (used for) financing activities from discontinued operations (46,183) 68,906 -------- -------- Cash provided by (used for) financing activities (17,472) (20,127) -------- -------- Effect of exchange rate changes on cash and equivalents (202) 158 LESS: (Increase) Decrease in cash and equivalents from discontinued operations (13,057) (67,600) -------- -------- Increase (Decrease) in cash and equivalents from continuing operations 65,635 (469) Beginning of period cash and equivalents 1,778 2,247 -------- -------- End of period cash and equivalents $ 67,413 $ 1,778 ======== ========
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SOURCE: Quanex Building Products Corporation
Quanex Building Products Corporation
Financial Contact:
Jeff Galow
713-877-5327
Media Contact:
Valerie Calvert
713-877-5305