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Quanex Building Products Corporation Reports Fiscal Second Quarter 2008 Results

Reported $0.17 EPS from Continuing Operations before Special Items

Company Continued to Outperform the Market

Expected Start-Up Cash of $52 million From the Spin / Merger
Transactions

Company Essentially Debt Free, with Financial Wherewithal to Fund Both
Organic and Acquisitive Growth

HOUSTON, June 9, 2008 (PRIME NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal second quarter 2008 results for the period ending April 30. Diluted earnings from continuing operations were $0.17 per share excluding special items. Including special items of $0.37 per share, diluted earnings from continuing operations were $(0.20) per share.

Income from continuing operations excluding special items was $6.5 million. Special items totaled $13.8 million after-tax, the result of transaction related costs. Income from continuing operations in the year ago quarter was $13.4 million, or $0.34 per diluted share.

Diluted earnings per share were $(0.14) in the quarter versus $0.86 in the second quarter 2007. Net sales for the second quarter 2008 were $207.3 million compared to $238.6 million a year ago.

Fiscal Second Quarter 2008 Highlights

  • Quanex Building Products Corporation was spun-off from Quanex Corporation on April 23rd.
  • Net sales were $207.3 million compared to $174.9 million and $238.6 million in the sequential and year ago quarters, respectively.
  • SG&A was $43.6 million, and included $25.7 million of corporate transaction related costs, of which $22.8 million were non-cash, stock-based compensation expenses paid by the acquirer of Quanex Corporation.
  • Cash provided by operating activities from continuing operations was $19.5 million, down from $31.9 million a year ago.
  • Capital expenditures were $6.9 million in the quarter versus $7.3 million a year ago.
  • Cash and equivalents totaled $40 million at quarter end.

Selected Financial Information



 Fiscal Second Quarter 2008 Financials
 ($ in millions, except per share data)

                                          2nd qtr    2nd qtr      inc/
                                           2008        2007      (dcr)
                                          ------      ------     ------
 Net sales:                               $207.3      $238.6      (13%)

 Operating income before special items:
                                             9.5        21.3      (55%)
 Income from continuing operations before
 special items:                              6.5        13.4      (51%)

 Diluted earnings per common share from
  continuing operations before special
  items:                                  $ 0.17      $ 0.34      (50%)


 Diluted earnings per common share
 from continuing operations               $(0.20)     $ 0.34       --

Fiscal Second Quarter 2008 Commentary



 Engineered Products     ($ in millions)

                               2nd qtr    2nd qtr      inc/
                                2008        2007      (dcr)
                               ------      ------     ------
 Net Sales                     $92.5       $103.6      (11%)
 Operating Income              $ 5.3       $  9.1      (42%)

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 housing market slowdown continues, with new housing starts off 34% compared to our second quarter last year. Sales held up relatively well, off about 11%, based in part on the strength of our leading customers and new programs, and lower, but more resilient home repair and remodeling expenditures. The combination of a huge inventory overhang of both new and existing home stock, the rise of home foreclosures and a tight credit market is keeping the residential housing market in a depressed state. The U.S. Department of Housing currently estimates a 10 month supply of homes available for sale. The remodeling industry is experiencing a slowdown in activity as well, down some 5% to 10% from a year ago. Engineered Products did see some seasonal improvement in demand over the first quarter, with April booking activity particularly noteworthy, and we look for higher overall sales at the segment in the third quarter. We continue to reduce expense levels in keeping with market realities, and are currently combining two separate facilities at our window and door fenestration components business into a single, more efficient operation. We expect to have this initiative completed by fiscal year end," said Raymond A. Jean, President and Chief Executive Officer.



 Aluminum Sheet Products   ($ in millions)

                              2nd qtr    2nd qtr      inc/
                               2008        2007      (dcr)
                              ------      ------     ------
 Net Sales                    $118.3      $139.2       (15%)
 Operating Income             $ 10.0      $ 16.8       (41%)

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 and together they represent about 65% of the division's sales.

"Our second quarter shipped pounds at Nichols Aluminum were down about 12% from year ago levels, but up some 23% compared to first quarter shipments due to the seasonal increase in the building products markets. Sales price per pound was off about 4% from the year ago period while our spread per pound (selling price less material costs) in the quarter was off about 7% due primarily to a lower mix of value-added painted sheet sales and a lower London Metal Exchange aluminum ingot price compared to a year ago. However, these prices increased during our second quarter and will benefit us going forward. Operating income was negatively impacted by a combination of the drop in shipped pounds, lower painted sheet sales and the weaker spread. During the quarter, we idled the rolling capacity at our Alabama finishing facility and moved that production to our Lincolnshire facility, thereby improving operating rates at the other plants," Jean said.

Cash Flow

"Cash and equivalents at quarter end was $40 million, including some $28 million of the expected $52 million start-up cash, and total debt to capitalization remained minimal at 0.5%. Operating cash flow from continuing operations came in at a very healthy $19.5 million. We continue to closely monitor our working capital, and at quarter end, our conversion cycle was about 31 days. With our healthy cash balance, strong cash flow and $270 million revolving credit facility, we have the financial wherewithal to fund attractive growth opportunities, both organic and acquisition related," said Jean.

Fiscal 2008 Outlook

The Company does not expect any near term improvement in the housing market, with industry prognosticators continuing to push out the timing of the expected trough, now estimated to occur in the fourth calendar quarter of 2008. Housing starts in fiscal 2008 are now expected to lag fiscal 2007 starts by 35% as the market struggles with the high inventory overhang and tougher credit requirements sought by mortgage lenders. However, the Company does expect to see higher demand from its Engineered Products customers in the second half of the fiscal year compared to the first half due to seasonal improvements in the market and the growth of new programs.

At Nichols Aluminum, volumes are expected to lag year ago quarters throughout the remainder of fiscal 2008. Spread per pound at Nichols, however, is expected to be more robust in the second half of the year compared to the first half in keeping with higher anticipated aluminum ingot prices.

The greater than expected intensity and duration of the housing storm makes forecasting particularly difficult. The current roll-up of income expectations by business still indicates the Company will generate around $80 million of operating income before taking into account approximately $20 million of corporate expenses in a normalized run rate. But given the economy's fragile state, the uncertainty attending this forecast is high and the risks remain to the downside. However, the Company does expect to continue to outperform the market and generate significant cash flow, and is well positioned to experience significant operating leverage when the market improves.

Dividend Declared

The Board of Directors previously declared a quarterly cash dividend of $0.03 per share on the Company's common stock, payable June 30, 2008, to shareholders of record on June 16, 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.

Financial Statistics as of 04/30/08

Book value per common share: $13.97; Total debt to capitalization: 0.5%; Actual number of common shares outstanding: 37,608,153

Non-GAAP Financial Measures

Operating Income and Income From Continuing Operations Excluding Special Items

Operating income and income from continuing operations excluding special items are non-GAAP financial measures. The Company believes these non-GAAP financial measures provide a consistent basis for comparison between quarters and enhance the understanding of the performance of its ongoing operations, as they are not influenced by certain costs incurred during the quarter and are believed to be special and related to specific, infrequent items.

Set forth below is a reconciliation of reported operating income, reported income from continuing operations and reported diluted earnings per share from continuing operations to operating income excluding special items, income from continuing operations excluding special items and diluted earnings per share from continuing operations excluding special items, respectively. 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
                                                      April 30,
                                                  ----------------
                                                   2008     2007
                                                  ----------------

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


 Operating income, as reported                    $(16.2)    $21.3

 Reconciling items associated with the Company's
  spin-off:

  Stock based compensation expense                  22.8        --
  Transaction costs associated                       1.9        --
  Executive incentives & other benefits              1.0        --
                                                  ------    ------
  Selling, general & administrative expense
   unusual items                                    25.7        --
                                                  ------    ------

 Operating income, excluding unusual items        $  9.5     $21.3
                                                  ======    ======


                                        Three months ended April 30,
                                      -------------------------------
                                           2008             2007
                                      --------------   --------------
                                              Diluted         Diluted
                                      Income   EPS     Income   EPS
                                      ------  ------   ------  ------

 Income (loss) from continuing
  operations, as reported             $(7.3)  $(0.20)   $13.4   $0.34

 After-tax reconciling items
  associated with the Company's
  spin-off:

  Stock based compensation expense     13.7     0.37       --      --
  Transaction costs                     1.9     0.05       --      --
  Executive incentives & other
   benefits                             0.6     0.01       --      --
                                      ------  ------   ------  ------
  Selling, general &
   administrative expense              16.2     0.43       --      --
  Rabbi trust merger consideration     (2.4)   (0.06)      --      --
                                      ------  ------   ------  ------
  Total after-tax unusual items        13.8     0.37       --      --
                                      ------  ------   ------  ------

 Income from continuing operations,
  excluding special items             $ 6.5    $0.17    $13.4   $0.34
                                      ======  ======   ======  ======

 Diluted weighted average common
  shares outstanding (in thousands)           37,265           39,416

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 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.

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



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

 Three months ended                                   Six months ended
     April 30,                                            April 30,
 ------------------                                  ------------------
   2008      2007                                      2008      2007
 --------  --------                                  --------  --------
                       Net sales:

 $ 92,494  $103,583    Engineered Products           $179,770  $202,452

  118,281   139,188    Aluminum Sheet Products        210,348   244,425
 --------  --------                                  --------  --------
  210,775   242,771      Building Products            390,118   446,877

   (3,437)   (4,220)     Eliminations                  (7,868)   (7,935)
 --------  --------     ---------------------        --------  --------

 $207,338  $238,551       Net sales                  $382,250  $438,942
 ========  ========                                  ========  ========

                       Operating income:

 $  5,296  $  9,087    Engineered Products           $  7,190  $ 12,938

    9,982    16,828    Aluminum Sheet Products         15,585    27,416
 --------  --------                                  --------  --------
   15,278    25,915      Building Products             22,775    40,354

  (31,500)   (4,620)     Corporate and Other*         (40,164)  (11,855)
 --------  --------                                  --------  --------

 $(16,222) $ 21,295       Operating Income (Loss)*   $(17,389) $ 28,499
 ========  ========                                  ========  ========

 -----------------------
 * Corporate and Other and Operating Loss for the three months and six
   months ended April 30, 2008 include $25.7 million and $26.4 million,
   respectively, of special items associated with the spin-off / merger
   transaction.



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

 Three months ended                                   Six months ended
      April 30,                                           April 30,
 ------------------                                  ------------------
   2008      2007                                      2008      2007
 --------  --------                                  --------  --------
 $207,338  $238,551  Net sales                       $382,250  $438,942
                     Cost of sales (exclusive of
  170,776   191,000   items shown separately below)   317,853   355,147
                     Selling, general and
   43,637    17,196   administrative expense           63,680    36,399
    9,147     9,060  Depreciation and amortization     18,106    18,897
 --------  --------                                  --------  --------
  (16,222)   21,295  Operating income (loss)          (17,389)   28,499
     (100)     (150) Interest expense                    (238)     (312)
    4,242        81  Other, net                         4,550       160
 --------  --------                                  --------  --------
                     Income (loss) before
  (12,080)   21,226   income taxes                    (13,077)   28,347
    4,765    (7,849) Income tax expense                 5,153   (10,481)
 --------  --------                                  --------  --------

                     Income (loss) from continuing
   (7,315)   13,377   operations                       (7,924)   17,866
                     Income (loss) from discontinued
    1,982    19,866   operations, net  of taxes         5,675    36,031
 --------  --------                                  --------  --------
 $ (5,333) $ 33,243  Net income (loss)               $ (2,249) $ 53,897
 ========  ========                                  ========  ========

                     Basic earnings per common share:
                      Earnings (loss) from
 $  (0.20) $   0.36    continuing operations         $  (0.21) $   0.48
                      Income (loss) from
 $   0.06  $   0.54    discontinued operations       $   0.15  $   0.98
 --------  --------                                  --------  --------
                     Basic earnings (loss)
 $  (0.14) $   0.90   per common share               $  (0.06) $   1.46
 --------  --------                                  --------  --------

                     Diluted earnings per common share:
                      Earnings (loss) from
 $  (0.20) $   0.34    continuing operations         $  (0.21) $   0.46
                      Income (loss) from
 $   0.06  $   0.52    discontinued operations       $   0.15  $   0.94
 --------  --------                                  --------  --------
                     Diluted earnings (loss)
 $  (0.14) $   0.86   per share                      $  (0.06) $   1.40
 --------  --------                                  --------  --------

                      Weighted average common shares
                       outstanding:
   37,265    36,943      Basic                         37,215    36,920
   37,265    39,416      Diluted                       37,215    39,113


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

  April 30,                                                  October 31,
    2008                                                        2007
 ----------------------------------------------------------------------
              Assets
 $   40,450   Cash and equivalents                           $    1,778
     85,834   Accounts and notes receivable, net                 80,095
     56,647   Inventories, net                                   53,556
      1,901   Deferred income taxes                               5,370
     10,349   Other current assets                                4,372
         --   Current assets of discontinued operations         431,326
 ----------   ---------------------------------------------  ----------
    195,181      Total current assets                           576,497
    165,786   Property, plant and equipment, net                173,590
     12,584   Deferred income taxes                                  --
    196,372   Goodwill                                          196,385
     64,838   Intangible assets, net                             68,199
      9,499   Other assets                                        9,225
         --   Assets of discontinued operations                 310,926
 ----------   ---------------------------------------------  ----------
 $  644,260      Total assets                                $1,334,822
 ==========  ==============================================  ==========
             Liabilities and stockholders' equity
 $   68,614  Accounts payable                                $   68,167
     32,155  Accrued liabilities                                 37,102
        363  Current maturities of long-term debt                 1,464
         --  Current liabilities of discontinued operations     242,570
 ----------  ----------------------------------------------  ----------
    101,132     Total current liabilities                       349,303
      2,388  Long-term debt                                       2,551
         --  Deferred income taxes                               34,457
      3,458  Non-current environmental reserves                   4,239
     11,891  Other liabilities                                   13,889
         --  Liabilities of discontinued operations              47,234
 ----------  ----------------------------------------------  ----------
    118,869     Total liabilities                               451,673
    525,391     Total stockholders' equity                      883,149
 ----------  ----------------------------------------------  ----------
 $  644,260     Total liabilities and stockholders' equity   $1,334,822
 ==========  ==============================================  ==========


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

                                                    Six months ended
                                                       April 30,
                                                 ----------------------
                                                    2008        2007
                                                 ----------  ----------

 Operating activities:
      Net income                                 $   (2,249) $   53,897
      Income from discontinued operations            (5,675)    (36,031)
                                                 ----------  ----------
      Net income from continuing operations          (7,924)     17,866
      Adjustments to reconcile net income to
       cash provided by operating activities:
        Depreciation and amortization                18,111      18,901
        Deferred income taxes                         2,999        (782)
        Stock-based compensation                     24,936       3,006
                                                 ----------  ----------
                                                     38,122      38,991
      Changes in assets and liabilities, net of
       effects from acquisitions, dispositions
       and the Separation:
       Decrease (Increase) in accounts and notes
        receivable                                   (5,896)    (12,080)
       Decrease (Increase) in inventory              (3,127)     (8,080)
       Decrease (Increase) in other current
        assets                                       (4,872)        633
       Increase (Decrease) in accounts payable          954      16,184
       Increase (Decrease) in accrued
        liabilities                                  (2,294)     (8,510)
       Increase (Decrease) in income taxes
        payable                                        (646)         (3)
       Other, net                                    (2,773)      4,742
                                                 ----------  ----------
      Cash provided by (used for) operating
       activities from continuing operations         19,468      31,877
      Cash provided by (used for) operating
       activities from discontinued operations       25,127      52,507
                                                 ----------  ----------
 Cash provided by (used for) operating
  activities                                         44,595      84,384
                                                 ----------  ----------

 Investment activities:
      Capital expenditures, net of retirements       (6,941)     (7,292)
                                                 ----------  ----------
       Cash provided by (used for) investing
        activities from continuing operations        (6,941)     (7,292)
       Cash provided by (used for) investing
        activities from discontinued operations      34,113    (107,515)
                                                 ----------  ----------
 Cash provided by (used for) investment
  activities                                         27,172    (114,807)
                                                 ----------  ----------

 Financing activities:
      Repayments of long-term debt                   (1,264)     (2,521)
      Funding from Separation                        27,755          --
      Transfers to Quanex Corporation                           (22,638)
      Other, net                                       (290)         --
                                                 ----------  ----------
       Cash provided by (used for) financing
        activities from continuing operations        26,201     (25,159)
       Cash provided by (used for) financing
        activities from discontinued operations     (46,183)     13,824
                                                 ----------  ----------
 Cash provided by (used for) financing
  activities                                        (19,982)    (11,335)
                                                 ----------  ----------

      Effect of exchange rate changes on cash
       and equivalents                                  (56)         11
 LESS: (Increase) Decrease in cash and
  equivalents from discontinued operations          (13,057)     41,184
                                                 ----------  ----------
 Increase (Decrease) in cash and equivalents
  from continuing operations                         38,672        (563)
 Beginning of period cash and equivalents             1,778       2,247
                                                 ----------  ----------
 End of period cash and equivalents              $   40,450  $    1,684
                                                 ==========  ==========

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

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