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Quanex Building Products Corporation Reports Fiscal Third Quarter 2008 Results

Reported $0.32 EPS From Continuing Ops. Before a Non-Cash LIFO Charge Company Outperformed the Market Via New Program Growth $54 Million Cash and Equivalents On Balance Sheet Operating Margin Exceeded 10%

HOUSTON, Aug. 28, 2008 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal third quarter 2008 results for the period ending July 31. Income from continuing operations was $8.8 million compared to $21.7 million a year ago. Diluted earnings per share from continuing operations were $0.32 excluding an after tax LIFO charge of $3.3 million ($0.08 per share) compared to $0.54 in the third quarter 2007.

Fiscal Third Quarter 2008 Highlights



 * David D. Petratis joined Quanex as President and Chief Executive
   Officer July 1.
 * Announced Brent L. Korb rejoined the Company as Senior Vice
   President and Chief Financial Officer effective August 1.
 * Deborah M. Gadin was promoted to Vice President - Corporate
   Controller June 16.
 * Net sales were $240.3 million compared to $269.5 million and
   $207.3 million in the year ago and sequential quarters, respectively.
 * Nine months ended cash provided by operating activities from
   continuing operations was $33.9 million compared to $64.5 million in
   the year ago period.
 * Capital expenditures for the nine months ended were $11.5 million
   versus $11.5 million a year ago.
 * Cash and equivalents totaled $53.9 million at quarter end.
 * Recorded a $5.5 million ($3.3 million after tax) LIFO charge
   primarily associated with the aluminum sheet business.

Selected Financial Information



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

                         3rd qtr 2008     3rd qtr 2007     inc/(dcr)
                         ------------     ------------     ---------
 Net sales:                    $240.3           $269.5         (11%)
 Operating income:               14.4             32.3         (55%)
 Income from continuing ops:      8.8             21.7         (59%)
 Diluted earnings per
  share from continuing ops:    $0.24            $0.54         (56%)

Fiscal Third Quarter 2008 Commentary



 Engineered Products ($ in millions)

                        3rd qtr 2008     3rd qtr 2007     inc/(dcr)
                        ------------     ------------     ---------
 Net Sales:                   $115.3           $131.4         (12%)
 Operating Income:             $12.6            $17.7         (29%)

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.

"We continue to find ourselves in a very difficult housing market, with new home starts off 31% compared to our third quarter last year while remodeling activity is thought to be down about 10%. Our sales at Engineered Products, down about 12%, held up well when you consider the depressed state of these end markets. Our ability to consistently outperform the market is due in part to the strength of new programs and new customers. We also believe our larger window and door customers are making measurable gains selling more window and door products into the home remodeling market, which in turn directly benefits us," said David D. Petratis, president and chief executive officer of Quanex Building Products.

"The housing market continues to suffer from a large inventory of both new and existing homes available for sale, a rise in foreclosures and an ongoing tight credit market. The U.S. Department of Housing currently estimates an 11 months supply of homes available for sale. We did see a meaningful improvement in seasonal demand at Engineered Products, with sales up about 25% over our sequential second quarter. We remained diligent on costs, continued to drive productivity improvements and worked with customers on pricing initiatives in an effort to recover rising raw material costs. The Company disclosed last quarter we were combining two separate facilities at our window and door fenestration components business into a single, more efficient operation. We look to have this consolidation complete by year end," continued Petratis.



 Aluminum Sheet Products ($ in millions)

                           3rd qtr 2008     3rd qtr 2007     inc/(dcr)
                           ------------     ------------     ---------
 Net Sales:                      $130.5           $143.7          (9%)
 Operating Income:                $12.1            $20.0         (39%)

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 third quarter shipped pounds at Nichols Aluminum were down 11% from year ago levels, but up 3% compared to the second quarter due to the seasonal increase in the building products markets. Nichols' spread (selling price less material costs) per pound in the quarter was down $0.03 from the year ago quarter primarily due to a lower mix of painted sheet sales. Compared to our sequential second quarter, unit sales price and spread were up consistent with higher aluminum ingot prices. Operating income compared to the third quarter 2007 was negatively impacted by a combination of a drop in shipped pounds, lower painted sheet sales and higher freight and energy costs. Compared to the sequential second quarter, operating income per pound was up 17%. In an effort to both further reduce our scrap costs and provide us with a wider range of available scrap, we recently invested in a new, high-torque scrap shredder at the Nichols Casting facility," Petratis said.

Cash Flow

"Our cash and equivalents at quarter end was a robust $54 million. We still have one remaining cash true-up item with Gerdau that involves a tax payment currently estimated to be some $20 million in our favor. Our total debt to capitalization remained minimal at 0.5%. Our year-to-date operating cash flow from continuing operations came in at a very healthy $33.9 million. We continue to closely monitor our working capital, and at quarter end, our conversion cycle was 32 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. On the acquisition front, we are actively evaluating various building products companies, both in the residential and commercial space. While we are experiencing some trepidation on the part of some acquisition candidates to sell at what appears to be the low point in the cycle, we are confident that our proven track record and financial position will enable us to successfully implement our growth strategy," said Petratis.

Fiscal 2008 Outlook

The Company does not expect any near term improvement in the housing market. Housing starts in fiscal 2008 are now expected to lag fiscal 2007 starts by 31% as the market struggles with the high inventory overhang and tougher credit requirements sought by lenders. However, the Company does expect to see higher demand from its Engineered Products customers in the fourth quarter compared to the third quarter based on seasonal improvements in the market, the growth of new programs and the uptick in remodeling activity on the part of customers. At Nichols Aluminum, fourth quarter volumes are expected to lag the year ago quarter by 10%. Spread per pound at Nichols in the fourth quarter is expected to be in line with third quarter spreads.

Forecasting the Company's financial results remains difficult given the current housing environment. The roll-up of income expectations by business indicates the Company will generate around $75 million of operating income before taking into account approximately $20 million of corporate expenses (excluding LIFO) in a normalized run rate. The current outlook for operating income is down $5 million from the previous guidance due primarily to lower spread and volume expectations at Nichols Aluminum. 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.

Non-GAAP Financial Measures

Income from Continuing Operations Excluding LIFO

Income from continuing operations excluding LIFO 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.

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 excluding LIFO and diluted earnings per share from continuing operations excluding LIFO. 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,
                             -----------------------------------------
                                      2008                 2007
                             --------------------  -------------------
                              Income (in  Diluted  Income (in  Diluted
                              millions)     EPS     millions)    EPS
                             -----------  -------  ----------  -------

 Income from continuing
  operations, as reported:       $8.8      $0.24      $21.7     $0.54

 LIFO charge (income),
  after tax                      $3.3      $0.08      $(0.2)       --
                             -----------  -------  ----------  -------

 Income from continuing
  operations, excluding LIFO    $12.1      $0.32      $21.5     $0.54
                             ===========  =======  ==========  =======

 Diluted weighted average
  common shares outstanding
  (in thousands)                          37,509               39,992

Dividend Declared

The Board of Directors declared a quarterly cash dividend of $0.03 per share on the Company's common stock, payable September 29, 2008, to shareholders of record on September 15, 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 07/31/08

Book value per common share: $14.31; Total debt to capitalization: 0.5%; Actual number of common shares outstanding: 37,627,891

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 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.

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

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                                Nine months ended
       July 31,                                          July 31,
 ---------------------                            ---------------------
    2008       2007                                  2008       2007
 ---------- ----------                            ---------- ----------
                       Net sales:

 $ 115,261  $ 131,445   Engineered Products       $ 295,031  $ 333,898
   130,540    143,667   Aluminum Sheet Products     340,889    388,092
 ---------- ----------                            ---------- ----------
   245,801    275,112    Building Products          635,920    721,990

    (5,463)    (5,606)   Eliminations               (13,332)   (13,542)
 ---------- ----------                            ---------- ----------

 $ 240,338  $ 269,506      Net sales              $ 622,588  $ 708,448
 ========== ==========                            ========== ==========

                       Operating income:

 $  12,590  $  17,657   Engineered Products       $  19,781  $  30,595
    12,110     19,985   Aluminum Sheet Products      27,695     47,401
 ---------- ----------                             ---------  ---------
    24,700     37,642    Building Products           47,476     77,996

   (10,328)    (5,370)   Corporate and Other        (50,493)   (17,225)
 ---------- ----------                            ---------- ----------

 $  14,372  $  32,272     Operating Income (Loss) $  (3,017) $  60,771
 ========== ==========                            ========== ==========


 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,
 -------------------                               -------------------
    2008      2007                                    2008      2007
 --------- ---------                               --------- ---------

 $ 240,338 $ 269,506  Net sales                    $ 622,588 $ 708,448
                      Cost of sales (exclusive of
   200,443   210,602   items shown separately below) 518,296   565,749
                      Selling, general and
    17,002    17,952   administrative expense         80,682    54,351
     8,521     8,680  Depreciation and amortization   26,627    27,577
 --------- ---------                               --------- ---------
    14,372    32,272  Operating income (loss)         (3,017)   60,771
      (118)     (140) Interest expense                  (356)     (452)
       326        99  Other, net                       4,876       259
 --------- ---------                               --------- ---------
                      Income (loss) from continuing
    14,580    32,231   operations before income taxes  1,503    60,578
    (5,762)  (10,575) Income tax expense                (609)  (21,056)
 --------- ---------                               --------- ---------
                      Income (loss) from continuing
     8,818    21,656   operations                        894    39,522
                      Income (loss) from discontinued
        --    16,991   operations, net of taxes        5,675    53,022
 --------- ---------                               --------- ---------
 $   8,818 $  38,647  Net income (loss)            $   6,569 $  92,544
 ========= =========                               ========= =========

                      Basic earnings per common share:
                      Earnings (loss) from
 $    0.24  $   0.59   continuing operations       $    0.02 $    1.07
                      Income (loss) from
 $      --  $   0.45   discontinued operations     $    0.16 $    1.43
 --------- ---------                               --------- ---------
                      Basic earnings (loss) per
 $    0.24  $   1.04   common share                $    0.18 $    2.50
 --------- ---------                               --------- ---------

                      Diluted earnings per common share:
                      Earnings (loss) from
 $    0.24  $   0.54   continuing operations       $    0.02 $    1.00
                      Income (loss) from
 $      --  $   0.44   discontinued operations     $    0.15 $    1.38
 --------- ---------                               --------- ---------
                      Diluted earnings (loss)
 $    0.24  $   0.98   per share                   $    0.17 $    2.38
 --------- ---------                               --------- ---------

                      Weighted average common shares
                       outstanding:
    37,333    37,012  Basic                           37,255    36,951
    37,509    39,992  Diluted                         38,896    39,449


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

  July 31,                                                  October 31,
    2008                                                       2007
 ----------------------------------------------------------------------
             Assets
 $   53,932  Cash and equivalents                           $     1,778
     99,077  Accounts and notes receivable, net                  80,095
     59,851  Inventories, net                                    53,556
      1,899  Deferred income taxes                                5,370
      5,116  Other current assets                                 4,372
         --  Current assets of discontinued operations          431,326
 ----------  ---------------------------------------------- -----------
    219,875    Total current assets                             576,497
    163,142  Property, plant and equipment, net                 173,590
     12,697  Deferred income taxes                                   --
    196,368  Goodwill                                           196,385
     63,550  Intangible assets, net                              68,199
      8,859  Other assets                                         9,225
         --  Assets of discontinued operations                  310,926
 ----------  ---------------------------------------------- -----------
 $  664,491    Total assets                                 $ 1,334,822
 ==========  ============================================== ===========
             Liabilities and stockholders' equity
 $   71,121  Accounts payable                               $    68,167
     33,217  Accrued liabilities                                 37,102
      4,415  Income taxes payable                                    --
        363  Current maturities of long-term debt                 1,464
         --  Current liabilities of discontinued operations     242,570
 ----------  ---------------------------------------------- -----------
    109,116    Total current liabilities                        349,303
      2,188  Long-term debt                                       2,551
         --  Deferred income taxes                               34,457
      2,979  Non-current environmental reserves                   4,239
     11,675  Other liabilities                                   13,889
         --  Liabilities of discontinued operations              47,234
 ----------  ---------------------------------------------- -----------
    125,958    Total liabilities                                451,673
    538,533    Total stockholders' equity                       883,149
 ----------  ---------------------------------------------- -----------
 $  664,491    Total liabilities and stockholders' equity   $ 1,334,822
 ==========  ============================================== ===========


 QUANEX BUILDING PRODUCTS CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOW
 (In thousands)
 (Unaudited)
                                                    Nine months ended
                                                         July 31,
                                                   --------------------
                                                      2008       2007
                                                   ---------  ---------
 Operating activities:
  Net income                                       $  6,569   $ 92,544
  Income from discontinued operations                (5,675)   (53,022)
                                                   ---------  ---------
  Net income from continuing operations                 894     39,522
  Adjustments to reconcile net income to cash
   provided by operating activities:
     Depreciation and amortization                   26,648     27,584
     Deferred income taxes                            2,891         81
     Stock-based compensation                        25,504      3,829
                                                   ---------  ---------
                                                     55,937     71,016
  Changes in assets and liabilities, net of
   effects from acquisitions, dispositions
   and the Separation:
     Decrease (Increase) in accounts and notes
      receivable                                    (19,147)   (10,212)
     Decrease (Increase) in inventory                (6,337)    (1,402)
     Decrease (Increase) in other current assets        820        601
     Increase (Decrease) in accounts payable          3,461      1,821
     Increase (Decrease) in accrued liabilities      (1,840)    (2,906)
     Increase (Decrease) in income taxes payable      3,774        (10)
  Other, net                                         (2,741)     5,555
                                                   ---------  ---------
  Cash provided by (used for) operating activities
   from continuing operations                        33,927     64,463
  Cash provided by (used for) operating activities
   from discontinued operations                      25,127     69,879
                                                   ---------  ---------
 Cash provided by (used for) operating activities    59,054    134,342
                                                   ---------  ---------
 Investing activities:
  Capital expenditures, net of retirements          (11,529)   (11,512)
  Other, net                                            (23)        --
                                                   ---------  ---------
  Cash provided by (used for) investing activities
   from continuing operations                       (11,552)   (11,512)
  Cash provided by (used for) investing activities
   from discontinued operations                      34,113   (111,681)
                                                   ---------  ---------
 Cash provided by (used for) investing activities    22,561   (123,193)
                                                   ---------  ---------
 Financing activities:
  Repayments of long-term debt                       (1,464)    (2,721)
  Common dividends paid                              (1,128)        --
  Funding from Separation                            32,735         --
  Transfers to Quanex Corporation                        --    (49,559)
  Other, net                                           (293)        --
                                                   ---------  ---------
  Cash provided by (used for) financing activities
   from continuing operations                        29,850    (52,280)
  Cash provided by (used for) financing activities
   from discontinued operations                     (46,183)    39,051
                                                   ---------  ---------
 Cash provided by (used for) financing activities   (16,333)   (13,229)
                                                   ---------  ---------
  Effect of exchange rate changes on cash and
   equivalents                                          (71)        44
 LESS: (Increase) Decrease in cash and equivalents
  from discontinued operations                      (13,057)     2,751
                                                   ---------  ---------
 Increase (Decrease) in cash and equivalents from
  continuing operations                              52,154        715
 Beginning of period cash and equivalents             1,778      2,247
                                                   ---------  ---------
 End of period cash and equivalents                $ 53,932   $  2,962
                                                   =========  =========

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

SOURCE: Quanex Building Products Corporation

Quanex Building Products Corporation
Financial Contact:
Jeff Galow
713/877-5327
Media Contact:
Valerie Calvert
713/877-5305
www.quanex.com

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