Quanex Building Products Reports Fourth Quarter 2013 Results
-
Fourth quarter net sales increased 17% to
$275 million vs.$235 million in Q4 2012 -
Fourth quarter EBITDA of
$25 million vs.$10 million in Q4 2012 -
Fourth quarter net loss of
$1.2 million vs. net income of$1.0 million in Q4 2012 -
Cash and cash equivalents were
$50 million as ofOctober 31, 2013
"EBITDA results for each of our business segments improved in the quarter," CEO
EPG reported fourth quarter 2013 net sales of
Preliminary U.S. window shipments as reported by Ducker Worldwide (Ducker), a market intelligence firm, increased 11% for the 12 months ended
The improved fourth quarter performance was due to an increase in shipped pounds, primarily due to regaining market share from 2012 strike-related losses and improved equipment reliability. Nichols' shipments for the 12 months ended
Corporate and Other Items
Fourth quarter 2013 corporate costs were
The cash balance improved significantly to
Additional information related to fourth quarter and full year 2013 results, including a reconciliation of EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) to its most comparable GAAP figure, can be found in the supplemental schedules accompanying this press release.
2014 Business Outlook and Guidance
"The key indicators that impact our markets are encouraging," Griffiths continued. "New housing starts have improved, home prices are increasing and consumers are beginning to invest in R&R. Much of the recovery in new construction is weighted more toward entry level windows; and, consumers are investing R&R dollars in items such as paint, cabinets and appliances, but not yet into windows. Prime window demand for the R&R market, which has been flat for the past several years, will remain challenging and we believe a measurable recovery is likely 12-18 months away, as low energy costs and tough financing conditions discourage homeowners from replacing windows."
Ducker is currently forecasting 2014 U.S. window shipments to increase 12%, with new construction increasing 22% and R&R increasing 6%. In 2014, EPG's revenue is expected to grow 5%-6% over 2013 results. EPG's EBITDA margins are expected to be similar to 2013 levels. Pricing pressure, particularly on vinyl profiles, is expected to remain throughout 2014.
As a result of the continued uncertainty surrounding the changes to the aluminum warehouse rules and their impact on net spread levels, it is difficult to provide specific EBITDA guidance for Nichols. Nichol's EBITDA sensitivity to an improvement in net spread is roughly
Corporate expenses during 2014 are expected to total
Quanex remains very positive on the long-term growth prospects of its markets and expects to continue to invest for its future through both organic growth initiatives and acquisitions.
Conference Call Information
Quanex will host its conference call today,
Forward Looking Statements
Statements that use the words "estimated," "expect," "could," "should," "believe," "will," "might," or similar words reflecting future expectations or beliefs are forward-looking statements. The forward-looking statements include, but are not limited to, future operating results of Quanex, the financial condition of Quanex, future uses of cash and other expenditures, expenses and tax rates, expectations relating to the company's industry, and the company's future growth. The statements in this release are based on current expectations. Actual results or events may differ materially from this release. Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, the availability and cost of raw materials, and customer demand. For a more complete discussion of factors that may affect the company's future performance, please refer to the company's Annual Report on Form 10-K for the fiscal year ended
For additional information, please visit www.quanex.com
QUANEX BUILDING PRODUCTS CORPORATION | ||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
(In thousands, except per share data) | ||||
(Unaudited) | ||||
Three Months Ended October 31, | Twelve Months Ended October 31, | |||
2013 | 2012 | 2013 | 2012 | |
$ 275,297 | $ 235,048 | Net sales | $ 952,642 | $ 828,976 |
222,242 | 193,302 | Cost of sales | 799,077 | 703,844 |
26,262 | 30,641 | Selling, general and administrative | 109,325 | 111,577 |
27,115 | 9,215 | Depreciation and amortization | 60,504 | 37,596 |
1,465 | 912 | Asset impairment charges | 1,465 | 912 |
(1,787) | 978 | Operating income (loss) | (17,729) | (24,953) |
(145) | (106) | Interest expense | (640) | (454) |
296 | 23 | Other, net | 168 | 222 |
(1,636) | 895 | Income (loss) before income taxes | (18,201) | (25,185) |
430 | 73 | Income tax benefit (expense) | 6,498 | 8,651 |
$ (1,206) | $ 968 | Net income (loss) | $ (11,703) | $ (16,534) |
Earnings (loss) per common share: | ||||
$ (0.03) | $ 0.03 | Basic | $ (0.32) | $ (0.45) |
$ (0.03) | $ 0.03 | Diluted | $ (0.32) | $ (0.45) |
Weighted average common shares outstanding: | ||||
36,941 | 36,737 | Basic | 36,864 | 36,622 |
36,941 | 37,322 | Diluted | 36,864 | 36,622 |
$ 0.04 | $ 0.04 | Cash dividends per share | $ 0.16 | $ 0.16 |
QUANEX BUILDING PRODUCTS CORPORATION | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(In thousands) | ||
(Unaudited) | ||
October 31, 2013 | October 31, 2012 | |
Assets | ||
Cash and cash equivalents | $ 49,736 | $ 71,255 |
Accounts receivable, net | 98,833 | 85,644 |
Inventories, net | 58,316 | 65,904 |
Deferred income taxes | 22,786 | 20,439 |
Prepaid and other current assets | 6,612 | 7,628 |
Total current assets | 236,283 | 250,870 |
Property, plant and equipment, net | 157,219 | 168,877 |
Deferred income taxes | 13,444 | 8,911 |
Goodwill | 71,866 | 68,331 |
Intangible assets, net | 78,962 | 78,380 |
Other assets | 14,041 | 14,169 |
Total assets | $ 571,815 | $ 589,538 |
Liabilities and stockholders' equity | ||
Accounts payable | $ 76,900 | $ 80,985 |
Accrued liabilities | 44,785 | 46,459 |
Current maturities of long-term debt | 183 | 368 |
Total current liabilities | 121,868 | 127,812 |
Long-term debt | 752 | 1,033 |
Deferred pension and postretirement benefits | 3,712 | 6,873 |
Liability for uncertain tax positions | 5,396 | 6,736 |
Non-current environmental reserves | 9,255 | 9,827 |
Other liabilities | 14,638 | 15,430 |
Total liabilities | 155,621 | 167,711 |
Total stockholders' equity | 416,194 | 421,827 |
Total liabilities and stockholders' equity | $ 571,815 | $ 589,538 |
QUANEX BUILDING PRODUCTS CORPORATION | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||
(In thousands) | ||
(Unaudited) | ||
Twelve Months Ended October 31, | ||
2013 | 2012 | |
Operating activities: | ||
Net loss | $ (11,703) | $ (16,534) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation and amortization | 60,504 | 37,596 |
Loss (gain) on disposition of property assets | 449 | (989) |
Stock-based compensation | 4,910 | 4,403 |
Deferred income tax benefit | (8,288) | (9,843) |
Excess tax benefit from share-based compensation | (236) | (496) |
Asset impairment charges | 1,465 | 912 |
Restructuring charges | — | (122) |
Other, net | 781 | 2,638 |
Changes in assets and liabilities, net of effects from acquisitions and dispositions: | ||
Decrease (increase) in accounts receivable | (9,204) | (4,250) |
Decrease (increase) in inventory | 12,791 | (10,288) |
Decrease (increase) in other current assets | 1,622 | (50) |
Increase (decrease) in accounts payable | (5,903) | 14,920 |
Increase (decrease) in accrued liabilities | (7,473) | 8,539 |
Increase (decrease) in income taxes | 1,708 | (547) |
Increase (decrease) in deferred pension and postretirement benefits | (164) | (693) |
Increase (decrease) in other long-term liabilities | 1,574 | 678 |
Other, net | 688 | 604 |
Cash provided by operating activities | 43,521 | 26,478 |
Investing activities: | ||
Acquisitions, net of cash acquired | (22,096) | — |
Capital expenditures | (37,931) | (42,871) |
Proceeds from disposition of capital assets | 340 | 44 |
Proceeds from property insurance claim | — | 1,123 |
Cash used for investing activities | (59,687) | (41,704) |
Financing activities: | ||
Borrowings under credit facility | 23,500 | — |
Repayments of credit facility borrowings | (23,500) | — |
Repayments of other long-term debt | (557) | (264) |
Common stock dividends paid | (5,931) | (5,891) |
Issuance of common stock | 2,583 | 3,015 |
Excess tax benefit from share-based compensation | 236 | 496 |
Debt issuance costs | (1,200) | — |
Purchase of treasury stock | — | (1,284) |
Cash used for financing activities | (4,869) | (3,928) |
Effect of exchange rate changes on cash and equivalents | (484) | 790 |
Decrease in cash and equivalents | (21,519) | (18,364) |
Cash and equivalents at beginning of period | 71,255 | 89,619 |
Cash and equivalents at end of period | $ 49,736 | $ 71,255 |
QUANEX BUILDING PRODUCTS CORPORATION | ||||
SEGMENT INFORMATION | ||||
(In thousands) | ||||
(Unaudited) | ||||
Three Months Ended October 31, | Twelve Months Ended October 31, | |||
2013 | 2012 | 2013 | 2012 | |
Net Sales: | ||||
$ 166,879 | $ 136,355 | Engineered Products | $ 554,980 | $ 478,578 |
110,888 | 101,298 | Aluminum Sheet Products | 410,380 | 362,315 |
277,767 | 237,653 | Building Products | 965,360 | 840,893 |
(2,470) | (2,605) | Eliminations | (12,718) | (11,917) |
$ 275,297 | $ 235,048 | Net Sales | $ 952,642 | $ 828,976 |
Operating Income (Loss) | ||||
$ 18,021 | $ 13,541 | Engineered Products | $ 45,324 | $ 28,490 |
4,191 | (885) | Aluminum Sheet Products | (996) | (17,098) |
22,212 | 12,656 | Building Products | 44,328 | 11,392 |
(23,999) | (11,678) | Corporate & Other | (62,057) | (36,345) |
$ (1,787) | $ 978 | Operating Income (Loss) | $ (17,729) | $ (24,953) |
QUANEX BUILDING PRODUCTS CORPORATION |
NON-GAAP FINANCIAL MEASURE DISCLOSURE |
(In thousands) |
(Unaudited) |
EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) is a non-GAAP financial measure that Quanex management uses to measure its operational performance and assist with financial decision-making. We believe this non-GAAP measure provides a consistent basis for comparison between periods, and will assist investors in understanding our financial performance, including under market conditions outlined in our forward-looking guidance. 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 October 31, 2013 | Twelve Months Ended October 31, 2013 | |||||||
Engineered | Aluminum Sheet | Corporate & | Engineered | Aluminum Sheet | Corporate & | |||
Products | Products | Other | Quanex | Products | Products | Other | Quanex | |
$ (1,206) | Net income (loss) | $ (11,703) | ||||||
(430) | Income tax expense (benefit) | (6,498) | ||||||
(296) | Other, net | (168) | ||||||
145 | Interest expense | 640 | ||||||
18,021 | 4,191 | (23,999) | (1,787) | Operating income (loss) | 45,324 | (996) | (62,057) | (17,729) |
7,731 | 1,810 | 17,574 | 27,115 | Depreciation and amortization | 31,368 | 6,983 | 22,153 | 60,504 |
25,752 | 6,001 | (6,425) | 25,328 | EBITDA | 76,692 | 5,987 | (39,904) | 42,775 |
Three Months Ended October 31, 2012 | Twelve Months Ended October 31, 2012 | |||||||
Engineered | Aluminum Sheet | Corporate & | Engineered | Aluminum Sheet | Corporate & | |||
Products | Products | Other | Quanex | Products | Products | Other | Quanex | |
$ 968 | Net income (loss) | $ (16,534) | ||||||
(73) | Income tax expense (benefit) | (8,651) | ||||||
(23) | Other, net | (222) | ||||||
106 | Interest expense | 454 | ||||||
13,541 | (885) | (11,678) | 978 | Operating income (loss) | 28,490 | (17,098) | (36,345) | (24,953) |
7,154 | 1,467 | 594 | 9,215 | Depreciation and amortization | 28,115 | 7,621 | 1,860 | 37,596 |
20,695 | 582 | (11,084) | 10,193 | EBITDA | 56,605 | (9,477) | (34,485) | 12,643 |
Financial Statistics as of October 31, 2013 | ||||||||
Book value per common share: | $11.20 | |||||||
Total debt to capitalization: | 0.2% | |||||||
Return on invested capital: | -2.7% | |||||||
Actual number of common shares outstanding: | 37,165,254 |
QUANEX BUILDING PRODUCTS CORPORATION | ||||||
Supplemental Financial Disclosures | ||||||
(In millions, except spread per pound) | ||||||
(Unaudited) | ||||||
Engineered Products Group (EPG) is focused on providing window and door OEMs with fenestration components, products, and systems. Key end market are residential remodeling and replacement (R&R) and new home construction. | ||||||
Q4 2013 | Q4 2012 | Change | FY 2013 | FY 2012 | Change | |
(In millions) | ||||||
Net sales | $ 166.9 | $ 136.4 | $ 30.5 | $ 555.0 | $ 478.6 | $ 76.4 |
Operating income | 18.0 | 13.5 | 4.5 | 45.3 | 28.0 | 17.3 |
EBITDA | $ 25.8 | $ 20.7 | $ 5.1 | $ 76.7 | $ 57.0 | $ 19.7 |
Aluminum Sheet Products Group is a leading provider of aluminum sheet coil through its Nichols Aluminum operation. Key end markets are residential R&R, new home construction and transportation. | ||||||
Q4 2013 | Q4 2012 | Change | FY 2013 | FY 2012 | Change | |
(In millions, except for spread) | ||||||
Net sales | $ 110.9 | $ 101.3 | $ 9.6 | $ 410.4 | $ 362.3 | $ 48.1 |
Operating income (loss) | 4.2 | (0.9) | 5.1 | (1.0) | (17.1) | 16.1 |
EBITDA | 6.0 | 0.6 | 5.4 | 6.0 | (9.5) | 15.5 |
Shipped pounds | 83 | 73 | 10 | 296 | 253 | 43 |
Spread per pound | $ 0.42 | $ 0.41 | $ 0.01 | $ 0.41 | $ 0.41 | $ -- |
Corporate & Other Items | ||||||
Q4 2013 | Q4 2012 | Change | FY 2013 | FY 2012 | Change | |
(In millions) | ||||||
ERP implementation costs | $ 5.2 | $ 2.7 | $ 2.5 | $ 16.3 | $ 6.9 | $ 9.4 |
ERP accelerated depreciation | 15.3 | -- | 15.3 | 15.3 | -- | 15.3 |
LIFO adjustment | (2.6) | (1.7) | (0.9) | (2.6) | (1.7) | (0.9) |
Stock-based compensation cost | 1.4 | 1.8 | (0.4) | 5.2 | 5.6 | (0.4) |
Transaction costs | -- | -- | -- | 1.0 | -- | 1.0 |
Other costs | 4.7 | 8.9 | (4.2) | 26.9 | 25.5 | 1.4 |
Total corporate costs | $ 24.0 | $ 11.7 | $ 12.3 | $ 62.1 | $ 36.3 | $ 25.8 |
QUANEX BUILDING PRODUCTS CORPORATION | |||||||||
PRE-TAX & AFTER TAX PRESENTATION | |||||||||
(In millions, except per share data) | |||||||||
(Unaudited) | |||||||||
Segment | Q4 2013 | Q4 2012 | FY 2013 | FY 2012 | |||||
Pre-Tax Presentation | $MM | $MM | $MM | $MM | |||||
Operating Income (Loss) As Reported | $ (1.8) | $ 1.0 | $ (17.7) | $ (25.0) | |||||
Benefit (Reduction) to Operating Income: | |||||||||
Strike Related | Nichols | -- | -- | -- | (11.1) | ||||
Facility Consolidations | EPG | -- | 0.7 | -- | (8.0) | ||||
IG Warranty Reserve | EPG | -- | 0.1 | -- | 0.9 | ||||
Asset Impairment | EPG | (1.5) | (0.9) | (1.5) | (0.9) | ||||
Transaction Related | Corp | -- | -- | (1.0) | -- | ||||
Discontinued ERP expenses* | Corp | (20.0) | (2.3) | (29.7) | (5.0) | ||||
LIFO Income (Charge) | Corp | 2.6 | 1.7 | 2.6 | 1.7 | ||||
Operating Income As Adjusted | $ 17.1 | $ 1.7 | $ 11.9 | $ (2.6) | |||||
Segment | Q4 2013 | Q4 2013 | Q4 2012 | Q4 2012 | FY 2013 | FY 2013 | FY 2012 | FY 2012 | |
After-Tax Presentation | $MM | EPS | $MM | EPS | $MM | EPS | $MM | EPS | |
Income (Loss) As Reported | $ (1.2) | $ (0.03) | $ 1.0 | $ 0.03 | $ (11.7) | $ (0.32) | $ (16.5) | $ (0.45) | |
Benefit (Reduction) to EPS: | |||||||||
Strike Related | Nichols | -- | -- | -- | -- | -- | -- | (7.3) | (0.20) |
Facility Consolidations | EPG | -- | -- | 0.4 | 0.01 | -- | -- | (5.3) | (0.14) |
IG Warranty Reserve | EPG | -- | -- | 0.1 | -- | -- | -- | 0.6 | 0.01 |
Asset Impairment | EPG | (0.9) | (0.02) | (0.6) | (0.02) | (0.9) | (0.03) | (0.6) | (0.02) |
Transaction Related | Corp | -- | -- | -- | -- | (0.6) | (0.02) | -- | -- |
Discontinued ERP expenses | Corp | (12.9) | (0.33) | (1.5) | (0.04) | (19.1) | (0.51) | (3.3) | (0.09) |
LIFO Income (Charge) | Corp | 1.7 | 0.04 | 1.1 | 0.03 | 1.7 | 0.04 | 1.1 | 0.03 |
Diluted Earnings (Loss) As Adjusted * | $ 10.9 | $ 0.28 | $ 1.5 | $ 0.05 | $ 7.2 | $ 0.20 | $ (1.7) | $ (0.04) | |
Notes: | |||||||||
* Q4 2013 and 2013 figures include $15.3M of accelerated depreciation related to ERP | |||||||||
Columns may not add up due to rounding |
CONTACT: Financial Contact:Marty Ketelaar 713-877-5402 Media Contact:Valerie Calvert 713-877-5305