News Release Details
Quanex Reports Fiscal 2000 Second-Quarter Earnings; - Best-Ever Quarterly Sales Performance; up 20 Percent Year-Over-Year; - EPS (Before One-Time Gains) of 66 Cents Basic/61 Cents Diluted Down From 69 Cents Basic/64 Cents Diluted A Year Ago; - Loss at Pip
HOUSTON, May 25 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced fiscal 2000 second-quarter earnings. Net income before extraordinary gains for the three-month period that ended April 30, 2000 was $9.0 million, which represents basic earnings of 66 cents per share and diluted earnings of 61 cents per share. This compares with net income of $9.8 million and basic and diluted earnings per share of 69 cents and 64 cents, respectively, for fiscal 1999's second quarter. Sales for the second quarter were a best-ever $243.3 million, a 20 percent increase from $202.9 million, which was reported for the same period last year.
During fiscal 2000's second quarter, the company accepted unsolicited block offers to buy back $10.4 million (principal amount) of convertible subordinated debentures. Quanex also purchased 511,800 shares of its common stock during fiscal 2000's second quarter as part of the company's share buyback program that was announced in December 1999.
Second-Quarter Business Results
The MACSTEEL(R) Group, Quanex's engineered steel bar business, earned second-quarter operating income of $15.9 million, an 11 percent increase compared with operating income of $14.3 million reported for the same period last year. Fiscal 2000's second-quarter net sales were up 18 percent from a year ago to $88.2 million. In fiscal 1999's second quarter, net sales were $74.9 million.
Nichols Aluminum, the company's aluminum sheet products business, posted best-ever second-quarter operating income of $6.6 million, up 117 percent from the second-quarter operating income of $3.0 million reported last year. Net sales were an all-time quarterly record at $112 million, up 46 percent from $76.9 million for the same period last year. Current year results include contributions by Nichols Aluminum-Golden, which was acquired in January 2000.
The Engineered Products Group (AMSCO, Homeshield, Imperial Products, Piper Impact(TM), and Piper Impact-Europe) reported an operating loss of $1.3 million, compared with operating income of $3.1 million in the prior year's second quarter. Net sales for the period were $49 million, compared with $57.9 million for the same period in the previous year.
Outlook
"The improved sales and operating income at Quanex's engineered steel bar and aluminum sheet businesses during the second quarter were offset by poor results from Piper Impact in our engineered products group," said Vernon E. Oechsle, chairman and chief executive officer of Quanex. "Despite that setback, Quanex still achieved strong EBITDA levels for the period and significant top-line growth, with revenues increasing 20 percent to $243 million, an all-time record for a three-month period.
"In our Engineered Products Group, Piper Impact-U.S. incurred higher costs due to the development and tooling of new products, implementing cellular manufacturing processes, and the decline in aluminum air bag components. The business outlook at our Netherlands-based facility has deteriorated as customer forecasted volumes for new products haven't materialized," Oechsle said. "These losses exceeded gains from the Fabricated Products Division, which realized strong results for this time of year. Progress on new aluminum products to replace declining sales of air bag parts continues slowly. Several new applications appear viable. We continue to monitor the progress at Piper Impact, and we should have better visibility on the prospects of these new products by year-end.
"The MACSTEEL Group's operating and financial results for the period were excellent," Oechsle said. "Bookings continue to be strong, with backlogs filled into July. Expansion at our MACSTEEL Heat Treating Division in Huntington, Indiana, is complete, and product trials have begun on its newly installed third line. MACSTEEL NitroSteel continues its improvement, and we're seeing stronger order backlogs for its products. Work continues at our two engineered bar mills on Phase V expansion projects, which are on schedule for completion by the end of the calendar year.
"Nichols Aluminum had an outstanding second quarter, setting records in volumes, sales, and operating income for the period. Even excluding the contribution from Nichols Aluminum Golden, the Colorado-based sheet manufacturing facility acquired in January from Alcoa (NYSE: AA), Nichols achieved best-ever second-quarter results," Oechsle said. "Backlogs remain solid, and we expect this division to be sold out through the fiscal year. Markets are strong, especially for painted aluminum sheet, Nichols' highest value-added product. At Nichols Aluminum-Golden we are focused on extending the customer base that eroded in the past few years when its ownership was uncertain."
Portions of the statements above are based on current expectations. Statements that use the word "expect", "should", "will" or similar words reflecting future expectation or belief are forward-looking statements, and actual results or events may differ materially. For a more complete discussion of factors that may affect the Company's future performance, please refer to the Company's most recent filings under the Securities Exchange Act of 1934, in particular, the sections titled "Private Securities Litigation Reform Act" contained therein.
Dividend Declared
The Board of Directors declared a regular quarterly dividend of 16 cents per share on the Company's common stock, payable June 30, 2000, to shareholders of record on June 15, 2000. This is the 48th consecutive quarter Quanex has paid a dividend to shareholders of its common stock.
Corporate Profile
Quanex is a technological leader in the production of value-added, engineered steel bars; aluminum flat-rolled products; and engineered, formed- metal products for customers in the transportation, capital equipment, homebuilding and remodeling, packaging, defense, and other commercial markets. For more information, visit the company's web site at www.quanex.com.
Latest 12 Months Financial Information
Sales: $866.7 million; EBITDA: $118.4 million; Operating income: $70.2 million; Net income: $38.9 million; Basic earnings per share: $2.75; Quarterly common dividend rate (per share): $.16; Book value per common share: $21.91; Long-term debt to capitalization: 44.4 %; Return on common equity: 13.45 %; Actual number of common shares outstanding: 13,536,090; Common stock price range (52-week hi - low): $29 - $16-1/8.
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Six months ended
April 30, April 30,
2000 1999 2000 1999
(Unaudited) (Unaudited)
$243,271 $202,879 Net sales $442,565 $385,982
200,655 160,147 Cost of sales 366,298 308,882
12,856 13,187 Selling, general and 26,138 27,489
administrative expense
12,909 11,405 Depreciation and amortization 25,071 22,977
16,851 18,140 Operating income 25,058 26,634
(4,020) (3,605) Interest expense (7,350) (7,286)
647 475 Capitalized interest 1,191 821
307 31 Other, net 1,309 825
13,785 15,041 Income before income taxes 20,208 20,994
and extraordinary gain
(4,756) (5,264) Income tax expense (7,004) (7,348)
9,029 9,777 Income before extraordinary 13,204 13,646
gain
358 415 Extraordinary gain on early 358 415
extinguishment of debt,
net of income taxes
$9,387 $10,192 Net income $13,562 $14,061
Weighted average common shares outstanding:
13,774 14,249 Basic 13,975 14,236
16,118 16,818 Diluted 16,406 16,846
Earnings per common share:
Basic:
$ 0.66 $ 0.69 Income before extraordinary $ 0.95 $ 0.96
gain
0.02 0.03 Extraordinary gain 0.02 0.03
$ 0.68 $ 0.72 Total basic net earnings $ 0.97 $ 0.99
Diluted:
$ 0.61 $ 0.64 Income before extraordinary $ 0.91 $ 0.93
gain
$ 0.02 0.02 Extraordinary gain 0.02 0.02
$ 0.63 $ 0.66 Total diluted net earnings $ 0.93 $ 0.95
$ 0.16 $ 0.16 Common stock dividends $ 0.32 $ 0.32
per share
QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION
(In thousands)
Three months ended Six months ended
April 30, April 30,
2000 1999 2000 1999
(Unaudited) (Unaudited)
Engineered Steel Bars:
$ 88,205 $ 74,859 Net sales $167,947 $139,956
$ 15,902 $ 14,314 Operating income $ 27,737 $ 25,617
Aluminum Mill Sheet Products:
$111,848 $ 76,867 Net sales $191,568 $148,287
$ 6,582 $ 3,034 Operating income $ 8,785 $ 5,199
Engineered Products:
$ 49,115 $ 57,923 Net sales $ 94,332 $110,587
$ (1,325) $ 3,059 Operating income $ (2,951) $ 2,837
Corporate and Other:
$ (5,897) $ (6,770) Net sales $(11,282) $(12,848)
$ (4,308) $ (2,267) Operating income $ (8,513) $ (7,019)
Total:
$243,271 $202,879 Net sales $442,565 $385,982
$ 16,851 $ 18,140 Operating income $ 25,058 $ 26,634
QUANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
April 30, October 31,
2000 1999 1999 1998
(Unaudited) Assets (Audited)
$ 23,340 $ 33,223 Cash and equivalents $ 25,874 $ 26,279
115,504 79,586 Accounts and notes 87,204 85,166
receivable, net
104,199 78,669 Inventories 78,463 85,397
13,966 14,108 Other current assets 20,846 12,970
257,009 205,586 Total current assets 212,387 209,812
415,984 400,978 Property, plant and 406,841 395,054
equipment, net
57,895 49,961 Goodwill, net 48,990 52,281
25,443 17,229 Other assets 22,228 17,141
$756,331 $673,754 Total assets $690,446 $674,288
Liabilities and stockholders' equity
$ 85,085 $ 68,082 Accounts payable $ 70,187 $ 75,160
51,948 56,003 Accrued expenses 54,305 56,125
9,131 7,994 Current portion of 10,545 12,248
long-term debt
3,783 3,827 Income taxes payable 1,103 3,300
149,947 135,906 Total current 136,140 146,833
liabilities
236,874 191,611 Long-term debt 179,121 188,302
7,217 7,595 Deferred pension credits 6,691 7,832
7,598 7,250 Deferred postretirement 7,490 7,092
welfare benefits
43,540 32,785 Deferred income taxes 43,910 33,412
14,583 17,529 Other liabilities 16,033 18,773
459,759 392,676 Total liabilities 389,385 402,244
296,572 281,078 Total stockholders' 301,061 272,044
equity
$756,331 $673,754 Total liabilities and $690,446 $674,288
stockholders' equity
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Three months ended Six months ended
April 30, April 30,
2000 1999 2000 1999
(Unaudited) (Unaudited)
Operating activities:
$ 9,387 $10,192 Net income $13,562 $14,061
(551) (638) Extraordinary gain on (551) (638)
early extinguishment of
debt
13,040 11,542 Depreciation and 25,340 23,254
amortization
129 14 Deferred income taxes 159 (589)
363 (533) Deferred pension and 636 (79)
postretirement benefits
22,368 20,577 39,146 36,009
(22,800) (1,184) (Increase) decrease in (21,989) 4,969
accounts and notes
receivable
(4,901) 1,679 (Increase) decrease in (11,004) 6,294
inventory
5,484 2,907 Increase (decrease) in 9,634 (6,729)
accounts payable
3,312 8,854 Increase (decrease) in (6,330) 168
accrued expenses
(47) (1,407) Other, net (including 8,060 (1,638)
income tax refund)
3,416 31,426 Cash provided by operating 17,517 39,073
activities
Investment activities:
(13,742) --- Acquisition of Golden (20,148) ---
Aluminum, net of cash
acquired
(15,303) --- Acquisition of Imperial (15,303) ---
Fabricated Products,
net of cash acquired
(10,312) (15,808) Capital expenditures, (24,770) (30,338)
net of retirements
(835) (514) Cash used by other (1,727) (753)
investment activities
(40,192) (16,322) Cash used by investment (61,948) (31,091)
activities
Financing activities:
60,304 7,414 Bank borrowings, net 69,473 11,108
(9,586) (8,399) Purchase of subordinated (9,586) (8,799)
debentures
(10,419) --- Purchases of Quanex common(14,204) ---
stock
(2,225) (2,280) Common dividends paid (4,521) (4,560)
(1) 7 Issuance of common stock, 619 1,283
net
(27) (3) Cash used by other (51) (29)
financing activities
38,046 (3,261) Cash provided by financing 41,730 (997)
activities
115 (25) Effect of exchange rate 167 (41)
changes on cash and equivalents
1,385 11,818 Decrease in cash (2,534) 6,944
21,955 21,405 Beginning of period cash 25,874 26,279
and equivalents
$23,340 $33,223 End of period cash and $23,340 $33,223
equivalents
Media contact: Patrick Cassidy of Quanex Corporation, 713/877-5389.
SOURCE Quanex Corporation
Web site: http: //www.quanex.com
Photo: NewsCom: http: //www.newscom.com/cgi-bin/prnh/19990517/NXLOGO PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT: financial, Jeff Galow, 713-877-5327, or media, Patrick Cassidy, 713-877-5389, both of Quanex Corporation
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