Quanex Reports Fiscal 2000 Third-Quarter Earnings
- Best-ever quarterly sales performance; up 23 percent year-over-year - Record third-quarter earnings and sales at Nichols Aluminum
HOUSTON, Aug. 30 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced fiscal 2000 third-quarter earnings. Including the $14.3-million loss associated with the July sale of Piper Impact-Europe, net income for the three-month period that ended July 31, 2000, was $715,000, which represents basic and diluted earnings of 5 cents per share. Excluding that one-time, non-cash loss, Quanex would have reported net income of $10.0 million with basic earnings of 74 cents per share and diluted earnings of 68 cents per share. This compares with net income of $12.3 million and basic and diluted earnings per share of 86 cents and 79 cents, respectively, for fiscal 1999's third quarter.
Sales for the third quarter were a best-ever $254.1 million, a 23 percent increase from $206.6 million, which was reported for the same period last year.
Third-Quarter Business Results
Fiscal 2000's third-quarter net sales for the MACSTEEL(R) Group, Quanex's engineered steel bar business, were up 17 percent from a year ago to $89.9 million. In fiscal 1999's third quarter, net sales were $76.8 million. Third-quarter operating income was $14.5 million, compared with operating income of $16.8 million reported for the same period last year. Operating income for this year's third quarter was affected by higher outside processing costs, which should be alleviated with the completion of Phase VI expansion projects at the end of fiscal 2001.
Nichols Aluminum, the company's aluminum sheet products business, posted best-ever third-quarter operating income of $6.6 million, up 65 percent from the third-quarter operating income of $4.0 million reported last year. Net sales were a third-quarter record at $110.8 million, up 45 percent from $76.7 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, and Imperial Products) reported operating income of $4.9 million, compared with operating income of $5.2 million in the prior year's third quarter. Net sales for the period were $32.3 million, compared with $28.7 million for the same period in the previous year.
Piper Impact, whose results have now been separated from the Engineered Products Group, reported an operating loss of $18.1 million on sales of $28.2 million for the fiscal 2000 third-quarter period. That includes the one-time loss of $14.3 million associated with the sale of Piper Impact-Europe. In the same period of the prior year, Piper Impact reported a loss of $339,000 on sales of $31.6 million.
Also during fiscal 2000's third quarter, Quanex purchased 94,200 shares of its common stock as part of the company's share buyback program that was announced in December 1999.
Outlook
"While I'm pleased to see higher sales levels throughout our company -- annual sales for this fiscal year will top $900 million for the first time in the company's history -- I'm disappointed with the earnings we achieved during the period. I expect better results," said Vernon E. Oechsle, chairman and chief executive officer of Quanex. "Our disposition of Piper Impact's European facility will help improve our near-term profitability, as we focus on our core North American manufacturing operations.
"The MACSTEEL Group reported lower earnings compared to the same period a year ago due to higher costs associated with outside processing and raw material prices that are up from the very low levels of last year," Oechsle said. "Demand among OEMs in our primary transportation markets remains strong. Volumes are at record levels, especially for MACPLUS(R), our premium, cold-finished engineered steel bar product.
"Nichols Aluminum had another outstanding quarter, setting records in volumes, sales, and operating income for the period. Demand remains healthy, especially for Nichols' highest value-added product, wide-width painted aluminum sheet. Nichols Aluminum-Golden, the Fort Lupton, Colorado-based casting and finishing mill acquired in January, continues its smooth transition into the Quanex and Nichols organization. New customer trials are underway to more fully optimize the facility's capabilities.
"In our Engineered Products Group, higher operating costs and a perceptible slowdown in the housing industry contributed to lower earnings compared with results from a year ago. The addition of Imperial Products, the door component company we acquired in April, is already paying some dividends. In cooperation with the group's other businesses, new product introductions and developments are continuing at a significant pace," Oechsle said.
"Piper Impact has made progress toward solving major problems with production and delivery systems, improving the relationship with its major customer, and reducing costs," Oechsle said. "However, much work remains. Particularly, Piper Impact must develop and produce new products and diversify its customer base to return to profitability."
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 September 29, 2000, to shareholders of record on September 15, 2000. This is the 49th 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: $914.2 million; EBITDA: $116.2 million; Operating income: $52.8 million; Net income: $27.2 million; Basic earnings per share: $1.94; Quarterly common dividend rate (per share): $.16; Book value per common share: $21.82; Long-term debt to capitalization: 41.9 %; Return on common equity: 9.3%; Actual number of common shares outstanding: 13,464,051; Common stock price range (52-week hi - low): $27-3/8 - $14-3/8.
QUANEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three months ended Nine months ended July 31, July 31, 2000 1999 2000 1999 (Unaudited) (Unaudited) $ 254,144 $ 206,619 Net sales $ 696,709 $ 592,601 208,874 161,107 Cost of sales 575,172 469,989 Selling, general and 14,113 12,032 administrative expense 40,251 39,521 12,310 11,571 Depreciation and amortization 37,381 34,548 Loss on sale of 14,280 --- Piper Impact Europe 14,280 --- 4,567 21,909 Operating income 29,625 48,543 (4,149) (3,595) Interest expense (11,499) (10,881) 499 383 Capitalized interest 1,690 1,204 289 274 Other, net 1,598 1,099 Income before income taxes 1,206 18,971 and extraordinary gain 21,414 39,965 (491) (6,640) Income tax expense (7,495) (13,988) 715 12,331 Income before extraordinary gain 13,919 25,977 Extraordinary gain on early extinguishment of debt, --- --- net of income taxes 358 415 $ 715 $ 12,331 Net income $ 14,277 $ 26,392 Weighted average common shares outstanding: 13,534 14,258 Basic 13,827 14,243 13,682 16,737 Diluted 13,973 16,799 Earnings per common share: Basic: Income before $ 0.05 $ 0.86 extraordinary gain $ 1.00 $ 1.82 --- --- Extraordinary gain 0.03 0.03 $ 0.05 $ 0.86 Total basic net earnings $ 1.03 $ 1.85 Diluted: Income before $ 0.05 $ 0.79 extraordinary gain $ 1.00 $ 1.71 --- --- Extraordinary gain 0.02 0.03 $ 0.05 $ 0.79 Total diluted net earnings $ 1.02 $ 1.74 Common stock dividends $ 0.16 $ 0.16 per share $ 0.48 $ 0.48 QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) Three months ended Nine months ended July 31, July 31, 2000 1999 2000 1999 (Unaudited) (Unaudited) Engineered Steel Bars: $ 89,938 $ 76,789 Net sales $ 257,885 $ 216,745 $ 14,481 $ 16,829 Operating income $ 42,218 $ 42,446 Aluminum Mill Sheet Products: $ 110,843 $ 76,672 Net sales $ 302,411 $ 224,959 $ 6,591 $ 4,002 Operating income $ 15,376 $ 9,201 Engineered Products: $ 32,263 $ 28,669 Net sales $ 73,407 $ 67,372 $ 4,863 $ 5,237 Operating income $ 9,184 $ 8,682 Piper Impact: $ 28,173 $ 31,594 Net sales $ 81,361 $ 103,478 $ (18,136) $ (339) Operating loss $ (25,408) $ (947) Corporate and Other: $ (7,073) $ (7,105) Net sales $ (18,355) $ (19,953) $ (3,232) $ (3,820) Operating loss $ (11,745) $ (10,839) Total: $ 254,144 $ 206,619 Net sales $ 696,709 $ 592,601 $ 4,567 $ 21,909 Operating income $ 29,625 $ 48,543
Note: The results from operations of Piper Impact as well as Piper Impact Europe have been separated into their own reporting segment named "Piper Impact" beginning in the 3rd Quarter of Fiscal 2000. Previous year's information has been restated to reflect this change. The one-time loss from the sale of Piper Impact Europe of $14.3 million is included in Piper Impact's operating loss for three and nine months ended July 31, 2000.
QUANEX CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) July 31, October 31, 2000 1999 1999 1998 (Unaudited) Assets (Audited) $ 32,552 $ 41,863 Cash and equivalents $ 25,874 $ 26,279 Accounts and notes 99,019 78,918 receivable, net 87,204 85,166 96,650 81,824 Inventories 78,463 85,397 12,877 14,365 Other current assets 20,846 12,970 241,098 216,970 Total current assets 212,387 209,812 Property, plant and 394,705 400,506 equipment, net 406,841 395,054 47,795 49,644 Goodwill, net 48,990 52,281 22,895 20,362 Other assets 22,228 17,141 $ 706,493 $ 687,482 Total assets $ 690,446 $ 674,288 Liabilities and stockholders' equity $ 79,593 $ 70,757 Accounts payable $ 70,187 $ 75,160 50,842 54,197 Accrued expenses 54,305 56,125 Current portion of 259 8,628 long-term debt 10,545 12,248 3,025 1,648 Income taxes payable 1,103 3,300 133,719 135,230 Total current liabilities 136,140 146,833 211,505 194,428 Long-term debt 179,121 188,302 6,631 7,113 Deferred pension credits 6,691 7,832 Deferred postretirement 7,634 7,342 welfare benefits 7,490 7,092 38,862 35,295 Deferred income taxes 43,910 33,412 14,423 16,528 Other liabilities 16,033 18,773 412,774 395,936 Total liabilities 389,385 402,244 293,719 291,546 Total stockholders' equity 301,061 272,044 Total liabilities and $ 706,493 $ 687,482 stockholders' equity $ 690,446 $ 674,288 QUANEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) Three months ended Nine months ended July 31, July 31, 2000 1999 2000 1999 (Unaudited) (Unaudited) Operating activities: $ 715 $ 12,331 Net income $ 14,277 $ 26,392 Extraordinary gain on early extinguishment of --- --- debt (net of taxes) (358) (638) Loss on sale of Piper Impact Europe (net of 9,282 --- taxes of $4,998) 9,282 --- 12,437 11,703 Depreciation and amortization 37,777 34,957 (3,036) 2,504 Deferred income taxes (2,877) 1,915 Deferred pension and (478) (390) postretirement benefits 158 (469) 18,920 26,148 58,259 62,157 (Increase) decrease in 13,443 722 accounts and notes receivable (8,546) 5,691 (Increase) decrease 3,126 (3,104) in inventory (7,878) 3,190 Increase (decrease) in (1,968) 2,615 accounts payable 7,666 (4,114) Increase (decrease) in 669 (1,829) accrued expenses (5,661) (1,661) Other, net (including 2,663 (3,302) income tax refund) 10,530 (4,940) Cash provided by 36,853 21,250 operating activities 54,370 60,323 Investment activities: Acquisition of Golden Aluminum --- --- , net of cash acquired (20,148) --- Acquisition of Imperial Fabricated Products, net --- --- of cash acquired (15,303) --- Capital expenditures, net (8,598) (13,547) of retirements (33,368) (43,885) Cash provided (used) by 1,158 (89) other investment activities (569) (842) Cash used by investment (7,440) (13,636) activities (69,388) (44,727) Financing activities: Bank borrowings (16,280) 3,088 (repayments), net 53,193 14,196 Purchase of subordinated --- --- debentures (9,586) (8,799) Purchases of Quanex (1,675) --- common stock (15,879) --- (2,190) (2,281) Common dividends paid (6,711) (6,841) 345 236 Issuance of common stock, net 964 1,519 Cash used by other (301) (30) financing activities (352) (59) Cash provided (used) by (20,101) 1,013 financing activities 21,629 16 Effect of exchange rate changes (100) 13 on cash and equivalents 67 (28) 9,212 8,640 Increase in cash 6,678 15,584 Beginning of period cash 23,340 33,223 and equivalents 25,874 26,279 End of period cash $ 32,552 $ 41,863 and equivalents $ 32,552 $ 41,863 Contact: media, 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
CAPTION: NXLOGO QUANEX CORPORATION LOGO Quanex Corporation logo. (PRNewsFoto)[HD] HOUSTON, TX USA 05/17/1999