Quanex Reports Record Earnings for Fiscal 2000 First Quarter; - Basic and Diluted EPS of 29 Cents, Up From 27 Cents Compared With Same Period Last Year; - Nichols Aluminum, MACSTEEL(R) Post Record First-Quarter Operating Income, Higher Sales
HOUSTON, Feb. 24 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced fiscal 2000 first-quarter earnings, including record sales and earnings for the three-month period ending January 31. Net income for the three-month period was $4.2 million, representing basic and diluted earnings per share of 29 cents. This compares with net income of $3.9 million and basic and diluted earnings per share of 27 cents for the same period last year. Sales for the first quarter were $199.3 million, up 9 percent compared with sales of $183.1 million for fiscal 1999's first quarter.
The company's engineered steel bar and aluminum mill sheet products businesses posted record first-quarter operating income and significantly higher sales compared with the same period last year. These results reflect a more value-added product mix, operational improvements, and seasonally strong markets with customers in the transportation and construction industries.
First Quarter Business Results
The MACSTEEL Group, Quanex's engineered steel bar business, earned best- ever first-quarter operating income of $11.8 million, up 5 percent compared with $11.3 million reported in the prior year. Fiscal 2000's first-quarter net sales increased 22 percent to $79.7 million. For the same period last year net sales were $65.1 million.
Nichols Aluminum, the company's aluminum sheet products business, posted first-quarter operating income of $2.2 million, matching the record of $2.2 million reported for the prior year. Net sales were a first-quarter record at $79.7 million, up 12 percent from $71.4 million reported for the same period last year.
The Engineered Products Group (AMSCO, Homeshield Fabricated Products, Piper Impact, and Piper Impact-Europe) reported an operating loss of $1.6 million, compared with an operating loss of $222,000 in the prior year's first quarter. Net sales for the period were $45.2 million, down from $52.7 million in the previous year.
Outlook
"I am pleased to report that Quanex posted another strong quarter with higher sales and earnings compared with the same period a year ago," said Vernon E. Oechsle, chairman of the board and chief executive officer of Quanex. "In what has historically been the slowest period of the year due to the holidays, model year changeovers, and other factors, we achieved year- over-year improvement in sales, net income, and earnings per share. We are running our businesses better, operating more efficiently and manufacturing more value-added products.
"The MACSTEEL Group reported record period results for the third consecutive quarter," Oechsle said. "This was achieved despite scheduled shutdowns due to the holidays and Phase V expansion projects at our engineered bar mills. While demand for MACSTEEL products is high and the backlog for orders looks strong, scrap markets are a little tighter, contributing to reduced spreads from a year ago." Sales of MACPLUS(R), a premium, value-added cold-finished steel bar, are at record levels. Higher volumes are being realized from last year's completion of Phase IV expansion projects, which boosted cold-finishing capacity at both of MACSTEEL's engineered bar mills.
"Nichols Aluminum is building on its record-setting performance from last year with best-ever first-quarter results for sales and operating income for the three-month period just completed," Oechsle said. "With the acquisition from Alcoa (NYSE: AA) of a high-quality, value-added aluminum sheet casting and rolling mill based in Fort Lupton, Colorado, this division is well- positioned for further growth and another record year." The newly acquired mill, which has been renamed Nichols Aluminum-Golden, was purchased in January 2000. It produces high-grade aluminum alloys that bring our Nichols division into more value-added applications. The plant features full finishing capabilities, including a paint line, for the production of aluminum sheet used for beverage can end-tabs, lids, and other food and packaging markets, as well as for other high quality, engineered consumer durable products.
"Lower revenues at Piper Impact due to declining sales of aluminum automotive air bag products were the major contributor to the first-quarter loss posted by the Engineered Products Group. Sales for the Fabricated Products unit (AMSCO and Homeshield) during the fiscal 2000 first-quarter period also were off from the seasonally high levels of a year ago. We are aggressively pursuing new business, and I'm encouraged with the amount of sales growth activity underway. New applications for our specialized roll- forming and impact-extrusion technologies are being developed. Several prototypes have been delivered and trials are taking place with both new and existing customers," he said.
Other
In December 1999, Quanex announced a program to repurchase the company's common stock. At the end of fiscal 2000's first quarter, the company had repurchased approximately 157,000 shares at a cost of nearly $3.8 million.
At the annual meeting of Quanex shareholders held February 23, 2000, Donald G. Barger and Vernon E. Oechsle were elected to the board of directors for terms expiring in 2003. Also, the company's 1996 Employee Stock Option and Restricted Stock Plan was amended to increase the number of authorized shares that can be issued under the plan.
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 March 31, 2000, to shareholders of record on March 17, 2000.
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, packaging, homebuilding and remodeling, defense, and other commercial markets.
Latest 12 Months Financial Information
Sales: $826.3 million; EBITDA: $118.1 million; Operating income: $71.5 million; Net income: $39.6 million; Basic earnings per share: $2.78; Quarterly common dividend rate (per share): $.16; Book value per common share: $21.33; Long-term debt to capitalization: 38.6%; Return on common equity: 13.8%; Actual number of common shares outstanding: 14,047,890; Common stock price range (52-week hi - low): $29 - $15 3/8.
QUANEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three months ended January 31, 2000 1999 (Unaudited) Net sales $199,294 $183,103 Cost of sales 165,643 148,735 Selling, general and administrative expense 13,282 14,302 Depreciation and amortization 12,162 11,572 Operating income 8,207 8,494 Interest expense (3,330) (3,681) Capitalized interest 544 346 Other, net 1,002 794 Income before income taxes 6,423 5,953 Income tax expense (2,248) (2,084) Net income $4,175 $3,869 Weighted average common shares outstanding: Basic 14,172 14,224 Diluted 14,360 14,234 Earnings per common share: Basic: Total basic net earnings $0.29 $0.27 Diluted: Total diluted net earnings $0.29 $0.27 Common stock dividends per share $0.16 $0.16 QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) Three months ended January 31, 2000 1999 (Unaudited) Engineered Steel Bars: Net sales $79,742 $65,097 Operating income $11,835 $11,303 Aluminum Mill Sheet Products: Net sales $79,720 $71,420 Operating income $ 2,203 $ 2,165 Engineered Products: Net sales $45,217 $52,664 Operating income $(1,626) $ (222) Corporate and Other: Net sales $(5,385) $(6,078) Operating income $(4,205) $(4,752) Total: Net sales $199,294 $183,103 Operating income $ 8,207 $ 8,494 QUANEX CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) January 31, October 31, 2000 1999 1999 1998 (Unaudited) Assets (Audited) $21,955 $21,405 Cash and equivalents $25,874 $26,279 91,816 78,804 Accounts and notes receivable, net 87,204 85,166 97,594 80,615 Inventories 78,463 85,397 13,505 13,342 Other current assets 20,846 12,970 224,870 194,166 Total current assets 212,387 209,812 416,543 397,638 Property, plant and equipment, net 406,841 395,054 47,715 51,302 Goodwill, net 48,990 52,281 23,812 17,166 Other assets 22,228 17,141 $712,940 $660,272 Total assets $690,446 $674,288 Liabilities and stockholders' equity $ 79,004 $ 65,373 Accounts payable $70,187 $75,160 13,462 --- Accrued payable - acquisition --- --- 47,615 47,358 Accrued expenses 54,305 56,125 9,226 13,583 Current portion of long-term debt 10,545 12,248 3,176 3,473 Income taxes payable 1,103 3,300 152,483 129,787 Total current liabilities 136,140 146,833 188,121 189,425 Long-term debt 179,121 188,302 7,004 8,181 Deferred pension credits 6,691 7,832 7,452 7,197 Deferred postretirement welfare 7,490 7,092 benefits 43,531 32,797 Deferred income taxes 43,910 33,412 14,711 18,617 Other liabilities 16,033 18,773 413,302 386,004 Total liabilities 389,385 402,244 299,638 274,268 Total stockholders' equity 301,061 272,044 $712,940 $660,272 Total liabilities and $690,446 $674,288 stockholders' equity QUANEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) Three months ended January 31, 2000 1999 (Unaudited) Operating activities: Net income $ 4,175 $ 3,869 Depreciation and amortization 12,300 11,712 Deferred income taxes 30 (603) Deferred pension and postretirement benefits 273 454 16,778 15,432 Decrease in accounts and notes receivable 811 6,153 (Increase) decrease in inventory (6,103) 4,615 Increase (decrease) in accounts payable 4,150 (9,636) Decrease in accrued expenses (9,642) (8,686) Other, net (including income tax refund) 8,107 (231) Cash provided by continuing operations 14,101 7,647 Investment activities: Acquisition of Golden Aluminum, net of cash acquired (6,406) --- Capital expenditures, net of retirements (14,458) (14,530) Cash used by other investment activities (892) (239) Cash used by investment activities (21,756) (14,769) Financing activities: Bank borrowings, net 9,169 3,694 Purchase of subordinated debentures --- (400) Purchases of Quanex common stock (3,785) --- Common dividends paid (2,296) (2,280) Issuance of common stock, net 620 1,276 Cash used by other financing activities (24) (26) Cash provided by financing activities 3,684 2,264 Effect of exchange rate changes on cash and equivalents 52 (16) Decrease in cash (3,919) (4,874) Beginning of period cash and equivalents 25,874 26,279 End of period cash and equivalents $21,955 $21,405 Contact: Patrick Cassidy of Quanex Corporation, 713-877-5389.
SOURCE Quanex Corporation
Web site: http: //www.quanex.com
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CONTACT: financial, Jeff Galow, 713-877-5327, or media, Patrick Cassidy, 713-877-5389, both of Quanex Corporation
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