UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 2015
Quanex Building Products Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-33913 | 26-1561397 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 1800 West Loop South, Suite 1500, Houston, Texas | 77027 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 713-961-4600
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On December 14, 2015 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated December 14, 2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Quanex Building Products Corporation
(Registrant) |
||
| December 14, 2015
(Date) |
/s/ BRENT L. KORB
Brent L. Korb Senior Vice President - Finance and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated December 14, 2015 | |
EXHIBIT 99.1
Quanex Building Products Corporation Reports 2015 Fourth Quarter and Fiscal Year Results
Fourth quarter EBITDA more than doubles to $27.5 million
EPS of $0.29 versus $0.08 last year
HL Plastics exceeds expectations in first full quarter since acquisition
Completes acquisition of Woodcraft Industries
HOUSTON, Dec. 14, 2015 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX), a leading OEM supplier of building products components, today released results for the fourth quarter and fiscal year ended October 31, 2015.
"The fourth quarter was a great finish to an exciting year for Quanex Building Products," said Chairman, President and Chief Executive Officer Bill Griffiths. "Fourth quarter EBITDA results more than doubled over last year's performance, despite slower revenue growth. Gross margins continued to improve as we saw further progress in the financial performance of our vinyl profile business. HL Plastics exceeded our internal expectations in their first full quarter after the acquisition, and we successfully completed the acquisition of Woodcraft Industries as planned on November 2nd. The stage is now set for a solid fiscal 2016 and beyond."
Highlights for the fourth quarter include:
- Improved margins from base business and addition of HL Plastics
- Reported EPS from Continuing Operations of $0.29 versus prior year's $0.08
- Strong cash generation – $42 million reduction in debt from June 15th to October 31st
- Acquisition of Woodcraft Industries on November 2nd
- Proforma net debt/EBITDA leverage ratio following Woodcraft acquisition equals 2.9x
Highlights for the fiscal year include:
- Improved margins from base business and addition of HL Plastics
- Reported EPS from Continuing Operations of $0.46 versus prior year's $0.22
- Year-end net debt of $34.3 million
- Acquisition of HL Plastics on June 15th
Reported revenue for the quarter was 19% higher than the prior year; 2% higher for the legacy business. Reported revenue for the year was 8% higher; 1% higher for the legacy business. Comparable sales for the legacy business after adjusting for the negative FX impact and the impact of a lower oil surcharge was 6.2% higher for the quarter and 5.9% higher for the year. Reduced sales into Russia coupled with the expected reduction in vinyl profile revenues were the key contributors to the softer growth rates. Fourth quarter 2015 gross margins improved 430 basis points driven primarily by labor and operating efficiencies as well as repair and maintenance improvement in the vinyl business.
Additional information related to fourth quarter and fiscal year 2015 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 measure, can be found in the supplemental schedules accompanying this press release.
Business Outlook
Assuming modest overall growth rates of 5-6%, Quanex expects 2016 revenues to approach $1 billion. At this level, and with further improvements across all segments of the business, projected 2016 EBITDA will be in the range of $112-$120 million. Additional 2016 assumptions include depreciation and amortization of $51 million, interest expense of $23 million (6.75% all in senior debt rate), tax rate of 34% and capital expenditure spend of $45 million.
Mr. Griffiths concluded, "Economic forecasts at this time of the year always tend to be optimistic, and have historically been revised downward as the year progresses. However, if the current economic forecasts prove to be accurate, growth rates could be in the 7%-8% range with a commensurate improvement in EBITDA."
Conference Call Information
Quanex will host its conference call today, December 14, 2015 at 11:00 a.m. (Eastern) to discuss its results and outlook. The call will be available via webcast at www.quanex.com in the Investors section.
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 investments being made in our vinyl business, the future 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, including revenue and EBITDA guidance. The statements set forth 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 October 31, 2014, under the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," in our other documents filed with the Securities and Exchange Commission from time to time. Any forward-looking statements in this press release are made as of the date hereof, and Quanex Building Products Corporation undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.
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, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Net sales | $ 195,459 | $ 163,816 | $ 645,528 | $ 595,384 |
| Cost of sales | 145,628 | 129,040 | 499,097 | 464,584 |
| Selling, general and administrative | 22,379 | 21,158 | 86,536 | 82,150 |
| Depreciation and amortization | 10,679 | 8,319 | 35,220 | 33,869 |
| Asset impairment charges | -- | -- | -- | 505 |
| Operating income | 16,773 | 5,299 | 24,675 | 14,276 |
| Interest expense | (367) | (143) | (991) | (562) |
| Other, net | (831) | 26 | (531) | 92 |
| Income before income taxes | 15,575 | 5,182 | 23,153 | 13,806 |
| Income tax expense | (5,632) | (2,170) | (7,539) | (5,468) |
| Income from continuing operations | 9,943 | 3,012 | 15,614 | 8,338 |
| Income (loss) from discontinued operations, net of taxes | -- | 1,944 | 479 | 20,896 |
| Net income | $ 9,943 | $ 4,956 | $ 16,093 | $ 29,234 |
| Earnings (loss) per common share: | ||||
| From continuing operations | $ 0.30 | $ 0.08 | $ 0.46 | $ 0.22 |
| From discontinued operations | $ -- | $ 0.05 | $ 0.01 | $ 0.57 |
| Diluted earnings (loss) per common share: | ||||
| From continuing operations | $ 0.29 | $ 0.08 | $ 0.46 | $ 0.22 |
| From discontinued operations | $ -- | $ 0.05 | $ 0.01 | $ 0.56 |
| Weighted average common shares outstanding: | ||||
| Basic | 33,640 | 37,000 | 33,993 | 37,128 |
| Diluted | 34,148 | 37,534 | 34,502 | 37,679 |
| Cash dividends per share | $ 0.04 | $ 0.04 | $ 0.16 | $ 0.16 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| (Unaudited) | ||
| October 31, 2015 | October 31, 2014 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 23,125 | $ 120,384 |
| Accounts receivable, net | 64,080 | 55,193 |
| Inventories, net | 63,029 | 57,358 |
| Deferred income taxes | 14,024 | 21,442 |
| Prepaid and other current assets | 7,992 | 6,052 |
| Total current assets | 172,250 | 260,429 |
| Property, plant and equipment, net | 140,672 | 109,487 |
| Deferred income taxes | -- | 1,545 |
| Goodwill | 129,770 | 70,546 |
| Intangible assets, net | 120,810 | 70,150 |
| Other assets | 8,529 | 4,956 |
| Total assets | $ 572,031 | $ 517,113 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 47,778 | $ 41,488 |
| Accrued liabilities | 37,364 | 32,482 |
| Income taxes payable | 747 | 107 |
| Current maturities of long-term debt | 2,359 | 199 |
| Total current liabilities | 88,248 | 74,276 |
| Long-term debt | 55,041 | 586 |
| Non Current Deferred Tax | 5,241 | -- |
| Deferred pension and postretirement benefits | 5,701 | 4,818 |
| Liability for uncertain tax positions | 564 | 4,626 |
| Other liabilities | 21,941 | 11,887 |
| Total liabilities | 176,736 | 96,193 |
| Stockholders' equity: | ||
| Common stock | 376 | 376 |
| Additional paid-in-capital | 250,937 | 249,600 |
| Retained earnings | 222,138 | 202,319 |
| Accumulated other comprehensive loss | (10,049) | (5,708) |
| Treasury stock at cost | (68,107) | (25,667) |
| Total stockholders' equity | 395,295 | 420,920 |
| Total liabilities and stockholders' equity | $ 572,031 | $ 517,113 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||
| (In thousands) | ||
| (Unaudited) | ||
| Twelve Months Ended October 31, | ||
| 2015 | 2014 | |
| Operating activities: | ||
| Net income | $ 16,093 | $ 29,234 |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
| Depreciation and amortization | 35,220 | 36,910 |
| Stock-based compensation | 4,266 | 3,925 |
| Deferred income tax (benefit) provision | 5,204 | 14,246 |
| Excess tax benefit from share-based compensation | (60) | (654) |
| Asset impairment charges | -- | 1,007 |
| Gain on sale of discontinued operations | -- | (39,122) |
| Gain on involuntary conversion | (1,263) | (2,408) |
| Other, net | 476 | 2,691 |
| Changes in assets and liabilities, net of effects from acquisitions and dispositions: | ||
| Decrease in accounts receivable | 2,668 | 484 |
| Decrease (Increase) in inventory | 9,805 | (25,650) |
| Increase in other current assets | (1,304) | (1,098) |
| (Decrease) increase in accounts payable | (2,862) | 12,842 |
| Decrease in accrued liabilities | (576) | (6,871) |
| Increase in income taxes payable | 369 | 866 |
| Decrease in deferred pension and postretirement benefits | (372) | (347) |
| Decrease in other long-term liabilities | (283) | (2,172) |
| Other, net | (294) | (3,105) |
| Cash used for operating activities | 67,087 | 20,778 |
| Investing activities: | ||
| Proceeds from sale of discontinued operations | -- | 107,431 |
| Acquisitions, net of cash acquired | (131,689) | (5,161) |
| Capital expenditures | (29,982) | (33,779) |
| Proceeds from property insurance claim | 1,263 | 4,801 |
| Proceeds from disposition of capital assets | 264 | 832 |
| Cash used in investing activities | (160,144) | 74,124 |
| Financing activities: | ||
| Credit facility borrowings | 117,000 | -- |
| Repayments of credit facility borrowings | (67,000) | -- |
| Repayments of other debt & capital lease obligations | (1,020) | (175) |
| Common stock dividends paid | (5,515) | (5,992) |
| Issuance of common stock | 5,109 | 3,249 |
| Excess tax benefit from share-based compensation | 60 | 654 |
| Purchase of treasury stock | (52,719) | (22,281) |
| Other | (496) | 86 |
| Cash used in financing activities | (4,581) | (24,459) |
| Effect of exchange rate changes on cash and cash equivalents | 379 | 207 |
| (Decrease) increase in cash and cash equivalents | (97,259) | 70,650 |
| Cash and cash equivalents at beginning of period | 120,384 | 49,734 |
| Cash and cash equivalents at end of period | $ 23,125 | $ 120,384 |
| NOTE: The cash flow statement presentation includes the sources and uses of cash for the discontinued operations as operating, investing and financing cash flows, as applicable, combined with such cash flows for continuing operations, as permitted by U.S. GAAP. | ||
| 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's management uses to measure its operational performance and assist with financial decision-making. EBITDA is a key metric used by management in determining the value of annual incentive awards for its employees. We believe this non-GAAP measure (included under market conditions outlined in our forward-looking guidance) provides a consistent basis for comparison between periods, and will assist investors in understanding our financial performance when comparing our results to other investment opportunities. EBITDA may not be the same as that used by other companies. The company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with US GAAP. | ||||
| Three Months Ended October 31, | Twelve Months Ended October 31, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Quanex | Quanex | Quanex | Quanex | |
| Net income | $ 9,943 | $ 4,956 | $ 16,093 | $ 29,234 |
| Income from discontinued operations, net of taxes | -- | (1,944) | (479) | (20,896) |
| Income tax expense | 5,632 | 2,170 | 7,539 | 5,468 |
| Other, net | 831 | (26) | 531 | (92) |
| Interest expense | 367 | 143 | 991 | 562 |
| Operating income | 16,773 | 5,299 | 24,675 | 14,276 |
| Depreciation and amortization | 10,679 | 8,319 | 35,220 | 33,869 |
| EBITDA | $ 27,452 | $ 13,618 | $ 59,895 | $ 48,145 |
| Transactions related costs | 1,698 | 356 | 5,628 | 502 |
| IG warranty reserve benefit | -- | -- | -- | (2,829) |
| Asset impairment charge | -- | -- | -- | 505 |
| Discontinued ERP expenses | -- | -- | -- | 500 |
| Foreign currency impact - excluding HL Plastics | 204 | 35 | 622 | 128 |
| EBITDA as adjusted | $ 29,354 | $ 14,009 | $ 66,145 | $ 46,951 |
| Financial Statistics as of October 31, 2015 | ||||
| Book value per common share: | $11.75 | |||
| Total debt to capitalization: | 12.7% | |||
| Return on invested capital: | 4.0% | |||
| Actual number of common shares outstanding: | 33,962,460 | |||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| PRE-TAX & AFTER TAX PRESENTATION | ||||||||
| (In millions, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Q4 2015 | Q4 2014 | FY 2015 | FY 2014 | |||||
| Pre-Tax Presentation | $MM | $MM | $MM | $MM | ||||
| Operating Income from Continuing Operations As Reported | $ 16.8 | $ 5.3 | $ 24.7 | $ 14.3 | ||||
| Benefit (Reduction) to Operating Income: | ||||||||
| IG Warranty Reserve Benefit | -- | -- | -- | (2.8) | ||||
| Asset Impairment Charge | -- | -- | -- | 0.5 | ||||
| Discontinued ERP Expenses | -- | -- | -- | 0.5 | ||||
| Foreign Currency Transaction Losses - Excluding HL Plastics | 0.2 | -- | 0.6 | 0.1 | ||||
| Transaction Related Expenses | 1.7 | 0.4 | 5.6 | 0.5 | ||||
| Operating Income from Continuing Operations As Adjusted | $ 18.7 | $ 5.7 | $ 30.9 | $ 13.1 | ||||
| Q4 2015 | Q4 2015 | Q4 2014 | Q4 2014 | FY 2015 | FY 2015 | FY 2014 | FY 2014 | |
| After-Tax Presentation | $MM | EPS | $MM | EPS | $MM | EPS | $MM | EPS |
| Income from Continuing Operations As Reported | $ 9.9 | $ 0.29 | $ 3.0 | $ 0.08 | $ 15.6 | $ 0.46 | $ 8.3 | $ 0.22 |
| Benefit to EPS: | ||||||||
| IG Warranty Reserve Benefit | -- | -- | -- | -- | -- | -- | (1.6) | (0.04) |
| Asset Impairment Charge | -- | -- | -- | -- | -- | -- | 0.3 | 0.01 |
| Discontinued ERP Expenses | -- | -- | -- | -- | -- | -- | 0.3 | 0.01 |
| Foreign Currency Transaction Losses | 0.1 | 0.00 | -- | -- | 0.4 | 0.01 | 0.1 | 0.00 |
| Transaction Related Expenses | 1.0 | 0.03 | 0.2 | 0.0 | 3.6 | 0.11 | 0.3 | 0.01 |
| Diluted Earnings from Continuing Operations As Adjusted | $ 11.0 | $ 0.32 | $ 3.2 | $ 0.08 | $ 19.6 | $ 0.58 | $ 7.7 | $ 0.21 |
CONTACT: Financial Contact: Brent Korb, 713-877-5328; Media Contact: Valerie Calvert, 713-877-5305