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Filed by Bowne Pure Compliance
 
 

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): February 26, 2009

QUANEX BUILDING PRODUCTS CORPORATION
 (Exact name of registrant as specified in its charter)

         
Delaware   1-33913   26-1561397
(State or other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     
1900 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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

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Item 2.02. Results of Operations and Financial Condition

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On February 26, 2009, Quanex Building Products Corporation issued a press release (the “Press Release”) reporting its earnings results for the first quarter of fiscal year 2009.  The foregoing is qualified by reference to the Press Release which is filed as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1          Press Release dated February 26, 2009

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

     
    QUANEX BUILDING PRODUCTS CORPORATION
    (Registrant)
 
February 27, 2009
   /s/ Brent L. Korb
(Date)
   Brent L. Korb
Senior Vice President – Finance and Chief Financial Officer
(Principal Financial Officer)

 

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Exhibit Index    
 
99.1         Press Release dated February 26, 2009

 

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Filed by Bowne Pure Compliance
Quanex Building Products   Exhibit 99.1
Quanex Building Products Corporation
Fiscal First Quarter 2009 Results
Loss of $0.21 per Diluted Share from Continuing Operations before Charges
Received Final Cash Payment from Gerdau SA
$75 Million Cash and Equivalents on Balance Sheet
Booked $137 Million Pre-tax Estimated Impairment Charge
Houston, Texas, February 26, 2009 — Quanex Building Products Corporation (NYSE:NX) today reported fiscal first quarter 2009 results for the period ending January 31. Income from continuing operations and diluted earnings per share from continuing operations were a loss of $8.0 million and a loss of $0.21, respectively, before taking into account a $137.3 million pre-tax, or $3.02 per diluted share, estimated impairment charge.
Quarterly Highlights
•  
Net sales were $112.9 million; operating loss before taxes was $18.3 million before impairment charges.
•  
Received a final cash payment of $15 million from Gerdau SA as a result of the April 2008 merger with Quanex Corporation.
•  
Cash and equivalents totaled $75.4 million.
•  
Capital expenditures in the quarter were $4.6 million.
•  
Completed consolidation of two facilities at the Engineered Products segment.
•  
To better size its operations to meet demand Nichols Aluminum: idled rolling capacity at two finishing facilities; reduced shifts and days of operation at its casting facility.
•  
Company booked a $137.3 million pre-tax estimated impairment charge.

 

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Quarterly Commentary
ENGINEERED PRODUCTS (in millions)
                 
    1st qtr 2009     1st qtr 2008  
Net sales
   $ 64.8     $ 87.3  
Operating income before charges
     ($4.7 )   $ 1.9  
Engineered Products is focused on providing window and door customers with value-added fenestration products and components. Key market drivers are housing starts and remodeling activity.
“The U.S. housing market deteriorated 48% in our first quarter compared to a year ago, while residential remodeling activity was estimated to be off some 15% over the same period. Net sales at Engineered Products were down 26%, which put our performance ahead of the overall market,” said David D. Petratis, president and chief executive officer of Quanex Building Products. “Customer demand fell dramatically at Engineered Products in the quarter, well beyond anything we had seen historically. In response to the ongoing drop in business, we further reduced our variable costs, which included taking out additional manpower, both hourly and management. We remain very guarded in our outlook for any significant increase in demand for the remainder of fiscal 2009, and therefore, we will continue to size both our structure and inventories accordingly to maximize cash generation,” Petratis said.
ALUMINUM SHEET PRODUCTS (in millions)
                 
    1st qtr 2009     1st qtr 2008  
Net sales
   $ 50.8     $ 92.1  
Operating income before charges
     ($7.8 )   $ 5.6  
Shipped pounds
     36       58  
Aluminum Sheet Products is a leading provider of common alloy aluminum sheet products for the building and construction, transportation and other consumer durable markets. Key market drivers are housing starts and remodeling activity, which together represent about 65% of the segment’s sales.
“London Metal Exchange (LME) aluminum prices fell dramatically during the quarter, down some 32% to an inflation-adjusted record low price of $0.63 per pound, which in turn compressed our raw material spread during the quarter. Shipments at Nichols Aluminum were approximately 36 million pounds, down 39% from the year ago quarter. Overall spread (sales price less material cost) was down about 30% and 27% from the first quarter 2008 and fourth quarter 2008, respectively. While our selling price remained at reasonable levels during the quarter, Nichols was negatively impacted by very low shipped pounds and a compression in our raw material spread,” Petratis said.

 

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Cash Flow
“Without question, fiscal 2009 is all about generating good cash flow and spending every dollar wisely, and we were disappointed in our first quarter cash flow performance. To put it simply, our customers’ forecasts for the quarter never materialized, and the resulting collapse in demand in both December and January left us with too much inventory, particularly at Nichols Aluminum and Mikron. We are attacking this issue during the second quarter, and we expect to have better cash flow news to report to you in the future. As we continue to closely monitor our working capital, we are also paying particular attention to the aging of receivables and the credit quality of our customer base,” continued Petratis.
“On a positive note, we did receive our final cash true-up related to the merger of Quanex Corporation with Gerdau SA in the amount of $15 million and our cash balance at the end of the first quarter was a very healthy $75 million,” Petratis said.
Outlook
A faltering economy, falling consumer confidence, ongoing bank credit crunch and high residential home inventories has resulted in a more difficult business environment in fiscal 2009 than the company had previously expected. Because of these issues, the company cannot predict with any confidence what the actual fiscal 2009 U.S. residential build rate will be. Consequently, it is suspending all specific financial guidance. Once these market issues become clear, the company will again provide specific financial guidance. The company does expect to report an operating loss for its second quarter and fiscal year.
Impairment Charge
In January 2009, the company determined there were sufficient indicators to require it to perform an interim goodwill and other intangible asset impairment analysis. The final analysis has not been completed due to the complexities involved in determining the implied fair value of goodwill. However, based on work performed to date, it has recognized an estimated goodwill and other intangible asset impairment charge of $137.3 million (pre-tax) in the quarter. The company expects to finalize its goodwill impairment analysis during the second quarter, which could result in an additional charge.
Non-GAAP Financial Measures
Income from Continuing Operations before Impairment Charge
Income from continuing operations before impairment charge is a non-GAAP financial measure. The company believes this non-GAAP financial measure provides a consistent basis for comparison between quarters, and enhances the understanding of the performance of its operations as they are not influenced by certain costs incurred during the periods that are believed to be special and related to specific, infrequent items. Set forth below is a reconciliation of reported income from continuing operations and reported diluted earnings per share from continuing operations to income from continuing operations before impairment charge and diluted earnings per share from continuing operations before impairment charge. 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.

 

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GAAP Reconciliation Table
                                 
    Three months ended January 31,  
    2009     2008  
            Diluted             Diluted  
(in millions except diluted EPS)   Income     EPS     Income     EPS  
 
                                
Income (loss) from continuing operations, as reported
   $ (120.4 )   $ (3.23 )   $ (0.6 )   $ (0.02 )
 
                                
Impairment of goodwill and intangibles, after-tax
     112.4       3.02       —       —  
 
                        
 
                                
Income from continuing operations, excluding impairment charge
   $ (8.0 )   $ (0.21 )   $ (0.6 )   $ (0.02 )
 
                        
 
                                
Diluted weighted average common shares outstanding (in thousands)
             37,333               37,166  
Dividend Declared
The Board of Directors declared a quarterly cash dividend of $0.03 per share on the company’s common stock, payable March 31, 2009, to shareholders of record on March 16, 2009.
Corporate Profile
Quanex Building Products Corporation is an industry-leading manufacturer of value-added, engineered materials and components serving the building products markets. It is an ROIC-driven company that grows shareholder returns through a combination of organic growth via new products and programs and strategic acquisitions.
Financial Statistics as of 01/31/09
Book value per common share: $11.75; Total debt to capitalization: 0.6%; Actual number of common shares outstanding: 37,670,367.
Definitions
Book value per common share — calculated as total stockholders’ equity as of balance sheet date divided by actual number of common shares outstanding;
Total debt to capitalization — calculated as the sum of both the current and long term portion of debt, as of balance sheet date, divided by the sum of both the current and long term portion of debt plus total stockholders’ equity as of balance sheet date;

 

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Statements that use the words “expect,” “should,” “believe,” “will,” “might,” or similar words reflecting future expectations or beliefs are forward-looking statements. The statements found above 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, and the availability and cost of raw materials. For a more complete discussion of factors that may affect the company’s future performance, please refer to the company’s 10-K filing on December 18, 2008, under the Securities Exchange Act of 1934, in particular the section titled, “Private Securities Litigation Reform Act” contained therein. The forward-looking statements are intended to express the company’s expectations as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Financial Contact: Jeff Galow, 713-877-5327
Media Contact: Valerie Calvert, 713-877-5305
For additional information, visit the company’s website at www.quanex.com.

 

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QUANEX BUILDING PRODUCTS CORPORATION
INDUSTRY SEGMENT INFORMATION
(In thousands)
(Unaudited)
                 
    Three months ended  
    January 31,  
    2009     2008  
Net sales:
                
Engineered Products
   $ 64,819     $ 87,275  
Aluminum Sheet Products
     50,808       92,068  
 
            
Building Products
     115,627       179,343  
 
                
Eliminations
     (2,739 )     (4,431 )
 
            
 
                
Net sales
   $ 112,888     $ 174,912  
 
            
 
                
Operating income*:
                
Engineered Products
   $ (121,614 )   $ 1,895  
Aluminum Sheet Products
     (28,204 )     5,602  
 
            
Building Products
     (149,818 )     7,497  
 
                
Corporate and Other
     (5,743 )     (8,664 )
 
            
 
                
Operating Income (Loss)
   $ (155,561 )   $ (1,167 )
 
            
 
     
*  
Operating income reflects non-cash impairment charge of $137,299:
                 
Engineered Products
   $ (116,910 )        
Aluminum Sheet Products
     (20,389 )        
 
              
Total impairment loss
   $ (137,299 )        
 
              

 

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QUANEX BUILDING PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
                 
    Three months ended  
    January 31,  
    2009     2008  
 
                
Net sales
   $ 112,888     $ 174,912  
Cost of sales (exclusive of items shown separately below)
     106,664       147,077  
Selling, general and administrative expense
     15,781       20,043  
Impairment of goodwill and intangibles
     137,299       —  
Depreciation and amortization
     8,705       8,959  
 
            
Operating income (loss)
     (155,561 )     (1,167 )
Interest expense
     (122 )     (138 )
 
            
Other, net
     122       308  
 
            
Income (loss) from continuing operations before income taxes
     (155,561 )     (997 )
Income tax benefit (expense)
     35,148       388  
 
            
 
                
Income (loss) from continuing operations
     (120,413 )     (609 )
 
                
Income (loss) from discontinued operations, net of taxes
     —       3,693  
 
            
Net income (loss)
   $ (120,413 )   $ 3,084  
 
            
 
                
Basic earnings per common share:
                
Earnings (loss) from continuing operations
   $ (3.23 )   $ (0.02 )
Income (loss) from discontinued operations
   $ —     $ 0.10  
 
            
Basic earnings (loss) per common share
   $ (3.23 )   $ 0.08  
 
            
 
                
Diluted earnings per common share:
                
Earnings (loss) from continuing operations
   $ (3.23 )   $ (0.02 )
Income (loss) from discontinued operations
   $ —     $ 0.10  
 
            
Diluted earnings (loss) per share
   $ (3.23 )   $ 0.08  
 
            
 
                
Weighted average common shares outstanding:
                
Basic
     37,333       37,166  
Diluted
     37,333       37,166  

 

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QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                 
January 31,         October 31,  
2009         2008  
       
Assets
        
$ 75,355    
Cash and equivalents
   $ 67,413  
  40,494    
Accounts and notes receivable, net
     101,211  
  58,566    
Inventories, net
     63,848  
  10,931    
Deferred income taxes
     10,932  
  6,908    
Other current assets
     6,239  
     
 
      
  192,254    
Total current assets
     249,643  
  153,761    
Property, plant and equipment, net
     157,389  
  39,349    
Deferred income taxes
     3,875  
  70,455    
Goodwill
     196,338  
  49,611    
Intangible assets, net
     62,476  
  11,136    
Other assets
     11,126  
     
 
      
$ 516,566    
Total assets
   $ 680,847  
     
 
      
       
Liabilities and stockholders’ equity
        
$ 30,328    
Accounts payable
   $ 79,512  
  27,132    
Accrued liabilities
     38,316  
  362    
Current maturities of long-term debt
     363  
     
 
      
  57,822    
Total current liabilities
     118,191  
  2,176    
Long-term debt
     2,188  
  1,887    
Non-current environmental reserves
     2,485  
  12,081    
Other liabilities
     10,155  
     
 
      
  73,966    
Total liabilities
     133,019  
  442,600    
Total stockholders’ equity
     547,828  
     
 
      
$ 516,566    
Total liabilities and stockholders’ equity
   $ 680,847  
     
 
      

 

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QUANEX BUILDING PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
                 
    Three months ended  
    January 31,  
    2009     2008  
Operating activities:
                
Net income
   $ (120,413 )   $ 3,084  
Income from discontinued operations
     —       (3,693 )
 
            
Net income from continuing operations
     (120,413 )     (609 )
Adjustments to reconcile net income to cash provided by operating activities:
                
Depreciation and amortization
     8,723       8,961  
Impairment of goodwill and intangibles
     137,299       —  
Deferred income taxes
     (22,492 )     83  
Stock-based compensation
     818       853  
 
            
 
     3,935       9,288  
Changes in assets and liabilities, net of effects from acquisitions, dispositions and the Separation:
                
Decrease (Increase) in accounts and notes receivable
     58,948       21,360  
Decrease (Increase) in inventory
     5,259       (4,132 )
Decrease (Increase) in other current assets
     (132 )     200  
Increase (Decrease) in accounts payable
     (49,239 )     (14,223 )
Increase (Decrease) in accrued liabilities
     (6,979 )     (8,088 )
Increase (Decrease) in income taxes
     (15,013 )     (372 )
Increase (Decrease) in deferred pension and postretirement benefits
     954       962  
Other, net
     584       2,907  
 
            
Cash provided by (used for) operating activities from continuing operations
     (1,683 )     7,902  
Cash provided by (used for) operating activities from discontinued operations
     —       16,168  
 
            
Cash provided by (used for) operating activities
     (1,683 )     24,070  
 
            
Investing activities:
                
Capital expenditures, net of retirements
     (4,611 )     (3,413 )
 
            
Cash provided by (used for) investing activities from continuing operations
     (4,611 )     (3,413 )
Cash provided by (used for) investing activities from discontinued operations
     —       36,350  
 
            
Cash provided by (used for) investing activities
     (4,611 )     32,937  
 
            
Financing activities:
                
Repayments of long-term debt
     (13 )     (14 )
Common dividends paid
     (1,130 )     —  
Funding from Separation
     15,401       20,900  
 
            
Cash provided by (used for) financing activities from continuing operations
     14,258       20,886  
Cash provided by (used for) financing activities from discontinued operations
     —       (40,402 )
 
            
Cash provided by (used for) financing activities
     14,258       (19,516 )
 
            
Effect of exchange rate changes on cash and equivalents
     (22 )     (55 )
LESS: (Increase) Decrease in cash and equivalents from discontinued operations
     —       (12,116 )
 
            
Increase (Decrease) in cash and equivalents from continuing operations
     7,942       25,320  
Beginning of period cash and equivalents
     67,413       1,778  
 
            
End of period cash and equivalents
   $ 75,355     $ 27,098  
 
            

 

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