News Release Details
Quanex Reports Annual and Fourth Quarter Earnings for Fiscal 2000
- Annual Sales Increased 15% to a Record $934 Million
- MACSTEEL(R) Records Best-Ever Sales
- Nichols Aluminum Posts Record Annual Sales and Operating Income
- Company Records a $56.3 Million Impairment Charge at Piper Impact
HOUSTON, Dec. 7 /PRNewswire/ -- Quanex Corporation (NYSE: NX) today announced record sales of $237.5 million for the fourth quarter of fiscal 2000, up 9 percent from fourth quarter a year ago, and annual sales of $934 million, up 15 percent from $810 million in 1999. Net loss for fiscal 2000 was $9.7 million, or $.70 basic and diluted earnings per share, which includes a $14.3 million (pre-tax) loss associated with the sale of Piper Impact-Europe, reported in the third quarter, and an asset impairment charge of $56.3 million (pre-tax) associated with Piper Impact -- US, reported in the fourth quarter. Excluding these charges, Quanex would have reported fiscal 2000 net income of $36.2 million or $2.64 basic and $2.46 diluted earnings per share, compared to net income of $39.7 million or $2.79 basic and $2.59 diluted earnings per share reported for fiscal 1999.
For the fourth quarter ending October 31, 2000, Quanex recorded a net loss of $23.9 million or $1.78 per share, which includes the asset impairment charge. Without this charge, the company would have reported net income of $12.7 million, representing basic and diluted earnings per share of $.94 and $.86 respectively. This compares with net income of $13.3 million, or basic and diluted earnings per share of $.94 and $.85 respectively, reported for fiscal 1999.
The asset impairment charge relates to the company's Piper Impact operations and results from the application of SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of."
Fiscal 2000 Segment Results
Quanex posted fiscal 2000 operating income of $66.6 million (before unusual charges) compared to $71.8 million in the prior year. Net sales were $934 million, up 15 percent from $810 million posted in the previous year.
MACSTEEL, Quanex's engineered steel bar business, reported operating income of $57.7 million compared with $60.4 million reported last year. The group's annual sales were a record $344.2 million, an increase of 16 percent from last year's sales of $297.4 million.
Nichols Aluminum, the company's aluminum sheet products business, inclusive of Nichols Aluminum Golden acquired in January 2000, posted best- ever operating income of $21.5 million for the year, a 41 percent increase from 1999 operating income of $15.3 million. Net sales of $404.4 million were also the highest reported, up 30 percent from last year.
Engineered Products (AMSCO, Homeshield, and Imperial Products acquired in April 2000) earned operating income of $14.3 million, up from $13.0 million posted in 1999. Net sales were also up to $104.9 million from $92.7 million, a 13 percent year-over-year increase.
Piper Impact reported an operating loss of $11.9 million (before unusual charges) for fiscal 2000, versus a loss of $853 thousand posted in 1999. Fiscal 2000 net sales were $105.6 million compared to $134.7 million reported in fiscal 1999.
Fourth Quarter Segment Results
MACSTEEL earned fourth quarter operating income of $15.5 million, compared with operating income of $18 million reported for the same period last year. Fiscal 2000's fourth quarter net sales were $86.4 million, an increase of 7 percent from fourth quarter 1999 sales of $80.6 million.
Nichols Aluminum reported fourth quarter operating income of $6.2 million, compared with $6.1 million reported for the same period last year. Net sales were $101.9 million, a fourth quarter record, compared to $86.8 million last year.
Engineered Products earned record fourth quarter operating income of $5.1 million, up 18 percent from the $4.3 million reported for the same period last year. Fourth quarter net sales were a quarterly record at $31.5 million versus 1999 fourth quarter sales of $25.3 million, a 25 percent increase year to year.
Piper Impact reported a fourth quarter operating loss of $762 thousand (before unusual charges) on sales of $24.3 million. In the same period of last year, Piper reported operating income of $94 thousand on sales of $31.2 million.
Portions of these statements 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.
Commentary
"Quanex's annual sales increased for all groups except Piper Impact," said Vernon E. Oechsle, chairman and chief executive officer of Quanex. "Quanex posted record 2000 sales, with company revenues increasing 15 percent to $934 million."
"MACSTEEL posted record sales while nearing completion of its Phase V capital expansion program. However, operating income was down due to higher depreciation charges and higher material and other costs." Mr. Oechsle added, "Pricing is a continuing concern as pressure from OEM's, weak domestic competitors, and globalization of the industry have affected some of our product lines. Phase V, which is being completed this month, will raise the annual shipping capacity to 700,000 tons at MACSTEEL and 35,000 tons at the Heat Treat facility, an increase of 13 percent and 40 percent, respectively. Also, work has begun at both bar mills for Phase VI, which will increase MACPLUS capacity, MACSTEEL's highest value-added product line."
"Nichols Aluminum had a record year in both sales and operating income," Oechsle said, "resulting from the acquisition of Nichols Aluminum Golden, operational improvements throughout the division, and healthy margins. A 41% increase in operating income from 1999 is a result of combined efforts of their new rotary furnaces, business acquisitions, penetration into more value- added markets and the improvements that Nichols accomplished in quality and delivery performance."
"The Engineered Products Group increased net sales in fiscal 2000 by 13% to $104.9 million and increased operating income by 10% to $14.3 million," Oechsle continued. "With the addition of Imperial Fabricated Products, we were able to add new customers and new markets while enjoying productivity improvements. The acquisition of Temroc Metals, Inc. provides us with extrusion capabilities in such diverse markets as outdoor recreation, medical, and energy."
"Piper Impact results have been adversely impacted all year by declining aluminum air bag product sales and higher manufacturing costs. Piper made good progress in the second half of the year reducing its costs and we look for those efforts to continue." Oechsle said, "The impairment charge in the fourth quarter, represents another step in our process of evaluating strategic alternatives for this business, including its possible sale."
Outlook
The company's first fiscal quarter (November, December, and January) is historically its least profitable of each year as there are fewer production days and the company's customers experience holiday shutdowns. Additionally, the business outlook for Quanex's first fiscal quarter 2001 finds the company's transportation and housing markets continuing to slow from fiscal 2000 levels.
However, because of recent acquisitions, the company expects net sales to be relatively flat when compared to fiscal first quarter 2000 net sales, which had no benefit from the operating results of Nichols Aluminum Golden, Imperial Products, and Temroc Metals acquisitions. Further, earnings are expected to be slightly better than first quarter 2000 earnings per share of $ .29 as the company expects results from its Piper Impact segment to approach breakeven versus a $3.5 million loss a year ago. Based on these assumptions, the company currently anticipates that fiscal 2001 fully diluted earnings per share will be higher than the $2.46 reported in fiscal 2000, excluding the charges related to Piper Impact-US and Piper Impact-Europe.
Other
The Board of Directors declared a regular quarterly dividend of 16 cents per share on the company's common stock, payable December 29, 2000, to shareholders of record on December 22, 2000. This is the 50th consecutive quarter Quanex has paid a dividend to shareholders of its common stock.
Also during the fiscal 2000 fourth quarter, Quanex purchased 71,600 shares of its common stock as part of the company's share buyback program that was announced in December 1999. For the 2000 fiscal year the company purchased a total of 834,300 shares under this program. Also during the year the company purchased $10.4 million, principal amount, of the Quanex Corporation 6.88% convertible subordinated debentures.
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 from continuing operations (excluding unusual charges)
Sales: $934.2 million; EBITDA: $115.5 million; Operating income: $66.6 million; Net income: $35.9 million; Basic earnings per share: $2.61; Quarterly common dividend rate (per share): $.16; Book value per common share: $19.90; Long-term debt to capitalization: 41.8%; Return on common equity: 12.63%; Actual number of common shares outstanding: 13,395,451; Common stock price range (52-week hi - low): $26.56 - $14.38.
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
October 31, October 31,
2000 1999 2000 1999
(Unaudited) (Audited)
$237,494 $217,493 Net sales $934,203 $810,094
190,947 169,922 Cost of sales 766,119 639,911
13,294 13,583 Selling, general and 53,545 53,104
administrative expense
10,540 10,774 Depreciation and 47,921 45,322
amortization
22,713 23,214 Operating income before 66,618 71,757
unusual charges
56,300 --- Piper Impact impairment 56,300 ---
charge
--- --- Loss on sale of Piper 14,280 ---
Impact Europe
(33,587) 23,214 Operating income/(loss) (3,962) 71,757
(3,756) (3,521) Interest expense (15,255) (14,402)
251 407 Capitalized interest 1,941 1,611
272 284 Other, net 1,870 1,383
(36,820) 20,384 Income/(loss) before (15,406) 60,349
income taxes and
extraordinary gain
12,878 (7,060) Income tax (expense) 5,383 (21,048)
/benefit
(23,942) 13,324 Income/(loss) before (10,023) 39,301
extraordinary gain
--- --- Extraordinary gain on 358 415
early extinguishment of
debt, net of income taxes
$(23,942) $13,324 Net income/(loss) $ (9,665) $ 39,716
Weighted average common
shares outstanding:
13,428 14,206 Basic 13,727 14,234
13,428 16,705 Diluted 13,727 16,776
Earnings per common share:
Basic:
$ (1.78) $ 0.94 Income/(loss) before $ (0.73) $ 2.76
extraordinary gain
--- --- Extraordinary gain 0.03 0.03
$ (1.78) $ 0.94 Total basic net $ (0.70) $ 2.79
earnings
Diluted:
$ (1.78) $ 0.85 Income/(loss) before $ (0.73) $ 2.56
extraordinary gain
$ --- --- Extraordinary gain 0.03 0.03
$ (1.78) $ 0.85 Total diluted net $ (0.70) $ 2.59
earnings
$ 0.16 $ 0.16 Common stock dividends $ 0.64 $ 0.64
per share
QUANEX CORPORATION INDUSTRY SEGMENT INFORMATION
(In thousands)
Three months ended Twelve months ended
October 31, October 31,
2000 1999 2000 1999
(Unaudited) (Audited)
Engineered Steel Bars:
$ 86,360 $ 80,624 Net sales $344,245 $297,369
$ 15,484 $ 18,000 Operating income $ 57,702 $ 60,446
Aluminum Mill Sheet
Products:
$101,944 $ 86,804 Net sales $404,355 $311,763
$ 6,153 $ 6,105 Operating income $ 21,529 $ 15,306
Engineered Products:
$ 31,541 $ 25,296 Net sales $104,948 $ 92,668
$ 5,117 $ 4,324 Operating income $ 14,301 $ 13,006
Piper Impact:
$ 24,271 $ 31,216 Net sales $105,632 $134,694
$(57,062) $ 94 Operating income/(loss) $(82,470) $ (853)
Corporate and Other:
$ (6,622) $ (6,447) Net sales $(24,977) $(26,400)
$ (3,279) $ (5,309) Operating loss $(15,024) $(16,148)
Total:
$237,494 $217,493 Net sales $934,203 $810,094
$(33,587) $ 23,214 Operating income/(loss) $ (3,962) $ 71,757
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 as well as the asset
impairment charge of $56.3 million is included in Piper Impact's operating
loss for three and twelve months ended October 31, 2000.
QUANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31,
2000 1999
Assets (Audited)
Cash and equivalents $ 22,409 $ 25,874
Accounts and notes receivable, net 98,465 87,204
Inventories 101,274 78,463
Other current assets 13,798 20,846
Total current assets 235,946 212,387
Property, plant and equipment, net 338,248 406,841
Goodwill, net 47,539 48,990
Other assets 24,126 22,228
Total assets $645,859 $690,446
Liabilities and stockholders' equity
Accounts payable $ 77,339 $ 70,187
Accrued expenses 50,189 54,305
Current portion of long-term debt 256 10,545
Income taxes payable 3,218 1,103
Total current liabilities 131,002 136,140
Long-term debt 191,657 179,121
Deferred pension credits 7,026 6,691
Deferred postretirement welfare benefits 7,634 7,490
Deferred income taxes 27,620 43,910
Other liabilities 14,423 16,033
Total liabilities 379,362 389,385
Total stockholders' equity 266,497 301,061
Total liabilities and stockholders' equity $645,859 $690,446
QUANEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
Three months ended Twelve months ended
October 31, October 31,
2000 1999 2000 1999
(Unaudited) (Audited)
Operating activities:
$(23,942) $ 13,324 Net income/(loss) $ (9,665) $ 39,716
--- --- Extraordinary gain on (358) (415)
early extinguishment of
debt (net of taxes of
$193 and $223,
respectively for 2000
and 1999)
--- --- Loss on sale of Piper 9,282 ---
Impact Europe (net of
taxes of $4,998)
36,595 --- Piper Impact Impairment 36,595 ---
charge (net of taxes of
$19,705)
10,668 10,926 Depreciation and 48,445 45,883
amortization
8,360 8,235 Deferred income taxes 5,483 10,150
501 40 Deferred pension and 659 (429)
postretirement benefits
32,182 32,525 90,441 94,905
(603) (8,356) Increase in accounts and (9,149) (2,665)
notes receivable
(4,596) 3,295 (Increase) decrease in (12,474) 6,485
inventory
(2,254) (534) Increase (decrease) in 5,412 (4,648)
accounts payable
(653) 151 Increase (decrease) in (6,314) (1,510)
accrued expenses
(575) (9,716) Other, net (including 9,954 (14,879)
income tax refund)
23,501 17,365 Cash provided by operating 77,870 77,688
activities
Investment activities:
--- --- Acquisition of Golden (20,148) ---
Aluminum, net of cash
acquired
--- --- Acquisition of Imperial (15,303) ---
Fabricated Products, net
of cash acquired
(8,959) (16,963) Capital expenditures, net (42,327) (60,848)
of retirements
(1,240) (990) Cash used by other (1,809) (1,832)
investment activities
(10,199) (17,953) Cash used by investment (79,587) (62,680)
activities
Financing activities:
(20,000) (13,161) Bank borrowings 33,394 1,035
(repayments), net
--- --- Purchase of subordinated (9,586) (8,799)
debentures
(1,306) --- Purchases of Quanex (17,185) ---
common stock
(2,173) (2,283) Common dividends paid (8,884) (9,124)
29 48 Issuance of common stock, 1,002 1,567
net
5 (1) Cash provided (used) by (556) (60)
other financing activities
(23,445) (15,397) Cash used by financing (1,815) (15,381)
activities
0 (4) Effect of exchange rate 67 (32)
changes on cash and
equivalents
(10,143) (15,989) Decrease in cash (3,465) (405)
32,552 41,863 Beginning of period cash 25,874 26,279
and equivalents
$ 22,409 $ 25,874 End of period cash and $ 22,409 $ 25,874
equivalents
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, Marianne Gooch, 713-877-5389, both of Quanex Corporation
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