Quanex Building Products Corporation Fiscal 2009 Fourth Quarter and Annual Results
Better Than Expected Seasonal Demand in the Quarter Fourth Quarter$0.41 Diluted EPS from Continuing Operations$124 Million Cash and Equivalents Company Outperformed its Market for the Quarter and Year
For the fiscal year, the company's net sales were
Quarterly and Annual Highlights
* Net sales for the quarter and the year were$194.9 million and$585.0 million , respectively. * Consolidated operating income for the quarter and the year were$20.3 million and a loss of$180.1 million , respectively. * Company booked$182.6 million of pre-tax impairment charges in the first half. * Capital expenditures were$3.3 million and$16.2 million for the quarter and year, respectively. * Cash provided by operating activities was$60.5 million for the year. * Cash and equivalents totaled$123.6 million
Commentary
ENGINEERED PRODUCTS (in millions) 4th qtr 4th qtr FY FY 2009 2008 2009(1) 2008 ------- ------- ------- ------- Net sales $ 99.9 $ 112.9 $ 323.3 $ 407.9 Operating income $ 15.2 $ 10.1 $(141.4) $ 29.9 (1) Fiscal 2009 operating income includes non-cash impairment charges of$162.2 million .
Engineered Products is focused on providing leading OEM window and door customers with value-added fenestration components, products, and systems. Key market drivers are U.S. residential housing starts and remodeling activity.
"The U.S. residential new housing market dropped 30% in our fourth quarter compared to a year ago, while residential remodeling activity was estimated to be off about 10%," said David D. Petratis, president and chief executive officer of
"We are pleased with the relatively strong performance of Engineered Products, particularly in the second half of the year, and although difficult to quantify, we do believe the segment benefited from the
ALUMINUM SHEET PRODUCTS (in millions) 4th qtr 4th qtr FY FY 2009 2008 2009(1) 2008 ------- ------- ------- ------- Net sales $ 98.3 $ 139.0 $ 273.7 $ 479.9 Operating income $ 9.9 $ 12.6 $ (26.4) $ 40.3 Shipped pounds 78 81 223 285 (1) Fiscal 2009 operating income includes a non-cash impairment charge of$20.4 million .
Aluminum Sheet Products is a leading provider of common alloy aluminum sheet products for the building & construction, transportation and other consumer durable markets. Key market drivers are U.S. residential housing starts and remodeling activity.
"Average aluminum prices were up in the fourth quarter compared to our sequential third quarter, which generally benefits our aluminum spread (sales less material costs). Spread was up 10% over the third quarter, better than we anticipated, but down 16% from the fourth quarter last year," Petratis said. "Shipments in the quarter were very healthy at 78 million pounds, off just 3% from the year ago quarter, while shipments in the aluminum market where we compete were down 23% over the same period. Compared to the sequential third quarter, our fourth quarter shipped pounds were up an impressive 21%. Our strong shipments were attributable to a further uptick in seasonal demand, and ongoing short lead-time sales opportunities."
Cash Position
"At fiscal year end, we had a cash balance of
Fiscal 2010 Business Outlook
"High unemployment, relatively high inventories of new and existing homes for sale, and high rates of foreclosures will continue to be a drag on our business for the next twelve months. However, we do believe both new home construction and remodeling activity bottomed during fiscal 2009, and we expect slightly better sales and improved earnings in 2010 compared to 2009. We expect the first half of 2010 to be challenging and it is uncertain as to how long our end markets will remain at depressed levels, so we must continue to operate our businesses with reduced staffs and minimal levels of materials," said Petratis. "This uncertainty carries through to our ability to precisely estimate segment operating income for fiscal 2010."
"At this time, we expect Engineered Products to earn
"We expect Aluminum Sheet Products to earn about
"Financial guidance for Engineered Products and Aluminum Sheet Products exclude estimated corporate expenses of
Non-GAAP Financial Measures
Income from Continuing Operations Excluding LIFO
Income from continuing operations excluding LIFO, impairments and separation related costs are non-GAAP financial measures. The Company believes these non-GAAP financial measures provide a consistent basis for comparison between quarters and enhances the understanding of the performance of its operations.
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 excluding LIFO, impairments and separation related costs and diluted earnings per share from continuing operations excluding LIFO, impairments and separation related costs. 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.
Three months ended October 31, -------------------------------- (in millions except diluted EPS) 2009 2008 ---------------- --------------- Diluted Diluted Income EPS Income EPS ------- ------- ------- ------- Income (loss) from continuing operations, as reported $ 15.3 $ 0.41 $ 15.0 $ 0.40 LIFO charge (income) (0.7) (0.02) (3.1) (0.08) Impairment of goodwill and intangibles -- -- -- -- Charges associated with the Company's Separation (stock-based compensation, transaction costs and other) -- -- -- -- ------- ------- ------- ------- Income (loss) from continuing operations, excluding special items $ 14.6 $ 0.39 $ 11.9 $ 0.32 ======= ======= ======= ======= Diluted weighted average common shares outstanding (in thousands) 37,698 37,466
Twelve months ended October 31, -------------------------------- (in millions except diluted EPS) 2009 2008 ---------------- --------------- Net Diluted Net Diluted Income EPS Income EPS ------- ------- ------- ------- Income (loss) from continuing operations, as reported $(137.1) $ (3.67) $ 15.9 $ 0.41 LIFO charge (income) (4.8) (0.13) 0.2 0.01 Impairment of goodwill and intangibles 141.4 3.79 -- -- Charges associated with the Company's Separation (stock-based compensation, transaction costs and other) -- -- 14.7 0.38 ------- ------- ------- ------- Income (loss) from continuing operations, excluding special items $ (0.5) $ (0.01) $ 30.8 $ 0.80 ======= ======= ======= ======= Diluted weighted average common shares outstanding (in thousands) 37,335 38,528
Dividend Declared
The Board of Directors declared a quarterly cash dividend of
Corporate Profile
Financial Statistics as of
Book value per common share:
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.
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
For additional information, visit the company's website at www.quanex.com.
QUANEX BUILDING PRODUCTS CORPORATION INDUSTRY SEGMENT INFORMATION (In thousands) (Unaudited) Three months ended Twelve months ended October 31, October 31, -------------------- -------------------- 2009 2008 2009 2008 --------- --------- --------- --------- Net Sales: $ 99,900 $ 112,866 Engineered Products $ 323,319 $ 407,896 98,309 139,037 Aluminum Sheet Products 273,728 479,925 --------- --------- --------- --------- 198,209 251,903 Building Products 597,047 887,821 (3,270) (5,558) Eliminations (12,037) (18,888) --------- --------- --------- --------- $ 194,939 $ 246,345 Net Sales $ 585,010 $ 868,933 ========= ========= ========= ========= Operating Income*: $ 15,160 $ 10,101 Engineered Products $(141,361) $ 29,882 9,879 12,565 Aluminum Sheet Products (26,416) 40,260 --------- --------- --------- --------- 25,039 22,666 Building Products (167,777) 70,141 (4,769) 1,332 Corporate and Other (12,304) (49,161) --------- --------- --------- --------- $ 20,270 $ 23,998 Operating Income(Loss) $(180,081) $ 20,981 ========= ========= ========= ========= -------------------- * Operating income reflects non-cash impairment charge of$182,562 : Twelve Months Ended October 31, 2009 ------------- (In thousands) Engineered Products $ (162,173) Aluminum Sheet Products $ (20,389) ------------- Total impairment loss (182,562) =============
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three months ended Twelve months ended October 31, October 31, ------------------ ------------------- 2009 2008 2009 2008 -------- -------- --------- -------- $194,939 $246,345 Net sales $ 585,010 $868,933 Cost of sales (exclusive of items 149,288 199,080 shown separately below) 489,348 717,376 Selling, general and 17,307 14,822 administrative expense 60,466 95,504 Impairment of -- -- goodwill and intangibles 182,562 -- Depreciation 8,074 8,445 and amortization 32,715 35,072 -------- -------- --------- -------- 20,270 23,998 Operating income (loss) (180,081) 20,981 (93) (124) Interest expense (453) (480) 80 312 Other, net 407 5,188 -------- -------- --------- -------- Income (loss) from continuing operations 20,257 24,186 before income taxes (180,127) 25,689 Income tax (4,926) (9,176) benefit (expense) 43,036 (9,785) -------- -------- --------- -------- Income (loss) from 15,331 15,010 continuing operations (137,091) 15,904 Income (loss) from discontinued operations, -- -- net of taxes -- 5,675 -------- -------- --------- -------- $ 15,331 $ 15,010 Net income (loss) $(137,091) $ 21,579 ======== ======== ========= ======== Basic earnings per common share: Earnings (loss) from continuing $ 0.41 $ 0.40 operations $ (3.67) $ 0.43 Income (loss) from discontinued $ -- $ -- operations $ -- $ 0.15 -------- -------- --------- -------- Basic earnings (loss) per $ 0.41 $ 0.40 common share $ (3.67) $ 0.58 -------- -------- --------- -------- Diluted earnings per common share: Earnings (loss) from continuing $ 0.41 $ 0.40 operations $ (3.67) $ 0.41 Income (loss) from $ -- $ -- discontinued operations $ -- $ 0.15 -------- -------- --------- -------- Diluted earnings $ 0.41 $ 0.40 (loss) per share $ (3.67) $ 0.56 -------- -------- --------- -------- Weighted average common shares outstanding: 37,338 37,333 Basic 37,335 37,274 37,698 37,466 Diluted 37,335 38,528
QUANEX BUILDING PRODUCTS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Oct. 31, Oct. 31, 2009 2008 --------------------------------------------------------------------- Assets $123,634 Cash and equivalents $ 67,413 80,171 Accounts receivable, net 101,211 46,525 Inventories, net 63,848 20,611 Deferred income taxes 10,932 5,264 Other current assets 6,239 -------- ----------------------------------------------- -------- 276,205 Total current assets 249,643 142,810 Property, plant and equipment, net 157,389 42,923 Deferred income taxes 3,875 25,189 Goodwill 196,338 47,359 Intangible assets, net 62,476 9,114 Other assets 11,126 -------- ----------------------------------------------- -------- $543,600 Total assets $680,847 ======== =============================================== ======== Liabilities and stockholders' equity $ 67,010 Accounts payable $ 79,512 30,329 Accrued liabilities 38,316 323 Current maturities of long-term debt 363 -------- ----------------------------------------------- -------- 97,662 Total current liabilities 118,191 1,943 Long-term debt 2,188 6,655 Deferred pension and postretirement benefits 3,092 1,767 Non-current environmental reserves 2,485 13,047 Other liabilities 7,063 -------- ----------------------------------------------- -------- 121,074 Total liabilities 133,019 422,526 Total stockholders' equity 547,828 -------- ----------------------------------------------- -------- $543,600 Total liabilities and stockholders' equity $680,847 ======== =============================================== ========
QUANEX BUILDING PRODUCTS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) Twelve months ended October 31, -------------------- 2009 2008 --------- --------- Operating activities: Net income (loss) $(137,091) $ 21,579 Income from discontinued operations -- (5,675) --------- --------- Net income from continuing operations (137,091) 15,904 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 32,784 35,111 Impairment of goodwill and intangibles 182,562 -- Deferred income taxes (43,608) 2,984 Stock-based compensation 3,429 26,378 --------- --------- 38,076 80,377 Changes in assets and liabilities, net of effects from acquisitions, dispositions and the Separation: Decrease (Increase) in accounts receivable 18,636 (21,495) Decrease (Increase) in inventory 16,494 (10,398) Decrease (Increase) in other current assets (168) (390) Increase (Decrease) in accounts payable (12,306) 11,406 Increase (Decrease) in accrued liabilities (3,154) (3,285) Increase (Decrease) in income taxes (892) 1,088 Increase (Decrease) in deferred pension and postretirement benefits (407) (2,515) Other, net 4,212 (1,824) --------- --------- Cash provided by (used for) operating activities from continuing operations 60,491 52,964 Cash provided by (used for) operating activities from discontinued operations -- 25,127 --------- --------- Cash provided by (used for) operating activities 60,491 78,091 --------- --------- Investing activities: Capital expenditures, net of retirements (16,153) (15,815) Proceeds from property insurance claims 1,400 -- Other, net (57) (23) --------- --------- Cash provided by (used for) investing activities from continuing operations (14,810) (15,838) Cash provided by (used for) investing activities from discontinued operations -- 34,113 --------- --------- Cash provided by (used for) investing activities (14,810) 18,275 --------- --------- Financing activities: Repayments of long-term debt (363) (1,464) Common dividends paid (4,519) (2,258) Funding from Separation 15,401 32,735 Other, net (11) (302) --------- --------- Cash provided by (used for) financing activities from continuing operations 10,508 28,711 Cash provided by (used for) financing activities from discontinued operations -- (46,183) --------- --------- Cash provided by (used for) financing activities 10,508 (17,472) --------- --------- Effect of exchange rate changes on cash and equivalents 32 (202) LESS: (Increase) Decrease in cash and equivalents from discontinued operations -- (13,057) --------- --------- Increase (Decrease) in cash and equivalents from continuing operations 56,221 65,635 Beginning of period cash and equivalents 67,413 1,778 --------- --------- End of period cash and equivalents $ 123,634 $ 67,413 ========= =========
CONTACT:Quanex Building Products Corporation Financial Contact:Jeff Galow 713-877-5327 Media Contact:Valerie Calvert 713-877-5305