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Quanex Building Products Corporation Reports Second Quarter 2015 Results; Confirms 2015 Guidance

20:00 EDT 2 Jun 2015 | Globe Newswire

HOUSTON, June 3, 2015 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX), a leading supplier of window and door components, today released results for the second quarter ended April 30, 2015.

"While inclement weather caused a slow start to the building and construction season and our fiscal second quarter, volumes rebounded nicely and allowed us to deliver solid revenue and earnings results," said Chairman, President and Chief Executive Officer Bill Griffiths. "We are starting to see tangible improvements in our vinyl extrusion business, even though we do not expect to reap the full benefits of the capital investments until the fourth quarter. This, together with continued improvements in our end markets, gives us sufficient confidence to confirm our full year guidance of 5 to 7 percent revenue growth and EBITDA of $57 to $63 million," said Griffiths.

Financial highlights for the second quarter include:

  • Q2 2015 net sales increased 5.2% (7.0% excluding currency translation impact) to $142 million vs. $135 million in Q2 2014
  • Q2 2015 income from continuing operations of $2.3 million vs. loss of ($2.0) million in Q2 2014
  • Q2 2015 diluted EPS from continuing operations of $0.07 vs. loss of ($0.05) in Q2 2014
  • Q2 2015 EBITDA of $11.5 million vs. $5.7 million in Q2 2014
  • Cash balance of $60.0 million and no borrowings on $150 million revolving credit facility

For the first half of the fiscal year, growth was flat in the Northeast and Midwest as a result of another long winter. Volumes increased in the West and Southeast, but were offset by declines in the South, mainly due to a slowdown in Texas. The company's vinyl extrusion business continued to show improvements in key operating metrics, including lower scrap rates, higher labor efficiency and improved on-time delivery to customers.

The Board of Directors declared a quarterly cash dividend of $0.04 per share on the company's common stock, payable June 30, 2015, to shareholders of record on June 15, 2015.

Additional information related to second quarter 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.

Conference Call Information

Quanex will host its conference call today, June 3, 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 April 30, Six Months Ended April 30,
  2015 2014 2015 2014
         
Net sales  $ 141,970  $ 135,208  $ 269,863  $ 261,587
Cost of sales  110,812  108,649  216,616  204,838
Selling, general and administrative  19,638  20,393  39,134  42,895
Depreciation and amortization  7,831  8,494  16,039  17,038
Asset impairment charges  --   500  --   505
Operating income (loss)  3,689  (2,828)  (1,926)  (3,689)
Interest expense  (145)  (143)  (286)  (284)
Other, net  (115)  (22)  (266)  74
Income (loss) before income taxes  3,429  (2,993)  (2,478)  (3,899)
Income tax benefit (expense)  (1,135)  963  1,678  658
Income (loss) from continuing operations  2,294  (2,030)  (800)  (3,241)
Income from discontinued operations, net of taxes  --   22,161  23  19,472
Net income (loss)  $ 2,294  $ 20,131  $ (777)  $ 16,231
         
Earnings (loss) per common share:        
From continuing operations  $ 0.07  $ (0.05)  $ (0.02)  $ (0.09)
From discontinued operations  $ --   $ 0.59  $ --   $ 0.53
         
Diluted earnings (loss) per common share:        
From continuing operations  $ 0.07  $ (0.05)  $ (0.02)  $ (0.09)
From discontinued operations  $ --   $ 0.58  $ --   $ 0.52
         
Weighted average common shares outstanding:        
Basic  33,621  37,217  34,362  37,108
Diluted  34,166  37,838  34,362  37,726
         
Cash dividends per share  $ 0.04  $ 0.04 0.08 0.08
     
     
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
     
  April 30, 2015 October 31, 2014
ASSETS    
Current assets:    
Cash and cash equivalents  $ 60,030  $ 120,384
Accounts receivable, net  50,210  55,193
Inventories, net   62,994  57,358
Deferred income taxes  23,684  21,442
Prepaid and other current assets  5,433  6,052
Total current assets  202,351  260,429
Property, plant and equipment, net  111,113  109,487
Deferred income taxes  7,367  1,545
Goodwill   68,788  70,546
Intangible assets, net  65,648  70,150
Other assets  5,620  4,956
Total assets  $ 460,887  $ 517,113
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 36,328  $ 41,488
Accrued liabilities  26,006  32,482
Income taxes payable  --   107
Current maturities of long-term debt  179  199
Total current liabilities  62,513  74,276
Long-term debt  455  586
Deferred pension and postretirement benefits  5,949  4,818
Liability for uncertain tax positions  548  4,626
Other liabilities  11,174  11,887
Total liabilities  80,639  96,193
Stockholders' equity:    
Common stock  376  376
Additional paid-in-capital  250,106  249,600
Retained earnings  208,020  202,319
Accumulated other comprehensive loss  (8,210)  (5,708)
Treasury stock at cost  (70,044)  (25,667)
Total stockholders' equity  380,248  420,920
Total liabilities and stockholders' equity  $ 460,887  $ 517,113
     
     
QUANEX BUILDING PRODUCTS CORPORATION    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW    
(In thousands)    
(Unaudited)    
     
  Six Months Ended April 30,
  2015 2014
Operating activities:    
Net (loss) income  $ (777)  $ 16,231
Adjustments to reconcile net income (loss) to cash provided by operating activities:    
Depreciation and amortization  16,039  20,078
Stock-based compensation  2,329  1,944
Deferred income tax (benefit) provision  (2,963)  8,128
Excess tax benefit from share-based compensation  (60)  (639)
Asset impairment charges  --  1,007
Gain on sale of discontinued operations  --  (39,645)
Other, net  (447)  1,427
Changes in assets and liabilities, net of effects from acquisitions and dispositions:    
Decrease in accounts receivable  4,553  3,964
Increase in inventory  (6,047)  (22,834)
Decrease (increase) in other current assets  601  (583)
(Decrease) increase in accounts payable  (5,799)  10,127
Decrease in accrued liabilities  (5,253)  (6,234)
Decrease in income taxes payable  260  1,667
Increase in deferred pension and postretirement benefits  1,201  297
Decrease in other long-term liabilities  (128)  (3,539)
Other, net  (201)  (2,419)
Cash used for operating activities  3,308  (11,023)
Investing activities:    
Proceeds from sale of discontinued operations  --  110,000
Acquisitions, net of cash acquired  --  (5,161)
Capital expenditures  (13,381)  (18,597)
Proceeds from property insurance claim  513  1,400
Proceeds from disposition of capital assets  202  304
Cash used in investing activities  (12,666)  87,946
Financing activities:    
Repayments of other long-term debt  (148)  (144)
Common stock dividends paid  (2,803)  (2,989)
Issuance of common stock  4,181  2,882
Excess tax benefit from share-based compensation  60  639
Purchase of treasury stock  (52,719)  --
Other  --  35
Cash used in financing activities  (51,429)  423
     
Effect of exchange rate changes on cash and cash equivalents  433  (96)
     
(Decrease) increase in cash and cash equivalents  (60,354)  77,250
Cash and cash equivalents at beginning of period  120,384  49,734
Cash and cash equivalents at end of period  $ 60,030  $ 126,984
     
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 April 30, Six Months Ended April 30,
  2015 2014 2015 2014
  Quanex Quanex Quanex Quanex
Net income (loss)  $ 2,294  $ 20,131  $ (777)  $ 16,231
Income from discontinued operations, net of taxes  --   (22,161)  (23)  (19,472)
Income tax (benefit) expense  1,135  (963)  (1,678)  (658)
Other, net  115  22  266  (74)
Interest expense  145  143  286  284
Operating income (loss)  3,689  (2,828)  (1,926)  (3,689)
Depreciation and amortization  7,831  8,494  16,039  17,038
EBITDA  $ 11,520  $ 5,666  $ 14,113  $ 13,349
         
         
Financial Statistics as of April 30, 2015        
Book value per common share:   $11.23    
Total debt to capitalization:    0.2%    
Return on invested capital:    3.1%    
Actual number of common shares outstanding:    33,871,310    
         
         
QUANEX BUILDING PRODUCTS CORPORATION
PRE-TAX & AFTER TAX PRESENTATION
(In millions, except per share data)
(Unaudited)
         
  Q2 2015   Q2 2014  
Pre-Tax Presentation $MM   $MM  
Operating Income (Loss) from Continuing Operations As Reported  $ 3.7    $ (2.8)  
Benefit (Reduction) to Operating Income (Loss):        
Asset Impairment Charge  --     0.5  
Transaction Related Expenses  0.1    --   
Discontinued ERP Expenses  --     0.3  
Operating Income (Loss) from Continuing Operations As Adjusted  $ 3.8    $ (2.0)  
         
         
  Q2 2015 Q2 2015 Q2 2014 Q2 2014
After-Tax Presentation $MM EPS $MM EPS
Income (Loss) from Continuing Operations As Reported  $ 2.3  $ 0.07  $ (2.0)  $ (0.05)
Benefit to EPS:        
Asset Impairment Charge  --   --   0.4  0.01
Transaction Related Expenses  0.1  --   --   -- 
Discontinued ERP Expenses  --   --   0.2  0.01
Diluted Earnings (Loss) from Continuing Operations As Adjusted  $ 2.4  $ 0.07  $ (1.4)  $ (0.03)
CONTACT: Financial Contact:
         Marty Ketelaar
         713-877-5402
         
         Media Contact:
         Valerie Calvert
         713-877-5305

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