4th Quarter EPS From Continuing Operations of $0.32 Before a LIFO Gain
Company's Sales Outperformed the Market for the Quarter and Year
$65 Million Cash and Equivalents Less Debt
HOUSTON, Dec. 4, 2008 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal fourth quarter and fiscal 2008 results for the period ending October 31, 2008. Income from continuing operations for the quarter and year were $11.9 million and $30.8 million, respectively, and diluted earnings per share from continuing operations for the quarter and year were $0.32 and $0.80, respectively, before spinoff related costs and LIFO impact.
Including spinoff related costs and LIFO impact, income from continuing operations for the quarter and year were $15.0 million and $15.9 million, respectively, and diluted earnings per share from continuing operations for the quarter and year were $0.40 and $0.41, respectively.
Fiscal Fourth Quarter and Fiscal 2008 Highlights
* David D. Petratis, the company's president and chief executive
officer, assumed the additional role of chairman of the board
upon the planned retirement of Raymond A. Jean, effective
December 5.
* Jairaj T. Chetnani joined the company as vice president and
treasurer effective December 1.
* Net sales in the quarter were $246.3 million versus $255.5
million in the year ago quarter. 2008 net sales were $868.9
million compared to $964 million in 2007.
* Cash provided by operating activities from continuing operations
in 2008 was $53 million.
* Capital expenditures for the fiscal year were $15.8 million.
* Cash and equivalents less debt totaled $65 million at year end.
* LIFO transactions: recorded a fourth quarter LIFO gain of $5.1
million ($3.1 million after tax, $0.08 per diluted share). For
2008, recorded a LIFO charge of $0.4 million ($0.2 million after
tax, $0.01 per diluted share). LIFO activity in 2008 was
primarily associated with the aluminum sheet business.
* Spinoff related costs: recorded fiscal 2008 costs of $26.5
million ($14.7 million after tax, $0.38 per diluted share).
Fiscal Fourth Quarter and Fiscal 2008 Commentary
ENGINEERED PRODUCTS ($ in millions)
4th qtr 4th qtr FY FY
2008 2007 2008 2007
------- ------- ------- -------
Net Sales $ 112.9 $ 123.9 $ 407.9 $ 457.8
Operating Inc. $ 10.1 $ 13.2 $ 29.9 $ 43.8
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 35% in our fiscal fourth quarter compared to the year ago quarter, and starts for fiscal 2008 were off 31% compared to a year ago. Residential remodeling activity was estimated to be down 10% in fiscal 2008 compared to last year. Net sales for the quarter and year at our Engineered Products segment were down 9% and 11%, respectively. Our ability to consistently outperform the market, even in this very tough economic environment, is testimony to the market-leading positions our customers hold in the window and door industry, and importantly, our collaboration with them on new product and program initiatives," said David D. Petratis, president and chief executive officer of Quanex Building Products. "We believe Engineered Products has one of the best combinations of engineering and design support, innovative products and components, and logistical support in the industry, all backed by the considerable financial strength of Quanex Building Products," continued Petratis.
ALUMINUM SHEET PRODUCTS (in millions)
4th qtr 4th qtr FY FY
2008 2007 2008 2007
------- ------- ------- -------
Net Sales $ 139.0 $ 136.1 $ 479.9 $ 524.2
Operating Inc. $ 12.6 $ 18.3 $ 40.3 $ 65.7
Shipped pounds 81 84 285 311
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.
"Shipments at Nichols Aluminum were approximately 81 million pounds in the quarter, down 4% from the year ago quarter. 2008 shipments of 285 million pounds were off 8% from last year. Spread per pound (selling price less material cost) was down 5% from both the fourth quarter 2007 and third quarter of 2008. We were pleased with the spread at Nichols, however, reduced shipments and a lower mix of painted sheet hurt their bottom line," Petratis said.
Cash Flow
"Our cash and equivalents less debt at year end were $65 million. We have one remaining favorable cash true-up item for taxes related to the merger of Quanex Corporation with Gerdau S.A. We currently estimate the true-up to be $15 million, down from the original estimate of $20 million as the various tax returns near completion. We expect to receive this cash in the first calendar quarter of 2009. Operating cash flow from continuing operations in 2008 came in at $53 million. We continue to closely monitor our working capital, and at quarter end, our conversion cycle, the time required to convert a customer order to cash, was approximately 31 days," continued Petratis.
Outlook
The company's fiscal first quarter segment operating income has historically been its lowest when compared to the other quarters of the year as there are fewer production days and a marked decline in residential building and remodeling activity during this time. This seasonality will be exacerbated given today's weak economic conditions. First quarter 2009 expectations indicate the company will report an operating loss of between $7 million to $11 million before taking into account approximately $5.5 million of corporate expenses (excluding any LIFO impact). The majority of the loss is expected to come from Aluminum Sheet Products due to significantly lower shipments and a deteriorating spread. As in most years, the company expects to report improved operating results each sequential quarter of fiscal 2009.
While the company expects to continue to outperform the market, the overall economic volatility and the ongoing uncertainty surrounding 2009 housing starts and residential remodeling activity does not allow it to reasonably predict fiscal 2009 operating income at this time. However, the company does expect to be profitable for the year. The company will continue to monitor and analyze ongoing economic changes and the impact those changes will have on its operating performance throughout the year. Estimates for fiscal 2009 depreciation / amortization, and capital expenditures are $35 million and $18 million, respectively.
Non-GAAP Financial Measures
Income from Continuing Operations Before Spinoff Related Costs and LIFO Impact
Income from continuing operations before spinoff related costs and LIFO impact is a non-GAAP financial measure. The company believes this non-GAAP financial measure provides a consistent basis for comparison between quarters and years, 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 spinoff related costs and LIFO impact and diluted earnings per share from continuing operations before spinoff related costs and LIFO impact. 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 Oct. 31, Twelve months ended Oct.
