Loss of $0.38 per Diluted Share from Continuing Operations                       excluding Special Items         Loss of $1.08 per Diluted Share from Continuing Operations     Generated $15 Million of Cash from Six Months Operating Activities                $85 Million Cash and Equivalents Balance 

HOUSTON, May 28, 2009 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX) today reported fiscal second quarter 2009 results for the period ending April 30. Loss from continuing operations was $14.0 million, or $0.38 per diluted share, excluding special items, and $40.1 million, or $1.08 per diluted share, including special items. Special items were an after-tax impairment charge of $29.0 million, or $0.78 per diluted share, and after-tax LIFO income of $2.9 million, or $0.08 per diluted share.

Quarterly Highlights

    * Net sales were $113.2 million.  * Operating loss was $16.4 million excluding special items.  * Reduced inventories by $21.6 million.  * Cash and equivalents totaled $85.4 million.  * Recorded a $45.3 million pre-tax true-up impairment charge.  * Recorded $4.5 million pre-tax LIFO income.  * Capital expenditures were $5.0 million.  * Cash provided by operating activities was $14.6 million for the    six months. 

Quarterly Commentary

    ENGINEERED PRODUCTS  (in millions)                                                     2nd qtr   2nd qtr                                                      2009      2008                                                    --------  --------  Net sales                                         $  65.2   $   92.5  Operating income (loss) excluding special items   $  (0.8)  $    5.3 

Engineered Products is focused on providing leading window and door customers with value-added fenestration components, products, and systems. Key market drivers are residential housing starts and residential remodeling activity.

"The U.S. residential housing market dropped 49% in our second quarter compared to a year ago, while residential remodeling activity was estimated to be off 10% to 15% over this same timeframe," said David D. Petratis, president and chief executive officer of Quanex Building Products. "Net sales at Engineered Products were down 29% as business conditions remained difficult. However, we did see demand improve during the quarter, particularly in April, due to the seasonal nature of our building products markets," Petratis continued. "While discussions with our customers currently reflect a bit of optimism for the second half of the year, home inventories remain at high levels. Therefore, we will continue to size the business and our inventories at conservative levels."

    ALUMINUM SHEET PRODUCTS  (in millions)                                                    2nd qtr   2nd qtr                                                     2009       2008                                                    --------  --------  Net sales                                         $  50.4   $  118.3  Operating income (loss)                           $ (11.6)  $   10.0  Shipped pounds                                         44         72 

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 residential housing starts and residential remodeling activity.

"London Metal Exchange (LME) aluminum prices in the second quarter fell to a new inflation-adjusted low of $0.57 per pound, before climbing back to $0.65 per pound by quarter end. These historically low prices, combined with relatively high aluminum scrap costs, continued to negatively impact our spread (sales price less material costs), which was down 51% and 33% from the second quarter 2008 and first quarter 2009, respectively. Shipped pounds were 44 million, down 39% from the year ago quarter and reflected the deterioration in demand in the building and construction market," said Petratis. "For the second half of the year, we expect spread to rise as the bulk of this high priced scrap has now been processed and LME aluminum prices have stabilized. However, shipped pounds are expected to continue to significantly trail year ago levels."

Cash Flow

"Generating good cash flow and carefully watching our spending remain paramount. During the quarter, we reduced company-wide inventories by $22 million, with particular progress at Nichols Aluminum, where inventory pounds were reduced by almost 50%, leaving it with an inventory level 25% lower than at any point in the last 10 years. We believe there is still room for incremental improvements company-wide. As we continue to monitor our working capital, we are also closely watching the aging of receivables. At quarter end, we had a healthy cash balance of $85 million," Petratis said.

Outlook

"Rising unemployment, difficult lending practices, high home inventories and troubling foreclosure rates have resulted in a difficult market environment for Quanex Building Products," said Petratis. "We responded to these challenges and made significant reductions in our workforce, consolidated and idled facilities, and leaned out working capital to maximize our cash flow. However, negative economic factors will continue to be a significant drag on U.S. residential build rates and remodeling activity, and at this time we cannot estimate what the rate of these activities will be in fiscal 2009. This uncertainty also carries through to our ability to precisely estimate operating income for the second half of the year," Petratis said. "At this time and subject to change, we expect our Engineered Products segment to report some $12 million to $15 million of operating income in the second half of the year, and our Aluminum Sheet Products segment to approach breakeven in the same period. Second half segment estimates exclude corporate expenses. For the company, we expect to report a loss for fiscal 2009 as previously reported, excluding impairment charges and LIFO income."

Impairment Charge

"In the first quarter of 2009, we determined there were sufficient indicators to require us to perform an interim goodwill and other intangible asset impairment analysis. As a result, we booked estimated goodwill and other intangible asset impairment charges of $137.3 million pre-tax in the first quarter. We completed this goodwill analysis during the second quarter and booked an additional $45.3 million pre-tax impairment charge," said Petratis.

Non-GAAP Financial Measures

Income (loss) from continuing operations excluding special items, diluted earnings (loss) per share from continuing operations excluding special items, and operating income (loss) excluding special items are non-GAAP financial measures.

We believe these non-GAAP financial measures provide a consistent basis for comparison between quarters, and enhance the understanding of the performance of our 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 operating income (loss) to operating income (loss) excluding special items; reported income (loss) from continuing operations to income (loss) from continuing operations excluding special items; and reported diluted earnings (loss) per share from continuing operations to diluted earnings (loss) per share from continuing operations excluding special items. We do not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.