Quanex Building Products Corporation Reports 2015 Fourth Quarter and Fiscal Year Results
December 14 2015 - 8:00AM
Fourth quarter EBITDA more than doubles
to $27.5 million EPS of $0.29 versus $0.08 last
year HL Plastics exceeds expectations in first
full quarter since acquisition Completes
acquisition of Woodcraft Industries
Quanex Building Products Corporation (NYSE:NX), a
leading OEM supplier of building products components, today
released results for the fourth quarter and fiscal year ended
October 31, 2015.
"The fourth quarter was a great finish to an exciting year for
Quanex Building Products," said Chairman, President and Chief
Executive Officer Bill Griffiths. "Fourth quarter EBITDA results
more than doubled over last year's performance, despite slower
revenue growth. Gross margins continued to improve as we saw
further progress in the financial performance of our vinyl profile
business. HL Plastics exceeded our internal expectations in their
first full quarter after the acquisition, and we successfully
completed the acquisition of Woodcraft Industries as planned on
November 2nd. The stage is now set for a solid fiscal 2016 and
beyond."
Highlights for the fourth quarter include:
- Improved margins from base business and addition of HL
Plastics
- Reported EPS from Continuing Operations of $0.29 versus prior
year's $0.08
- Strong cash generation – $42 million reduction in debt from
June 15th to October 31st
- Acquisition of Woodcraft Industries on November 2nd
- Proforma net debt/EBITDA leverage ratio following Woodcraft
acquisition equals 2.9x
Highlights for the fiscal year include:
- Improved margins from base business and addition of HL
Plastics
- Reported EPS from Continuing Operations of $0.46 versus prior
year's $0.22
- Year-end net debt of $34.3 million
- Acquisition of HL Plastics on June 15th
Reported revenue for the quarter was 19% higher than the prior
year; 2% higher for the legacy business. Reported revenue for the
year was 8% higher; 1% higher for the legacy business. Comparable
sales for the legacy business after adjusting for the negative FX
impact and the impact of a lower oil surcharge was 6.2% higher for
the quarter and 5.9% higher for the year. Reduced sales into Russia
coupled with the expected reduction in vinyl profile revenues were
the key contributors to the softer growth rates. Fourth quarter
2015 gross margins improved 430 basis points driven primarily by
labor and operating efficiencies as well as repair and maintenance
improvement in the vinyl business.
Additional information related to fourth quarter and fiscal year
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.
Business Outlook
Assuming modest overall growth rates of 5-6%, Quanex expects
2016 revenues to approach $1 billion. At this level, and with
further improvements across all segments of the business, projected
2016 EBITDA will be in the range of $112-$120
million. Additional 2016 assumptions include depreciation and
amortization of $51 million, interest expense of $23 million (6.75%
all in senior debt rate), tax rate of 34% and capital expenditure
spend of $45 million.
Mr. Griffiths concluded, "Economic forecasts at this time of the
year always tend to be optimistic, and have historically been
revised downward as the year progresses. However, if the
current economic forecasts prove to be accurate, growth rates could
be in the 7%-8% range with a commensurate improvement in
EBITDA."
Conference Call Information
Quanex will host its conference call today, December 14, 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 October 31, |
Twelve Months
Ended October 31, |
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Net sales |
$ 195,459 |
$ 163,816 |
$ 645,528 |
$ 595,384 |
Cost of sales |
145,628 |
129,040 |
499,097 |
464,584 |
Selling, general and administrative |
22,379 |
21,158 |
86,536 |
82,150 |
Depreciation and amortization |
10,679 |
8,319 |
35,220 |
33,869 |
Asset impairment charges |
-- |
-- |
-- |
505 |
Operating income |
16,773 |
5,299 |
24,675 |
14,276 |
Interest expense |
(367) |
(143) |
(991) |
(562) |
Other, net |
(831) |
26 |
(531) |
92 |
Income before income
taxes |
15,575 |
5,182 |
23,153 |
13,806 |
Income tax expense |
(5,632) |
(2,170) |
(7,539) |
(5,468) |
Income from continuing operations |
9,943 |
3,012 |
15,614 |
8,338 |
Income (loss) from discontinued operations,
net of taxes |
-- |
1,944 |
479 |
20,896 |
Net income |
$ 9,943 |
$ 4,956 |
$ 16,093 |
$ 29,234 |
|
|
|
|
|
Earnings (loss) per common
share: |
|
|
|
|
From continuing operations |
$ 0.30 |
$ 0.08 |
$ 0.46 |
$ 0.22 |
From discontinued operations |
$ -- |
$ 0.05 |
$ 0.01 |
$ 0.57 |
|
|
|
|
|
Diluted earnings (loss) per common
share: |
|
|
|
|
From continuing operations |
$ 0.29 |
$ 0.08 |
$ 0.46 |
$ 0.22 |
From discontinued operations |
$ -- |
$ 0.05 |
$ 0.01 |
$ 0.56 |
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
33,640 |
37,000 |
33,993 |
37,128 |
Diluted |
34,148 |
37,534 |
34,502 |
37,679 |
|
|
|
|
|
Cash dividends per share |
$ 0.04 |
$ 0.04 |
$ 0.16 |
$ 0.16 |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
October 31,
2015 |
October 31,
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 23,125 |
$ 120,384 |
Accounts receivable, net |
64,080 |
55,193 |
Inventories, net |
63,029 |
57,358 |
Deferred income taxes |
14,024 |
21,442 |
Prepaid and other current
assets |
7,992 |
6,052 |
Total current assets |
172,250 |
260,429 |
Property, plant and equipment, net |
140,672 |
109,487 |
Deferred income taxes |
-- |
1,545 |
Goodwill |
129,770 |
70,546 |
Intangible assets, net |
120,810 |
70,150 |
Other assets |
8,529 |
4,956 |
Total assets |
$ 572,031 |
$ 517,113 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 47,778 |
$ 41,488 |
Accrued liabilities |
37,364 |
32,482 |
Income taxes payable |
747 |
107 |
Current maturities of long-term
debt |
2,359 |
199 |
Total current liabilities |
88,248 |
74,276 |
Long-term debt |
55,041 |
586 |
Non Current Deferred Tax |
5,241 |
-- |
Deferred pension and postretirement
benefits |
5,701 |
4,818 |
Liability for uncertain tax positions |
564 |
4,626 |
Other liabilities |
21,941 |
11,887 |
Total liabilities |
176,736 |
96,193 |
Stockholders' equity: |
|
|
Common stock |
376 |
376 |
Additional paid-in-capital |
250,937 |
249,600 |
Retained earnings |
222,138 |
202,319 |
Accumulated other comprehensive
loss |
(10,049) |
(5,708) |
Treasury stock at cost |
(68,107) |
(25,667) |
Total stockholders' equity |
395,295 |
420,920 |
Total liabilities and
stockholders' equity |
$ 572,031 |
$ 517,113 |
|
QUANEX BUILDING PRODUCTS
CORPORATION |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW |
(In thousands) |
(Unaudited) |
|
|
|
|
Twelve Months
Ended October 31, |
|
2015 |
2014 |
Operating activities: |
|
|
Net income |
$ 16,093 |
$ 29,234 |
Adjustments to reconcile net
income (loss) to cash provided by operating activities: |
|
|
Depreciation and
amortization |
35,220 |
36,910 |
Stock-based compensation |
4,266 |
3,925 |
Deferred income tax (benefit)
provision |
5,204 |
14,246 |
Excess tax benefit from
share-based compensation |
(60) |
(654) |
Asset impairment charges |
-- |
1,007 |
Gain on sale of discontinued
operations |
-- |
(39,122) |
Gain on involuntary
conversion |
(1,263) |
(2,408) |
Other, net |
476 |
2,691 |
Changes in assets and
liabilities, net of effects from acquisitions and
dispositions: |
|
|
Decrease in accounts
receivable |
2,668 |
484 |
Decrease (Increase) in
inventory |
9,805 |
(25,650) |
Increase in other current
assets |
(1,304) |
(1,098) |
(Decrease) increase in accounts
payable |
(2,862) |
12,842 |
Decrease in accrued
liabilities |
(576) |
(6,871) |
Increase in income taxes
payable |
369 |
866 |
Decrease in deferred pension
and postretirement benefits |
(372) |
(347) |
Decrease in other long-term
liabilities |
(283) |
(2,172) |
Other, net |
(294) |
(3,105) |
Cash used for operating activities |
67,087 |
20,778 |
Investing activities: |
|
|
Proceeds from sale of
discontinued operations |
-- |
107,431 |
Acquisitions, net of cash
acquired |
(131,689) |
(5,161) |
Capital expenditures |
(29,982) |
(33,779) |
Proceeds from property
insurance claim |
1,263 |
4,801 |
Proceeds from disposition of
capital assets |
264 |
832 |
Cash used in investing activities |
(160,144) |
74,124 |
Financing activities: |
|
|
Credit facility borrowings |
117,000 |
-- |
Repayments of credit facility
borrowings |
(67,000) |
-- |
Repayments of other debt &
capital lease obligations |
(1,020) |
(175) |
Common stock dividends
paid |
(5,515) |
(5,992) |
Issuance of common stock |
5,109 |
3,249 |
Excess tax benefit from
share-based compensation |
60 |
654 |
Purchase of treasury stock |
(52,719) |
(22,281) |
Other |
(496) |
86 |
Cash used in financing activities |
(4,581) |
(24,459) |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
379 |
207 |
|
|
|
(Decrease) increase in cash and cash
equivalents |
(97,259) |
70,650 |
Cash and cash equivalents at beginning of
period |
120,384 |
49,734 |
Cash and cash equivalents at end of
period |
$ 23,125 |
$ 120,384 |
|
|
|
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 October 31, |
Twelve Months
Ended October 31, |
|
2015 |
2014 |
2015 |
2014 |
|
Quanex |
Quanex |
Quanex |
Quanex |
Net
income |
$ 9,943 |
$ 4,956 |
$ 16,093 |
$ 29,234 |
Income from discontinued
operations, net of taxes |
-- |
(1,944) |
(479) |
(20,896) |
Income tax expense |
5,632 |
2,170 |
7,539 |
5,468 |
Other, net |
831 |
(26) |
531 |
(92) |
Interest expense |
367 |
143 |
991 |
562 |
Operating
income |
16,773 |
5,299 |
24,675 |
14,276 |
Depreciation and
amortization |
10,679 |
8,319 |
35,220 |
33,869 |
EBITDA |
$ 27,452 |
$ 13,618 |
$ 59,895 |
$ 48,145 |
Transactions related costs |
1,698 |
356 |
5,628 |
502 |
IG warranty reserve
benefit |
-- |
-- |
-- |
(2,829) |
Asset impairment charge |
-- |
-- |
-- |
505 |
Discontinued ERP expenses |
-- |
-- |
-- |
500 |
Foreign currency impact -
excluding HL Plastics |
204 |
35 |
622 |
128 |
EBITDA as
adjusted |
$ 29,354 |
$ 14,009 |
$ 66,145 |
$ 46,951 |
|
|
|
|
|
|
|
|
|
|
Financial Statistics as of October
31, 2015 |
|
|
|
|
Book value per common share: |
|
$11.75 |
|
|
Total debt to capitalization: |
|
12.7% |
|
|
Return on invested capital: |
|
4.0% |
|
|
Actual number of common shares
outstanding: |
|
33,962,460 |
|
|
|
QUANEX BUILDING PRODUCTS
CORPORATION |
PRE-TAX & AFTER TAX
PRESENTATION |
(In millions, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Q4 2015 |
|
Q4 2014 |
|
FY 2015 |
|
FY 2014 |
|
Pre-Tax
Presentation |
$MM |
|
$MM |
|
$MM |
|
$MM |
|
Operating Income from Continuing
Operations As Reported |
$ 16.8 |
|
$ 5.3 |
|
$ 24.7 |
|
$ 14.3 |
|
Benefit (Reduction) to Operating Income: |
|
|
|
|
|
|
|
|
IG Warranty Reserve
Benefit |
-- |
|
-- |
|
-- |
|
(2.8) |
|
Asset Impairment Charge |
-- |
|
-- |
|
-- |
|
0.5 |
|
Discontinued ERP Expenses |
-- |
|
-- |
|
-- |
|
0.5 |
|
Foreign Currency Transaction
Losses - Excluding HL Plastics |
0.2 |
|
-- |
|
0.6 |
|
0.1 |
|
Transaction Related
Expenses |
1.7 |
|
0.4 |
|
5.6 |
|
0.5 |
|
Operating Income from Continuing
Operations As Adjusted |
$ 18.7 |
|
$ 5.7 |
|
$ 30.9 |
|
$ 13.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2015 |
Q4 2015 |
Q4 2014 |
Q4 2014 |
FY 2015 |
FY 2015 |
FY 2014 |
FY 2014 |
After-Tax
Presentation |
$MM |
EPS |
$MM |
EPS |
$MM |
EPS |
$MM |
EPS |
Income from Continuing Operations As
Reported |
$ 9.9 |
$ 0.29 |
$ 3.0 |
$ 0.08 |
$ 15.6 |
$ 0.46 |
$ 8.3 |
$ 0.22 |
Benefit to EPS: |
|
|
|
|
|
|
|
|
IG Warranty Reserve
Benefit |
-- |
-- |
-- |
-- |
-- |
-- |
(1.6) |
(0.04) |
Asset Impairment Charge |
-- |
-- |
-- |
-- |
-- |
-- |
0.3 |
0.01 |
Discontinued ERP Expenses |
-- |
-- |
-- |
-- |
-- |
-- |
0.3 |
0.01 |
Foreign Currency Transaction
Losses |
0.1 |
0.00 |
-- |
-- |
0.4 |
0.01 |
0.1 |
0.00 |
Transaction Related
Expenses |
1.0 |
0.03 |
0.2 |
0.0 |
3.6 |
0.11 |
0.3 |
0.01 |
Diluted Earnings from Continuing
Operations As Adjusted |
$ 11.0 |
$ 0.32 |
$ 3.2 |
$ 0.08 |
$ 19.6 |
$ 0.58 |
$ 7.7 |
$ 0.21 |
CONTACT: Financial Contact: Brent Korb, 713-877-5328; Media Contact: Valerie Calvert, 713-877-5305
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