Quanex Building Products Corporation Reports Gains in Third QuarterSeptember 5th, 2013 by DWM Magazine
Quanex Building Products Corp. has released fiscal 2013 third quarter results for the period ended July 31, 2013. The company reports a consolidated net income of $5 million and an improved operating income of $18.6 million.
According to the company, consolidated third quarter 2013 net sales increased 8.9 percent to $259.2 million, compared to $237.9 million a year ago. Third quarter 2013 net income was $5.0 million, or $0.13 per diluted share compared to net income of $1.5 million, or $0.04 per diluted share in the year ago quarter.
Additionally, consolidated third quarter EBITDA, a non-GAAP measure, was $19.3 million, compared to $10.6 million a year ago. Consolidated year-to-date EBITDA, a non-GAAP measure, was $17.4 million, compared to $2.5 million a year ago.
Year-to-date consolidated 2013 net sales were $677.3 million, compared to $593.9 million a year ago, and year-to-date consolidated net loss was $10.5 million compared to a loss of $17.5 million a year ago.
The company says that 2013 year-to-date results, when measured against comparable prior year periods, benefitted from the inclusion of sales related to the Aluminite acquisition completed in December 2012 and the elimination of 2012 strike-related costs at Nichols Aluminum. Adjusting for these items, third quarter and year-to-date results improved as a result of higher sales across all divisions under the Engineered Products Group (EPG) segment and cost savings associated with the company’s insulating glass systems facility consolidation that occurred in 2012.This was partially offset by higher information technology and Enterprise Resource Planning (ERP) implementation costs.
On August 29, 2013, the board of directors declared a quarterly cash dividend of $0.04 per share on the company’s common stock, payable September 30, 2013, to shareholders of record on September 16, 2013.
According to Quanex, global EPG sales for the 12 months ended July 31, 2013, were up 11.2 percent. EPG’s North American domestic fenestration sales, the most comparable sales figure to those reported by Ducker, increased 11.5 percent (3.4 percent excluding Aluminite) from the previous 12 months.
Preliminary U.S. window shipments as reported by Ducker increased 10.1 percent over the 12 months ended June 30, 2013, driven by a 27.6 percent increase in new construction units. U.S. window shipments to the residential R&R market as reported by Ducker increased 1.3 percent for the 12-month period ended June 30, 2013. A greater portion of EPG’s sales are tied to R&R versus new construction.
EPG sales results continue to be negatively impacted by lower vinyl pricing, higher industry sales of lower performance windows typically installed in new construction and continued weak R&R sales.
Corporate expenses in the quarter were $11.0 million compared to $8.4 million in the year ago quarter primarily due to higher ERP expenses of $2.0 million, (including $1.7 million of higher depreciation) and $1.1 million in higher IT-related costs, partially offset by $0.6 million in lower stock-based compensation costs.
In August 2013, following a management recommendation, the company’s board of directors voted to cease the implementation of the ERP project. The proposal was made based on management’s belief that investments made in initiatives that will drive greater revenue growth and profitability will be more impactful to increasing shareholder value than continuing to invest in the ERP system.
The company reports total cash of $16.1 million with no outstanding borrowings against the revolving credit facility. Cash provided by operating activities for the first nine months of 2013 was $6.6 million and available capacity under the company’s revolving credit facility was approximately $82.5 million.