Quanex First Quarter Net Sales up from a Year AgoMarch 6th, 2012 by DWM Magazine
Quanex Building Products Corp. of Houston, parent company of Edgetech IG of Cambridge, Ohio, has released its fiscal 2012 first quarter results for the period ending January 31, 2012.
First-quarter 2012 consolidated net sales were $161.6 million, compared to $159.8 million a year ago, and included Edgetech net sales of $18.9 million, according to the release. First-quarter 2012 operating loss was $0.18 per diluted share compared to an operating loss of $0.13 per diluted share a year ago.
Engineered Products Group’s (EPG) first-quarter 2012 net sales were $99.4 million, compared to $84.0 million a year ago, and included net sales of $18.9 million at Edgetech. First quarter 2012 net sales, excluding Edgetech, were down about 4 percent from the year ago quarter which benefited from higher demand as a result of the $1500 energy-efficient window tax credit program that expired on December 31, 2010. EPG’s first-quarter 2012 operating income was $1.8 million, compared to an operating loss of $0.7 million a year ago, and included an operating loss of $1.1 million at Edgetech. Segment expenses associated with the IG spacer consolidation program were $2.5 million in the quarter, of which $0.4 million were included in Edgetech’s operating loss. First quarter 2011 operating loss of $0.7 million included $5.2 million of consolidation and warranty reserve costs, according to the release.
At EPG, sales excluding Edgetech for the 12 months ended January 31, 2012, were down 2 percent from the previous 12 months, compared to U.S. window shipments as reported by Ducker Worldwide that were down 7 percent over the same periods. The integration of Edgetech into the EPG’s sales and marketing organization was completed in September 2011, and while still early, company officials believe the consolidated organization will continue to generate incremental opportunities.
On November 7, 2011, the company announced a consolidation program for its IG spacer manufacturing facility in Barbourville, Ky., into its IG spacer manufacturing facility in Cambridge, Ohio. At the completion of the consolidation, which is expected to be around August 2012, the Barbourville facility will be permanently closed. The consolidation remains on budget and on schedule. Cash costs associated with the plan have been estimated at about $16 million (excludes a pre-tax, non-cash impairment charge of $1.6 million taken in the fourth quarter 2011). The company expects a payback period on its investment of about 2.6 years, based on annual pre-tax cash savings of $9 million, once the consolidation is concluded.
Corporate expenses in the first quarter were $7.6 million and included ERP expenses of $0.7 million, according to the release.
At quarter end, Quanex had a cash balance of $81.7 million, a total debt outstanding balance of $1.6 million, and cash provided by operating activities from continuing operations of $2.1 million. The company had no borrowings under its $270 million revolving credit facility at quarter end, however, due to the facility’s EBITDA covenant requirement, the available capacity was approximately $173 million at the end of the quarter. During the first quarter, the company purchased approximately $1.3 million of its outstanding common stock (94,337 shares of common stock at an average price of $13.61, including commissions).
Going forward, stagnant residential repair and replacement demand, historically low home starts, elevated residential foreclosures, and stringent credit conditions will create a difficult housing environment in 2012, according to the release. The company currently expects calendar year 2012 U.S. window shipments to be about 39 million units, which is 8 percent below Ducker’s forecasted shipments of 42.6 million. For 2012, the company estimated capital expenditures of $49 million (includes IG consolidation capital of $7 million and ERP capital of $13 million), corporate expenses of $31 million (includes ERP costs of $3 million), and depreciation & amortization of $41 million (includes ERP depreciation of $3 million).