Quanex Building Products Corp. released its fiscal 2010 fourth quarter and annual results for the period ending October 31, 2010. The company’s 2010 sales and operating income at its two business segments – Engineered Products and Aluminum Sheet Products – were both substantially better than 2009 results, according to the company.

Engineered Products benefited from new products, customer-driven market share gains and price realization. Quanex outperformed its end markets (residential remodeling activity and housing starts) in 2010.

In the fourth quarter 2010 versus the year ago quarter, Quanex’s sales were up, primarily at Aluminum Sheet Products, while its operating income was down, primarily due to lower profitability at Engineered Products, in part the result of higher material costs and product mix issues and higher corporate expenses.

2010 net sales were $798.3 million compared to $585.0 million a year ago; fourth quarter net sales were $222.3 million compared to $194.9 million in the year ago quarter. 2010 income from continuing operations was $24.2 million versus a 2009 loss from continuing operations of $136.1 million; fourth quarter 2010 income from continuing operations was $8.3 million compared to fourth quarter 2009 income from continuing operations of $15.8 million.

“We outperformed the market for the year with sales for fiscal 2010 of $361 million, up 12 percent over last year, while our blended market was relatively flat. For the fourth quarter, our market drivers were estimated to be up 9 percent on a blended basis compared to a year ago, most of that on the reported strength in R&R activity, while Engineered Products sales were up 2 percent over the same period,” says David D. Petratis, president and chief executive officer of Quanex Building Products. “On slightly higher fourth quarter sales, operating income was down 27 percent over the year ago quarter, which reflected product mix changes and higher material costs at our sealant business. In response to these higher costs, we announced a price increase effective November 15, 2010. Operating income was also impacted by costs associated with building consolidations at our vinyl extrusion business, and segment expenses associated with the launch of Nexus,” he adds.

“Relative to a U.S. residential building and construction market that remained incredibly weak in 2010, Quanex turned in a solid performance this year, earning an adjusted $0.70 per diluted share (see reconciliation) compared to an adjusted $0.02 per diluted share in 2009. We know programs like the expired $8,000 first time homebuyers’ tax credit, the $1,500 tax credit for energy efficient windows, which expires at the end of the month, and customer restocking in the first half of the year helped in 2010. As we look to 2011, we do not expect another round of government sponsored incentives, so the industry is on its own,” says Petratis. “With no catalyst to provide a surge in market activity, together with a large inventory of homes available for sale, we expect a challenging environment in 2011, with sales flat to slightly down from 2010, along with tough quarter to quarter comparisons, particularly in the first half of the year.”


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