Quanex Building Products Corporation
) reported earnings of 28 cents per share in the fourth quarter
of fiscal 2013 (ended Oct 31, 2013), increased around six-fold
from 5 cents earned in the year-ago quarter. Reported earnings
surpassed the Zacks Consensus Estimate of 17 cents.
The results benefited from improvement in the housing market
along with savings generated from last year's insulating glass
facility consolidation and the addition of Aluminite earlier in
2013, but were partly offset by the termination of the Enterprise
Resource Planning (ERP) implementation.
Revenues improved 17% year over year to $275 million, beating the
Zacks Consensus Estimate of $266 million. Results were aided by
higher sales across all divisions.
Cost of sales during the quarter increased 15% to $222 million
from $193 million in the prior-year quarter. Gross profit
improved 27% year over year to $53 million. Consequently, gross
margin expanded 150 basis points to 19.3%.
Selling, general and administrative expenses decreased 14% year
over year to $26 million. Operating profit was $7.1 million in
the third quarter compared with $1.4 million in the prior-year
quarter. Quanex Building reported an adjusted operating profit of
$17 million versus $1.7 million in the prior-year quarter.
Both net sales and operating income results were in line with the
second-half 2013 guidance provided by Quanex Building at the end
of the fiscal second quarter.
Net sales at the segment hiked 22% year over year (10% excluding
Aluminite's sales) to $167 million. Operating income for the
segment increased 28.5% to $18 million from $14 million in the
Aluminum Sheet Products:
The segment reported sales of $111 million, up 9% year over year.
However, the segment's operating profit was $4 million in the
quarter against an operating loss of $1 million the year-ago
quarter. The profits were driven by an increase in shipped
Cash and cash equivalents were $50 million as of Oct 31, 2013
compared with $71 million as of Oct 31, 2012. Long-term debt
declined to $0.7 million as of Oct 31, 2013, compared with $1
million as of Oct 31, 2012. Cash from operations in fiscal 2013
was $43.5 million up 64% from $26.5 million in the prior fiscal.
Fiscal 2013 Performance
Quanex Building posted earnings of 20 cents per share for fiscal
2013, reversing the year ago loss of 4 cents. Earnings were ahead
of the Zacks Consensus Estimate of loss of 8 cents. Revenues
improved 15% to $952.6 million in fiscal 2013 from $828.9 million
in fiscal 2012. It also surpassed the Zacks Consensus Estimate of
Quanex Building forecasts window shipments in U.S to increase by
12% in 2014, with new construction rising 22% and R&R
(replacement and remodeling) expanding 6%. For the full-year 2014
the company expects revenues in the EPG segment to grow 5%-6%
over 2013 results. However, earnings before interest, taxes,
depreciation and amortization (EBITDA) margins will be similar to
2013 levels for the segment. Pricing pressure, particularly on
vinyl profiles, is expected to remain throughout 2014.
However, due to uncertainty surrounding the new warehouse rules
and their potential impact on net spreads, the company did not
provide any specific EBITDA guidance for the Nichols group
(Aluminum Sheet Products Group). Quanex Building expects 2014
revenue growth in the mid to high single-digit range and
operational improvements to contribute modestly to the Nichols
group's profitability in a steady spread environment.
Houston, Texas-based Quanex Building Products Corporation is a
leading manufacturer of engineered materials, components and
systems, serving domestic and international window and door OEMs
(original equipment manufacturers) through its Engineered
Products and Aluminum Sheet Products Groups.
Quanex currently holds a Zacks Rank #5 (Strong Sell). Better
ranked companies in the building and construction industry are
CaesarStone Sdot-Yam Ltd.
James Hardie Industries plc
Simpson Manufacturing Co., Inc.
). While CaesarStone and James Hardie carry a Zacks Rank #1
(Strong Buy), Simpson Manufacturing holds a Zacks Rank #2 (Buy).
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