Quanex Building Products Corporation
) reported a loss of 20 cents per share in the second quarter of
2013 compared with the prior-year loss of 34 cents a share. The
results benefited from the elimination of strike-related costs at
its Nichols Aluminum operation, partly offset by lower aluminum
prices and higher corporate expenses from Enterprise Resource
Planning (ERP) implementation costs. The loss per share was wider
than the Zacks Consensus Estimate of a loss per share of 5 cents.
Revenues improved 19.5% year over year to $232.4 million. The
results were ahead of the Zacks Consensus Estimate of $216
Cost of sales during the quarter increased 15.7% to $198.9
million from $171.8 million in the prior-year quarter. Gross
profit increased 48% to $33.5 million. Consequently, gross margin
expanded 280 basis points to 14.4% in the quarter.
Selling, general and administrative expenses increased 7.5% to
$31.3 million. Operating loss was $9.3 million in the second
quarter compared with $16 million in the prior-year quarter.
Engineered Products Group (EPG):
Net sales at the segment spiked 15% to $125 million in the
quarter, primarily due to the acquisition of Aluminite. Operating
income for the segment also increased significantly to $5.9
million in the second quarter from $0.1 million in the year-ago
The segment recorded EBITDA of $14.0 million compared with $7.1
million a year ago, driven by the benefits from last year's
insulating glass spacer facility consolidation as well as higher
sales results, partly offset by pricing concessions and higher
Aluminum Sheet Products:
The segment reported sales of $109.7 million, up 24% year over
year. However, operating loss in the segment was $0.5 million in
the second quarter compared to $7.5 million in the year-ago
Segment's EBITDA was $1.3 million compared with a loss of $5.5
million a year ago. The improved results were primarily due to
the non-recurrence of strike-related costs which affected the
company in 2012, partly offset by product mix.
Cash and cash equivalents were $9.6 million as of Apr 30, 2013
compared with $71 million as of Oct 31, 2012. Long-term debt
amounted to $11.4 million as of Apr 30, 2013, compared with $1.4
million as of Oct 31, 2012. Cash flow used in operating
activities was $20.8 million in the reported quarter compared
with $11.7 million in the year-ago quarter.
For the full year 2013, Quanex expects the U.S. window shipments
to be approximately 42 million units. The company believes that
improvement in the U.S. window shipments will come from new
The company stated that even though new housing starts are up,
the residential repair and remodel window market remains
challenging. Furthermore, increased global supply of aluminum
products coupled with tight regional aluminum scrap supply
continue to create a challenging environment for Nichols
The EPG segment is expected to report net sales during the second
half of 2013 of about $315 million and operating income of about
$35-$38 million. For the second half of 2013, Nichols Aluminum is
supposed to ship about 160 million pounds at an estimated spread
of $0.41 per pound and generate an operating income of about $3.5
Corporate expenses during the second half of 2013 are expected to
total $24 million, including $4.8 million of depreciation and
Quanex remains positive on the long-term growth prospects of
residential and commercial markets and expects to continue to
invest through both organic growth initiatives and acquisitions
in the future.
Houston, Tx.-based Quanex Building Products Corporation is a
leading manufacturer of engineered materials, components and
systems serving domestic and international window and door OEMs
through its Engineered Products and Aluminum Sheet Products
Quanex currently retains a Zacks Rank #3 (Hold).
) posted first-quarter 2013 adjusted earnings of 6 cents per
share compared with the prior-year loss of a penny per share. The
results were ahead of the Zacks Consensus Estimate of 3 cents.
Armstrong World Industries, Inc.
) reported first-quarter 2013 adjusted earnings of 22 cents per
share, declining 55% from the prior year quarter's earnings of 49
cents per share. The decline was attributable to increased
foreign losses and the disbursement of previously capitalized
financing costs resulting in a higher tax rate. The results also
missed the Zacks Consensus Estimate of 39 cents.
James Hardie Industries plc
) reported fourth-quarter 2013 adjusted earnings of 6.9 cents per
share, a decrease of 12.6% from the prior-year quarter's earnings
of 7.9 cents per share. The results missed the Zacks Consensus
Estimate of 36 cents.
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