UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 9, 2015
Quanex Building Products Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-33913 | 26-1561397 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 1800 West Loop South, Suite 1500, Houston, Texas | 77027 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 713-961-4600
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On September 9, 2015 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated September 9, 2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Quanex Building Products Corporation
(Registrant) |
||
| September 9, 2015
(Date) |
/s/ BRENT L. KORB
Brent L. Korb Senior Vice President - Finance and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated September 9, 2015 | |
EXHIBIT 99.1
Core Business Generates Improved Margins on Flat Year Over Year Sales
Acquisitions Add $340M of Sales and $49M of EBITDA, Pro-Forma LTM
HOUSTON, Sept. 9, 2015 (GLOBE NEWSWIRE) -- Quanex Building Products Corporation (NYSE:NX), a leading OEM supplier of building products components, today released results for the third quarter ended July 31, 2015.
"The third quarter was particularly exciting for Quanex Building Products," said Chairman, President and Chief Executive Officer Bill Griffiths. "Third quarter results were in line with internal expectations and consistent with our recent guidance. This included anticipated year-over-year margin improvement in our vinyl profile business, despite lower year over year sales. We are confident that this trend will continue under Tim Reese's proven leadership. During the quarter we added HL Plastics, the fastest growing vinyl window profile extruder in the UK, and recently announced an agreement to acquire Woodcraft Industries, the largest North American supplier of cabinet doors and components to kitchen and bath cabinet OEMs. This positions Quanex as the largest OEM supplier in the Building Products Industry, and the two acquisitions add $340M of revenues and $49M of EBITDA on a pro forma LTM basis to our core business."
Highlights for the third quarter include:
* Adjusted figures exclude certain items such as the impact of HL Plastics, transaction costs and foreign currency translation. A reconciliation of adjusted EBITDA and adjusted EPS can be found in the tables that accompany this release.
Revenue on a comparable basis was essentially flat, after excluding HL Plastics ($14.2 million), FX impact ($2.5 million) and the impact of a lower oil surcharge ($1.0 million). Slower market growth in our accessories and spacer products was fully offset by the expected reduction in vinyl profile revenues which resulted in flat revenues overall. Third quarter 2015 gross margins improved 200 basis points, on the same comparable flat revenue as above, when compared to third quarter 2014 results, driven primarily by labor as well as repair and maintenance improvement in the vinyl business.
On June 15, 2015, the Company announced the acquisition of HL Plastics, the UK's fastest growing window and door vinyl extruder, for $149 million (five percent of which was deferred and will be paid through a three year earn out mechanism). The transaction was financed with cash on hand and borrowing under the Company's $150 million revolving credit facility.
On August 31, 2015, the Company announced it had agreed to acquire Woodcraft Industries, the largest North American supplier of cabinet doors to OEMs, for $248.5 million. The transaction is expected to close in the fourth calendar quarter of 2015. The transaction along with the existing revolver will be refinanced by a new ABL revolving credit facility and new Term Loan B.
The Board of Directors declared a quarterly cash dividend of $0.04 per share on the company's common stock, payable September 30, 2015, to shareholders of record on September 18, 2015.
Additional information related to third quarter 2015 results, including a reconciliation of EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) to its most comparable GAAP measure, can be found in the supplemental schedules accompanying this press release.
Conference Call Information
Quanex will host its conference call today, September 9, 2015 at 11:00 a.m. (Eastern) to discuss its results and outlook. The call will be available via webcast at www.quanex.com in the Investors section.
Forward Looking Statements
Statements that use the words "estimated," "expect," "could," "should," "believe," "will," "might," or similar words reflecting future expectations or beliefs are forward-looking statements. The forward-looking statements include, but are not limited to, future operating results of Quanex, the investments being made in our vinyl business, the future financial condition of Quanex, future uses of cash and other expenditures, expenses and tax rates, expectations relating to the Company's industry, and the Company's future growth, including revenue and EBITDA guidance. The statements set forth in this release are based on current expectations. Actual results or events may differ materially from this release. Factors that could impact future results may include, without limitation, the effect of both domestic and global economic conditions, the impact of competitive products and pricing, the availability and cost of raw materials, and customer demand. For a more complete discussion of factors that may affect the Company's future performance, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2014, under the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors," in our other documents filed with the Securities and Exchange Commission from time to time. Any forward-looking statements in this press release are made as of the date hereof, and Quanex Building Products Corporation undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.
| QUANEX BUILDING PRODUCTS CORPORATION | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
| (In thousands, except per share data) | ||||
| (Unaudited) | ||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Net sales | $ 180,206 | $ 169,981 | $ 450,069 | $ 431,568 |
| Cost of sales | 136,853 | 130,706 | 353,468 | 335,544 |
| Selling, general and administrative | 25,023 | 18,097 | 64,157 | 60,992 |
| Depreciation and amortization | 8,502 | 8,512 | 24,542 | 25,550 |
| Asset impairment charges | -- | -- | -- | 505 |
| Operating income | 9,828 | 12,666 | 7,902 | 8,977 |
| Interest expense | (338) | (135) | (624) | (419) |
| Other, net | 566 | (8) | 300 | 66 |
| Income before income taxes | 10,056 | 12,523 | 7,578 | 8,624 |
| Income tax expense | (3,585) | (3,956) | (1,907) | (3,298) |
| Income from continuing operations | 6,471 | 8,567 | 5,671 | 5,326 |
| Income (loss) from discontinued operations, net of taxes | 456 | (520) | 479 | 18,952 |
| Net income | $ 6,927 | $ 8,047 | $ 6,150 | $ 24,278 |
| Earnings (loss) per common share: | ||||
| From continuing operations | $ 0.20 | $ 0.23 | $ 0.17 | $ 0.14 |
| From discontinued operations | $ 0.01 | $ (0.01) | $ 0.01 | $ 0.51 |
| Diluted earnings (loss) per common share: | ||||
| From continuing operations | $ 0.19 | $ 0.23 | $ 0.17 | $ 0.14 |
| From discontinued operations | $ 0.01 | $ (0.02) | $ 0.01 | $ 0.50 |
| Weighted average common shares outstanding: | ||||
| Basic | 33,618 | 37,296 | 34,111 | 37,171 |
| Diluted | 34,142 | 37,823 | 34,626 | 37,756 |
| Cash dividends per share | $ 0.04 | $ 0.04 | $ 0.12 | $ 0.12 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| (Unaudited) | ||
| July 31, 2015 | October 31, 2014 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 27,011 | $ 120,384 |
| Accounts receivable, net | 62,523 | 55,193 |
| Inventories, net | 72,948 | 57,358 |
| Deferred income taxes | 18,508 | 21,442 |
| Prepaid and other current assets | 8,576 | 6,052 |
| Total current assets | 189,566 | 260,429 |
| Property, plant and equipment, net | 140,549 | 109,487 |
| Deferred income taxes | -- | 1,545 |
| Goodwill | 130,861 | 70,546 |
| Intangible assets, net | 124,502 | 70,150 |
| Other assets | 7,302 | 4,956 |
| Total assets | $ 592,780 | $ 517,113 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 45,712 | $ 41,488 |
| Accrued liabilities | 32,250 | 32,482 |
| Income taxes payable | 150 | 107 |
| Current maturities of long-term debt | 9,468 | 199 |
| Total current liabilities | 87,580 | 74,276 |
| Long-term debt | 82,575 | 586 |
| Non Current Deferred Tax | 6,605 | -- |
| Deferred pension and postretirement benefits | 6,621 | 4,818 |
| Liability for uncertain tax positions | 548 | 4,626 |
| Other liabilities | 21,811 | 11,887 |
| Total liabilities | 205,740 | 96,193 |
| Stockholders' equity: | ||
| Common stock | 376 | 376 |
| Additional paid-in-capital | 250,229 | 249,600 |
| Retained earnings | 213,571 | 202,319 |
| Accumulated other comprehensive loss | (8,175) | (5,708) |
| Treasury stock at cost | (68,961) | (25,667) |
| Total stockholders' equity | 387,040 | 420,920 |
| Total liabilities and stockholders' equity | $ 592,780 | $ 517,113 |
| QUANEX BUILDING PRODUCTS CORPORATION | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||
| (In thousands) | ||
| (Unaudited) | ||
| Nine Months Ended July 31, | ||
| 2015 | 2014 | |
| Operating activities: | ||
| Net (loss) income | $ 6,150 | $ 24,278 |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
| Depreciation and amortization | 24,541 | 28,590 |
| Stock-based compensation | 3,391 | 2,835 |
| Deferred income tax (benefit) provision | 1,576 | 11,036 |
| Excess tax benefit from share-based compensation | (60) | (643) |
| Asset impairment charges | -- | 1,007 |
| Gain on sale of discontinued operations | -- | (39,122) |
| Gain on involuntary conversion | (1,263) | -- |
| Other, net | 655 | 1,723 |
| Changes in assets and liabilities, net of effects from acquisitions and dispositions: | ||
| Decrease in accounts receivable | 4,328 | 162 |
| Increase in inventory | (51) | (23,232) |
| Increase in other current assets | (1,568) | (999) |
| (Decrease) increase in accounts payable | (5,236) | 17,435 |
| Decrease in accrued liabilities | (5,606) | (12,111) |
| (Decrease) increase in income taxes payable | (817) | 1,998 |
| Increase in deferred pension and postretirement benefits | 1,873 | 1,008 |
| Decrease in other long-term liabilities | (162) | (1,719) |
| Other, net | (202) | (2,492) |
| Cash used for operating activities | 27,549 | 9,754 |
| Investing activities: | ||
| Proceeds from sale of discontinued operations | -- | 107,431 |
| Acquisitions, net of cash acquired | (131,689) | (5,161) |
| Capital expenditures | (21,918) | (29,026) |
| Proceeds from property insurance claim | 1,263 | 1,400 |
| Proceeds from disposition of capital assets | 207 | 807 |
| Cash used in investing activities | (152,137) | 75,451 |
| Financing activities: | ||
| Credit facility borrowings | 92,000 | -- |
| Repayments of credit facility borrowings | (8,000) | -- |
| Repayments of other debt & capital lease obligations | (411) | (160) |
| Common stock dividends paid | (4,158) | (4,491) |
| Issuance of common stock | 4,309 | 3,219 |
| Excess tax benefit from share-based compensation | 60 | 643 |
| Purchase of treasury stock | (52,719) | -- |
| Other | -- | 98 |
| Cash used in financing activities | 31,081 | (691) |
| Effect of exchange rate changes on cash and cash equivalents | 134 | (18) |
| (Decrease) increase in cash and cash equivalents | (93,373) | 84,496 |
| Cash and cash equivalents at beginning of period | 120,384 | 49,734 |
| Cash and cash equivalents at end of period | $ 27,011 | $ 134,230 |
| NOTE: The cash flow statement presentation includes the sources and uses of cash for the discontinued operations as operating, investing and financing cash flows, as applicable, combined with such cash flows for continuing operations, as permitted by U.S. GAAP. | ||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||
| NON-GAAP FINANCIAL MEASURE DISCLOSURE | ||||
| (In thousands) | ||||
| (Unaudited) | ||||
| EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) is a non-GAAP financial measure that Quanex's management uses to measure its operational performance and assist with financial decision-making. EBITDA is a key metric used by management in determining the value of annual incentive awards for its employees. We believe non-GAAP measures presented (included under market conditions outlined in our forward-looking guidance) provide a consistent basis for comparison between periods, and will assist investors in understanding our financial performance when comparing our results to other investment opportunities. The definition of non-GAAP financial measures used by Quanex may not be the same as that used by other companies. The company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with US GAAP. | ||||
| Three Months Ended July 31, | Nine Months Ended July 31, | |||
| 2015 | 2014 | 2015 | 2014 | |
| Quanex | Quanex | Quanex | Quanex | |
| Net income | $ 6,927 | $ 8,047 | $ 6,150 | $ 24,278 |
| (Income) loss from discontinued operations, net of taxes | (456) | 520 | (479) | (18,952) |
| Income tax expense | 3,585 | 3,956 | 1,907 | 3,298 |
| Other, net | (566) | 8 | (300) | (66) |
| Interest expense | 338 | 135 | 624 | 419 |
| Operating income | 9,828 | 12,666 | 7,902 | 8,977 |
| Depreciation and amortization | 8,502 | 8,512 | 24,542 | 25,550 |
| EBITDA | $ 18,330 | $ 21,178 | $ 32,444 | $ 34,527 |
| Transactions related costs | 3,824 | 64 | 3,930 | 146 |
| IG warranty reserve benefit | -- | -- | -- | (2,800) |
| Asset impairment charge | -- | -- | -- | 505 |
| Discontinued ERP expenses | -- | -- | -- | 500 |
| HL Plastics - loss | 81 | -- | 81 | -- |
| Foreign currency impact - excluding HL Plastics | 109 | 64 | 418 | 92 |
| EBITDA as adjusted | $ 22,344 | $ 21,306 | $ 36,873 | $ 32,970 |
| Financial Statistics as of July 31, 2015 | ||||
| Book value per common share: | $11.51 | |||
| Total debt to capitalization: | 19.2% | |||
| Return on invested capital: | 2.8% | |||
| Actual number of common shares outstanding: | 33,916,727 | |||
| QUANEX BUILDING PRODUCTS CORPORATION | ||||||||
| PRE-TAX & AFTER TAX PRESENTATION | ||||||||
| (In millions, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Operating Income (Loss) from Continuing Operations As Adjusted and Diluted Earnings (Loss) from Continuing Operations As Adjusted are non-GAAP financial measures that exclude certain charges and credits because Quanex believes that such items are not indicative of its core operating results, are not indicative of trends, and do not provide meaningful comparisons with other reporting periods. We believe non-GAAP measures presented (included under market conditions outlined in our forward-looking guidance) provide a consistent basis for comparison between periods, and will assist investors in understanding our financial performance when comparing our results to other investment opportunities. The definition of non-GAAP financial measures used by Quanex may not be the same as that used by other companies. The company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with US GAAP. | ||||||||
| Q3 2015 | Q3 2014 | FY 2015 | FY 2014 | |||||
| Pre-Tax Presentation | $MM | $MM | $MM | $MM | ||||
| Operating Income from Continuing Operations As Reported | $ 9.8 | $ 12.7 | $ 7.9 | $ 9.0 | ||||
| Benefit (Reduction) to Operating Income: | ||||||||
| IG Warranty Reserve Benefit | -- | -- | -- | (2.8) | ||||
| Asset Impairment Charge | -- | -- | -- | 0.5 | ||||
| Discontinued ERP Expenses | -- | -- | -- | 0.5 | ||||
| Foreign Currency Translation Impact - Excluding HL Plastics | 0.1 | 0.1 | 0.4 | 0.1 | ||||
| HL Plastics - loss | 0.8 | -- | 0.8 | -- | ||||
| Transaction Related Expenses | 3.8 | -- | 3.9 | 0.1 | ||||
| Operating Income from Continuing Operations As Adjusted | $ 14.5 | $ 12.8 | $ 13.0 | $ 7.4 | ||||
| Q3 2015 | Q3 2015 | Q3 2014 | Q3 2014 | FY 2015 | FY 2015 | FY 2014 | FY 2014 | |
| After-Tax Presentation | $MM | EPS | $MM | EPS | $MM | EPS | $MM | EPS |
| Income from Continuing Operations As Reported | $ 6.5 | $ 0.19 | $ 8.6 | $ 0.23 | $ 5.7 | $ 0.17 | $ 5.3 | $ 0.14 |
| Benefit to EPS: | ||||||||
| IG Warranty Reserve Benefit | -- | -- | -- | -- | -- | -- | (1.6) | (0.04) |
| Asset Impairment Charge | -- | -- | -- | -- | -- | -- | 0.3 | 0.01 |
| Discontinued ERP Expenses | -- | -- | -- | -- | -- | -- | 0.3 | 0.01 |
| Foreign Currency Translation Impact-IG Systems | 0.1 | 0.00 | 0.1 | -- | 0.3 | 0.01 | 0.1 | 0.00 |
| HL Plastics - loss | 0.5 | 0.02 | -- | -- | 0.5 | 0.02 | -- | -- |
| Transaction Related Expenses | 2.5 | 0.07 | -- | -- | 2.8 | 0.08 | 0.1 | 0.00 |
| Diluted Earnings from Continuing Operations As Adjusted | $ 9.6 | $ 0.28 | $ 8.7 | $ 0.23 | $ 9.3 | $ 0.28 | $ 4.5 | $ 0.12 |
CONTACT: Financial Contact: Marty Ketelaar, 713-877-5402
Media Contact: Valerie Calvert, 713-877-5305
For additional information, please visit www.quanex.com