Quanex Building Products Corporation NX reported an impressive second-quarter fiscal 2015 (ended Apr 30, 2015), wherein adjusted earnings of 7 cents per share reversed prior-year quarter’s loss of 3 cents per share. Results mainly improved as the company’s volume bounced back in the quarter. Earnings also outperformed the Zacks Consensus Estimate of 1 cent by a significant margin.
Including one-time items, loss per share in the reported quarter stood at 7 cents compared to a loss of 5 cents in the year-ago quarter.
Quanex Building Products Corporation – Earnings Surprise | FindTheCompany
Operational Update
Quanex Building reported revenues of $142 million, which increased 5.2% year over year. Revenues however missed the Zacks Consensus Estimate of $143 million. On a constant currency basis, net sales increased nearly 7% year over year.
Cost of sales during the quarter went up 2% to $110.8 million from $108.6 million in the prior-year quarter. Consequently, gross profit declined 17% year over year to $31 million with gross margin expanding 230 basis points to 21.9%.
Selling, general and administrative expenses decreased 3.7% year over year to $19.6 million. Quanex Building reported adjusted operating profit of $3.8 million as against operating loss of $2 million in the year-ago quarter.
Financial Update
At the end of second-quarter fiscal 2015, Quanex Building had cash and cash equivalents of $60 million versus $120 million as of Oct 31, 2014. The company generated $3.3 million in cash from operating activities for the six months period ended Apr 30, 2015 compared with cash usage of $11 million in the prior-year comparable period. Long-term debt decreased to $0.45 million as of Apr 30, 2015 from $0.59 million as of Oct 31, 2014.
Guidance
For fiscal 2015, Quanex Building reiterated its revenue growth guidance in the range of 5% to 7%. Given a recovery in the second half of the year in vinyl profile business, full-year earnings before interest, taxes, depreciation and amortization (EBITDA) is expected to range from $57—$63 million.
Quanex Building remains optimistic about improvement in the vinyl business with key operating metrics of on-time delivery, quality, scrap rates and labor efficiency all moving in the right track. With respect to reinvestment in vinyl operations, the company has planned major overhauls of 61 extrusion lines, of which 48 are now complete and the balance will be finished by the end of the current quarter.
Quanex Building also plans to complete or partially rebuild a further 35 extrusion lines of which 13 have been completed. The remainder will be finished by early fourth quarter. The company finished the installation of the two lines relocated from Kentucky to Greenville, TX after being completely rebuilt and a new high output line will be installed in Greenville in the fourth quarter. This will complete the planned expansion of this facility by more than doubling its capacity since the acquisition.
In the long-term, Quanex Building is hopeful about window shipments and expects the same to recover within 4–5 years from now. This will help the company to deliver revenues in the $825 million to $875 million range with EBITDA levels of $115 million to $130 million.
However, strengthening of the U.S. dollar and ongoing political unrest in Russia and the Ukraine remain headwinds for the company in the near term.
Houston, TX-based Quanex Building Products Corp. is a leading manufacturer of engineered materials, components and systems, serving domestic and international window and door original equipment manufacturers (OEMs), through its Engineered Products and Aluminum Sheet Products Groups.
Quanex Building currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Headwaters Incorporated HW, Aspen Aerogels, Inc. ASPN and Trex Co. Inc. TREX. While Headwaters sports a Zacks Rank #1 (Strong Buy), Aspen Aerogels and Trex carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment