Net sales were $252.4 million, 12% higher than a year ago, due primarily to the acquisition of Edgetech.
Quanex reported diluted earnings from continuing operations of $0.24 per share, which included $0.01 per share from Edgetech's results. The $0.24 per share also included special expense items totaling $0.06 per share. In the third quarter of 2010, diluted earnings from continuing operations were $0.27 per share, which included special expense items of $0.02 per share. Excluding results of Edgetech and special expense items, third quarter 2011 earnings were even to a year ago.
Engineered Products Group (EPG) is focused on providing window and door OEMs with fenestration components, products, and systems. Key end markets are residential repair & remodel (R&R) and new home construction. Third quarter net sales were $124.1 million, which included $23.7 million of net sales from Edgetech. Excluding Edgetech, net sales were nearly flat compared to the third quarter of 2010, which had the benefit of a $1500 energy efficient window tax credit program. There were no similar tax credits in the third quarter of 2011.
Third quarter operating income was $14.1 million, which included $1.0 million of operating income from Edgetech. Edgetech's results were negatively impacted in the quarter by a step-up in inventory expense of $0.7 million related to the purchase method of accounting. Excluding Edgetech, operating income was equal to the third quarter of 2010 despite headwinds in the end markets. EPG experienced higher raw material costs in the quarter, which were generally offset by higher prices, surcharges and productivity improvements. Truseal, one of the company's warm edge, insulating glass spacer divisions, initiated an oil based raw material surcharge effective May 1. The surcharge helped Truseal offset the rising cost of butyl, a key raw material of the business.
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