"With the seasonally strongest part of the year ahead of us, Quanex is optimistic that it can sustain growth rates in the 8-9 percent range for the full year."
Second quarter 2014 net sales grew to $135 million, an increase of 8% over the second quarter of 2013. Second quarter 2014 operating loss was $2.8 million compared to an operating loss of $8.6 million in the second quarter of 2013. Second quarter 2014 EBITDA was $5.7 million compared to $1.2 million in the second quarter of 2013. Operating loss and EBITDA results were negatively impacted by the inability to pass through a 12% vinyl resin price increase on approximately 60 percent of vinyl shipments as a result of previously agreed to contractual obligations, which will expire at the end of the calendar year. At the same time, repair and maintenance costs were abnormally high during the quarter as Quanex continues to invest in upgrading its vinyl profile equipment and facilities. This is expected to continue into the 3rd quarter of 2014.
Preliminary U.S. window shipments as reported by Ducker Worldwide, LLC (Ducker), a market intelligence firm, increased 7.4% for the twelve months ended March 31, 2014. North American domestic fenestration sales, the most comparable sales figure to those reported by Ducker, increased 8.1% from the previous twelve months. Industry window shipment growth was driven by a 13.3% increase in new construction units and a 3.7% increase in residential remodeling and replacement units (R&R).
Corporate and Other Items
Second quarter 2014 corporate costs were $6.8 million compared to $14.5 million in the year ago second quarter. Second quarter 2014 results included deferred compensation costs of $0.1 million, compared to a benefit of $0.5 million in the second quarter of 2013.
Second quarter 2014 cash balances totaled $127 million, which included the $110 million received for the sale of Nichols. For the year, cash used by operating activities was $11 million (inclusive of discontinued operation results). There were no outstanding borrowings against the revolving credit facility.
On February 10, 2014, Quanex announced the sale of Nichols to Aleris for $110 million in an all-cash transaction. The transaction was completed on April 1, 2014.
Additional information related to second quarter 2014 results, including a reconciliation of EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net) and to its most comparable GAAP figure, can be found in the supplemental schedules accompanying this press release.