"Results were favorably impacted by an improvement in the housing market, coupled with savings generated from last year's insulating glass facility consolidation and the addition of Aluminite earlier in 2013. Corporate results were negatively impacted as we recognized $15 million of accelerated depreciation from the cessation of our ERP implementation."
Engineered Products Group (EPG)
EPG reported fourth quarter 2013 net sales of $167 million, an increase of 22% (10% excluding Aluminite's sales), compared to $136 million in the fourth quarter of 2012. Fourth quarter 2013 operating income was $18 million compared to $14 million in the fourth quarter of 2012. EPG's fourth quarter 2013 EBITDA was $26 million compared to $21 million in the fourth quarter of 2012. EPG's results continue to be impacted by higher industry sales of lower performance windows typically installed in new construction and continued weak residential remodeling and replacement (R&R) sales.
Preliminary U.S. window shipments as reported by Ducker Worldwide (Ducker), a market intelligence firm, increased 11% for the 12 months ended September 30, 2013, driven by a 24% increase in new construction units. U.S. window shipments to the R&R market, as reported by Ducker, increased 4% for the 12 month period ended September 30, 2013. The Company estimates that approximately 70% of EPG's sales are currently tied to R&R versus new construction. EPG's North American domestic fenestration sales, the most comparable sales figure to those reported by Ducker, increased 18% (6% excluding Aluminite) from the previous 12 months.
Aluminum Sheet Products Group (Nichols)
The Aluminum Sheet Products Group reported fourth quarter 2013 net sales of $111 million, an increase of 9% compared to $101 million in the fourth quarter of 2012. Fourth quarter 2013 operating income was $4 million compared to an operating loss of $1 million in the fourth quarter of 2012. Fourth quarter 2013 EBITDA was $6 million compared to $1 million in the fourth quarter of 2012.
The improved fourth quarter performance was due to an increase in shipped pounds, primarily due to regaining market share from 2012 strike-related losses and improved equipment reliability. Nichols' shipments for the 12 months ended October 31, 2013, increased 17%. Industry shipments, as reported by the Aluminum Association, decreased 3% over the same period. Profitability was negatively impacted by product mix, with increased demand for mill finished product, which commands a lower price when compared to painted sheet. Spread improved $0.01 per pound to $0.42 per pound compared to $0.41 per pound in the year ago quarter, driven primarily by a modest improvement in scrap spread. Spread at Nichols remains challenging primarily due to a larger reduction in aluminum prices compared to the reduction in scrap aluminum prices, driven by tight scrap supply market.
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