Building Products Corp. continued to spill red ink as a tight
scrap market and low aluminum prices hammered its Nichols
Aluminum LLC subsidiary and sluggish demand for high-end
windows for the repair and remodeling (R&R) sector hurt its
engineered products group.
New housing starts have
increased thanks to growing demand for multifamily units, but
the R&R window market has "remained challenging," the
Houston-based company said. While Quanex said it expects window
shipments to gain in 2013, it predicts that most of the
increase will be for low-end windows for the new-construction
sector instead of high-end windows for R&R, where Quanex
has a stronger presence.
Higher costs related to the
implementation of an enterprise resource planning (ERP) system
also hurt results, the company said.
Quanex posted a net loss of
$7.35 million for its fiscal second quarter, down 40.2 percent
from a $12.29-million loss in the same period last year, on
sales that increased 19.6 percent to $232.46 million. For the
six months ended April 30, the company posted a net loss of
$15.47 million, down 18.7 percent from a $19.03-million loss a
year earlier, on sales that rose 17.5 percent to $418.17
million. Losses narrowed in part because a 2012 strike at
Nichols Aluminum (
amm.com, Jan. 23, 2012) cost the company $9
million, it said.
Nichols Aluminum posted an
operating loss of $500,000 in its fiscal second quarter, down
sharply from a $7.5-million loss in the same period last year,
on sales that jumped 24.2 percent to $109.7 million from $88.3
million. Nichols recorded an operating loss of $4.7 million for
the six months ended April 30 vs. a $13.1-million loss a year
earlier on sales that climbed 26.2 percent to $194.3 million
from $154 million.
Nichols shipped 78 million
pounds of aluminum at a spread of 42 cents per pound in its
fiscal second quarter compared with 61 million pounds at a
spread of 37 cents per pound a year earlier, Quanex said. But
the year-ago quarter included 6 cents per pound in
strike-related costs. Nichols shipped 137 million pounds of
aluminum in the six months ended April 30 and expects to ship
an additional 160 million pounds at an estimated spread of 41
cents per pound in its fiscal second half.
In addition to tight spreads,
Nichols profitability was hurt by increased demand for
mill finished product, which fetches a lower premium than
painted aluminum sheet, Quanex said.
On the painted sheet front,
Nichols in May completed the $9-million installation of a new
paint oven at its Decatur, Ala., facility, which should improve
quality and delivery times, the company said.
In part because of "proactive"
maintenance programs, Nichols expects capital expenditures to
range from $10 million to $13 million in coming years, Quanex