Quanex Building Products Corporation (NYSE:NX) Q1 2015 Earnings Conference Call - Final Transcript
Mar 03, 2015 • 11:00 am ET
Good day, ladies and gentlemen, and welcome to the Quanex 2015 Fiscal First Quarter Conference Call. [Operator Instructions]
During today's conference call, company management may make forward-looking statements about the future prospects of Quanex Building Products. Participants should refer to the company's Form 10-K filed with the SEC for more complete forward-looking statement disclosures. Additionally, the company may refer to non-GAAP figures throughout today's call. A reconciliation to the most comparable GAAP figure is included in the company's most recent earnings release, which is available, along with the company's Form 10-K and 10-Q document at the company's website at www.quanex.com.
Last, participants are reminded that today's conference call is being recorded.
I would now like to turn the call over to Mr. Bill Griffiths, Chairman, President and CEO of Quanex Building Products for opening comments. Please go ahead, sir.
Thank you. Good morning and thank you for joining us for our 2015 fiscal first quarter conference call. On the call with me this morning is Brent Korb, our Chief Financial Officer; and Marty Ketelaar, our Vice President of Treasury and Investor Relations. Revenue grew in the first quarter by 1.2%, slightly better than our expectations. When we guided toward a flat first quarter, it was with the expectation that we would see normal market growth in our spacer, screens and accessory product lines offset by a contraction in vinyl extrusion sales. In fact, the screens and accessory product lines performed better than anticipated, driven mainly by continued strength in the south and west. The contraction in the vinyl business was expected as the customer utilized a competitor's extrusions for two of their new window designs. We continue to provide extrusions for the balance of their product portfolio. In addition, most customers had a reduced inventory build heading into the spring compared to last year. Going forward, this lost business has already been replaced by new business from other customers. However, because of the timing of the overlap, overall growth rate in our vinyl business, while still positive, will be below industry levels for the balance of the year.
Net-net though, we are on track for our full year guidance of 5% to 7%, which is in line with current industry forecast. One caveat to our revenue forecast is the translation effect of foreign currency impacting our international spacer business. If the dollar maintains its current strength against the pound and euro, our revenue growth forecast for fiscal 2015 could be negatively impacted by as much as 1.5 percentage points. Operationally, our vinyl business performed as expected in the first quarter as the refurbishment projects started to gain traction. We completed the rebuild or refurbishment of 17 lines and began work on a further 36 during the quarter. Two lines have been relocated from Kentucky to Texas to support further expansion of that facility as our Southern business continues to grow. As of January 1, all major customers have contracts that include a resin adjuster tied to CDI. This will essentially make