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QUANEX'S RESULTS CONFIRMS EARLIER ANNOUNCEMENT; FOURTH QUARTER EARNINGS ARE EXPECTED TO DECLINE, COMMON AND PREFERRED DIVIDENDS DECLARED

QUANEX'S RESULTS CONFIRMS EARLIER ANNOUNCEMENT; FOURTH QUARTER EARNINGS
 ARE EXPECTED TO DECLINE, COMMON AND PREFERRED DIVIDENDS DECLARED
 HOUSTON, Aug. 26 /PRNewswire/ -- Quanex Corporation (NYSE: NX), a "Fortune 500" company and leading manufacturer of specialty metals, today reported net income for the three months ending July 31, 1992 of $2.6 million or 11 cents per share on revenues of $142 million.
 As Expected, Third Quarter Earnings Down Sharply From Same Quarter Last Year:
 On June 25, 1992 the company announced that it expected "...operating earnings may be down as much as one half..." year-to-year for the third quarter. Operating income as finally reported decreased 43 percent to $6.4 million; net income decreased 25 percent to $2.6 million; earnings per primary common share decreased 62 percent to 11 cents.
 Per share effects from reduced operating income were magnified by the deduction of $1.2 million of preferred dividends associated with the recently issued Quanex 6.88 percent convertible preferred stock. Earnings per share were also affected by an increase in average shares outstanding due to conversion of Quanex 9-1/8 percent convertible debentures into common stock.
 All Industry Segments Are Profitable For The Nine Months:
 For the nine month period, all industry segments were profitable. Compared to the same nine months of last year, lower sales and margins decreased net income by 12 percent to $7.1 million while earnings per primary common share decreased to 47 cents from 64 cents.
 Economy And Other Factors Expected To Reduce Fourth Quarter Earnings Per Share:
 Carl E. Pfeiffer, chairman and CEO said, "Currently, we see no improvement in the economy and all of our businesses are experiencing generally soft markets.
 "We are confident of profitability in the fourth quarter. However, current business conditions; the start-up of our casting plant in Davenport and our cold mill at Lincolnshire; reduced demand from soft markets; the absence of capitalized interest on the aluminum mini-mill; higher preferred dividends; and greater average common shares outstanding will impact the fourth quarter.
 "We expect that fourth quarter earnings per primary common share will once again decrease compared to last year and will probably be less than the 28 cents reported in the second quarter of 1992."
 Progress Continues With Startup of Lincolnshire Cold Mill:
 Pfeiffer continued, "We have resolved most of the equipment problems experienced in the startup of the Lincolnshire mill. From June to July, monthly shipments nearly doubled to approximately 5 million pounds; shipments increased 21 percent in the third quarter compared to the second quarter. With appropriate demand we expect another significant shipment increase during the fourth quarter. Recently, the operating rate of the cold mill has reached 70 percent and employee training on the new equipment is progressing well."
 MacSteel Operating Rate Increases, Some Markets Continue To Be Soft:
 Pfeiffer continued, "MacSteel was operating at 12 shifts per week after its scheduled vacation and maintenance shutdown in July. Although MacSteel's farm equipment, defense, and tubular markets remain relatively weak; operating schedules have returned to 17 shifts per week through September."
 Strategic Actions Strengthen Balance Sheet And Position Quanex for Growth:
 Pfeiffer concluded, "With a longer term view, we took three strategic actions in the third quarter. We called for redemption the remaining $10.2 million of Quanex 9-1/8 percent convertible subordinated debentures. We signed a letter of intent to sell our titanium subsidiary Viking Metallurgical, which is no longer consistent with our strategic focus. Finally, in late May, we completed the issuance of $86.3 million of 6.88 percent convertible exchangeable preferred stock which strengthened our balance sheet and positioned Quanex to continue investing in profitable growth. Moreover, our balance sheet is strong and our cash position is over $100 million."
 Board of Directors Declares Common Dividend:
 The company also said that its board of directors declared a regular quarterly dividend of 13 cents per share of Quanex common stock and a quarterly dividend of 63 cents per share of Quanex 6.88 percent depositary convertible exchangeable preferred stock. The common and preferred dividends are payable Sept. 30, 1992 to shareholders of record Sept. 16, 1992.
 Corporate Profile:
 Quanex is a technological leader in the manufacture of steel, aluminum and titanium specialty metal products for transportation, capital equipment, home building and remodeling and energy processing markets.
 Latest twelve months (through third quarter, 1992) data: sales: $566.7 million; operating income: $27.3 million; net income: $11.5 million; cash from operations: $36.5 million; earnings per primary share: $.85; quarterly dividend rate: $.13 per share; book value per share: $13.16; return on common equity: 6.4 percent; common stock price range (latest 52 week High/Low) $31-3/4 & $16-1/8.
 QUANEX CORPORATION
 Consolidated Income Statements
 (Unaudited, in thousands, except per share data)
 Three Months Ended July 31, 1992 1991
 Net sales $141,899 $152,282
 Cost of sales 126,039 131,601
 Gross profit 15,860 20,681
 Selling, general and
 administrative expense 9,493 9,485
 Operating income 6,367 11,196
 Interest expense (3,981) (4,600)
 Capitalized interest 1,127 751
 Other, net 1,005 (1,072)
 Income before income taxes 4,518 6,275
 Income tax expense (1,898) (2,789)
 Net income 2,620 3,486
 Preferred dividends (1,170) 0
 Net income attributable
 to common stockholders $ 1,450 $ 3,486
 Weighted average common
 shares outstanding 12,897 11,683
 Earnings per common share $0.11 $0.29
 common stock dividends
 per share (Record Date) $0.13 $0.12
 Nine Months Ended July 31, 1992 1991
 Net sales $415,192 $437,430
 Cost of sales 367,579 383,642
 Gross profit 47,613 53,788
 Selling, general and
 administrative expense 29,483 27,852
 Operating income 18,130 25,936
 Interest expense (12,004) (13,152)
 Capitalized interest 3,928 1,527
 Other, net 2,169 (452)
 Income before income taxes 12,223 13,859
 Income tax expense (5,134) (5,823)
 Net income 7,089 8,036
 Preferred dividends (1,170) (524)
 Net income attributable
 to common stockholders $ 5,919 $ 7,512
 Weighted average common
 shares outstanding 12,467 11,674
 Earnings per common share $0.47 $0.64
 Common stock dividends
 per share (Record Date) $0.39 $0.36
 QUANEX CORPORATION
 Industry Segment Information
 (Unaudited, in thousands)
 Three Months Ended July 31, Sales Operating income
 1992 1991 1992 1991
 Hot rolled steel bars $42,685 $47,814 $ 4,405 $ 5,065
 Cold finished steel bars 31,842 23,190 1,461 178
 Steel tubes 26,413 27,957 (506) 356
 Aluminum building
 products 37,820 44,261 2,352 4,987
 Other 3,139 9,060 (1,345) 610
 Total $141,899 $152,282 $ 6,367 $11,196
 Nine Months Ended July 31, Sales Operating income
 1992 1991 1992 1991
 Hot rolled steel bars $137,475 $140,679 $14,853 $14,890
 Cold finished steel bars 88,015 74,785 3,803 586
 Steel tubes 80,222 97,385 1,104 5,694
 Aluminum building
 products 98,053 96,682 4,226 5,599
 Other 11,427 27,899 (5,856) (833)
 Total $415,192 $437,430 $18,130 $25,936
 QUANEX CORPORATION
 Consolidated Cash Flow Statements
 (Unaudited, In thousands)
 Three Months Ended July 31, 1992 1991
 Operating activities:
 Net income $2,620 $3,486
 Depreciation and amortization 7,007 6,540
 Deferred income taxes (804) (141)
 Pension costs and other 362 (524)
 Working capital provided by
 operations 9,185 9,361
 Decrease (increase) in accounts
 receivable 3,042 2,287
 Decrease(increase) in inventory (1,583) 3,103
 Increase (decrease) in accounts
 payable (848) 1,427
 Increase (decrease) in accrued
 expenses (3,085) 2,314
 Other, net (471) 893
 Cash provided (used) by
 operations 6,240 19,385
 Capital expenditures, net of
 retirements (7,204) (11,761)
 Cash provided (used) by other
 investment activities (1,719) 7,998
 Cash provided (used) by
 financing activities 83,069 (1,414)
 Increase (decrease) in cash 80,386 14,208
 Beginning of period cash 21,619 2,194
 End of period cash $102,005 $16,402
 Nine Months Ended July 31, 1992 1991
 Operating activities:
 Net income $7,089 $8,036
 Depreciation and amortization 20,075 19,572
 Deferred income taxes 35 (1,728)
 Pension costs and other 1,644 816
 Working capital provided by
 operations 28,843 26,696
 Decrease (increase) in accounts
 receivable (4,977) 10,679
 Decrease(increase) in inventory (5,692) 2,549
 Increase (decrease) in accounts
 payable 1,813 (14,839)
 Increase (decrease) in accrued
 expenses (4,229) (1,348)
 Other, net 1,713 (2,562)
 Cash provided (used) by
 operations 17,471 21,175
 Capital expenditures, net of
 retirements (35,171) (36,074)
 Cash provided (used) by other
 investment activities 12,862 15,384
 Cash provided (used) by
 financing activities 75,727 (8,136)
 Increase (decrease) in cash 70,889 (7,651)
 Beginning of period cash 31,116 24,053
 End of period cash $102,005 $16,402
 QUANEX CORPORATION
 Consolidated Balance Sheets
 (in thousands)
 July 31, October 31,
 1992 1991 1991 1990
 (Unaudited) Assets (Audited)
 $ 102,005 $ 16,402 Cash and equivalents $ 31,116 $ 24,053
 59,998 59,718 Accounts receivable, net 55,021 70,147
 78,061 72,463 Inventories 72,369 74,641
 3,972 3,623 Other current assets 5,484 1,145
 $ 244,036 152,206 Total current assets 163,990 169,986
 Property, plant
 236,383 214,472 and equipment, net 220,038 187,712
 35,149 36,096 Goodwill, net 35,860 36,828
 Designated cash and
 -- 27,000 equivalents 17,000 49,000
 12,300 8,654 Other assets 9,571 7,855
 $ 527,868 $ 438,428 Total assets $ 446,459 $ 451,381
 Liabilities and Stockholders' equity
 $ 57,111 $ 49,525 Accounts payable $ 55,298 $ 64,033
 29,012 32,637 Accrued expenses 33,241 31,480
 Current portion of
 193 202 long-term debt 6,309 196
 201 0 Other 0 90
 Total current
 86,517 82,364 liabilities 94,848 95,799
 139,065 165,235 Long-term debt 156,483 131,302
 Deferred
 11,856 12,266 pension credits 10,212 11,450
 Deferred
 32,463 29,672 income taxes 32,428 31,400
 269,901 289,537 Total liabilities 293,971 269,951
 86,250 0 Preferred stock 0 34,500
 6,523 5,842 Common stock 5,868 5,958
 Additional paid -
 76,254 58,962 in capital 59,885 58,226
 88,940 84,087 Retained earnings 86,735 82,746
 Total stockholders'
 257,967 148,891 equity 152,488 181,430
 Total liabilities and
 $ 527,868 $ 438,428 stockholders' equity $ 446,459 $ 451,381
 -0- 8/26/92
 /CONTACT: W.F. Cleary or C.A. Meador of Quanex Corporation, 713-961-4600/
 (NX) CO: Quanex Corporation ST: Texas IN: MNG SU: ERN


LD -- NY091 -- 3709 08/26/92 18:06 EDT
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Date:Aug 26, 1992
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