NX Quanex Corp

Quanex Building Products Corporation (NYSE:NX) (“Quanex” or the “Company”) today announced its results for the three months ended January 31, 2025.  

The Company reported the following selected financial results:

		Three Months Ended January 31,
($ in millions, except per share data)		2025		2024
Net Sales		$400.0		$239.2
Gross Margin		$92.3		$51.4
Gross Margin %		23.1%		21.5%
Net (Loss) Income		($14.9)		$6.2
Diluted EPS		($0.32)		$0.19
Adjusted Net Income		$9.0		$8.4
Adjusted Diluted EPS		$0.19		$0.25
Adjusted EBITDA		$38.5		$19.3
Adjusted EBITDA Margin %		9.6%		8.1%
Cash (Used For) Provided by Operating Activities		($12.5)		$3.9
Free Cash Flow		($24.1)		($5.7)

(See Non-GAAP Terminology Definitions and Disclaimers section, Non-GAAP Financial Measure Disclosure table, Selected Segment Data table and reconciliation tables for additional information)

George Wilson, Chairman, President and Chief Executive Officer, stated, “The first quarter of 2025 was a very busy time for Quanex internally and I would like to thank all my Quanex teammates for their continuous efforts as we navigate through the process of integrating legacy Quanex with legacy Tyman. The integration gained speed and traction during the quarter, and we remain confident in our ability to deliver on the $30 million cost synergy target. Volume came in as expected during the first quarter, and we were pleased with the margin expansion and the overall impact of the cost synergies we have realized to date. On a consolidated basis, results for the first quarter were again lifted by the contribution from the Tyman acquisition and we achieved margin expansion. Our continued focus on cash flow and managing working capital enabled us to repay approximately $12 million in debt during the first quarter of 2025, or approximately $65 million since closing the acquisition on August 1, 2024.

“Looking ahead, despite the soft macro backdrop, we continue to expect an improvement in demand as we enter the spring selling season and through the summer. Longer-term we also expect to benefit from the unwinding of pent-up demand as consumer confidence improves. Our near-term priorities are staying focused on the Tyman integration, capturing the targeted synergies, and generating cash flow to pay down debt.”

First Quarter Results Summary

Quanex reported net sales of $400.0 million during the three months ended January 31, 2025, which represents an increase of 67.3% compared to $239.2 million for the same period of 2024. The increase reflects the contribution from the Tyman acquisition that closed on August 1, 2024. Excluding the contribution from Tyman, net sales would have declined by 6.2% for the first quarter of 2025, mostly due to lower volume. The Company reported a decrease in net sales of 9.2% for the first quarter of 2025 in its North American Fenestration segment. In its North American Cabinet Components segment, Quanex reported an increase of 1.6% in net sales for the first quarter of 2025. Excluding foreign exchange impact, net sales were essentially flat in its European Fenestration segment. In addition, Quanex reported net sales of $175.7 million related to contributions from the Tyman acquisition during the first quarter of 2025. (See Sales Analysis table for additional information)

The increase in adjusted earnings for the three months ended January 31, 2025 was mostly attributable to the contribution from the Tyman acquisition combined with the realization of costs synergies.

Balance Sheet & Liquidity Update

The Company borrowed $770 million ($500 Term Loan A and $270 on Senior Secured Revolving Credit Facility) to acquire Tyman on August 1, 2024 and has repaid $65 million of debt since closing. As of January 31, 2025, the Company had total debt of $764.3 million and Quanex’s leverage ratio of Net Debt to LTM Adjusted EBITDA improved slightly to 3.6x. As of January 31, 2025, the Company’s LTM Net Income was $11.9 million and LTM Adjusted EBITDA was $201.7 million (See Non-GAAP Terminology Definitions and Disclaimers section, Net Debt Reconciliation table and Last Twelve Months Adjusted EBITDA Reconciliation table for additional information)

The leverage ratio for Quanex’s quarterly debt covenant compliance (“Debt Covenant Leverage Ratio”) for its lenders was 2.2x as of January 31, 2025. The Debt Covenant Leverage Ratio calculation is defined in the Company’s Amendment No. 1 to its Second Amended and Restated Credit Agreement, which was filed with the SEC on June 12, 2024. In general, the main difference is that the Debt Covenant Leverage Ratio excludes real-estate leases that are considered “finance” leases under U.S. GAAP and is calculated on a proforma basis to include Adjusted EBITDA from the Tyman acquisition, $30 million of EBITDA for the synergy target related to the acquisition and only cash from domestic subsidiaries. The Debt Covenant Leverage Ratio would be 2.1x if calculated using the cash and cash equivalents amount on the balance sheet as of January 31, 2024.

Quanex’s liquidity was $301.5 million as of January 31, 2025, consisting of $50.0 million in cash on hand plus availability under its Senior Secured Revolving Credit Facility due 2029, less letters of credit outstanding.

Share Repurchases

Quanex’s Board authorized a $75 million share repurchase program in December of 2021. Repurchases under this program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements, and other relevant factors. The Company repurchased 150,000 shares of common stock for approximately $3.7 million at an average price of $24.66 per share during the three months ended January 31, 2025. As of January 31, 2025, approximately $59.1 million remained under the existing share repurchase authorization.

Outlook

Mr. Wilson commented, “We issued official guidance for 2025 as part of our Investor Day held at the New York Stock Exchange on February 6, 2025. Based on our results year-to-date, combined with our operational execution, recent demand trends and conversations with our customers, we are reaffirming our guidance for fiscal 2025. On a consolidated basis for fiscal 2025, we continue to estimate that we will generate net sales of approximately $1.84 billion to $1.86 billion, which we expect will yield Adjusted EBITDA* of $270 million to $280 million.

“Our capital allocation priorities continue to be paying down debt, evaluating growth opportunities and opportunistically buying back our stock. In addition, the finance and accounting teams are logging long hours working hard in conjunction with our external auditors on re-segmenting the business, so we will report in the new operating segments as soon as practical.”

*When Quanex provides expectations for Adjusted EBITDA on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and corresponding GAAP measures is generally not available without unreasonable effort. Certain items required for such a reconciliation are outside of the Company’s control and/or cannot be reasonably predicted or estimated, such as the provision for income taxes related to net income.

Conference Call and Webcast Information

The Company has also scheduled a conference call for Tuesday, March 11, 2025 at 11:00 a.m. ET (10:00 a.m. CT) to discuss the release. A link to the live audio webcast will be available on Quanex’s website at http://www.quanex.com in the Investors section under Presentations & Events.

Participants can pre-register for the conference call using the following link: https://register.vevent.com/register/BIafe91a1501e44eaaadfb84ddc0982237

Registered participants will receive an email containing conference call details for dial-in options. To avoid delays, it is recommended that participants dial into the conference call ten minutes ahead of the scheduled start time. A replay will be available for a limited time on the Company’s website at http://www.quanex.com in the Investors section under Presentations & Events.

About Quanex

Quanex is a global manufacturer with core capabilities and broad applications across various end markets. The Company currently collaborates and partners with leading OEMs to provide innovative solutions in the window, door, solar, refrigeration, custom mixing, building access and cabinetry markets.  Looking ahead, Quanex plans to leverage its material science expertise and process engineering to expand into adjacent markets.

Non-GAAP Terminology Definitions and Disclaimers

Adjusted Net Income (defined as net income further adjusted to exclude amortization of step-up for purchase price adjustments on inventory, transaction, advisory fees and reorganization costs, restructuring charges related to severance and disposal of software, amortization expense related to intangible assets, pension settlement refund and other net adjustments related to foreign currency transaction gain/loss and effective tax rates reflecting impacts of adjustments on a with and without basis) and Adjusted EPS are non-GAAP financial measures that Quanex believes provide a consistent basis for comparison between periods and more accurately reflects operational performance, as they are not influenced by certain income or expense items not affecting ongoing operations. EBITDA (defined as net income or loss before interest, taxes, depreciation and amortization and other, net), Adjusted EBITDA and LTM Adjusted EBITDA (defined as EBITDA further adjusted to exclude purchase price accounting inventory step-ups, transaction costs, certain severance charges, gain/loss on the sale of certain fixed assets, restructuring charges and asset impairment charges) are non-GAAP financial measures that the Company uses to measure operational performance and assist with financial decision-making.  Net Debt is defined as total debt (outstanding balance on the revolving credit facility plus financial lease obligations) less cash and cash equivalents. The leverage ratio of Net Debt to LTM Adjusted EBITDA is a financial measure that the Company believes is useful to investors and financial analysts in evaluating Quanex’s leverage. In addition, with certain limited adjustments, this leverage ratio is the basis for a key covenant in the Company’s credit agreement.

Free Cash Flow is a non-GAAP measure calculated using cash provided by operating activities less capital expenditures. Quanex uses the Free Cash Flow metric to measure operational and cash management performance and assist with financial decision-making.   Free Cash Flow is measured before application of certain contractual commitments (including capital lease obligations), and accordingly is not a true measure of the Company’s residual cash flow available for discretionary expenditures. Quanex believes Free Cash Flow is useful to investors in understanding and evaluating the Company’s financial and cash management performance.

Quanex believes that the presented non-GAAP measures provide a consistent basis for comparison between periods and will assist investors in understanding the Company’s financial performance when comparing results to other investment opportunities.  The presented non-GAAP measures may not be the same as those used by other companies. Quanex does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with U.S. GAAP.

Forward Looking Statements

Statements that use the words “estimated,” “expect,” “could,” “should,” “believe,” “will,” “might,” or similar words reflecting future expectations or beliefs are forward-looking statements. The forward-looking statements include, but are not limited to, the following: impacts from public health issues (including pandemics) on the economy and the demand for Quanex’s products, timing estimates or any other expectations related to the acquisition of Tyman, the Company’s future operating results, future financial condition, future uses of cash and other expenditures, expenses and tax rates, expectations relating to Quanex’s industry, and the Company’s future growth, including any guidance discussed in this press release. The statements and guidance set forth in this release are based on current expectations. Actual results or events may differ materially from this release. For a complete discussion of factors that may affect Quanex’s future performance, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2024, and the Company’s Quarterly Reports on Form 10-Q under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”. Any forward-looking statements in this press release are made as of the date hereof, and Quanex undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data)(Unaudited)
		Three Months Ended January 31,
		2025				2024
Net sales		$	400,044			$	239,155
Cost of sales			307,728				187,723
Selling, general and administrative			66,650				32,363
Restructuring charges			7,904				-
Depreciation and amortization			24,740				11,152
Operating income			(6,978	)			7,917
Interest expense			(14,186	)			(1,068	)
Other, net			1,229				1,042
(Loss) income before income taxes			(19,935	)			7,891
Income tax benefit (expense)			5,050				(1,642	)
Net (loss) income		$	(14,885	)		$	6,249
(Loss) earnings per common share, basic		$	(0.32	)		$	0.19
(Loss) earnings per common share, diluted		$	(0.32	)		$	0.19
Weighted average common shares outstanding:
Basic			47,015				32,825
Diluted			47,015				33,043
Cash dividends per share		$	0.08			$	0.08

QUANEX BUILDING PRODUCTS CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)
		January 31, 2025				October 31, 2024
ASSETS
Current assets:
Cash and cash equivalents		$	49,982			$	97,744
Restricted Cash			5,486				5,251
Accounts receivable, net			164,347				197,689
Inventories			280,580				275,550
Income taxes receivable			5,283				5,937
Prepaid and other current assets			41,943				29,097
Total current assets			547,621				611,268
Property, plant and equipment, net			391,118				402,466
Operating lease right-of-use assets			125,002				126,715
Deferred tax assets			3,709				3,845
Goodwill			569,688				574,711
Intangible assets, net			580,081				597,909
Other assets			3,270				2,874
Total assets		$	2,220,489			$	2,319,788
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	108,374			$	124,404
Accrued liabilities			81,302				103,623
Income taxes payable			-				6,620
Current maturities of long-term debt			25,827				25,745
Current operating lease liabilities			13,275				12,475
Total current liabilities			228,778				272,867
Long-term debt			725,231				737,198
Noncurrent operating lease liabilities			115,517				117,560
Deferred income taxes			162,846				162,304
Other liabilities			16,001				19,113
Total liabilities			1,248,373				1,309,042
Stockholders’ equity:
Common stock			512				513
Additional paid-in-capital			697,358				701,008
Retained earnings			411,708				430,405
Accumulated other comprehensive loss			(62,379	)			(46,428	)
Treasury stock at cost			(75,083	)			(74,752	)
Total stockholders’ equity			972,116				1,010,746
Total liabilities and stockholders' equity		$	2,220,489			$	2,319,788

QUANEX BUILDING PRODUCTS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW(In thousands)(Unaudited)
`	Three Months Ended January 31,
	2025				2024
Operating activities:
Net (loss) income	$	(14,885	)		$	6,249
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		24,740				11,152
Stock-based compensation		902				583
Deferred income tax		2,851				1,136
Other, net		6,173				1,790
Changes in assets and liabilities:
Decrease in accounts receivable		30,330				18,147
Increase in inventory		(8,602	)			(8,756	)
Increase in other current assets		(8,985	)			(1,680	)
Decrease in accounts payable		(16,548	)			(19,044	)
Decrease in accrued liabilities		(22,558	)			(7,181	)
(Decrease) increase in income taxes receivable		(5,087	)			264
(Decrease) increase in other long-term liabilities		(247	)			852
Other, net		(594	)			342
Cash (used for) provided by operating activities		(12,510	)			3,854
Investing activities:
Business acquisition
Capital expenditures		(11,624	)			(9,580	)
Proceeds from disposition of capital assets		169				31
Cash used for investing activities		(11,455	)			(9,549	)
Financing activities:
Borrowings under credit facilities		45,000				-
Repayments of credit facility borrowings		(56,250	)			(5,000	)
Repayments of other long-term debt		(2,026	)			(679	)
Common stock dividends paid		(3,812	)			(2,645	)
Issuance of common stock		214				400
Payroll tax paid to settle shares forfeited upon vesting of stock		(1,400	)			(1,193	)
Purchase of treasury stock		(3,698	)			-
Cash used for financing activities		(21,972	)			(9,117	)
Effect of exchange rate changes on cash and cash equivalents		(1,590	)			760
Increase in cash, cash equivalents and restricted cash		(47,527	)			(14,052	)
Cash, cash equivalents and restricted cash at beginning of period		102,995				58,474
Cash, cash equivalents and restricted cash at end of period	$	55,468			$	44,422

QUANEX BUILDING PRODUCTS CORPORATIONFREE CASH FLOW AND NET DEBT RECONCILIATION(In thousands)(Unaudited)
The following table reconciles the Company's calculation of Free Cash Flow, a non-GAAP measure, to its most directly comparable GAAP measure. The Company defines Free Cash Flow as cash provided by operating activities less capital expenditures.
			Three Months Ended January 31,
			2025				2024
Cash (used for) provided by operating activities			($12,510		)		$3,854
Capital expenditures				(11,624	)			(9,580	)
Free Cash Flow			($24,134		)		($5,726		)
The following table reconciles the Company's Net Debt which is defined as total debt principal of the Company plus finance lease obligations minus cash.
			As of January 31,
			2025				2024
Term loan facility			$487,500				$0
Revolving credit facility				217,500			$10,000
Finance lease obligations(1)				59,306				55,211
Total debt(2)				764,306				65,211
Less: Cash and cash equivalents				49,982				44,422
Net Debt			$714,324				$20,789
(1) Includes $55.1 million and $51.7 million in real estate lease liabilities considered finance leases under U.S. GAAP as of January 31, 2025 and 2024, respectively.
(2) Excludes outstanding letters of credit.

QUANEX BUILDING PRODUCTS CORPORATIONNON-GAAP FINANCIAL MEASURE DISCLOSURELAST TWELVE MONTHS ADJUSTED EBITDA RECONCILIATION(In thousands, except per share data)(Unaudited)
Reconciliation of Last Twelve Months Adjusted EBITDA		Three Months Ended January 31, 2025				Three Months Ended October 31, 2024				Three Months Ended July 31, 2024				Three Months Ended April 30, 2024				Total
		Reconciliation				Reconciliation				Reconciliation				Reconciliation				Reconciliation
Net (loss) income as reported		$	(14,885	)		$	(13,917	)		$	25,350			$	15,377			$	11,925
Income tax (benefit) expense			(5,050	)			(3,621	)			6,688				4,314				2,331
Other, net			(1,229	)			2,671				(9,474	)			(4	)			(8,036	)
Interest expense			14,186				17,697				878				950				33,711
Depreciation and amortization			24,740				27,329				10,953				10,894				73,916
EBITDA			17,762				30,159				34,395				31,531				113,847
Cost of sales (1)			-				887				1,507				631				3,025
Selling, general and administrative (1),(2),(3)			12,876				50,004				6,133				7,862				76,875
Restructuring charges (4)			7,904				-				-				-				7,904
Adjusted EBITDA		$	38,542			$	81,050			$	42,035			$	40,024			$	201,651
(1) Expense (gain) related to plant closure.
(2) Transaction, advisory fees, and reorganization costs.
(3) Amortization of step-up for purchase price adjustments on inventory.
(4) Restructuring charges related to severance and disposal of software.

QUANEX BUILDING PRODUCTS CORPORATIONNON-GAAP FINANCIAL MEASURE DISCLOSURE(In thousands, except per share data)(Unaudited)
Reconciliation of Adjusted Net Income and Adjusted EPS		Three Months Ended January 31, 2025								Three Months Ended January 31, 2024
		Net Income				Diluted EPS				Net Income				Diluted EPS
Net (loss) income as reported		$	(14,885	)		$	(0.32	)		$	6,249			$	0.19
Net (loss) income reconciling items from below			23,847			$	0.51				2,121			$	0.06
Adjusted net income and adjusted EPS		$	8,962			$	0.19			$	8,370			$	0.25
Reconciliation of Adjusted EBITDA		Three Months Ended January 31, 2025								Three Months Ended January 31, 2024
		Reconciliation								Reconciliation
Net (loss) income as reported		$	(14,885	)						$	6,249
Income tax (benefit) expense			(5,050	)							1,642
Other, net			(1,229	)							(1,042	)
Interest expense			14,186								1,068
Depreciation and amortization			24,740								11,152
EBITDA			17,762								19,069
EBITDA reconciling items from below			20,780								205
Adjusted EBITDA		$	38,542							$	19,274
Reconciling Items		Three Months Ended January 31, 2025								Three Months Ended January 31, 2024
		Income Statement				Reconciling Items				Income Statement				Reconciling Items
Net sales		$	400,044			$	-			$	239,155			$	-
Cost of sales			307,728				-				187,723				-
Selling, general and administrative			66,650				(12,876	)	(1),(2)		32,363				(205	)	(2)
Restructuring charges			7,904				(7,904	)	(3)		-				-
EBITDA			17,762				20,780				19,069				205
Depreciation and amortization			24,740				(10,650	)	(4)		11,152				(3,229	)	(4)
Operating income			(6,978	)			31,430				7,917				3,434
Interest expense			(14,186	)			-				(1,068	)			-
Other, net			1,229				(172	)	(5)		1,042				(755	)	(5)
(Loss) Income before income taxes			(19,935	)			31,258				7,891				2,679
Income tax benefit (expense)			5,050				(7,411	)	(6)		(1,642	)			(558	)	(6)
Net (loss) income		$	(14,885	)		$	23,847			$	6,249			$	2,121
Diluted (loss) earnings per share		$	(0.32	)						$	0.19
(1) Amortization of step-up for purchase price adjustments on inventory.
(2) Transaction, advisory fees, and reorganization costs.
(3) Restructuring charges related to severance and disposal of software.
(4) Amortization expense related to intangible assets.
(5) Pension settlement refund and foreign currency transaction losses (gains).
(6) Tax impact of net income reconciling items.

QUANEX BUILDING PRODUCTS CORPORATIONSELECTED SEGMENT DATA(In thousands)(Unaudited)
This table provides gross margin, operating income (loss), EBITDA, and Adjusted EBITDA by reportable segment. Non-operating expense and income tax expense are not allocated to the reportable segments.
		NA Fenestration				EU Fenestration				NA Cabinet Components				Tyman				Unallocated Corp & Other				Total
Three months ended January 31, 2025
Net sales		$	134,333			$	48,471			$	43,810			$	175,676			$	(2,246	)		$	400,044
Cost of sales			106,567				30,638				39,415				132,796				(1,688	)			307,728
Gross Margin			27,766				17,833				4,395				42,880				(558	)			92,316
Gross Margin %			20.7%				36.8%				10.0%				24.4%								23.1%
Selling, general and administrative(1)			16,133				7,920				5,268				34,378				2,951				66,650
Restructuring charges			-				-				-				7,904				-				7,904
Depreciation and amortization			4,779				2,610				3,009				14,263				79				24,740
Operating income (loss)			6,854				7,303				(3,882	)			(13,665	)			(3,588	)			(6,978	)
Depreciation and amortization			4,779				2,610				3,009				14,263				79				24,740
EBITDA			11,633				9,913				(873	)			598				(3,509	)			17,762
Expense related to plant closure (Cost of sales)			-				-				-				-				-				-
Net gain related to plant closure (SG&A)			-				-				-				-				-				-
Amortization of step-up for purchase price adjustments on inventory			-				-				-				9,007				-				9,007
Transaction, advisory fees, and reorganization costs			-				-				-				1,469				2,400				3,869
Restructuring charges related to severance and disposal of software															7,904				-				7,904
Adjusted EBITDA		$	11,633			$	9,913			$	(873	)		$	18,978			$	(1,109	)		$	38,542
Adjusted EBITDA Margin %			8.7%				20.5%				-2.0%				10.8%								9.6%
Three months ended January 31, 2024
Net sales		$	147,995			$	49,437			$	43,137			$	-			$	(1,414	)		$	239,155
Cost of sales			118,368				31,703				38,743				-				(1,091	)			187,723
Gross Margin			29,627				17,734				4,394				-				(323	)			51,432
Gross Margin %			20.0%				35.9%				10.2%												21.5%
Selling, general and administrative(1)			15,910				7,745				5,126				-				3,582				32,363
Depreciation and amortization			5,475				2,558				3,065				-				54				11,152
Operating income (loss)			8,242				7,431				(3,797	)			-				(3,959	)			7,917
Depreciation and amortization			5,475				2,558				3,065				-				54				11,152
EBITDA			13,717				9,989				(732	)			-				(3,905	)			19,069
Transaction and advisory fees			-				-				-				-				205				205
Adjusted EBITDA		$	13,717			$	9,989			$	(732	)		$	-			$	(3,700	)		$	19,274
Adjusted EBITDA Margin %			9.3%				20.2%				-1.7%												8.1%
(1) Includes stock-based compensation expense of $1.2 million and $2.6 million as of January 31, 2025 and January 31, 2024, respectively.

QUANEX BUILDING PRODUCTS CORPORATIONSALES ANALYSIS(In thousands)(Unaudited)
		Three Months Ended January 31,
		2025				2024
NA Fenestration:
	United States - fenestration	$	100,429			$	111,634
	International - fenestration		5,859				6,144
	United States - non-fenestration		23,205				25,791
	International - non-fenestration		4,840				4,426
		$	134,333			$	147,995
EU Fenestration:(1)
	International - fenestration	$	42,056			$	41,751
	International - non-fenestration		6,415				7,686
		$	48,471			$	49,437
NA Cabinet Components:
	United States - fenestration	$	3,452			$	3,675
	United States - non-fenestration		40,063				39,179
	International - non-fenestration		295				283
		$	43,810			$	43,137
Tyman:
	United States - fenestration	$	105,591			$	-
	International - fenestration		69,282				-
	United States - non-fenestration		785				-
	International - non-fenestration		18				-
		$	175,676			$	-
Unallocated Corporate & Other:
	Eliminations	$	(2,246	)		$	(1,414	)
		$	(2,246	)		$	(1,414	)
Net Sales		$	400,044			$	239,155
(1) Reflects a decrease of $0.9 million in revenue associated with foreign currency exchange rate impacts for the three months ended January 31, 2025.