Quanex Building Products Reports Decline in Net Sales and Profitability for Q3 and Nine Months Ended July 31, 2024

Quanex Building Products Corporation reported its financial results for the three and nine months ended July 31, 2024, revealing a decline in net sales and profitability compared to the same periods in 2023. For the three months ended July 31, 2024, net sales totaled $280.3 million, a decrease of 6% from $299.6 million in the prior year. Similarly, net sales for the nine months were $785.7 million, down 6% from $835.1 million in 2023. The decline in sales was attributed to reduced volumes in key segments, particularly in North American fenestration and European fenestration.

Operating income for the three months ended July 31, 2024, was $23.4 million, a significant drop of 37% from $37.5 million in the same quarter of 2023. For the nine-month period, operating income decreased by 27% to $52.0 million from $71.2 million. Net income for the three months was $25.4 million, down 20% from $31.7 million, while for the nine months, net income fell 15% to $47.0 million from $55.1 million. Basic earnings per share for the three months were $0.77, compared to $0.97 in the prior year, and for the nine months, earnings per share decreased to $1.43 from $1.68.

The company’s cost of sales decreased for both the three and nine-month periods, reflecting lower volumes and pricing pressures. However, selling, general, and administrative expenses increased, primarily due to higher labor costs and professional fees.

Strategically, Quanex completed the acquisition of Tyman plc on August 1, 2024, for approximately $504.1 million, which included the issuance of new shares. This acquisition is expected to enhance the company’s market presence and product offerings. The company also amended its credit agreement to support this acquisition, increasing its revolving credit facility to $475 million and establishing a senior secured term loan of $500 million.

As of July 31, 2024, Quanex reported total assets of $872.5 million, up from $831.1 million at the end of the previous fiscal year. Cash and cash equivalents increased to $94.0 million from $58.5 million. Long-term debt decreased to $51.4 million from $66.4 million, reflecting improved financial leverage.

Overall, the company is navigating a challenging market environment characterized by geopolitical tensions and fluctuating commodity prices, which have impacted its operational performance and strategic initiatives.