Quanex Building Products (NX) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended January 31, 2025, increased to $400,044,000, compared to$239,155,000 for the same period in 2024, representing a growth of 67.4%[12] - The company reported a net loss of $14,885,000 for the three months ended January 31, 2025, compared to a net income of$6,249,000 for the same period in 2024[12] - Comprehensive loss for the three months ended January 31, 2025, was $30,836,000, compared to comprehensive income of$12,330,000 for the same period in 2024[14] - Operating loss for the three months ended January 31, 2025, was $6,978,000, compared to an operating income of$7,917,000 for the same period in 2024[12] - Basic and diluted loss per common share for the three months ended January 31, 2025, was $(0.32), while basic earnings per common share for the same period in 2024 was$0.19[112] Assets and Liabilities - Total assets decreased to $2,220,489,000 as of January 31, 2025, down from$2,319,788,000 as of October 31, 2024, reflecting a decline of 4.3%[10] - Cash and cash equivalents decreased to $49,982,000 as of January 31, 2025, from$97,744,000 as of October 31, 2024, a decrease of 48.9%[10] - Total stockholders' equity decreased to $972,116,000 as of January 31, 2025, down from$1,010,746,000 as of October 31, 2024, a decline of 3.8%[10] - Long-term debt as of January 31, 2025, totaled $725,231,000, a decrease from$737,198,000 as of October 31, 2024[64] - The total debt decreased from $762,943,000 as of October 31, 2024, to$751,058,000 as of January 31, 2025[64] Cash Flow - Cash used for operating activities was $12,510,000 for the three months ended January 31, 2025, compared to cash provided of$3,854,000 for the same period in 2024[17] - Cash provided by operating activities decreased by $16.4 million for the three months ended January 31, 2025, compared to the same period in 2024[164] - Cash used for investing activities increased by$1.9 million for the three months ended January 31, 2025, primarily due to increased capital expenditures[165] - Cash used for financing activities increased by $12.9 million for the three months ended January 31, 2025, mainly due to long-term debt repayment and treasury share purchases[166] Segment Performance - The North American Fenestration segment reported sales of$134.3 million, down from $148.0 million, a decrease of 9.2$175.7 million in sales, with no comparable sales in the prior year due to the acquisition completed on August 1, 2024[34] - The European Fenestration segment experienced a 2% decline in net sales to $48.5 million, attributed to weaker consumer confidence and negative foreign currency impacts[143] - The Tyman segment reported net sales of$175.7 million for the three months ended January 31, 2025, with an operating loss of $13.7 million[150] Expenses - Selling, general and administrative expenses increased by 106$66.7 million for the three months ended January 31, 2025, compared to $32.4 million in 2024[139] - The company incurred restructuring charges of$7,904,000 during the three months ended January 31, 2025[12] - Operating lease costs for the three months ended January 31, 2025, were $5,313,000, compared to$2,435,000 for the same period in 2024, reflecting a significant increase[55] Acquisitions and Investments - The acquisition of Tyman plc involved cash consideration of approximately $504.1 million and the issuance of 14,139,477 new Quanex common shares[39] - As of January 31, 2025, the preliminary purchase price allocation for the Tyman acquisition indicated net assets acquired valued at$848.6 million[44] - The company continues to evaluate business acquisitions to expand its manufacturing and distribution footprint and enhance product offerings[127] Credit Facilities and Debt - The Revolving Credit Facility was increased to an aggregate principal amount of $475 million as part of the amended credit agreement related to the Tyman acquisition[41] - The Amended Credit Agreement increased the senior secured revolving credit facility to an aggregate principal amount of$475 million and provides for a senior secured term loan A facility of $500 million[66] - As of January 31, 2025, the company had$705 million borrowings outstanding under the Facilities, with a weighted-average borrowing rate of 6.85% for the three months ended January 31, 2025[73] Stock and Shareholder Information - The company paid cash dividends of $3,812,000 during the three months ended January 31, 2025, maintaining a dividend of$0.08 per share[12] - The company had a beginning treasury stock balance of 4,014,431 shares as of November 1, 2024, which decreased to 3,983,606 shares by January 31, 2025[103] - During the three months ended January 31, 2025, the company repurchased 150,000 shares of common stock at an average price of $24.66, with$59,108,618 remaining under the stock repurchase program[194] Tax and Regulatory Matters - The estimated annual effective tax rates from continuing operations for the three months ended January 31, 2025 and 2024 were 25.3% and 20.8%, respectively[75] - The company recorded an income tax benefit of $5.1 million on a pre-tax loss of$19.9 million for the three months ended January 31, 2025, resulting in an effective tax rate of 25.3%[155] Internal Controls and Compliance - Tyman plc has been excluded from the management's assessment of internal controls over financial reporting as of January 31, 2025, due to its prior public listing and compliance with International Financial Reporting Standards[186] - The company is actively engaged in remediation efforts to address a material weakness related to the statement of cash flows, which includes enhanced review procedures and a structured non-cash transaction checklist[187][191] - Integration of internal controls for the recently acquired Tyman business is ongoing, with completion expected during fiscal 2025[189] Market and Economic Conditions - The company is monitoring the impacts of geopolitical tensions and global trade policies on its operations and supply chain[129] - The NAHB forecasted housing starts to be approximately 1.3 million in 2025, with a projected decrease of 2.5% in total window shipments for the same year[135]