Quanex Building Products (US:NX)2024-03-07 16:00Financial Performance - Net sales for the three months ended January 31, 2024, were $239,155,000, a decrease of 8.5% compared to $261,916,000 for the same period in 2023[12] - Operating income increased to $7,917,000 for the three months ended January 31, 2024, compared to $4,403,000 in the prior year, reflecting a 79.5% increase[12] - Net income for the three months ended January 31, 2024, was $6,249,000, significantly higher than $1,909,000 for the same period in 2023, representing a 227.5% increase[12] - Basic earnings per share rose to $0.19 for the three months ended January 31, 2024, compared to $0.06 in the same period last year[12] - Net sales decreased by $22.8 million, or 9%, to $239.2 million for the three months ended January 31, 2024, compared to $261.9 million in the same period of 2023[108] - Operating income increased by $3.5 million, or 80%, to $7.9 million for the three months ended January 31, 2024, compared to $4.4 million in the same period of 2023[108] - Net income rose by $4.3 million, or 227%, to $6.2 million for the three months ended January 31, 2024, compared to $1.9 million in the same period of 2023[108] Assets and Liabilities - Total current assets decreased to $252,995,000 as of January 31, 2024, down from $273,600,000 as of October 31, 2023, a decline of 7.5%[10] - Total liabilities decreased to $258,391,000 as of January 31, 2024, compared to $285,589,000 as of October 31, 2023, a reduction of 9.5%[10] - Long-term debt decreased to $64.094 million as of January 31, 2024, down from $68.800 million as of October 31, 2023[43] - The total assets as of January 31, 2024, were $813,420,000, a decrease from $831,143,000 as of October 31, 2023[85] Cash Flow - Cash and cash equivalents at the end of the period were $44,422,000, down from $58,474,000 at the beginning of the period, reflecting a decrease of 24%[17] - Cash provided by operating activities was $3,854,000 for the three months ended January 31, 2024, compared to $3,135,000 in the prior year, an increase of 23%[17] - Cash provided by operating activities increased by $0.7 million to $3.9 million for the three months ended January 31, 2024[128] - Cash used for investing activities decreased by $89.9 million to $9.5 million for the three months ended January 31, 2024, with no business acquisitions in 2024[129] Inventory and Expenses - Total inventories rose to $107.478 million as of January 31, 2024, compared to $97.959 million as of October 31, 2023, indicating a 9.5% increase[38] - Selling, general and administrative expenses increased by $2.6 million, or 20%, in the NA Fenestration segment due to higher labor costs[111] - Capital expenditures for the three months ended January 31, 2024, totaled $9,580,000, an increase from $7,582,000 in the prior year[85] Foreign Currency and Market Conditions - The company reported a foreign currency translation gain of $6,081,000 for the three months ended January 31, 2024, compared to a gain of $11,372,000 in the same period last year[14] - The company has exposure to foreign currency rate risks primarily due to fluctuations in the Euro, British Pound Sterling, and Canadian Dollar[140] - The ongoing geopolitical tensions and military conflicts in Ukraine and Gaza may lead to market disruptions and increased commodity prices[101] Business Segments - The company operates three reportable business segments: North American Fenestration, European Fenestration, and North American Cabinet Components[99] - NA Fenestration segment net sales decreased by $5.0 million, or 3%, primarily due to a $4.3 million decrease in volumes[109] - EU Fenestration segment net sales decreased by $5.5 million, or 10%, driven by a $6.8 million decrease in volumes[112] - NA Cabinet Components segment net sales decreased by $11.5 million, or 21%, attributed to a $6.4 million decrease in volumes due to weaker consumer confidence[115] Tax and Compliance - The annual effective tax rate from continuing operations for the three months ended January 31, 2024, was 20.8%, up from 19.2% for the same period in 2023[54] - The company had a liability for uncertain tax positions of $0.3 million related to certain U.S. federal and state tax items as of January 31, 2024[55] - The company is not currently involved in any remediation or environmental compliance matters that could materially impact its financial condition[58] Stock and Compensation - The total weighted-average grant-date fair value of restricted stock awards that vested during the three months ended January 31, 2024, was $1.4 million, compared to $0.9 million for the same period in 2023[67] - As of January 31, 2024, the total unrecognized compensation cost related to unamortized restricted stock awards was $4.0 million, expected to be recognized over a remaining weighted-average vesting period of 2.3 years[67] - During the three months ended January 31, 2024, the company recognized total compensation expense of $2,576,000 related to stock-based awards, a decrease from $4,809,000 in the prior year[80] Future Outlook - The National Association of Homebuilders (NAHB) forecasts housing starts to be 1.4 million for the 2024 and 2025 calendar years[105] - Ducker Worldwide forecasts a decrease in total window shipments by 7.6% in calendar year 2023 and 1.2% in 2024[105] - The company continues to evaluate business acquisitions to expand its fenestration and cabinet component footprint and enhance product offerings[98] - The company is evaluating the potential impact of new accounting guidance on its consolidated financial statements[90] - The company is evaluating the potential impact of adopting new guidance on segment reporting and income tax disclosures issued by the FASB[135][136]