Quanex's Stock Up on Q3 Earnings & Sales Beat, Margins Down Y/Y

Core Viewpoint - Quanex Building Products Corporation (NX) reported better-than-expected third-quarter results for fiscal 2024, with adjusted earnings and net sales exceeding the Zacks Consensus Estimate, although both metrics declined year-over-year [1][4]. Financial Performance - Adjusted earnings were 73 cents per share, surpassing the consensus estimate of 70 cents by 4.3%, but down from 97 cents in the prior-year quarter [4]. - Net sales reached $280.3 million, slightly above the consensus mark of $278 million by 0.8%, but a decline of 6.4% from the previous year [4]. - Gross profit decreased to $70.9 million from $78.6 million year-over-year, with a consolidated gross margin contraction of 90 basis points to 25.3% [8]. Segment Analysis - North American Fenestration segment saw net sales decline by 3.9% to $170.3 million, with gross profit margin contracting to 23.5% [5]. - European Fenestration segment's net sales fell 10.8% to $59.6 million, with gross profit margin down to 38.1% [6]. - North American Cabinet Components segment reported a decline in net sales to $51.4 million from $55.4 million, with gross profit margin contracting to 16.6% [6][7]. Operational Highlights - Selling and administrative expenses increased to $36.5 million from $30.5 million in the prior-year quarter [8]. - Adjusted EBITDA was $42 million, down 13.4% year-over-year, with adjusted EBITDA margin declining to 15% from 16.2% [8]. Financial Position - As of July 31, 2024, cash and cash equivalents were $94 million, up from $58.5 million at the end of fiscal 2023, while long-term debt decreased to $51.4 million from $66.4 million [9]. - Net cash provided by operating activities for the first nine months of fiscal 2024 was $83.3 million, compared to $102.6 million a year ago [10]. Future Outlook - NX expects consolidated net sales for fiscal 2024 to range between $1.275 billion and $1.285 billion, compared to $1,130.6 million in the previous year [11]. - Adjusted EBITDA is anticipated to be between $171 million and $176 million, up from $159.6 million reported in fiscal 2023 [11].