On June 6, 2024, Quanex Building Products Corp (NX, Financial) released its 8-K filing announcing its financial results for the second quarter of 2024. Quanex Building Products Corp is a manufacturer of components sold to original equipment manufacturers in the building products industry. It manufactures engineered products like window and door components, solar panel sealants, and precision-formed metal and wood products. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components, with the majority of its revenue derived from the United States.
Second Quarter 2024 Results Summary
Quanex reported net sales of $266.2 million for the three months ended April 30, 2024, a 2.7% decrease from $273.5 million in the same period of 2023. This decline was primarily due to softer market demand in the European Fenestration and North American Cabinet Components segments. However, the North American Fenestration segment saw a 1.8% increase in net sales due to improved volume.
Net income for the quarter was $15.4 million, down from $21.5 million in the same period last year. Diluted earnings per share (EPS) were $0.46, missing the analyst estimate of $0.50. Adjusted net income was $21.8 million, with adjusted diluted EPS at $0.66, consistent with the previous year.
Financial Achievements and Challenges
Despite the revenue decline, Quanex achieved margin expansion in North America and on a consolidated basis. The gross margin for the quarter was 24.9%, up from 24.6% in the same period last year. The company also repaid $10 million in bank debt, leaving no outstanding draws on its revolver.
George Wilson, Chairman, President, and Chief Executive Officer, commented, “Our second quarter results came in as expected and we continue to execute. Volumes in North America increased in the second quarter compared to the first quarter of the year, which is encouraging and follows normal seasonality in our business. Volumes in Europe were challenged during the quarter as low consumer confidence continues to impact demand. However, we continue to operate efficiently and were able to realize margin expansion in both of our North American operating segments and on a consolidated basis for the second quarter of 2024. Our continued focus on generating cash and managing working capital enabled us to pay down the remaining $10 million balance on our revolver.”
Income Statement Highlights
| ($ in millions, except per share data) | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 |
|---|---|---|
| Net Sales | $266.2 | $273.5 |
| Gross Margin | $66.2 | $67.2 |
| Gross Margin % | 24.9% | 24.6% |
| Net Income | $15.4 | $21.5 |
| Diluted EPS | $0.46 | $0.65 |
| Adjusted Net Income | $21.8 | $21.7 |
| Adjusted Diluted EPS | $0.66 | $0.66 |
| Adjusted EBITDA | $40.0 | $39.9 |
| Adjusted EBITDA Margin % | 15.0% | 14.6% |
| Cash Provided by Operating Activities | $33.1 | $35.3 |
| Free Cash Flow | $25.5 | $27.8 |
Balance Sheet and Cash Flow
As of April 30, 2024, Quanex had total debt of $55.2 million, primarily from finance leases, and was net debt-free. The company's leverage ratio of Net Debt to Last Twelve Months (LTM) Adjusted EBITDA continued to improve. LTM Net Income was $80.7 million, and LTM Adjusted EBITDA was $158.5 million.
Outlook and Recent Events
Quanex reaffirmed its full-year 2024 guidance, estimating net sales of approximately $1.1 billion and Adjusted EBITDA of $145 million to $150 million. The company also announced the expected closure of its acquisition of Tyman plc in the second half of 2024, a move anticipated to enhance its market position.
For more detailed financial information and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Quanex Building Products Corp for further details.
