Quanex Corp. Full-Year 2023

Quanex reported net sales of $295.5 million during the three months ended October 31, 2023, which represents a decrease of 3.9% compared to $307.5 million for the same period of 2022.

The Company reported net sales of $1.13 billion during the twelve months ended October 31, 2023, which represents a decrease of 7.4% compared to $1.22 billion for the same period of 2022. The decreases were primarily attributable to softer market demand and lower pricing in North America.

Quanex reported net sales growth of 1.3% for the fourth quarter of 2023 and a decline of 2.9% in net sales for the full year in its North American Fenestration segment. Excluding the contribution from the LMI Custom Mixing assets the Company acquired on November 1, 2022, net sales in the North American Fenestration segment would have declined by 10.7% for the fourth quarter and 13.9% for the full year.

In its North American Cabinet Components segment, Quanex reported a decline of 23.7% in net sales for the fourth quarter and a decline of 21.9% in net sales for the full year. Excluding foreign exchange impact, the Company realized a decrease in net sales of 3.7% for the fourth quarter and a decrease of 2.8% in net sales for the full year in its European Fenestration segment.

The increase in adjusted earnings for the three months and twelve months ended October 31, 2023, was largely attributable to effective cost control, real price increases, a decline in raw material costs, and a decrease in income tax expense. As such, Quanex was able to realize margin expansion in the fourth quarter and a full year in each of its operating segments and on a consolidated basis.

• As of October 31, 2023, Quanex had a total debt of $70.0 million ($18.5 million excluding real-estate leases that are considered “finance” leases under U.S. GAAP) and the Company’s leverage ratio of Net Debt to LTM Adjusted EBITDA decreased to 0.1x (Net Debt free excluding these real-estate leases).
• As of October 31, 2023, Quanex’s LTM Adjusted EBITDA was $159.6 million and LTM Net Income, the most directly comparable GAAP measure, was $82.5 million.