Quanex Corp. Half-Year Report 2023

The Company reported net sales of $273.5 million during the three months ended April 30, 2023, which represents a decrease of 15.3% compared to $322.9 million for the same period of 2022. The decrease was mostly attributable to softer demand, caused in part by customer inventory rebalancing initiatives, lower pricing in North America, and foreign exchange translation impact.

Quanex realized a decline in net sales of 11.8% for the second quarter of 2023 in its North American Fenestration segment. Excluding LMI, net sales in the North American Fenestration segment would have declined by approximately 21.8% year-over-year.

The Company reported a decline in net sales of 26.6% in its North American Cabinet Components segment and a decline of 7.1% in net sales in its European Fenestration segment, excluding foreign exchange impact. (See Sales Analysis table for additional information)

The decrease in earnings for the three months ended April 30, 2023 was mostly attributable to lower volumes, decreased pricing mainly due to surcharge rollbacks and raw material index pricing mechanisms in North America, foreign exchange translation, and higher interest expense.

As of April 30, 2023, Quanex had total debt of $135.6 million ($82.5 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 0.6x (0.3x excluding these real-estate leases).

• As of April 30, 2023, Quanex’s LTM Adjusted EBITDA was $143.3 million and LTM Net Income, the most directly comparable GAAP measure, was $74.0 million.