Quanex Corp. Q1 Report 2023

The Company reported net sales of $261.9 million during the three months ended January 31, 2023, which represents a decrease of 1.9% compared to $267.0 million for the same period of 2022. The decrease was mostly attributable to softer demand, customer inventory rebalancing initiatives, and foreign exchange translation impact.

Quanex realized net sales growth of 4.3% for the first quarter of 2023 in its North American Fenestration segment, which was driven by the contribution from LMI. Excluding LMI, net sales in the North American Fenestration segment would have declined by approximately 7% year-over-year.

The Company reported a decline in net sales of 12.3% in its North American Cabinet Components segment and an increase of 3.9% in net sales in its European Fenestration segment, excluding foreign exchange impact.

The decrease in earnings for the three months ended January 31, 2023, was largely due to lower volumes, one-time transaction and advisory fees, foreign exchange translation, higher interest expense, and increased stock-based compensation expense, mostly due to stock price appreciation.

  • As of January 31, 2023, the Company had total debt of $155.1 million ($100.0 million excluding real-estate leases that are considered “finance” leases under U.S. GAAP) and Quanex’s leverage ratio of Net Debt to LTM Adjusted EBITDA was 0.8x (0.4x excluding these real-estate leases).
  • As previously disclosed, the Company borrowed $92 million to acquire substantially all the assets of LMI on November 1, 2022. As of January 31, 2023, the Company’s LTM Adjusted EBITDA was $148.6 million and LTM Net Income, the most directly comparable GAAP measure, was $79.0 million.

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