Quanex reports lower y-o-y revenue for second quarter 2023, remains optimistic

Quanex posted its second quarter results for the period ending April 30, noting a decline year-over-year in revenue across all segments. The company posted $273.5 million in net sales. Company officials cited “ongoing macroeconomic challenges” as the cause of decline.

North American fenestration sees a decline in sales

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 a decline of 7.1% in net sales in its European Fenestration segment, excluding foreign exchange impact.

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.

Leadership ‘cautiously optimistic’

George Wilson, president and chief executive officer says, “We continue to be cautiously optimistic for the second half of our fiscal year, especially as we gain confidence from recent results and our belief that we are seeing a return to normal seasonality.

In addition, the long-term underlying fundamentals for the residential housing market remain positive.  Based on conversations with our customers and recent demand trends, we are reaffirming prior guidance for fiscal 2023.  On a consolidated basis, we continue to estimate that we will generate net sales of $1.12 billion to $1.16 billion, which we expect will yield approximately $130 million to $142 million in Adjusted EBITDA in fiscal 2023.

Our capital allocation priorities continue to be generating cash, paying down debt, evaluating growth opportunities and opportunistically buying back our stock.”