Quanex Building Products Corp (NX) Q2 2025 Earnings Call Highlights: Record Sales Surge and ...
Net Sales: $452.2 million in Q2 2025, up 70% from $266.2 million in Q2 2024.
Net Income: $20.5 million or $0.44 per diluted share in Q2 2025; adjusted net income of $27.9 million or $0.60 per diluted share.
Adjusted EBITDA: Increased by 54.7% to $61.9 million in Q2 2025 from $40 million in Q2 2024.
North American Fenestration Segment Sales: $151 million in Q2 2025, a decrease of 5.5% from $159.8 million in Q2 2024.
European Fenestration Segment Sales: $61.3 million in Q2 2025, up 8.3% from $56.5 million in Q2 2024.
North American Cabinet Component Segment Sales: $51.2 million in Q2 2025, compared to $51.1 million in Q2 2024.
Tyman Business Sales: $190.1 million in Q2 2025.
Cash Flow from Operations: $28.5 million in Q2 2025, compared to $33.1 million in Q2 2024.
Free Cash Flow: $13.6 million in Q2 2025.
Leverage Ratio: Net debt to last 12 months adjusted EBITDA at 3.2 times; debt covenant leverage ratio at 2.7 times.
Share Repurchase: Approximately $23.5 million of stock repurchased in Q2 2025.
Cost Synergies: Expected to realize $45 million over time, a 50% increase from the original target.
Guidance: Reaffirmed net sales guidance of $1.84 billion to $1.86 billion and adjusted EBITDA guidance of $270 million to $280 million for fiscal 2025.
Warning! GuruFocus has detected 3 Warning Signs with NX.
Release Date: June 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Quanex Building Products Corp (NYSE:NX) reported a significant increase in net sales, reaching $452.2 million in Q2 2025, a 70% rise compared to the same period in 2024, primarily driven by the Tyman acquisition.
The integration of the Tyman acquisition is progressing well, with cost synergies expected to reach $45 million, a 50% increase from the original target.
The company has successfully localized supply chains to mitigate tariff impacts, with 22% of total cost of goods sold exposed to tariff risk, but USMCA compliance reduces this risk for Mexico and Canada.
Quanex Building Products Corp (NYSE:NX) repurchased approximately $23.5 million of its stock in Q2 2025, taking advantage of a low share price and maintaining a healthy balance sheet.
The company reaffirmed its net sales guidance of $1.84 billion to $1.86 billion and adjusted EBITDA guidance of $270 million to $280 million for fiscal 2025, indicating confidence in future performance.
Despite the overall sales increase, net sales excluding the Tyman contribution declined by 1.4% in Q2 2025, largely due to lower volume in North America.
The North American fenestration segment saw a 5.5% decrease in net sales, with volumes declining by approximately 7% year over year.
Consumer confidence in North America and Europe is negatively impacted by higher interest rates and geopolitical tensions, affecting market conditions.
Pricing pressures continue in Europe, although operational performance has helped offset price concessions.
Free cash flow was impacted by one-time items related to integration costs and achieving cost synergies, resulting in $13.6 million for the quarter.
Q: Can you give a little more color on raising the synergy target from $30 million to $45 million, and is there potential beyond that? A: George Wilson, CEO, explained that the increase in synergy targets is due to the efficiency and opportunities identified in the new operating segments. These include headcount reductions and sourcing synergies. While revenue synergies are still early, the team is confident in further potential as they continue to refine their strategies.
Q: Is the tariff situation an opportunity for Quanex given your domestic manufacturing footprint, and are you seeing bids related to increased domestic sourcing? A: George Wilson, CEO, noted that their structured supply chain and diverse geographic footprint have indeed provided opportunities. They have seen increased quoting and execution of spot purchases, particularly in the cabinet segment, as customers seek to mitigate supply chain risks.
Q: Where in the Tyman portfolio have you realized cost synergies faster than expected? A: Scott Zuehlke, CFO, highlighted that the main synergies came from procurement and corporate functions such as finance, HR, and IT. The integration of teams revealed more opportunities than initially estimated.
Q: Is the $6.5 million in intangible asset amortization realized in Q2 a good quarterly run rate, and what is the full-year expectation for D&A? A: Scott Zuehlke, CFO, confirmed that the Q2 figure is a reasonable run rate. The company initially guided around $60 million for adjusted D&A for the year, excluding intangible amortization, which remains a good estimate.
Q: Can you provide more details on the impact of tariffs on your cost of goods sold? A: George Wilson, CEO, stated that approximately 22% of their total cost of goods sold is exposed to tariff risk, with 13% specific to Mexico and Canada. However, being USMCA compliant, the tariff rate is essentially zero for these countries, minimizing potential margin impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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