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Quanex's Stock Up on Q3 Earnings & Sales Beat, Margins Down Y/Y
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Quanex Building Products Corporation (NX - Free Report) reported better-than-expected results for the third quarter of fiscal 2024 (ended July 31, 2024) wherein the adjusted earnings and net sales topped the Zacks Consensus Estimate. However, on a year-over-year basis, the bottom and top lines declined.
The quarter’s results reflect a year-over-year decline due to demand softness across the building products industry due to inflated interest rates and low consumer confidence. This downtrend was also reflected in the reduced sales contributions from the reportable segments of Quanex. Furthermore, a decrease in volumes, accompanied by lower operating leverage, pressurized the bottom line and the margins.
Going forward, NX is optimistic about the gains from the recently acquired Tyman business. Also, it aims to capitalize on the existing commercial opportunities and absorb new innovative solutions.
Following the result announcement, NX’s shares jumped 12.3% in the after-hours trading session on Wednesday.
NX’s Q3 Discussion
Quanex reported adjusted earnings of 73 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 4.3%. In the prior-year quarter, it reported adjusted earnings per share of 97 cents.
Quanex Building Products Corporation Price, Consensus and EPS Surprise
Net sales of $280.3 million marginally topped the consensus mark of $278 million by 0.8%. The metric declined 6.4% from the prior-year quarter’s level.
NX’s Segmental Details
North American Fenestration: The segment’s net sales declined year over year by 3.9% to $170.3 million, mainly due to lower volumes.
The gross profit margin contracted 20 basis points (bps) to 23.5% from 23.7% in the year-ago period. Adjusted EBITDA margin also contracted year over year to 14.5% from 15.6%.
European Fenestration: The net sales of this segment declined 10.8% (excluding foreign exchange impact) year over year to $59.6 million. The downtrend was due to lower volumes and pricing pressures.
The gross profit margin contracted 110 bps year over year to 38.1%. The adjusted EBITDA margin declined 170 bps year over year to 25.7%.
North American Cabinet Components: Net sales of this segment declined to $51.4 million from $55.4 million reported a year ago, mainly due to lower volumes.
The segmental gross profit margin contracted year over year to 16.6% from 18.9%. The adjusted EBITDA margin contracted 310 bps year over year to 6.6%.
Operating Highlights of Quanex
NX’s gross profit declined to $70.9 million from $78.6 million in the year-ago period. The consolidated gross margin contracted 90 bps year over year to 25.3%.
Selling and administrative expenses increased to $36.5 million from $30.5 million in the prior-year quarter.
Quanex reported an adjusted EBITDA of $42 million, down 13.4% year over year. Adjusted EBITDA margin also declined to 15% from 16.2% in the prior-year period.
NX’s Financials
As of July 31, 2024, Quanex’s cash and cash equivalents were $94 million, up from $58.5 million at fiscal 2023-end. Long-term debt at the end of the fiscal third quarter declined to $51.4 million from $66.4 million at fiscal 2023 end. The current maturities of long-term debt marginally increased to $2.7 million from $2.4 million at fiscal 2023-end.
At the end of the first nine months of fiscal 2024, net cash provided by operating activities was $83.3 million compared with $102.6 million a year ago.
Quanex’s Fiscal 2024 Outlook
NX expects consolidated net sales for the fiscal year to range between $1.275 billion and $1.285 billion compared with the year-ago figure of $1,130.6 billion.
Adjusted EBITDA is expected to be between $171 million and $176 million compared with $159.6 reported in fiscal 2023.
Dycom Industries Inc. (DY - Free Report) reported strong results in second-quarter fiscal 2025 (ended July 27, 2024). Both the bottom and top lines surpassed the respective Zacks Consensus Estimate.
Contract revenues and earnings increased on a year-over-year basis. The upside was backed by solid organic growth from the top five customers and strong contributions from all other customers. On Aug. 21, the company acquired Black & Veatch’s public carrier wireless telecommunications infrastructure business. This takeover will strengthen DY’s customer base and broaden its scope to address growth opportunities in wireless network modernization, including Open RAN transformation initiatives and deployment services.
Toll Brothers, Inc. (TOL - Free Report) reported impressive third-quarter fiscal 2024 (ended July 31, 2024) results. Its earnings and revenues surpassed the Zacks Consensus Estimate. However, on a year-over-year basis, earnings declined despite revenue growth.
The company witnessed solid deposit and traffic activity through the first three weeks of August. TOL remains optimistic for the future as demand will continue to be solid through the end of fiscal 2024 and into 2025. This is mainly backed by lower mortgage rates, favorable demographics and continued imbalance in the supply and demand of homes for sale. Backed by solid fiscal third-quarter performance and expectations for the fiscal fourth quarter, TOL has raised its full-year guidance for all key home-building metrics.
LSI Industries Inc. (LYTS - Free Report) reported better-than-expected results in fourth-quarter fiscal 2024 (ended June 30), with earnings and net sales surpassing the Zacks Consensus Estimate. The top line increased while the bottom line declined year over year.
The top-line performance was backed by the notable contributions from EMI Industries, which was acquired by the company on April 18, 2024, and the solid execution of the vertical market strategy. This was partially offset by continued lower demand in the grocery vertical owing to the proposed merger of two large industry participants, which the company has previously reported and remains under regulatory review at this time.
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Quanex's Stock Up on Q3 Earnings & Sales Beat, Margins Down Y/Y
Quanex Building Products Corporation (NX - Free Report) reported better-than-expected results for the third quarter of fiscal 2024 (ended July 31, 2024) wherein the adjusted earnings and net sales topped the Zacks Consensus Estimate. However, on a year-over-year basis, the bottom and top lines declined.
The quarter’s results reflect a year-over-year decline due to demand softness across the building products industry due to inflated interest rates and low consumer confidence. This downtrend was also reflected in the reduced sales contributions from the reportable segments of Quanex. Furthermore, a decrease in volumes, accompanied by lower operating leverage, pressurized the bottom line and the margins.
Going forward, NX is optimistic about the gains from the recently acquired Tyman business. Also, it aims to capitalize on the existing commercial opportunities and absorb new innovative solutions.
Following the result announcement, NX’s shares jumped 12.3% in the after-hours trading session on Wednesday.
NX’s Q3 Discussion
Quanex reported adjusted earnings of 73 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 4.3%. In the prior-year quarter, it reported adjusted earnings per share of 97 cents.
Quanex Building Products Corporation Price, Consensus and EPS Surprise
Quanex Building Products Corporation price-consensus-eps-surprise-chart | Quanex Building Products Corporation Quote
Net sales of $280.3 million marginally topped the consensus mark of $278 million by 0.8%. The metric declined 6.4% from the prior-year quarter’s level.
NX’s Segmental Details
North American Fenestration: The segment’s net sales declined year over year by 3.9% to $170.3 million, mainly due to lower volumes.
The gross profit margin contracted 20 basis points (bps) to 23.5% from 23.7% in the year-ago period. Adjusted EBITDA margin also contracted year over year to 14.5% from 15.6%.
European Fenestration: The net sales of this segment declined 10.8% (excluding foreign exchange impact) year over year to $59.6 million. The downtrend was due to lower volumes and pricing pressures.
The gross profit margin contracted 110 bps year over year to 38.1%. The adjusted EBITDA margin declined 170 bps year over year to 25.7%.
North American Cabinet Components: Net sales of this segment declined to $51.4 million from $55.4 million reported a year ago, mainly due to lower volumes.
The segmental gross profit margin contracted year over year to 16.6% from 18.9%. The adjusted EBITDA margin contracted 310 bps year over year to 6.6%.
Operating Highlights of Quanex
NX’s gross profit declined to $70.9 million from $78.6 million in the year-ago period. The consolidated gross margin contracted 90 bps year over year to 25.3%.
Selling and administrative expenses increased to $36.5 million from $30.5 million in the prior-year quarter.
Quanex reported an adjusted EBITDA of $42 million, down 13.4% year over year. Adjusted EBITDA margin also declined to 15% from 16.2% in the prior-year period.
NX’s Financials
As of July 31, 2024, Quanex’s cash and cash equivalents were $94 million, up from $58.5 million at fiscal 2023-end. Long-term debt at the end of the fiscal third quarter declined to $51.4 million from $66.4 million at fiscal 2023 end. The current maturities of long-term debt marginally increased to $2.7 million from $2.4 million at fiscal 2023-end.
At the end of the first nine months of fiscal 2024, net cash provided by operating activities was $83.3 million compared with $102.6 million a year ago.
Quanex’s Fiscal 2024 Outlook
NX expects consolidated net sales for the fiscal year to range between $1.275 billion and $1.285 billion compared with the year-ago figure of $1,130.6 billion.
Adjusted EBITDA is expected to be between $171 million and $176 million compared with $159.6 reported in fiscal 2023.
NX’s Zacks Rank & Recent Construction Releases
Quanex currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dycom Industries Inc. (DY - Free Report) reported strong results in second-quarter fiscal 2025 (ended July 27, 2024). Both the bottom and top lines surpassed the respective Zacks Consensus Estimate.
Contract revenues and earnings increased on a year-over-year basis. The upside was backed by solid organic growth from the top five customers and strong contributions from all other customers. On Aug. 21, the company acquired Black & Veatch’s public carrier wireless telecommunications infrastructure business. This takeover will strengthen DY’s customer base and broaden its scope to address growth opportunities in wireless network modernization, including Open RAN transformation initiatives and deployment services.
Toll Brothers, Inc. (TOL - Free Report) reported impressive third-quarter fiscal 2024 (ended July 31, 2024) results. Its earnings and revenues surpassed the Zacks Consensus Estimate. However, on a year-over-year basis, earnings declined despite revenue growth.
The company witnessed solid deposit and traffic activity through the first three weeks of August. TOL remains optimistic for the future as demand will continue to be solid through the end of fiscal 2024 and into 2025. This is mainly backed by lower mortgage rates, favorable demographics and continued imbalance in the supply and demand of homes for sale. Backed by solid fiscal third-quarter performance and expectations for the fiscal fourth quarter, TOL has raised its full-year guidance for all key home-building metrics.
LSI Industries Inc. (LYTS - Free Report) reported better-than-expected results in fourth-quarter fiscal 2024 (ended June 30), with earnings and net sales surpassing the Zacks Consensus Estimate. The top line increased while the bottom line declined year over year.
The top-line performance was backed by the notable contributions from EMI Industries, which was acquired by the company on April 18, 2024, and the solid execution of the vertical market strategy. This was partially offset by continued lower demand in the grocery vertical owing to the proposed merger of two large industry participants, which the company has previously reported and remains under regulatory review at this time.