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1. Company Snapshot

1.a. Company Description

Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, Europe, Canada, Asia, and internationally.The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components.It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry.


The company also provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components.It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents.The company was founded in 1927 and is based in Houston, Texas.

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1.b. Last Insights on NX

Quanex Building Products Corporation's recent performance was negatively driven by lower volumes, which weighed on its performance. The company's muted start to fiscal 2025 was attributed to decreased demand, as evident from its Q1 2025 earnings release. Additionally, the realization of cost synergies from the Tyman acquisition, while progressing well, may not be enough to offset the impact of lower volumes. Furthermore, the company's focus on margin expansion and debt repayment may not be sufficient to drive growth in the near term.

1.c. Company Highlights

2. Quanex Building Products Corporation: A Mixed Bag in Q3 2025

Quanex Building Products Corporation reported a 77% increase in net sales to $495.3 million for the third quarter of 2025, primarily driven by the Tyman acquisition. Adjusted net income was $31.6 million, or $0.69 per diluted share, compared to $26.9 million, or $0.81 per diluted share, in the same period last year. The actual EPS came in lower than expected at $0.69 relative to estimates at $0.85. Adjusted EBITDA increased by 67.2% to $70.3 million, driven by the acquisition and some organic growth.

Publication Date: Sep -08

📋 Highlights
  • Net Sales Surge: 77% to $495.3M driven by Tyman acquisition.
  • Adjusted EBITDA Growth: 67.2% to $70.3M despite operational challenges.
  • Goodwill Impairment: $302.3M noncash loss due to resegmentation and market cap drop.
  • Hardware Solutions Impact: $5M EBITDA headwind from Mexico facility operational issues.
  • Cash Flow & Leverage: Free cash flow up 15.1% to $46.2M; leverage ratio drops to 2.6x.

Segment Performance

The company's segment performance was mixed, with the Hardware Solutions segment experiencing a 201% increase in net sales to $227.1 million, driven by the Tyman acquisition and internal restructuring. However, the segment faced operational challenges in Mexico, impacting adjusted EBITDA. The Extruded Solutions segment saw a 29.6% increase in net sales to $174.4 million, driven by the Tyman acquisition, and adjusted EBITDA increased to $37.1 million. The Custom Solutions segment also reported a 37.5% increase in net sales to $102.3 million, driven by the Tyman acquisition and increased spot business.

Operational Challenges and Updates

The company faced operational challenges at its Monterrey, Mexico facility, which impacted results in the Hardware Solutions segment by approximately $5 million in the third quarter. Despite these challenges, Quanex generated strong cash flow, with cash provided by operating activities at $60.7 million and free cash flow increasing by 15.1% to $46.2 million. The company repaid $51.25 million of bank debt, and its leverage ratio decreased to 2.6x.

Valuation and Outlook

Quanex's valuation metrics indicate a mixed picture, with a P/E Ratio of -2.64, P/B Ratio of 1.05, and P/S Ratio of 0.4. The EV/EBITDA ratio is -12.24, indicating that the company's enterprise value is not justified by its EBITDA. Analysts estimate next year's revenue growth at 2.9%. The company's guidance for fiscal 2025 expects net sales of approximately $1.82 billion and adjusted EBITDA of approximately $235 million. With a Dividend Yield of 1.98% and Free Cash Flow Yield of 3.69%, Quanex presents an interesting opportunity for income investors.

Conclusion on Financial Health

Quanex's financial health is improving, with a Net Debt / EBITDA ratio of -6.37, indicating a strong ability to service its debt. The company's return on invested capital (ROIC) is -12.9%, and return on equity (ROE) is -30.72%, both of which are negative due to the goodwill impairment. However, the company's focus on integrating the Tyman acquisition and strengthening its balance sheet is expected to drive improvement in the long term.

3. NewsRoom

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Creative Planning Has $917,000 Holdings in Quanex Building Products Corporation $NX

Dec -02

Source: defenseworld.net

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Johnson Fistel, PLLP Investigates Claims on Behalf of Long‑Term Shareholders of Quantum Computing Inc. (QUBT), Quanex Building Products Corporation (NX), Treace Medical Concepts, Inc. (TMCI), and BigBear.ai Holdings, Inc. (BBAI)

Dec -01

Source: globenewswire.com

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Quanex Building Products Announces Fourth Quarter and Full Year 2025 Earnings Release and Conference Call Schedule

Nov -26

Source: globenewswire.com

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NX Deadline: NX Investors Have Opportunity to Lead Quanex Building Products Corporation Securities Fraud Lawsuit

Nov -19

Source: prnewswire.com

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NX DEADLINE: ROSEN, GLOBAL INVESTOR COUNSEL, Encourages Quanex Building Products Corporation Investors to Secure Counsel Before Important November 18 Deadline in Securities Class Action - NX

Nov -19

Source: newsfilecorp.com

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NX Investors Have Opportunity to Lead Quanex Building Products Corporation Securities Fraud Lawsuit with the Schall Law Firm

Nov -18

Source: prnewswire.com

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Portnoy Law Firm Announces Class Action on Behalf of Quanex Building Products Corporation Investors

Nov -18

Source: globenewswire.com

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Quanex Building Products Corporation Sued for Securities Law Violations - Contact the DJS Law Group to Discuss Your Rights – NX

Nov -18

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.09%)

6. Segments

North American Fenestration

Expected Growth: 1.2%

The 1.2% growth in North American Fenestration from Quanex Building Products Corporation is driven by increasing demand for energy-efficient windows, rising residential construction, and remodeling activities. Additionally, growing adoption of smart windows and doors, and favorable government policies supporting green building initiatives also contribute to the segment's growth.

European Fenestration

Expected Growth: 0.8%

The 0.8 growth of European Fenestration from Quanex Building Products Corporation is driven by increasing demand for energy-efficient windows, government incentives for green buildings, and a rebound in European construction activity. Additionally, Quanex's strategic acquisitions and product innovations have expanded its market share, contributing to the segment's growth.

North American Cabinet Components

Expected Growth: 1.1%

Quanex Building Products Corporation's North American Cabinet Components segment growth of 1.1% is driven by increasing demand for new housing and remodeling projects, fueled by low interest rates and rising consumer confidence. Additionally, the company's focus on operational efficiency and cost savings initiatives has contributed to the segment's growth.

Unallocated Corporate & Other

Expected Growth: 0.5%

Quanex Building Products Corporation's Unallocated Corporate & Other segment growth of 0.5% is driven by modest increases in corporate expenses, partially offset by reductions in other miscellaneous items. This growth is also influenced by the company's efforts to optimize its cost structure and improve operational efficiency.

7. Detailed Products

Windows

Quanex Building Products Corporation offers a wide range of window products, including vinyl windows, aluminum windows, and wood windows, designed for new construction, replacement, and remodeling projects.

Doors

Quanex provides a variety of door products, including entry doors, patio doors, and interior doors, made from materials like steel, fiberglass, and wood.

Kitchen and Bath Cabinets

Quanex offers a range of kitchen and bath cabinets, including stock, semi-custom, and custom cabinets, designed for functionality, style, and durability.

Roofing Components

Quanex provides roofing components, including roofing membranes, roofing underlayments, and roofing accessories, designed for residential and commercial applications.

Insulation and Composites

Quanex offers insulation and composite products, including fiberglass insulation, foam insulation, and composite materials, designed for energy efficiency and durability.

Molded Products

Quanex provides molded products, including vinyl profiles, vinyl extrusions, and PVC profiles, designed for various building applications.

8. Quanex Building Products Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Quanex Building Products Corporation is moderate due to the availability of alternative materials and products in the building industry.

Bargaining Power Of Customers

The bargaining power of customers for Quanex Building Products Corporation is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Quanex Building Products Corporation is moderate due to the presence of multiple suppliers in the market, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants for Quanex Building Products Corporation is low due to the high barriers to entry in the building industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Quanex Building Products Corporation is high due to the presence of several established competitors in the building industry, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 17.58%
Debt Cost 8.22%
Equity Weight 82.42%
Equity Cost 10.84%
WACC 10.38%
Leverage 21.33%

11. Quality Control: Quanex Building Products Corporation passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Quanex Building Products

A-Score: 3.6/10

Value: 7.8

Growth: 5.1

Quality: 2.6

Yield: 3.0

Momentum: 0.0

Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

13.85$

Current Price

13.85$

Potential

-0.00%

Expected Cash-Flows