QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. | ☐ |
PART I. | ||||||||
Item 1: | ||||||||
Condensed Consolidated Balance Sheets – April 30, 2024 and October 31, 2023 | ||||||||
Condensed Consolidated Statements of Cash Flows – Six Months Ended April 30, 2024 and 2023 | ||||||||
Condensed Consolidated Statement of Stockholders’ Equity – Six Months Ended April 30, 2024 and 2023 | ||||||||
Item 2: | ||||||||
Item 3: | ||||||||
Item 4: | ||||||||
PART II. | ||||||||
Item 1A: | ||||||||
Item 5: | ||||||||
Item 6: |
April 30, 2024 | October 31, 2023 | ||||||||||
(In thousands, except share amounts) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Inventories | |||||||||||
Income taxes receivable | |||||||||||
Prepaid and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Income taxes payable | |||||||||||
Current maturities of long-term debt | |||||||||||
Current operating lease liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Noncurrent operating lease liabilities | |||||||||||
Deferred income taxes | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in-capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Less: Treasury stock at cost, | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost and expenses: | |||||||||||||||||||||||
Cost of sales (excluding depreciation and amortization) | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Non-operating (expense) income: | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other, net | ( | ||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Cash dividends per share | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net income | $ | $ | |||||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation (loss) gain | ( | ||||||||||||||||||||||
Other comprehensive (expense) income | ( | ||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Six Months Ended | |||||||||||
April 30, | |||||||||||
2024 | 2023 | ||||||||||
(In thousands) | |||||||||||
Operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Deferred income tax | ( | ||||||||||
Other, net | |||||||||||
Changes in assets and liabilities: | |||||||||||
Decrease in accounts receivable | |||||||||||
(Increase) decrease in inventory | ( | ||||||||||
Increase in other current assets | ( | ( | |||||||||
Decrease in accounts payable | ( | ( | |||||||||
Decrease in accrued liabilities | ( | ( | |||||||||
Decrease (increase) in income taxes receivable | ( | ||||||||||
Increase in deferred pension benefits | |||||||||||
Increase in other long-term liabilities | |||||||||||
Other, net | |||||||||||
Cash provided by operating activities | |||||||||||
Investing activities: | |||||||||||
Business acquisition | ( | ||||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from disposition of capital assets | |||||||||||
Cash used for investing activities | ( | ( | |||||||||
Financing activities: | |||||||||||
Borrowings under credit facilities | |||||||||||
Repayments of credit facility borrowings | ( | ( | |||||||||
Repayments of other long-term debt | ( | ( | |||||||||
Common stock dividends paid | ( | ( | |||||||||
Issuance of common stock | |||||||||||
Payroll tax paid to settle shares forfeited upon vesting of stock | ( | ( | |||||||||
Purchase of treasury stock | ( | ||||||||||
Cash (used for) provided by financing activities | ( | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Three Months Ended April 30, 2024 | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
(In thousands, no per share amounts shown except in verbiage) | |||||||||||||||||||||||||||||||||||
Balance at October 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
Expense related to stock-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | ||||||||||||||||||||||||||||||||
Restricted stock awards granted | — | ( | — | — | — | ||||||||||||||||||||||||||||||
Performance restricted stock units vested | — | ( | — | — | — | ||||||||||||||||||||||||||||||
Other | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Balance at January 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
Expense related to stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | ||||||||||||||||||||||||||||||||
Balance at April 30, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Three Months Ended April 30, 2023 | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
(In thousands, no per share amounts shown except in verbiage) | |||||||||||||||||||||||||||||||||||
Balance at October 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
Expense related to stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Stock options exercised | — | — | — | ||||||||||||||||||||||||||||||||
Restricted stock awards granted | — | ( | — | — | — | ||||||||||||||||||||||||||||||
Performance restricted stock units vested | — | ( | — | — | — | ||||||||||||||||||||||||||||||
Other | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Balance at January 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
Expense related to stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
Balance at April 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
North American Fenestration: | |||||||||||||||||||||||
United States - fenestration | $ | $ | $ | $ | |||||||||||||||||||
International - fenestration | |||||||||||||||||||||||
United States - non-fenestration | |||||||||||||||||||||||
International - non-fenestration | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
European Fenestration: | |||||||||||||||||||||||
International - fenestration | $ | $ | $ | $ | |||||||||||||||||||
International - non-fenestration | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
North American Cabinet Components: | |||||||||||||||||||||||
United States - fenestration | $ | $ | $ | $ | |||||||||||||||||||
United States - non-fenestration | |||||||||||||||||||||||
International - non-fenestration | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Unallocated Corporate & Other | |||||||||||||||||||||||
Eliminations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
$ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Net sales | $ | $ | $ | $ |
April 30, 2024 | October 31, 2023 | ||||||||||
Raw materials | $ | $ | |||||||||
Finished goods and work in process | |||||||||||
Supplies and other | |||||||||||
Total | $ | $ |
Leases | Classification | April 30, 2024 | October 31, 2023 | |||||||||||||||||
Assets | ||||||||||||||||||||
Operating lease assets | Operating lease right-of-use assets | $ | $ | |||||||||||||||||
Finance lease assets | Property, plant and equipment (less accumulated depreciation of $ | |||||||||||||||||||
Total lease assets | $ | $ | ||||||||||||||||||
Liabilities | ||||||||||||||||||||
Current | ||||||||||||||||||||
Operating | Current operating lease liabilities | $ | $ | |||||||||||||||||
Finance | Current maturities of long-term debt | |||||||||||||||||||
Noncurrent | ||||||||||||||||||||
Operating | Noncurrent operating lease liabilities | |||||||||||||||||||
Finance | Long-term debt | |||||||||||||||||||
Total lease liabilities | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
Finance lease cost | |||||||||||||||||||||||
Amortization of leased assets | |||||||||||||||||||||||
Interest on lease liabilities | |||||||||||||||||||||||
Variable lease costs | |||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ |
Six Months Ended | |||||||||||
April 30, | |||||||||||
2024 | 2023 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Finance leases - financing cash flows | $ | $ | |||||||||
Finance leases - operating cash flows | $ | $ | |||||||||
Operating leases - operating cash flows | $ | $ | |||||||||
Right-of-use assets obtained in exchange for lease liabilities: | |||||||||||
Operating leases | $ | $ | |||||||||
Finance leases | $ | $ |
April 30, 2024 | October 31, 2023 | |||||||||||||
Weighted-average remaining lease term (in years) | ||||||||||||||
Operating leases | ||||||||||||||
Financing leases | ||||||||||||||
Weighted-average discount rate | ||||||||||||||
Operating leases | % | % | ||||||||||||
Financing leases | % | % |
Operating Leases | Finance Leases | |||||||||||||
2024 (remaining six months) | $ | $ | ||||||||||||
2025 | ||||||||||||||
2026 | ||||||||||||||
2027 | ||||||||||||||
2028 | ||||||||||||||
Thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: present value discount | ||||||||||||||
Total lease liabilities | $ | $ |
Six Months Ended | |||||
April 30, 2024 | |||||
Beginning balance as of November 1, 2023 | $ | ||||
Foreign currency translation adjustment | |||||
Balance as of the end of the period | $ |
April 30, 2024 | October 31, 2023 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
Customer relationships | $ | $ | $ | $ | |||||||||||||||||||
Trademarks and trade names | |||||||||||||||||||||||
Patents and other technology | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Estimated Amortization Expense | |||||
2024 (remaining six months) | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total | $ |
April 30, 2024 | October 31, 2023 | ||||||||||
Revolving Credit Facility | $ | $ | |||||||||
Finance lease obligations and other | |||||||||||
Unamortized deferred financing fees | ( | ( | |||||||||
Total debt | $ | $ | |||||||||
Less: Current maturities of long-term debt | |||||||||||
Long-term debt | $ | $ |
Pricing Level | Consolidated Net Leverage Ratio | Commitment Fee | Eurocurrency Rate Loans and RFR Loans | Base Rate Loans | ||||||||||||||||||||||
I | Less than or equal to 1.50 to 1.00 | |||||||||||||||||||||||||
II | Greater than 1.50 to 1.00, but less than or equal to 2.25 to 1.00 | |||||||||||||||||||||||||
III | Greater than 2.25 to 1.00, but less than or equal to 3.00 to 1.00 | |||||||||||||||||||||||||
IV | Greater than 3.00 to 1.00 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | |||||||||||||||||||||
Amortization of net loss | |||||||||||||||||||||||
Settlement reimbursement | ( | ( | |||||||||||||||||||||
Net periodic pension (benefit) cost | $ | ( | $ | $ | ( | $ |
Restricted Stock Awards | Weighted-Average Grant Date Fair Value per Share | ||||||||||
Non-vested at October 31, 2023 | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Non-vested at April 30, 2024 | $ |
Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (000s) | ||||||||||||||||||||
Outstanding at October 31, 2023 | $ | ||||||||||||||||||||||
Exercised | ( | ||||||||||||||||||||||
Outstanding at April 30, 2024 | $ | $ | |||||||||||||||||||||
Vested at April 30, 2024 | $ | $ | |||||||||||||||||||||
Exercisable at April 30, 2024 | $ | $ |
Grant Date | Shares Awarded | Grant Date Fair Value | Shares Forfeited | |||||||||||||||||
December 9, 2021 | $ | |||||||||||||||||||
December 7, 2022 | $ | |||||||||||||||||||
December 7, 2023 | $ |
Vesting Level | Vesting Criteria | Percentage of Award Vested | ||||||||||||
Level 1 | A-TSR greater than or equal to 50% | |||||||||||||
Level 2 | A-TSR less than 50% and greater than or equal to 20% | |||||||||||||
Level 3 | A-TSR less than 20% and greater than or equal to -20% | |||||||||||||
Level 4 | A-TSR less than -20% |
Grant Date | Shares Awarded | Grant Date Fair Value | Shares Forfeited | |||||||||||||||||
December 9, 2021 | $ | |||||||||||||||||||
December 7, 2022 | $ | |||||||||||||||||||
December 7, 2023 | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Restricted stock awards | $ | $ | $ | $ | |||||||||||||||||||
Restricted stock units | ( | ||||||||||||||||||||||
Performance share awards | |||||||||||||||||||||||
Performance restricted stock units | |||||||||||||||||||||||
Total compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Six Months Ended | |||||
April 30, 2024 | |||||
Beginning Balance as of November 1, 2023 | |||||
Restricted stock awards granted | ( | ||||
Performance restricted stock units vested | ( | ||||
Stock options exercised | ( | ||||
Balance at April 30, 2024 |
NA Fenestration | EU Fenestration | NA Cabinet Components | Unallocated Corp. & Other | Total | |||||||||||||||||||||||||
Three Months Ended April 30, 2024 | |||||||||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||||||||
Capital expenditures | |||||||||||||||||||||||||||||
Three Months Ended April 30, 2023 | |||||||||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||
Capital expenditures | |||||||||||||||||||||||||||||
Six Months Ended April 30, 2024 | |||||||||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Operating income (loss) | ( | ( | |||||||||||||||||||||||||||
Capital expenditures | |||||||||||||||||||||||||||||
Six Months Ended April 30, 2023 | |||||||||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Operating income (loss) | ( | ( | |||||||||||||||||||||||||||
Capital expenditures | |||||||||||||||||||||||||||||
As of April 30, 2024 | |||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
As of October 31, 2023 | |||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ |
NA Fenestration | EU Fenestration | NA Cabinet Comp. | Unallocated Corp. & Other | Total | |||||||||||||||||||||||||
Balance as of October 31, 2023 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Foreign currency translation adjustment | |||||||||||||||||||||||||||||
Balance as of April 30, 2024 | $ | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
April 30, | April 30, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Operating income | $ | $ | $ | $ | |||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other, net | ( | ||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
Net income | $ | $ | $ | $ |
Net Income | Weighted-Average Shares | Per Share | |||||||||||||||
Three Months Ended April 30, 2024 | |||||||||||||||||
Basic earnings per common share | $ | $ | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Stock options | — | — | |||||||||||||||
Restricted stock awards | — | — | |||||||||||||||
Performance restricted stock units | — | — | |||||||||||||||
Diluted earnings per common share | $ | $ | |||||||||||||||
Three Months Ended April 30, 2023 | |||||||||||||||||
Basic earnings per common share | $ | $ | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Stock options | — | — | |||||||||||||||
Restricted stock awards | — | — | |||||||||||||||
Performance restricted stock units | — | — | |||||||||||||||
Diluted earnings per common share | $ | $ | |||||||||||||||
Six Months Ended April 30, 2024 | |||||||||||||||||
Basic earnings per common share | $ | $ | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Stock options | — | — | |||||||||||||||
Restricted stock awards | — | — | |||||||||||||||
Performance restricted stock units | — | — | |||||||||||||||
Diluted earnings per common share | $ | $ | |||||||||||||||
Six Months Ended April 30, 2023 | |||||||||||||||||
Basic earnings per common share | $ | $ | |||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Stock options | — | — | |||||||||||||||
Restricted stock awards | — | — | |||||||||||||||
Performance restricted stock units | — | — | |||||||||||||||
Diluted earnings per common share | $ | $ |
Three Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | Change $ | % Variance | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 266,201 | $ | 273,535 | $ | (7,334) | (3) | % | |||||||||||||||
Cost of sales (excluding depreciation and amortization) | 199,963 | 206,372 | (6,409) | (3) | % | ||||||||||||||||||
Selling, general and administrative | 34,707 | 27,371 | 7,336 | 27 | % | ||||||||||||||||||
Depreciation and amortization | 10,894 | 10,456 | 438 | 4 | % | ||||||||||||||||||
Operating income | 20,637 | 29,336 | (8,699) | (30) | % | ||||||||||||||||||
Interest expense | (950) | (2,244) | 1,294 | (58) | % | ||||||||||||||||||
Other, net | 4 | (29) | 33 | (114) | % | ||||||||||||||||||
Income tax expense | (4,314) | (5,551) | 1,237 | (22) | % | ||||||||||||||||||
Net income | $ | 15,377 | $ | 21,512 | $ | (6,135) | (29) | % |
Three Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Variance | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 159,774 | $ | 156,975 | $ | 2,799 | 2% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 122,261 | 122,472 | (211) | —% | |||||||||||||||||||
Selling, general and administrative | 13,730 | 14,158 | (428) | (3)% | |||||||||||||||||||
Depreciation and amortization | 5,218 | 5,050 | 168 | 3% | |||||||||||||||||||
Operating income | $ | 18,565 | $ | 15,295 | $ | 3,270 | 21% | ||||||||||||||||
Operating income margin | 12 | % | 10 | % |
Three Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Variance | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 56,583 | $ | 63,763 | $ | (7,180) | (11)% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 35,694 | 40,452 | (4,758) | (12)% | |||||||||||||||||||
Selling, general and administrative | 7,873 | 8,452 | (579) | (7)% | |||||||||||||||||||
Depreciation and amortization | 2,538 | 2,353 | 185 | 8% | |||||||||||||||||||
Operating income | $ | 10,478 | $ | 12,506 | $ | (2,028) | (16)% | ||||||||||||||||
Operating income margin | 19 | % | 20 | % |
Three Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | Variance % | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 51,078 | $ | 53,518 | $ | (2,440) | (5)% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 42,624 | 43,731 | (1,107) | (3)% | |||||||||||||||||||
Selling, general and administrative | 5,066 | 5,971 | (905) | (15)% | |||||||||||||||||||
Depreciation and amortization | 3,082 | 2,970 | 112 | 4% | |||||||||||||||||||
Operating income | $ | 306 | $ | 846 | $ | (540) | (64)% | ||||||||||||||||
Operating income margin | 1 | % | 2 | % |
Three Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | Variance % | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | (1,234) | $ | (721) | $ | (513) | 71% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | (616) | (283) | (333) | 118% | |||||||||||||||||||
Selling, general and administrative | 8,038 | (1,210) | 9,248 | (764)% | |||||||||||||||||||
Depreciation and amortization | 56 | 83 | (27) | (33)% | |||||||||||||||||||
Operating (loss) income | $ | (8,712) | $ | 689 | $ | (9,401) | (1,364)% |
Six Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | Change $ | % Variance | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 505,356 | $ | 535,451 | $ | (30,095) | (6) | % | |||||||||||||||
Cost of sales (excluding depreciation and amortization) | 387,686 | 416,521 | (28,835) | (7) | % | ||||||||||||||||||
Selling, general and administrative | 67,070 | 64,115 | 2,955 | 5 | % | ||||||||||||||||||
Depreciation and amortization | 22,046 | 21,076 | 970 | 5 | % | ||||||||||||||||||
Operating income | 28,554 | 33,739 | (5,185) | (15) | % | ||||||||||||||||||
Interest expense | (2,018) | (4,503) | 2,485 | (55) | % | ||||||||||||||||||
Other, net | 1,046 | 189 | 857 | 453 | % | ||||||||||||||||||
Income tax expense | (5,956) | (6,004) | 48 | (1) | % | ||||||||||||||||||
Net income | $ | 21,626 | $ | 23,421 | $ | (1,795) | (8) | % |
Six Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | % Variance | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 307,769 | $ | 309,955 | $ | (2,186) | (1)% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 240,629 | 247,189 | (6,560) | (3)% | |||||||||||||||||||
Selling, general and administrative | 29,640 | 27,453 | 2,187 | 8% | |||||||||||||||||||
Depreciation and amortization | 10,693 | 10,295 | 398 | 4% | |||||||||||||||||||
Operating income | $ | 26,807 | $ | 25,018 | $ | 1,789 | 7% | ||||||||||||||||
Operating income margin | 9 | % | 8 | % |
Six Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | Variance % | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 106,020 | $ | 118,715 | $ | (12,695) | (11)% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 67,397 | 78,155 | (10,758) | (14)% | |||||||||||||||||||
Selling, general and administrative | 15,618 | 15,957 | (339) | (2)% | |||||||||||||||||||
Depreciation and amortization | 5,096 | 4,701 | 395 | 8% | |||||||||||||||||||
Operating income | $ | 17,909 | $ | 19,902 | $ | (1,993) | (10)% | ||||||||||||||||
Operating income margin | 17 | % | 17 | % |
Six Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | Variance % | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | 94,215 | $ | 108,192 | $ | (13,977) | (13)% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | 81,367 | 91,787 | (10,420) | (11)% | |||||||||||||||||||
Selling, general and administrative | 10,192 | 10,844 | (652) | (6)% | |||||||||||||||||||
Depreciation and amortization | 6,147 | 5,904 | 243 | 4% | |||||||||||||||||||
Operating loss | $ | (3,491) | $ | (343) | $ | (3,148) | 918% | ||||||||||||||||
Operating loss margin | (4) | % | — | % |
Six Months Ended April 30, | |||||||||||||||||||||||
2024 | 2023 | $ Change | Variance % | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Net sales | $ | (2,648) | $ | (1,411) | $ | (1,237) | 88% | ||||||||||||||||
Cost of sales (excluding depreciation and amortization) | (1,707) | (610) | (1,097) | 180% | |||||||||||||||||||
Selling, general and administrative | 11,620 | 9,861 | 1,759 | 18% | |||||||||||||||||||
Depreciation and amortization | 110 | 176 | (66) | (38)% | |||||||||||||||||||
Operating loss | $ | (12,671) | $ | (10,838) | $ | (1,833) | 17% |
Six Months Ended | |||||||||||
April 30, | |||||||||||
2024 | 2023 | ||||||||||
(Dollars in thousands) | |||||||||||
Cash provided by operating activities | $ | 36,945 | $ | 38,460 | |||||||
Cash used for investing activities | $ | (17,090) | $ | (106,275) | |||||||
Cash (used for) provided by financing activities | $ | (21,887) | $ | 54,313 |
QUANEX BUILDING PRODUCTS CORPORATION | |||||||||||
Date: | June 7, 2024 | /s/ Scott M. Zuehlke | |||||||||
Scott M. Zuehlke | |||||||||||
Senior Vice President - Chief Financial Officer & Treasurer (Principal Financial Officer) |
EXHIBIT INDEX | |||||||||||
Exhibit Number | Description of Exhibits | ||||||||||
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/s/ George L. Wilson | |||||
George L. Wilson President and Chief Executive Officer (Principal Executive Officer) |
/s/ Scott M. Zuehlke | |||||
Scott M. Zuehlke Senior Vice President - Chief Financial Officer and Treasurer (Principal Financial Officer) |
/s/ George L. Wilson | /s/ Scott M. Zuehlke | |||||||
George L. Wilson President and Chief Executive Officer (Principal Executive Officer) | Scott M. Zuehlke Senior Vice President—Chief Financial Officer and Treasurer (Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Apr. 30, 2024 |
Oct. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 198 | $ 843 |
Accumulated depreciation of property, plant and equipment | $ 381,366 | $ 368,763 |
Preferred stock, no par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 37,127,024 | 37,176,958 |
Common stock, shares outstanding | 33,111,593 | 33,011,119 |
Treasury stock, common, shares | 4,015,431 | 4,165,839 |
Condensed Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Income Statement [Abstract] | ||||
Net sales | $ 266,201 | $ 273,535 | $ 505,356 | $ 535,451 |
Cost and expenses: | ||||
Cost of sales (excluding depreciation and amortization) | 199,963 | 206,372 | 387,686 | 416,521 |
Selling, general and administrative | 34,707 | 27,371 | 67,070 | 64,115 |
Depreciation and amortization | 10,894 | 10,456 | 22,046 | 21,076 |
Operating income | 20,637 | 29,336 | 28,554 | 33,739 |
Non-operating (expense) income: | ||||
Interest expense | (950) | (2,244) | (2,018) | (4,503) |
Other, net | 4 | (29) | 1,046 | 189 |
Income before income taxes | 19,691 | 27,063 | 27,582 | 29,425 |
Income tax expense | (4,314) | (5,551) | (5,956) | (6,004) |
Net income | $ 15,377 | $ 21,512 | $ 21,626 | $ 23,421 |
Basic earnings per common share | $ 0.47 | $ 0.65 | $ 0.66 | $ 0.71 |
Diluted earnings per common share | $ 0.46 | $ 0.65 | $ 0.65 | $ 0.71 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 32,870 | 32,858 | 32,847 | 32,905 |
Diluted (in shares) | 33,103 | 33,017 | 33,076 | 33,070 |
Cash dividends per share (in usd per share) | $ 0.08 | $ 0.08 | $ 0.16 | $ 0.16 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 15,377 | $ 21,512 | $ 21,626 | $ 23,421 |
Other comprehensive income: | ||||
Foreign currency translation (loss) gain | (2,571) | 3,082 | 3,510 | 14,454 |
Other comprehensive (expense) income | (2,571) | 3,082 | 3,510 | 14,454 |
Comprehensive income | $ 12,806 | $ 24,594 | $ 25,136 | $ 37,875 |
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2024 |
Jan. 31, 2024 |
Apr. 30, 2023 |
Jan. 31, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Statement of Stockholders' Equity [Abstract] | ||||||
Cash dividends per share (in usd per share) | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.16 | $ 0.16 |
Nature of Operations and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Quanex Building Products Corporation is a global, publicly traded manufacturing company primarily serving original equipment manufacturers (OEMs) in the fenestration, cabinetry, solar, refrigeration and outdoor products markets. These components can be categorized as window and door (fenestration) components and kitchen and bath cabinet components. Examples of fenestration components include: (1) energy-efficient flexible insulating glass spacers, (2) extruded vinyl profiles, (3) window and door screens, and (4) precision-formed metal and wood products. We also manufacture cabinet doors and other components for OEMs in the kitchen and bathroom cabinet industry. In addition, we provide certain other non-fenestration components and products, which include custom mixing, solar panel sealants, trim moldings, vinyl decking, vinyl fencing, customized compounds, water retention barriers, and conservatory roof components. We have organized our business into three reportable business segments. For additional discussion of our reportable business segments, see Note 12, “Segment Information.” We use low-cost, short lead-time production processes and engineering expertise to provide our customers with specialized products for their specific window, door, and cabinet applications. We believe these capabilities provide us with unique competitive advantages. We serve a primary customer base in North America and the United Kingdom (U.K.), and also serve customers in international markets through our operating plants in the U.K. and Germany, as well as through sales and marketing efforts in other countries. Unless the context indicates otherwise, references to “Quanex”, the “Company”, “we”, “us” and “our” refer to the consolidated business operations of Quanex Building Products Corporation and its subsidiaries. Basis of Presentation and Principles of Consolidation The accompanying interim unaudited condensed consolidated financial statements include the accounts of Quanex Building Products Corporation. All intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of October 31, 2023 was derived from audited financial information but does not include all disclosures required by U.S. GAAP. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023. In our opinion, the accompanying financial statements contain all adjustments (which consist of normal recurring adjustments, except as disclosed herein) necessary to fairly present our financial position, results of operations and cash flows for the interim periods. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year or for any future periods. Use of Estimates In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an on-going basis, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Revenue from Contracts with Customers Revenue recognition We recognize revenue that reflects the consideration we expect to receive for product sales upon transfer to customers. Revenue for product sales is recognized when control of the promised products is transferred to our customers, and we are entitled to consideration in exchange for such transfer. We account for a contract when a customer provides us with a firm purchase order that identifies the products to be provided, the payment terms for those products, and when collectability of the consideration due is probable. Performance obligations A performance obligation is a promise to provide the customer with a good or service. Our performance obligations include product sales, with each product included in a customer contract being recognized as a separate performance obligation. For contracts with multiple performance obligations, the standalone selling price of each product is generally readily observable. Revenue from product sales is recognized at a point in time when the product is transferred to the customer, in accordance with the shipping terms, which is generally upon shipment. We estimate a provision for sales returns and warranty allowances to account for product returns related to general returns and product nonconformance. We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. Additionally, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Pricing and sales incentives Pricing is established at or prior to the time of sale with our customers and we record sales at the agreed-upon net selling price, reflective of current and prospective discounts. Shipping and handling costs We account for shipping and handling services as fulfillment services; accordingly, freight revenue is combined with the product deliverable rather than being accounted for as a distinct performance obligation within the terms of the agreement. Shipping and handling costs incurred by us for the delivery of goods to customers are considered a cost to fulfill the contract and are included in cost of sales in the accompanying condensed consolidated statements of income. Contract assets and liabilities Deferred revenue, which is not significant, is recorded when we have remaining unsatisfied performance obligations for which we have received consideration. Disaggregation of revenue We produce a wide variety of products that are used in the fenestration industry, including window spacer systems; extruded vinyl products; metal fabricated products; and astragals, thresholds and screens. In addition, we produce certain non-fenestration products, including kitchen and bath cabinet doors and components, flooring and trim moldings, solar edge tape, plastic decking, fencing, water retention barriers, conservatory roof components, and other products. The following table summarizes our product sales for the three and six months ended April 30, 2024 and 2023 into groupings by segment which we believe depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. For further details regarding our results by segment, refer to Note 12, “Segment Information.”
Allowance for Credit Losses We have established an allowance for credit losses to estimate the risk of losses, which represents an estimate of expected losses over the remaining contractual life of our receivables. The allowance is determined using two methods. The amounts calculated from each of these methods are combined to determine the total amount reserved. First, a specific reserve is established for individual accounts where information indicates the customers may have an inability to meet financial obligations. Second, a reserve is determined for all customers based on a range of percentages applied to aging categories. These percentages are based on historical collection rates, write-off experience, and forecasts of future economic conditions. Actual write-offs are charged against the allowance when collection efforts have been unsuccessful. Related Parties Net sales include transactions with a customer which is a related party with one of our non-employee directors for the six months ended April 30, 2024 and 2023 of approximately $0.5 million and $0.6 million, respectively. We performed a review of these transactions, of which no single transaction or series of related transactions exceeded $120,000 in amount, and determined that these transactions were enacted independently of each other. We are not aware of any other related party transactions with any of our current non-employee directors or officers outside of their normal business functions or expected contractual duties.
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Acquisition |
6 Months Ended |
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Apr. 30, 2024 | |
Business Combinations [Abstract] | |
Asset Acquisition | AcquisitionOn November 1, 2022, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with LMI Custom Mixing, LLC (“LMI”) and the equity owners of LMI, Lauren International, Ltd. and Meteor-US-Beteiligungs GMBH. Under the Purchase Agreement, we acquired substantially all of the operating assets comprising LMI’s polymer mixing and rubber compound production business (collectively, the “Purchased Assets”) and also agreed to assume certain liabilities relating to the Purchased Assets (collectively, the “Acquisition”). As consideration for the Purchased Assets, we paid $91.3 million in cash utilizing funds borrowed under our Credit Facility. In connection with the Acquisition, we amended our existing finance lease with Lauren Real Estate Holding LLC for the purpose of adding an additional lease renewal option and increasing rental space by approximately 60,000 square feet of rental space which was added to the 313,595 square feet of rentable area located in Cambridge, Ohio. |
Inventories |
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):
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Leases |
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We recognize a right-of-use (ROU) asset and lease liability for each operating and finance lease with a contractual term greater than 12 months at the time of lease inception. We include ROU assets and lease liabilities for leases that exist within other contracts. Leases with an original term of 12 months or less are not recognized on the balance sheet, and the rent expense related to those short-term leases is recognized over the lease term. We do not account for lease and non-lease (e.g., common area maintenance) components of contracts separately for any underlying asset class. We lease certain manufacturing plants, warehouses, office space, vehicles and equipment under finance and operating leases. Lease commencement occurs on the date we take possession or control of the property or equipment. Original terms for our real estate-related leases are generally between five years and twenty years. Original terms for equipment-related leases, primarily manufacturing equipment and vehicles, are generally between one year and ten years. Some of our leases also include rental escalation clauses. Renewal options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital. If readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of our leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, our estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. Total lease costs recorded include fixed operating lease costs and variable lease costs. Most of our real estate leases require we pay certain expenses, such as common area maintenance costs, of which the fixed portion is included in operating lease costs. We recognize operating lease costs on a straight-line basis over the lease term. In addition to the above costs, variable lease costs are recognized when probable and are not included in determining the present value of our lease liability. The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date and initial direct costs. For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method. For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term. Interest expense on each finance lease liability is recognized utilizing the effective interest method. ROU assets are tested for impairment in the same manner as long-lived assets. Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required. The table below presents the lease-related assets and liabilities recorded on the balance sheet at April 30, 2024 and October 31, 2023 (in thousands):
The table below presents the components of lease costs for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):
The table below presents supplemental cash flow information related to leases for the six months ended April 30, 2024 and 2023 was as follows (in thousands):
The table below presents the weighted-average remaining lease terms and weighted-average discount rates for the Company's leases as of April 30, 2024 and October 31, 2023:
The table below presents the maturity of the lease liabilities as of April 30, 2024 (in thousands):
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Leases | Leases We recognize a right-of-use (ROU) asset and lease liability for each operating and finance lease with a contractual term greater than 12 months at the time of lease inception. We include ROU assets and lease liabilities for leases that exist within other contracts. Leases with an original term of 12 months or less are not recognized on the balance sheet, and the rent expense related to those short-term leases is recognized over the lease term. We do not account for lease and non-lease (e.g., common area maintenance) components of contracts separately for any underlying asset class. We lease certain manufacturing plants, warehouses, office space, vehicles and equipment under finance and operating leases. Lease commencement occurs on the date we take possession or control of the property or equipment. Original terms for our real estate-related leases are generally between five years and twenty years. Original terms for equipment-related leases, primarily manufacturing equipment and vehicles, are generally between one year and ten years. Some of our leases also include rental escalation clauses. Renewal options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital. If readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of our leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, our estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. Total lease costs recorded include fixed operating lease costs and variable lease costs. Most of our real estate leases require we pay certain expenses, such as common area maintenance costs, of which the fixed portion is included in operating lease costs. We recognize operating lease costs on a straight-line basis over the lease term. In addition to the above costs, variable lease costs are recognized when probable and are not included in determining the present value of our lease liability. The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date and initial direct costs. For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method. For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term. Interest expense on each finance lease liability is recognized utilizing the effective interest method. ROU assets are tested for impairment in the same manner as long-lived assets. Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required. The table below presents the lease-related assets and liabilities recorded on the balance sheet at April 30, 2024 and October 31, 2023 (in thousands):
The table below presents the components of lease costs for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):
The table below presents supplemental cash flow information related to leases for the six months ended April 30, 2024 and 2023 was as follows (in thousands):
The table below presents the weighted-average remaining lease terms and weighted-average discount rates for the Company's leases as of April 30, 2024 and October 31, 2023:
The table below presents the maturity of the lease liabilities as of April 30, 2024 (in thousands):
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The change in the carrying amount of goodwill for the six months ended April 30, 2024 was as follows (in thousands):
At our last annual test date, August 31, 2023, we evaluated the recoverability of goodwill at each of our five reporting units with goodwill balances and determined that our goodwill was not impaired. We evaluated for indicators of impairment for all reporting units during the three and six months ended April 30, 2024 and determined that there were no triggering events. For additional discussion of change in reporting units and a summary of the change in the carrying amount of goodwill by segment, see Note 12, “Segment Information.” Identifiable Intangible Assets Amortizable intangible assets consisted of the following as of April 30, 2024 and October 31, 2023 (in thousands):
We had aggregate amortization expense related to intangible assets for the three and six months ended April 30, 2024 of $3.0 million and $6.2 million, respectively, and $3.0 million and $6.1 million for the comparable prior year periods. Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for future fiscal years as of April 30, 2024 (in thousands):
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Debt and Finance Lease Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Finance Lease Obligations | Debt and Finance Lease Obligations Long-term debt consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):
Revolving Credit Facility On July 6, 2022, we entered into our Second Amended and Restated Credit Agreement (the “Credit Facility”) with Wells Fargo Securities, LLC, as Agent, Swingline Lender and Issuing Lender, and BofA Securities, Inc. serving as Syndication Agent. We capitalized $1.2 million of deferred financing fees related to the Credit Facility. This $325.0 million revolving credit facility has a -year term, maturing on July 6, 2027, and replaces our previous credit facility. Our previous credit facility is more fully described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023. Interest payments for the Credit Facility are calculated, at our election and depending upon the Consolidated Net Leverage Ratio, at a Base Rate (as defined within the Credit Facility) plus an applicable margin or at the same rate as Risk-Free Rate (“RFR”) Loans for domestic borrowings or Eurocurrency Rate Loans plus an applicable margin. In addition, we are subject to commitment fees for the unused portion of the Credit Facility. The applicable margin and commitment fees are outlined in the following table:
In the event of default, outstanding borrowings would accrue interest at the Default Rate, as defined, whereby the obligations will bear interest at a per annum rate equal to 2% above the total per annum rate otherwise applicable. The Credit Facility provides for incremental revolving credit commitments for a minimum principal amount of $10.0 million, up to an aggregate amount of $150.0 million or 100% of Consolidated EBITDA, subject to the lender's discretion to elect or decline the incremental increase. We can also borrow up to the lesser of $15.0 million or the revolving credit commitment, as defined, under a Swingline feature of the Credit Facility. The Credit Facility contains a: (1) Consolidated Interest Coverage Ratio requirement whereby we must not permit the Consolidated Interest Coverage Ratio, as defined, to be less than 3.00 to 1.00, and (2) Consolidated Net Leverage Ratio requirement, whereby we must not permit the Consolidated Net Leverage Ratio, as defined, to be greater than 3.25 to 1.00. In addition to maintaining these financial covenants, the Credit Facility also limits our ability to enter into certain business transactions, such as to incur indebtedness or liens, to acquire businesses or dispose of material assets, make restricted payments, pay dividends (limited to $25.0 million per year) and other transactions as further defined in the Credit Facility. Some of these limitations, however, do not take effect so long as Consolidated Net Leverage Ratio is less than or equal to 2.75 to 1.00 and available liquidity exceeds $25.0 million. Substantially all of our domestic assets, with the exception of real property, are used as collateral for the Credit Agreement. As of April 30, 2024, we had no borrowings outstanding under the Credit Facility, unamortized debt issuance costs of $1.0 million, $3.7 million of outstanding letters of credit and $55.2 million outstanding primarily under finance leases and other debt. We had $321.3 million available for use under the Credit Facility at April 30, 2024. Our weighted-average borrowing rate for borrowings outstanding during the six months ended April 30, 2024 and 2023 was 6.69% and 5.71%, respectively. We were in compliance with our debt covenants as of April 30, 2024.
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Retirement Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | Retirement Plans Pension Plan Our non-contributory, single employer defined benefit pension plan covered certain of our employees in the U.S. During the year ended October 31. 2023, we terminated our defined contribution plan and settled the obligation during the three months ended October 31, 2023. The net periodic pension (benefit) cost for this plan for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):
Other Plans We also have a supplemental benefit plan covering certain executive officers and key employees and a non-qualified deferred compensation plan covering members of the Board of Directors and certain key employees. As of April 30, 2024 and October 31, 2023, our liability under the supplemental benefit plan was approximately $2.0 million. During the year ended October 31, 2023, the supplemental benefit plan was terminated. Benefits associated with this plan will be distributed in June 2024 in accordance with Internal Revenue Service regulations. As of April 30, 2024 and October 31, 2023, the liability associated with the deferred compensation plan was approximately $4.7 million and $3.9 million, respectively. We record the current portion of liabilities associated with these plans under the caption “Accrued liabilities,” and the long-term portion under the caption “Other liabilities” in the accompanying condensed consolidated balance sheets.
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Income Taxes |
6 Months Ended |
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Apr. 30, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes To determine our income tax expense or benefit for interim periods, consistent with accounting standards, we apply the estimated annual effective income tax rate to year-to-date results, plus any applicable discrete items, which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitations, tax benefits on equity compensation, and increases or decreases in valuation allowances on deferred tax assets. Our estimated annual effective tax rates from continuing operations for the six months ended April 30, 2024 and 2023 were 21.6% and 19.7%, respectively. The difference between our estimated annual effective income tax rate and the U.S. federal statutory rate of 21% principally results from discrete tax items, U.S. state taxes, a non-U.S. tax rate differential and other permanent differences. The primary discrete items affecting the 2024 effective rate were the benefit of $0.4 million related to the vesting or exercise of equity-based compensation awards, and a charge of $0.6 million related to the true up of the deferred tax rate. The primary discrete item affecting the 2023 effective rate was a benefit of $0.2 million related to the rate change on deferred taxes. As of April 30, 2024, our liability for uncertain tax positions (UTP) of $0.3 million relates to certain U.S. federal and state tax items regarding the interpretation of tax laws and regulations, including a minimal amount of interest and penalties. We include all interest and penalties related to uncertain tax benefits within our income tax provision account. To the extent interest and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. We evaluate the likelihood of realization of our deferred tax assets by considering both positive and negative evidence. We maintain a valuation allowance for certain state net operating losses which totaled $0.6 million as of April 30, 2024 and October 31, 2023, respectively.
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Contingencies |
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Apr. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Remediation and Environmental Compliance Costs Under applicable state and federal laws, we may be responsible for, among other things, all or part of the costs required to remove or remediate wastes or hazardous substances at locations we, or our predecessors, have owned or operated. From time to time, we also have been alleged to be liable for all or part of the costs incurred to clean up third-party sites where there might have been an alleged improper disposal of hazardous substances. Currently, we are not involved in any such matters. From time to time, we incur routine expenses and capital expenditures associated with compliance with existing environmental regulations, including control of air emissions and water discharges, and plant decommissioning costs. We have not incurred any material expenses or capital expenditures related to environmental matters during the past three fiscal years, and do not expect to incur a material amount of such costs in fiscal 2024. While we will continue to have future expenditures related to environmental matters, any such amounts are impossible to reasonably estimate at this time. Based upon our experience to date, we do not believe that our compliance with environmental requirements will have a material adverse effect on our operations, financial condition or cash flows. Litigation From time to time, we, along with our subsidiaries, are involved in various litigation matters arising in the ordinary course of our business, including those arising from or related to contractual matters, commercial disputes, intellectual property, personal injury, environmental matters, product performance or warranties, product liability, insurance coverage and personnel and employment disputes. We regularly review with legal counsel the status of all ongoing proceedings, and we maintain insurance against these risks to the extent deemed prudent by our management and to the extent such insurance is available. However, there is no assurance that we will prevail in these matters or that our insurers will accept full coverage of these matters, and we could, in the future, incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome or insurability of matters we face, which could materially impact our results of operations. We have been and are currently party to multiple claims, some of which are in litigation, relating to alleged defects in a commercial sealant product that was manufactured and sold during the 2000’s. While we believe that our product was not defective and that we would prevail in these commercial sealant product claims if taken to trial, the timing, ultimate resolution and potential impact of these claims is not currently determinable. Nevertheless, after taking into account all currently available information, including our defenses, the advice of our counsel, and the extent and currently-expected availability of our existing insurance coverage, we believe that the eventual outcome of these commercial sealant claims will not have a material adverse effect on our overall financial condition, results of operations or cash flows, and we have not recorded any accrual with regard to these claims.
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Fair Value Measurement of Assets and Liabilities |
6 Months Ended |
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Apr. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Assets and Liabilities | Fair Value Measurement of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market data developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to Level 1 and the lowest priority to Level 3. The three levels of the fair value hierarchy are described below: •Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. •Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs that are derived principally from or corroborated by observable market data by correlation or other means. •Level 3 - Inputs that are both significant to the fair value measurement and unobservable. Carrying amounts reported on the balance sheet for cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Our outstanding debt is variable rate debt that re-prices frequently, thereby limiting our exposure to significant change in interest rate risk. As a result, the fair value of our debt instrument approximates carrying value at April 30, 2024, and October 31, 2023 (Level 2 measurement). Our performance share awards are marked-to-market on a quarterly basis during a three-year vesting period based on market data (Level 2 measurement). For further information, refer to Note 11, “Stock-Based Compensation - Performance Share Awards.”
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We have established and maintain an Omnibus Incentive Plan (2020 Plan) that provides for the granting of restricted stock awards, stock options, restricted stock units, performance share awards, performance restricted stock units, and other stock-based and cash-based awards. The 2020 Plan is administered by the Compensation and Management Development Committee of the Board of Directors. The aggregate number of shares of common stock authorized for grant under the 2020 Plan is 3,139,895 as approved by shareholders. Any officer, key employee and/or non-employee director is eligible for awards under the 2020 Plan. We grant restricted stock units to non-employee directors on the first business day of each fiscal year. As approved by the Compensation & Management Development Committee of our Board of Directors annually, we grant a mix of restricted stock awards, performance shares and performance restricted stock units to officers, management and key employees. We also historically granted stock options to certain officers, directors and key employees. Occasionally, we may make additional grants to key employees at other times during the year. Restricted Stock Awards Restricted stock awards are granted to key employees and officers annually, and typically cliff vest over a three-year period with service and continued employment as the only vesting criteria. The recipient of the restricted stock award is entitled to all of the rights of a shareholder, except that the award is nontransferable during the vesting period and quarterly dividends are not paid until the award vests. The fair value of the restricted stock award is established on the grant date and then expensed over the vesting period resulting in an increase in additional paid-in-capital. Shares are generally issued from treasury stock at the time of grant. A summary of non-vested restricted stock awards activity during the six months ended April 30, 2024 is presented below:
The total weighted-average grant-date fair value of restricted stock awards that vested during each of the six months ended April 30, 2024 and 2023 was $1.4 million and $0.9 million, respectively. As of April 30, 2024, total unrecognized compensation cost related to unamortized restricted stock awards was $3.5 million. We expect to recognize this expense over the remaining weighted-average vesting period of 2.1 years. Stock Options Historically, stock options have been awarded to key employees, officers and non-employee directors. In December 2017, the Compensation & Management Development Committee of the Board of Directors approved a change to the long-term incentive award program eliminating the grant of stock options and replacing this award with a grant of performance restricted stock units and performance shares as further described below. As a result, the final stock options were granted during the fiscal year ended October 31, 2017. Stock options typically vested ratably over a three-year period with service and continued employment as the vesting conditions. Our stock options may be exercised up to a maximum of ten years from the date of grant. The fair value of the stock options was determined on the grant date and expensed over the vesting period resulting in an increase in additional paid-in-capital. For employees who were nearing retirement-eligibility, we recognize stock option expense ratably over the shorter of the vesting period or the period from the grant-date to the retirement-eligibility date. We use a Black-Scholes pricing model to estimate the fair value of stock options. A description of the methodology for the valuation assumptions was disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023. The following table summarizes our stock option activity for the six months ended April 30, 2024:
Intrinsic value is the amount by which the market price of the common stock on the date of exercise exceeds the exercise price of the stock option. The total intrinsic value of stock options exercised during the six months ended April 30, 2024 and 2023 was $0.4 million and less than $0.1 million, respectively. Restricted Stock Units Restricted stock units may be awarded to key employees and officers from time to time, and annually to non-employee directors. The non-employee director restricted stock units vest immediately but are payable only upon the director's cessation of service unless an election is made by the non-employee director to settle and pay the award on an earlier specified date. Restricted stock units awarded to employees and officers typically cliff vest after a three-year period with service and continued employment as the vesting conditions. Restricted stock units are not considered outstanding shares and do not have voting rights, although the holder does receive a cash payment equivalent to the dividend paid, on a one-for-one basis, on our outstanding common shares. Once the criteria is met, each restricted stock unit is payable to the holder in cash based on the market value of one share of our common stock. Accordingly, we record a liability for the restricted stock units on our balance sheet and recognize any changes in the market value during each reporting period as compensation expense. During the six months ended April 30, 2024 and 2023, non-employee directors received 26,215 and 38,704 restricted stock units, respectively, at a weighted-average grant date fair value of $26.70 per share and $20.67 per share, respectively, which vested immediately. During the six months ended April 30, 2023, 21,774 restricted stock units, which were awarded to key employees, vested. During the six months ended April 30, 2024, we paid $0.6 million and $0.4 million for the comparable prior year to settle vested restricted stock units. Performance Share Awards We have awarded annual grants of performance shares to key employees and officers. Performance share awards vest with return on net assets (RONA) as the vesting condition and pay out 100% in cash, and are accounted for as liability. The expected cash settlement of the performance share award is recorded as a liability and is being marked to market over the three-year term of the award and can fluctuate depending on the number of shares ultimately expected to vest. Depending on the achievement of the performance conditions, 0% to 200% of the awarded performance shares may ultimately vest. The following table summarizes our performance share grants and the grant date fair value for the RONA performance metrics:
In December 2023, 122,400 shares vested pursuant to the December 2020 grant, which were settled with a cash payment of $3.4 million. Performance share awards are payable in cash based upon the number of performance shares ultimately earned, and are therefore not considered outstanding shares. Performance Restricted Stock Units We award performance restricted stock units to key employees and officers. These awards cliff vest upon a three-year service period with the absolute total shareholder return of our common stock over this three-year term as the vesting criteria. The number of shares earned is variable depending on the metric achieved, and the settlement method is 100% in our common stock, with accrued dividends paid in cash at the time of vesting, assuming the shares had been outstanding throughout the performance period. To value the performance restricted stock units, we used a Monte Carlo simulation model to arrive at a grant-date fair value. This amount will be adjusted for forfeitures and expensed over the three-year term of the award with a credit to additional paid-in-capital. Depending on the achievement of the performance conditions, a minimum of 0% and a maximum of 150% of the awarded performance restricted stock units may vest. Specifically, the awards vest on a continuum with the following Absolute Total Shareholder Return (A-TSR) milestones:
The following table summarizes our performance restricted stock unit grants and the grant date fair value for the A-TSR performance metric:
During the six months ended April 30, 2024, 49,228 performance restricted stock units vested. The performance restricted stock units are not considered outstanding shares, do not have voting rights, and are excluded from diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares. As of April 30, 2024, we have deemed 65,669 shares related to the December 2021 grant of performance restricted stock units as probable to vest. The following table summarizes amounts expensed as selling, general and administrative expense related to restricted stock awards, stock options, restricted stock units, performance share awards and performance restricted stock units for the three and six months ended April 30, 2024 and 2023 (in thousands):
Treasury Shares We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Shares are generally issued from treasury stock at the time of grant of restricted stock awards, upon the exercise of stock options, and upon the vesting of performance restricted stock units. On the subsequent issuance of treasury shares, we record proceeds in excess of cost as an increase in additional paid in capital. A deficiency of such proceeds relative to costs would be applied to reduce paid-in-capital associated with prior issuances to the extent available, with the remainder recorded as a charge to retained earnings. There were no charges to retained earnings during the six months ended April 30, 2024. The following table summarizes the treasury stock activity during the six months ended April 30, 2024:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We present three reportable business segments (1) NA Fenestration, comprising four operating segments primarily focused on the fenestration market in North America including vinyl profiles, insulating glass spacers, screens, custom compound mixing, and other fenestration components; (2) EU Fenestration, comprising our U.K.-based vinyl extrusion business, manufacturing vinyl profiles & conservatories, and the European insulating glass business manufacturing insulating glass spacers; and (3) NA Cabinet Components, comprising our cabinet door and components operations. Additionally, we maintain an Unallocated Corporate & Other which includes transaction expenses, stock-based compensation, long-term incentive awards based on the performance of our common stock and other factors, certain severance, legal, and other costs not deemed to be allocable to all segments, depreciation of corporate assets, interest expense, other, net, income taxes and inter-segment eliminations, and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during the annual planning process. Other general and administrative costs associated with the corporate office are allocated to the reportable segments, based upon a relative measure of profitability in order to more accurately reflect each reportable business segment's administrative costs. We allocate corporate expenses to businesses acquired mid-year from the date of acquisition. The accounting policies of our operating segments are the same as those used to prepare the accompanying condensed consolidated financial statements. Corporate general and administrative expense allocated during the three and six month period ended April 30, 2024 was $6.9 million and $14.2 million, respectively, and $6.1 million and $10.8 million for the comparable prior year periods. ASC Topic 280-10-50, “Segment Reporting” (ASC 280) permits aggregation of operating segments based on factors including, but not limited to: (1) similar nature of products serving the building products industry, primarily the fenestration business; (2) similar production processes, although there are some differences in the amount of automation amongst operating plants; (3) similar types or classes of customers, namely the primary OEMs; (4) similar distribution methods for product delivery, although the extent of the use of third-party distributors will vary amongst the businesses; (5) similar regulatory environment; and (6) converging long-term economic similarities. Segment information for the three and six months ended April 30, 2024 and 2023, and total assets as of April 30, 2024 and October 31, 2023 are summarized in the following table (in thousands):
The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2024 (in thousands):
For further details of Goodwill, see Note 5, “Goodwill & Intangible Assets,” located herewith. We did not allocate non-operating loss or income tax benefit to the reportable segments. The following table reconciles operating income as reported above to net income for the three and six months ended April 30, 2024 and 2023 (in thousands):
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Earnings Per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share We compute basic earnings per share by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common and potential common shares include the weighted-average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock as determined using the treasury stock method prescribed by U.S. GAAP and contingent shares associated with performance share awards, if dilutive. Basic and diluted earnings per share for the three and six months ended April 30, 2024 and 2023 were calculated as follows (in thousands, except per share data):
We do not include equity instruments in our calculation of diluted earnings per share if those instruments would be anti-dilutive. Such dilution is dependent on the excess of the market price of our stock over the exercise price and other components of the treasury stock method. There were no anti-dilutive instruments for the three and six months ended April 30, 2024 and 2023.
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New Accounting Guidance |
6 Months Ended |
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Apr. 30, 2024 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Guidance | New Accounting Guidance From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt as of the specified effective date. We did not adopt any new accounting pronouncements during the three and six months ended April 30, 2024. Accounting Standards Not Yet Adopted In November 2023, the FASB issued “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures. In December 2023, the FASB issued “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which includes updates to the income tax disclosures related to the rate reconciliation and disaggregation of income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The amendments should be applied prospectively, however retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
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Subsequent Events |
6 Months Ended |
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Apr. 30, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 22, 2024, we announced that we reached an agreement with Tyman plc, a company incorporated in England and Wales (LSE:TYMN) (“Tyman”) on the terms of a cash and share offer (the “Tyman Acquisition”), under which we will acquire the entire issued and to be issued share capital of Tyman for approximately $1.1 billion (based on the each of the £/US$ exchange rate and the Company’s last reported trading price as of April 19, 2024) in enterprise value. Under the terms of the Tyman Acquisition, Tyman shareholders will be entitled to elect to receive: (i) 240 pence in cash and 0.05715 of a share of Quanex common stock, par value of $0.01 per share, to be newly issued in connection with the Tyman Acquisition (the “New Quanex Shares”) for each Tyman ordinary share (such shares, the “Tyman Shares” and such option, the “Main Offer”) or (ii) under an alternative to the Main Offer, New Quanex Shares at an exchange ratio of 0.14288 of a New Quanex Share for each Tyman Share (such option, the “Capped All-Share Alternative”), provided that the Capped All-Share Alternative shall be made available for up to 25% of the Tyman Shares outstanding. The Tyman Acquisition will be implemented by means of a court-sanctioned scheme of arrangement under the UK Companies Act 2006, as amended (the” Scheme”). The Tyman Acquisition has been unanimously approved by the Boards of Directors of both Quanex and Tyman and is currently expected to close in the second half of calendar year 2024, subject to the satisfaction of customary closing conditions, including shareholder approval from both Tyman and Quanex shareholders and regulatory approvals. On May 2, 2024, we entered into a deal contingent foreign exchange forward currency contract to manage our exposure to foreign currency exchange rate fluctuations against the USD and GBP for approximately $605 million of the $1.1 billion purchase consideration for the proposed Tyman Acquisition. This forward contract will expire if the Tyman Acquisition terminates or does not close by March 18, 2025. This forward contract will be accounted for as a derivative and will be classified in other current assets and other current liabilities on the consolidated balance sheet, with changes in fair value recognized in the consolidated income statement.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Apr. 30, 2024 |
Jan. 31, 2024 |
Apr. 30, 2023 |
Jan. 31, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
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Pay vs Performance Disclosure | ||||||
Net income | $ 15,377 | $ 6,249 | $ 21,512 | $ 1,909 | $ 21,626 | $ 23,421 |
Insider Trading Arrangements |
3 Months Ended |
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Apr. 30, 2024 | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | During the three months ended April 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
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Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Nature of Operations and Basis of Presentation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease-Related Assets and Liabilities | The table below presents the lease-related assets and liabilities recorded on the balance sheet at April 30, 2024 and October 31, 2023 (in thousands):
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Schedule of Components of Lease Costs | The table below presents the components of lease costs for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):
The table below presents supplemental cash flow information related to leases for the six months ended April 30, 2024 and 2023 was as follows (in thousands):
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Schedule of Weighted Average Remaining Lease Terms and Weighted Average Discount Rates | The table below presents the weighted-average remaining lease terms and weighted-average discount rates for the Company's leases as of April 30, 2024 and October 31, 2023:
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Schedule of Maturity of Lease Liabilities | The table below presents the maturity of the lease liabilities as of April 30, 2024 (in thousands):
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Schedule of Maturity of Lease Liabilities | The table below presents the maturity of the lease liabilities as of April 30, 2024 (in thousands):
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Goodwill and Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Carrying Amount of Goodwill | The change in the carrying amount of goodwill for the six months ended April 30, 2024 was as follows (in thousands):
The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2024 (in thousands):
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | Identifiable Intangible Assets Amortizable intangible assets consisted of the following as of April 30, 2024 and October 31, 2023 (in thousands):
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Estimated Amortization Expense Related to Intangible Assets |
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Debt and Finance Lease Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Finance Lease Obligations | Long-term debt consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):
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Schedule of Applicable Margin and Commitment Fees | The applicable margin and commitment fees are outlined in the following table:
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Retirement Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Pension Cost | The net periodic pension (benefit) cost for this plan for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Restricted Share Activity | A summary of non-vested restricted stock awards activity during the six months ended April 30, 2024 is presented below:
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Schedule of Stock Option Activity | The following table summarizes our stock option activity for the six months ended April 30, 2024:
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Schedule of Performance Share Awards | The following table summarizes our performance share grants and the grant date fair value for the RONA performance metrics:
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Schedule of Performance Restricted Stock Vesting Conditions | Specifically, the awards vest on a continuum with the following Absolute Total Shareholder Return (A-TSR) milestones:
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Performance Restricted Stock Units by Grant |
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table summarizes amounts expensed as selling, general and administrative expense related to restricted stock awards, stock options, restricted stock units, performance share awards and performance restricted stock units for the three and six months ended April 30, 2024 and 2023 (in thousands):
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Treasury Stock Activity | The following table summarizes the treasury stock activity during the six months ended April 30, 2024:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Segment information for the three and six months ended April 30, 2024 and 2023, and total assets as of April 30, 2024 and October 31, 2023 are summarized in the following table (in thousands):
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Changes in the Carrying Amount of Goodwill | The change in the carrying amount of goodwill for the six months ended April 30, 2024 was as follows (in thousands):
The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2024 (in thousands):
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | We did not allocate non-operating loss or income tax benefit to the reportable segments. The following table reconciles operating income as reported above to net income for the three and six months ended April 30, 2024 and 2023 (in thousands):
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share for the three and six months ended April 30, 2024 and 2023 were calculated as follows (in thousands, except per share data):
|
Nature of Operations and Basis of Presentation (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Related Party Transaction [Line Items] | ||||
Net sales | $ 266,201,000 | $ 273,535,000 | $ 505,356,000 | $ 535,451,000 |
Non-employee directors | ||||
Related Party Transaction [Line Items] | ||||
Net sales | 500,000 | $ 600,000 | ||
Non-employee directors | No single transaction or series of related transactions exceeded $120,000 | ||||
Related Party Transaction [Line Items] | ||||
Net sales | $ 120,000 |
Acquisition (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2024
USD ($)
|
Apr. 30, 2024
USD ($)
|
Apr. 30, 2023
USD ($)
|
Nov. 01, 2022
ft²
|
|
Business Acquisition [Line Items] | ||||
Payments to Acquire Businesses, Net of Cash Acquired | $ | $ 91,300 | $ 0 | $ 91,302 | |
OHIO | ||||
Business Acquisition [Line Items] | ||||
Increase In Net Rentable Area | 60,000 | |||
Net Rentable Area | 313,595 |
Inventories (Detail) - USD ($) $ in Thousands |
Apr. 30, 2024 |
Oct. 31, 2023 |
---|---|---|
Inventory, Raw Materials and Supplies, Net of Reserves [Abstract] | ||
Raw materials | $ 60,259 | $ 53,585 |
Finished goods and work in process | 39,683 | 42,195 |
Supplies and other | 1,504 | 2,179 |
Inventories | $ 101,446 | $ 97,959 |
Leases - Additional Information (Details) |
Apr. 30, 2024 |
---|---|
Real Estate-Related | Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 5 years |
Real Estate-Related | Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 20 years |
Equipment-Related | Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 1 year |
Equipment-Related | Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of contract | 10 years |
Leases - Lease-Related Assets and Liabilities (Details) - USD ($) $ in Thousands |
Apr. 30, 2024 |
Oct. 31, 2023 |
---|---|---|
Assets | ||
Operating lease right-of-use assets | $ 65,019 | $ 46,620 |
Finance Lease, Right-of-Use Asset, Accumulated Amortization | 8,528 | 6,691 |
Property, plant and equipment | 60,135 | 58,496 |
Total lease assets | 125,154 | 105,116 |
Current | ||
Current operating lease liabilities | 6,433 | 7,224 |
Current maturities of long-term debt | 2,957 | 2,676 |
Noncurrent | ||
Noncurrent operating lease liabilities | 59,965 | 40,361 |
Long-term debt | 52,260 | 52,309 |
Total lease liabilities | $ 121,615 | $ 102,570 |
Leases - Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Lease, Cost [Abstract] | ||||
Operating Lease, Cost | $ 2,520 | $ 2,239 | $ 4,953 | $ 4,408 |
Finance lease cost, Amortization of leased assets | 907 | 815 | 1,781 | 1,614 |
Finance lease cost, Interest on lease liabilities | 618 | 602 | 1,231 | 1,202 |
Variable Lease, Cost | 487 | 467 | 938 | 790 |
Lease, Cost | $ 4,532 | $ 4,123 | $ 8,903 | $ 8,014 |
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Cash Flow, Lessee [Abstract] | ||
Finance leases - financing cash flows | $ 1,382 | $ 1,145 |
Finance leases - operating cash flows | 1,231 | 1,202 |
Operating leases - operating cash flows | 4,550 | 4,513 |
Right-Of-Use Asset Obtained In Exchange For Lease Liability [Abstract] | ||
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | 21,834 | 2,169 |
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability | $ 1,228 | $ 25,206 |
Leases - Weighted Average Remaining Lease Terms and Weighted Average Discount Rates (Details) |
Apr. 30, 2024 |
Oct. 31, 2023 |
---|---|---|
Weighted-average remaining lease term (in years) | ||
Operating leases | 10 years 9 months 18 days | 10 years 8 months 12 days |
Financing leases | 18 years | 18 years 8 months 12 days |
Weighted-average discount rate | ||
Operating leases | 4.62% | 4.09% |
Financing leases | 4.56% | 4.52% |
Leases - Present Maturity of Lease Liabilities (Details) $ in Thousands |
Apr. 30, 2024
USD ($)
|
---|---|
Operating Leases | |
2024 (remaining six months) | $ 4,580 |
2025 | 9,198 |
2026 | 9,055 |
2027 | 8,064 |
2028 | 7,248 |
Thereafter | 48,531 |
Total lease payments | 86,676 |
Less: present value discount | 20,278 |
Total lease liabilities | 66,398 |
Finance Leases | |
2024 (remaining six months) | 2,687 |
2025 | 5,295 |
2026 | 5,136 |
2027 | 4,980 |
2028 | 4,817 |
Thereafter | 58,406 |
Total lease payments | 81,321 |
Less: present value discount | 26,104 |
Total lease liabilities | $ 55,217 |
Goodwill and Intangible Assets - Goodwill (Details) |
6 Months Ended |
---|---|
Apr. 30, 2024
USD ($)
reporting_unit
| |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Number of reporting units | reporting_unit | 5 |
Goodwill, impairment loss | $ 0 |
Goodwill [Roll Forward] | |
Beginning balance | 182,956,000 |
Foreign currency translation adjustment | 1,525,000 |
Balance as of the end of the period | $ 184,481,000 |
Retirement Plans (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
Oct. 31, 2023 |
|
Retirement Benefits [Abstract] | |||||
Supplemental benefit plan liability | $ 2,000 | $ 2,000 | $ 2,000 | ||
Deferred compensation liability | 4,700 | 4,700 | $ 3,900 | ||
Net periodic benefit cost: | |||||
Service cost | 0 | $ 96 | 0 | $ 192 | |
Interest cost | 0 | 389 | 0 | 779 | |
Expected return on plan assets | 0 | (367) | 0 | (733) | |
Amortization of net loss | 0 | 11 | 0 | 21 | |
Settlement reimbursement | (138) | 0 | (903) | 0 | |
Net periodic pension (benefit) cost | $ (138) | $ 129 | $ (903) | $ 259 |
Income Taxes (Detail) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Oct. 31, 2023 |
|
Income Tax Disclosure | |||
Effective Income Tax Rate Reconciliation, Percent | 21.60% | 19.70% | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | ||
Effective Income Tax Rate Reconciliation, Vesting or Exercise Of Share-based Payment Arrangement, Amount | $ 0.4 | ||
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Other, Amount | 0.6 | $ 0.2 | |
Liability for uncertain tax positions | 0.3 | ||
Valuation allowance | $ 0.6 | $ 0.6 |
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted Stock Awards (RSAs) - USD ($) |
6 Months Ended | |
---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Number of Shares | ||
Non-vested at beginning of the period (in shares) | 242,300 | |
Grants (in shares) | 72,900 | |
Cancelled (in shares) | (11,800) | |
Vested (in shares) | (66,600) | |
Non-vested at end of the period (in shares) | 236,800 | |
Weighted-Average Grant Date Fair Value per Share | ||
Non-vested at beginning of the period (in usd per share) | $ 22.36 | |
Granted (in usd per share) | 32.15 | |
Cancelled (in usd per share) | 22.30 | |
Vested (in usd per share) | 20.68 | |
Non-vested at end of the period (in usd per share) | $ 25.85 | |
Fair value of restricted stock awards vested | $ 1,400,000 | $ 900,000 |
Unrecognized compensation cost - non vested restricted stock awards | $ 3,500,000 | |
Weighted-average period over which unrecognized cost is expected to be recognized | 2 years 1 month 6 days |
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Grants (in shares) | 26,215 | 38,704 |
Granted (in usd per share) | $ 26.70 | $ 20.67 |
Cash paid to settle vested units | $ 600 | $ 400 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 21,774 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Grants (in shares) | 49,228 |
Stock-Based Compensation - Treasury Shares (Details) - shares |
6 Months Ended | |
---|---|---|
Apr. 30, 2024 |
Oct. 31, 2023 |
|
Treasury Stock [Abstract] | ||
Stock options exercised | (28,280) | |
Treasury stock, common, shares | 4,015,431 | 4,165,839 |
Restricted Stock Awards (RSAs) | ||
Treasury Stock [Abstract] | ||
Restricted stock awards granted | (72,900) | |
Performance Shares | ||
Treasury Stock [Abstract] | ||
Restricted stock awards granted | (49,228) | |
Stock Options | ||
Treasury Stock [Abstract] | ||
Stock options exercised | (28,280) |
Segment Information (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2024
USD ($)
|
Apr. 30, 2023
USD ($)
|
Apr. 30, 2024
USD ($)
segment
|
Apr. 30, 2023
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | 3 | |||
Allocated corporate general and administrative expense | $ | $ 6.9 | $ 6.1 | $ 14.2 | $ 10.8 |
Operating Segments | NA Fenestration | ||||
Segment Reporting Information [Line Items] | ||||
Number of operating segments | 4 |
Segment Information Segment Reporting Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 30, 2024 |
Apr. 30, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
Oct. 31, 2023 |
|
Segment Reporting Information [Line Items] | |||||
Net sales | $ 266,201 | $ 273,535 | $ 505,356 | $ 535,451 | |
Depreciation and amortization | 10,894 | 10,456 | 22,046 | 21,076 | |
Operating income (loss) | 20,637 | 29,336 | 28,554 | 33,739 | |
Capital expenditures | 7,603 | 7,492 | 17,183 | 15,074 | |
Total assets | 837,213 | 837,213 | $ 831,143 | ||
Operating Segments | NA Fenestration | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 159,774 | 156,975 | 307,769 | 309,955 | |
Depreciation and amortization | 5,218 | 5,050 | 10,693 | 10,295 | |
Operating income (loss) | 18,565 | 15,295 | 26,807 | 25,018 | |
Capital expenditures | 5,739 | 4,859 | 11,460 | 8,472 | |
Total assets | 392,108 | 392,108 | 379,286 | ||
Operating Segments | EU Fenestration | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 56,583 | 63,763 | 106,020 | 118,715 | |
Depreciation and amortization | 2,538 | 2,353 | 5,096 | 4,701 | |
Operating income (loss) | 10,478 | 12,506 | 17,909 | 19,902 | |
Capital expenditures | 605 | 1,100 | 2,406 | 3,056 | |
Total assets | 239,277 | 239,277 | 239,333 | ||
Operating Segments | NA Cabinet Components | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 51,078 | 53,518 | 94,215 | 108,192 | |
Depreciation and amortization | 3,082 | 2,970 | 6,147 | 5,904 | |
Operating income (loss) | 306 | 846 | (3,491) | (343) | |
Capital expenditures | 1,099 | 1,481 | 2,935 | 3,341 | |
Total assets | 154,833 | 154,833 | 158,824 | ||
Corporate Non-Segment | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | (1,234) | (721) | (2,648) | (1,411) | |
Depreciation and amortization | 56 | 83 | 110 | 176 | |
Operating income (loss) | (8,712) | 689 | (12,671) | (10,838) | |
Capital expenditures | 160 | $ 52 | 382 | $ 205 | |
Total assets | $ 50,995 | $ 50,995 | $ 53,700 |
Segment Information Goodwill by Segment (Details) $ in Thousands |
6 Months Ended |
---|---|
Apr. 30, 2024
USD ($)
| |
Goodwill [Line Items] | |
Beginning balance | $ 182,956 |
Foreign currency translation adjustment | 1,525 |
Balance as of the end of the period | 184,481 |
Operating Segments | NA Fenestration | |
Goodwill [Line Items] | |
Beginning balance | 80,105 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | 80,105 |
Operating Segments | EU Fenestration | |
Goodwill [Line Items] | |
Beginning balance | 63,704 |
Foreign currency translation adjustment | 1,525 |
Balance as of the end of the period | 65,229 |
Operating Segments | NA Cabinet Components | |
Goodwill [Line Items] | |
Beginning balance | 39,147 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | 39,147 |
Corporate Non-Segment | |
Goodwill [Line Items] | |
Beginning balance | 0 |
Foreign currency translation adjustment | 0 |
Balance as of the end of the period | $ 0 |
Segment Information Reconciliation of Operating Income to Net Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2024 |
Jan. 31, 2024 |
Apr. 30, 2023 |
Jan. 31, 2023 |
Apr. 30, 2024 |
Apr. 30, 2023 |
|
Segment Reporting [Abstract] | ||||||
Operating income | $ 20,637 | $ 29,336 | $ 28,554 | $ 33,739 | ||
Interest expense | (950) | (2,244) | (2,018) | (4,503) | ||
Other, net | 4 | (29) | 1,046 | 189 | ||
Income tax expense | (4,314) | (5,551) | (5,956) | (6,004) | ||
Net income | $ 15,377 | $ 6,249 | $ 21,512 | $ 1,909 | $ 21,626 | $ 23,421 |
Subsequent Events (Details) $ / shares in Units, $ in Millions |
6 Months Ended | |||
---|---|---|---|---|
Apr. 30, 2024
USD ($)
|
May 02, 2024
USD ($)
|
Apr. 30, 2024
£ / shares
|
Apr. 30, 2024
$ / shares
|
|
Tyman [Member] | ||||
Subsequent Event [Line Items] | ||||
Payments to Acquire Businesses, Gross | $ | $ 1,100 | |||
Business Acquisition, Share Price | £ / shares | £ 2.40 | |||
New Quanex Shares - Main Offer | $ / shares | $ 0.05715 | |||
New Quanex Shares - Main Offer Alternative | $ / shares | $ 0.14288 | |||
Capped All-Share Alternative | 25.00% | 25.00% | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Derivative, Notional Amount | $ | $ 605 |
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