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What changed in Quanex Building Products CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Quanex Building Products CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+245 added−202 removedSource: 10-K (2025-12-12) vs 10-K (2024-12-16)

Top changes in Quanex Building Products CORP's 2025 10-K

245 paragraphs added · 202 removed · 155 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also use data related to cabinet demand in the U.S. to evaluate the residential cabinet market, and commercial building starts to evaluate the commercial access market. 5 Table of Contents The following table presents calendar-year annual housing starts information as of November 2024 from the National Association of Home Builders (NAHB) (units in thousands): Single-family Units Multi-family Units Manufactured Units Period Units % Change Units % Change Units % Change Total Units Annual Data 2020 1,003 13% 394 (2)% 94 (1)% 1,491 2021 1,132 13% 474 20% 106 13% 1,712 2022 1,004 (11)% 547 15% 112 6% 1,663 2023 949 (5)% 473 (14)% 89 (21)% 1,511 Annual Data - Forecast 2024 1,003 6% 339 (28)% 104 17% 1,446 2025 1,024 2% 332 (2)% 113 9% 1,469 2026 1,101 8% 384 16% 121 7% 1,606 Ducker Worldwide LLC, a consulting and research firm, indicated in November 2024 that window shipments in the residential remodeling and replacement (R&R) market are expected to decrease approximately 5.9% for the calendar-year 2024 and increase approximately 4.0% in 2025.
Biggest changeWe also use data related to cabinet demand in the U.S. to evaluate the residential cabinet market, and commercial building starts to evaluate the commercial access market. 5 Table of Contents The following table presents calendar-year annual housing starts information as of November 2025 from the National Association of Home Builders (NAHB) (units in thousands): Single-family Units Multi-family Units Manufactured Units Period Units % Change Units % Change Units % Change Total Units Annual Data 2021 1,129 13% 474 20% 106 12% 1,709 2022 1,005 (11)% 547 15% 113 7% 1,665 2023 947 (6)% 473 (14)% 89 (21)% 1,509 2024 1,016 7% 355 (25)% 103 16% 1,474 Annual Data - Forecast 2025 947 (7)% 410 15% 106 3% 1,463 2026 951 —% 395 (4)% 106 —% 1,452 2027 982 3% 389 (2)% 108 2% 1,479 Ducker Worldwide LLC, a consulting and research firm, indicated in November 2025 that window shipments in the residential remodeling and replacement (R&R) market are expected to decrease approximately 5.2% and 1.9% in the calendar-years ended 2025 and 2026, respectively .
These enhancements may include higher thermal efficiency, enhanced functionality, improved weatherability, better appearance and best-in-class quality for our fenestration and cabinet door products; • realize improved profitability in our manufacturing processes through: (1) ongoing preventive maintenance programs; (2) better utilization of our capacity by focusing on operational efficiencies and reducing scrap; (3) marketing our value added products; and (4) focusing on employee safety; • offer logistics solutions that provide our customers with just-in-time service which can reduce their processing costs; 6 Table of Contents • recognize the importance of sustainability by continually looking for ways to reduce our environmental impact and carbon footprint, protect the health and safety of our employees and communities, engage diverse workers and leaders, and remain committed to doing good in our community; • pursue targeted business acquisitions that allow us to expand our existing footprint, enhance our existing product offerings, acquire complementary technology, enhance our leadership position within the markets we serve, and expand into adjacent markets or service lines; and • exit unprofitable or non-core service lines or customer relationships.
These enhancements may include higher thermal efficiency, enhanced functionality, improved weatherability, better appearance and best-in-class quality for our fenestration and cabinet door products; • realize improved profitability in our manufacturing processes through: (1) ongoing preventive maintenance programs; (2) better utilization of our capacity by focusing on operational efficiencies and reducing scrap; (3) marketing our value added products; and (4) focusing on employee safety; 6 Table of Contents • offer logistics solutions that provide our customers with just-in-time service which can reduce their processing costs; • emphasize sustainability by continually looking for ways to reduce our environmental impact and carbon footprint, protect the health and safety of our employees and communities, engage diverse workers and leaders, and remain committed to doing good in our community; • pursue targeted business acquisitions that allow us to expand our existing footprint, enhance our existing product offerings, acquire complementary technology, enhance our leadership position within the markets we serve, and expand into adjacent markets or service lines; and • exit unprofitable or non-core service lines or customer relationships.
IG systems are used in numerous end markets including residential housing, commercial construction, appliances and transportation vehicles, but we primarily serve the residential housing market. Competition is largely based on regional presence, custom engineering, product development, quality, service and price.
IG systems are used in numerous end markets including residential housing, commercial construction, appliances and transportation, but we primarily serve the residential housing market. Competition is largely based on regional presence, custom engineering, product development, quality, service and price.
Therefore, we have sales representatives whose territories essentially cover the U.S., Canada, Europe, and to a lesser extent, the Middle East, Latin and South America, Australia, New Zealand and Asia.
We have sales representatives whose territories essentially cover the U.S., Canada, Europe, and to a lesser extent, the Middle East, Latin and South America, Australia, New Zealand and Asia.
Our strategy to achieve this vision includes the following: • focus on growth with a purpose and explore markets that are synergistic with existing manufacturing capabilities and expand our market share with our customers and collaborative partnerships by providing: (1) a quality product; (2) a high level of customer service; (3) product choices at different price points; and (4) an expanded product portfolio or enhancements to existing product offerings.
Our strategy to achieve this vision includes the following: • focus on profitable growth and explore markets that are synergistic with existing manufacturing capabilities and expand our market share with our customers and collaborative partnerships by providing: (1) a quality product; (2) a high level of customer service; (3) product choices at different price points; and (4) an expanded product portfolio or enhancements to existing product offerings.
Examples of fenestration components include energy-efficient flexible insulating glass spacers, extruded vinyl profiles, window and door screens, precision-formed metal and wood products, window and door seals, and window and door hardware. In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, water retention barriers, conservatory roof components, and commercial access solutions.
Examples of components include energy-efficient flexible insulating glass spacers, extruded vinyl profiles, window and door screens, precision-formed metal and wood products, window and door seals, and window and door hardware. In addition, we provide certain other components and products, which include solar panel sealants, trim moldings, vinyl decking, water retention barriers, conservatory roof components, and commercial access solutions.
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 2025. While we will continue to have future expenditures related to environmental matters, any such amounts are impossible to reasonably estimate at this time.
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 2026. 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. Human Capital We track hum an capital metrics that we consider to be key to our business, including employee headcount, temporary workers, health and safety, and turnover.
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. Human Capital Hum an capital metrics that we consider to be key to our business include employee headcount, temporary workers, health and safety, and turnover.
Since the spin-off in 2008, we have evolved our business by making investments in organic growth initiatives and taking a disciplined approach to new business and strategic acquisition opportunities, while disposing of non-core businesses. On August 1, 2024, we completed our acquisition of Tyman plc, a company incorporated in England and Wales.
Since the spin-off in 2008, we have evolved our business by making investments in organic growth initiatives and taking a disciplined approach to new business and strategic acquisition opportunities, while disposing of non-core businesses. Most recently, on August 1, 2024, we completed our acquisition of Tyman plc, a company incorporated in England and Wales (“Tyman”).
We use low-cost production processes and engineering expertise to provide our customers with specialized products for their specific applications. We believe these capabilities provide us with unique competitive advantages.
We use cost-effective production processes and engineering expertise to provide our customers with specialized products for their specific applications. We believe these capabilities provide us with unique competitive advantages.
See Note 1, “Nature of Operations, Basis of Presentation and Significant Accounting Policies - Concentration of Credit Risk and Allowance for Credit Losses,” of the accompanying financial statements in this Annual Report on Form 10-K for related disclosure. 7 Table of Contents Sales Backlog Given the short lead times involved in our business, we have a backlog of approximat ely $61.6 million as of October 31, 2024.
See Note 1, “Nature of Operations, Basis of Presentation and Significant Accounting Policies - Concentration of Credit Risk and Allowance for Credit Losses,” of the accompanying financial statements in this Annual Report on Form 10-K for related disclosure. 7 Table of Contents Sales Backlog Given the short lead times involved in our business, we have a backlog of approximat ely $54.1 million as of October 31, 2025.
Extrusions Ltd., Eurocell and others. Primary competitors in the cabinet door business in the U.S. include Conestoga, Appalachian Wood, Olon, Northern Contours and others. Primary competitors in the U.K. and European hardware and seals businesses include Assa Abloy, Roto, Siegenia, Hoppe, GU, Maco, and Tecseal. Sales, Marketing, and Distri bution We sell our products to customers in various countries.
Primary competitors in the wood business in the U.S. include Appalachian Wood, Conestoga, Northern Contours, Olon, and others. Primary competitors in the U.K. and European hardware and seals businesses include Assa Abloy, GU, Hoppe, Maco, Roto, Siegenia, and Tecseal. Sales, Marketing, and Distri bution We sell our products to customers in various countries.
As of October 31, 2024, we had 7,068 employees located throughout our global organization. Generally, the total number of employees of Quanex and its subsidiaries does not significantly fluctuate throughout the year. Employee turnover rates are monitored monthly a t the division and plant levels. Both voluntary and involuntary terminations, including retirements, are used to calculate the turnover rate.
As of October 31, 2025, we had 7,071 full-time employees located throughout our global organization. Generally, the total number of employees of Quanex and its subsidiaries does not significantly fluctuate throughout the year. Employee turnover rates are monitored monthly a t the division and plant levels. Both voluntary and involuntary terminations, including retirements, are used to calculate the turnover rate.
The criteria for revenue recognition has not been met with regard to sales backlog, and therefore, we have not recor ded revenue or deferred revenue pursuant to these sales orders. If these sales orders result in a sale, we will record revenue in fiscal 2025 in accordance with our revenue recognition accounting policy.
As the criteria for revenue recognition has not been met with regard to sales backlog, we have not recor ded revenue or deferred revenue pursuant to these sales orders. If these sales orders result in a sale, we will record revenue in fiscal 2026 in accordance with our revenue recognition accounting policy.
For our kitchen and bathroom cabinet door business, we believe we are the largest supplier to OEMs in the U.S., but we compete with other national and regional businesses, including OEMs who are vertically integrated.
For our wood business, we believe we are the largest supplier to OEMs in the U.S., but we compete with other national and regional businesses, including OEMs who are vertically integrated.
We have noted the following trends which we believe affect our industry: • the recent growth in the hous ing market over the past several years has been predominately in new construction which has outpaced the growth in the residential remodeling and replacement sector; • programs in the U.S. such as Energy Star have improved customer awareness of the technological advances in window and door energy-efficiency, but the government has been reluctant to enforce stricter energy standards; • supply chain disruptions and inflationary pressures related to transportation, labor, and raw materials have increased causing delays in production and higher prices; • foreign currency rates in the U.K. and other European nations have changed significantly relative to the United States Dollar due in part to Brexit in the U.K., as well as other international unrest or uncertainties; • commodity prices have fluctuated in recent years, and to the extent we cannot pass this cost to our customers, this impacts the cost of critical materials used in our manufacturing processes such as resin, which affects margins related to our vinyl extrusion products; oil products such as butyl, which affects our insulating glass products; and stainless steel, zinc, aluminum, wood, polypropylene and silicone products used by our other businesses; and • higher energy efficiency standards in Europe should favorably impact sales of our insulating glass spacer and weather seal products in the short- to mid-term.
We have noted the following trends which we believe affect our industry: • the growth in the hous ing market over the past several years has been predominately in new construction which has outpaced the growth in the residential remodeling and replacement sector; • programs in the U.S. such as Energy Star have improved customer awareness of the technological advances in window and door energy-efficiency, but the government has been reluctant to enforce stricter energy standards; • over the past several years, supply chain disruptions and inflationary pressures related to transportation, labor, and raw materials have increased and at times have caused delays in production and higher prices; • foreign currency rates in the U.K. and other European nations have changed significantly relative to the United States Dollar due in part fluctuations in interest rates, economic indicators, political instability, as well as other international unrest or uncertainties; • ongoing uncertainty and turmoil related to U.S. and international tariff actions, including potential changes in tariff rates, retaliation by trading partners, and resulting volatility in material costs and supply chain planning; • commodity prices have fluctuated in recent years, and to the extent we cannot pass this cost to our customers, this impacts the cost of critical materials used in our manufacturing processes such as resin, which affects margins related to our vinyl extrusion products; oil products such as butyl, which affects our insulating glass products; and stainless steel, zinc, aluminum, wood, polypropylene and silicone products used by our other businesses; and • higher energy efficiency standards in Europe should favorably impact sales of our insulating glass spacer and weather seal products in the short- to mid-term.
The volume of engineered building products that we sell in the U.S. represents a small percentage of annual domestic consumption. Similarly, our subsidiaries in the U.K. compete against some larger vinyl producers and smaller window manufacturers. The U.K. and International fenestration components market is highly fragmented and we compete with a large number of other component suppliers.
Similarly, our subsidiaries in the U.K. compete against some larger vinyl producers and smaller window manufacturers. The U.K. and International market is highly fragmented and we compete with a large number of other component suppliers.
Item 1. Business. Our Company Quanex was incorporated in Delaware on December 12, 2007, as Quanex Building Products Corporation. We currently manufacture and distribute components for original equipment manufacturers (OEM) in the building products industry. The majority of these components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components.
Item 1. Business. Our Company Quanex was incorporated in Delaware on December 12, 2007, as Quanex Building Products Corporation. We currently manufacture and distribute components for original equipment manufacturers (OEM) in the building products industry, including window, door, solar, refrigeration, custom mixing, building access, and cabinetry markets.
As of October 31, 2024, we operated 35 manufacturing facilities located in 18 states in the U.S., seven facilities in the U.K., three facilities in Mexico, two facilities in Italy, one facility in Germany, and one facility in Canada.
As of October 31, 2025, we operated 34 manufacturing facilities located in 18 states in the U.S., 7 facilities in the U.K., 3 facilities in Mexico, 2 facilities in Italy, 1 facility in Germany, and 1 facility in Canada.
Derived from reports published by Ducker, the overall decrease in window shipments for the trailing twelve months ended September 30, 2024 was 0.7%. During this period, new construction activity decreased 2.5% and R&R replacement increased 1.1% respectively.
Derived from reports published by Ducker, overall window shipments decreased 3.9%, new construction activity decreased 5.3%, and R&R replacement decreased 2.6%, respectively, for the trailing twelve months ended September 30, 2025.
Competition Our products are sold under highly competitive conditions. We compete with a number of companies, some of which have greater financial resources than us. We believe the primary competitive factors in the markets we serve include price, product quality, delivery performance, and the ability to manufacture to customer specifications.
Competition Our products are sold under highly competitive conditions. We believe the primary competitive factors in the markets we serve include price, product quality, delivery performance, and the ability to manufacture to customer specifications. The volume of engineered building products that we sell in the U.S. represents a small percentage of annual domestic consumption.
We are able to maintain minimal levels of finished goods inventories at most locations because we typically manufacture products upon order to customer specifications. We believe the primary drivers of our operating results are residential remodeling and replacement activity and new home construction in the markets we serve.
We believe the primary drivers of our operating results are residential remodeling and replacement activity and new home construction in the markets we serve.
Primary competitors in the North American Fenestration business include, but are not limited to, Veka, Deceuninck, Energi, Vision Extrusions, GED Integrated Solutions, Technoform, Swiss Spacer, Thermix, RiteScreen, Allmetal, Endura, Klinger, Thermoseal, Fenzi Group, Caldwell, Roto, Hoppe, Ultrafab, Vision Hardware, and Radisson Industries. Competitors in the vinyl extrusion business in the U.K. include Epwin, Veka, Profine U.K.
Primary competitors in North America include, but are not limited to, Assa Abloy, FlexScreen, Hoppe, Interlock, Radisson Industries, RiteScreen, Roto, Screenco, ScreenFab, and Vision Hardware. Competitors in the vinyl extrusion business in the U.K. include Epwin, Eurocell, Profine U.K. Extrusions Ltd., Veka, and others.
These facilities feature efficient plant design and flexible manufacturing processes, enabling us to produce a wide variety of custom engineered products and components primarily focused on the window and door segment of the residential building products markets.
These facilities feature efficient plant design and flexible manufacturing processes, enabling us to produce a wide variety of custom engineered products and components. We are able to maintain minimal levels of finished goods inventories at most locations because we typically manufacture products upon order to customer specifications.
We typically experience more favorable results in the third and fourth quarters of the fiscal year. Our exposure to seasonality was somewhat tempered with the entry into the kitchen and bathroom cabinet door industry, which is focused "inside the house" and less susceptible to inclement weather. Expenses for labor and other costs are generally semi-variable throughout the year.
Our business activity generally increases in the third and fourth quarters of the fiscal year as weather conditions improve, resulting in higher relative volumes compared to the first half of the year. Expenses for labor and other costs are generally semi-variable throughout the year.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. As disclosed in Item 9A, “Controls and Procedures,” our controls and procedures were not effective as a result of a material weakness in internal controls over financial reporting.
Biggest changeCompany Risks We may identify new or additional material weakness or weaknesses in our internal control over financial reporting which may, if not remediated, result in material misstatements in our financial statements. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934.
In addition to this potential direct impact on our facilities and operations, continuing outbreaks of the virus could negatively impact our industry and end markets as a whole, or result in a longer-term economic recession. Any of these factors could negatively affect our business, financial condition, cash flows, profitability, and results of operations.
In addition to this potential direct impact on our facilities and operations, continuing outbreaks could negatively impact our industry and end markets as a whole, or result in a longer-term economic recession. Any of these factors could negatively affect our business, financial condition, cash flows, profitability, and results of operations.
If our suppliers are unable to timely meet our supply needs, it could impact our ability to provide our customers with high quality products on a timely basis, which could result in order cancellations, delivery refusals, price concessions, or other negative customer outcomes, any of which could 13 Table of Contents negatively impact our business, revenues, financial condition, results of operations and liquidity.
If our suppliers are unable to timely meet our supply needs, it could impact our ability to provide our customers with high quality products on a timely basis, which could result in order cancellations, delivery refusals, price concessions, or other negative customer outcomes, any of which could negatively impact our business, revenues, financial condition, results of operations and liquidity.
Climate change and related extreme weather events could disrupt our supply chain, decrease customer demand for our products, or damage our manufacturing facilities. We, along with many of our customers and suppliers, operate manufacturing facilities in areas at risk for extreme weather events such as hurricanes, tornadoes, drought, wildfires, winter storms, or floods.
Changes in climate and extreme weather events could disrupt our supply chain, decrease customer demand for our products, or damage our manufacturing facilities. We, along with many of our customers and suppliers, operate manufacturing facilities in areas at risk for extreme weather events such as hurricanes, tornadoes, drought, wildfires, winter storms, or floods.
Our business, financial condition, and results of operations could be adversely affected by disruptions in the global economy caused by the wars in Ukraine and Gaza. U.S. and global markets are experiencing volatility and disruption related to the escalation of geopolitical tensions and the military conflict currently ongoing in Ukraine and the Gaza Strip.
Our business, financial condition, and results of operations could be adversely affected by disruptions in the global economy caused by the continued conflicts in Ukraine and Gaza. U.S. and global markets are experiencing volatility and disruption related to the escalation of geopolitical tensions and the military conflict currently ongoing in Ukraine and the Gaza Strip.
However, our efforts in this regard may not be successful and our operating margins could be negatively impacted. Our revenues could decline or we may lose business if our customers vertically integrate their operations, diversify their supplier base, or transfer manufacturing capacity to other regions.
However, our efforts in this regard may not be successful and our operating margins could be negatively impacted. Our revenues could decline or we may lose business if our customers vertically integrate their operations, diversify their supplier base, transfer manufacturing capacity to other regions, or respond to operational challenges in our business.
If an epidemic or pandemic, such as COVID-19, disrupts the worldwide economy, or if similar widespread disease outbreaks occur in the future, our business, financial condition and results of operations could be negatively affected to the extent such event harms the economy or region in which we operate.
If an epidemic or pandemic disrupts the worldwide economy, or if similar widespread disease outbreaks occur in the future, our business, financial condition and results of operations could be negatively affected to the extent such event harms the economy or region in which we operate.
For example, when the government issues tax credits designed to encourage increased homebuilding or energy-efficient window purchases, the credits may create a spike in demand that would not otherwise have occurred and our production capabilities may not be able to keep pace, which could 10 Table of Contents materially impact our profitability.
For example, when the government issues tax credits designed to encourage increased homebuilding or energy-efficient window purchases, the credits may create a spike in demand that would not otherwise have occurred and our production capabilities may not be able to keep pace, which could materially impact our profitability.
In addition, we were authorized, by prior stockholder approval, to issue up to 125,000,000 shares of our common stock, $0.01 par value per share, of which 51,266,501 were issued at October 31, 2024. These authorized shares can be issued, without stockholder approval, as securities convertible into either common stock or preferred stock. Item 1B. Unresolved Staff Comments. None.
In addition, we were authorized, by prior stockholder approval, to issue up to 125,000,000 shares of our common stock, $0.01 par value per share, of which 51,211,469 were issued at October 31, 2025. These authorized shares can be issued, without stockholder approval, as securities convertible into either common stock or preferred stock. Item 1B. Unresolved Staff Comments. None.
If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected.
If additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected.
If we are unable to remediate the material weakness, or if we are otherwise unable to maintain effective internal control over financial reporting, our financial statements may contain material misstatements and we could be required to restate our financial results.
If we are unable to maintain effective internal control over financial reporting, our financial statements may contain material misstatements and we could be required to restate our financial results.
It is likely that we will be subject to increasingly stringent environmental standards, and we will incur additional expenditures to comply with such standards. Furthermore, if we fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.
It is likely that we will be subject to increasingly stringent environmental standards, and we will incur additional expenditures to comply with such standards. Furthermore, if we fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability. We may not be able to protect our intellectual property.
A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
It is possible that we may identify vulnerabilities with respect to our internal controls. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
We consider the United States to be our most significant jurisdiction; however, all tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business.
We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. We consider the United States to be our most significant jurisdiction; however, all tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business.
If we acquire a business for which we do not fully understand or appreciate the specific business risks, if we overvalue or fail to conduct effective due diligence on an acquisition, or if we fail to effectively and efficiently integrate a business that we acquire, then there could be a material adverse effect on our ability to achieve the projected growth and cash flow goals associated with the new business, which could result in an overall material adverse effect on our long-term profitability or revenue generation.
If we acquire a business for which we do not fully understand or appreciate the specific business or operational risks, if we overvalue or fail to conduct effective due diligence on an acquisition, or if we fail to effectively and efficiently integrate a business that we acquire, then there could be a material adverse effect on our ability to achieve the projected growth and cash flow goals associated with the new business, which could result in an overall material adverse effect on our long-term profitability or revenue generation. 12 Table of Contents If our information technology systems fail, or if we experience an interruption in our operations due to an aging information system infrastructure, then our results of operations and financial condition could be materially adversely affected.
In addition, many of our suppliers are large international conglomerates with numerous customers that are much larger than us, which lessens our leverage in pricing and supply negotiations.
Our primary customers are OEMs, who have substantial leverage in setting purchasing and payment terms. In addition, many of our suppliers are large international conglomerates with numerous customers that are much larger than us, which lessens our leverage in pricing and supply negotiations.
Failure to achieve and maintain effective internal controls could have a material adverse effect on our business and on our stock price. Effective internal controls are necessary for us to effectively monitor our business, prevent fraud or theft, remain in compliance with our credit facility covenants, and provide reliable financial reports, both to the public and to our lenders.
Effective internal controls are necessary for us to effectively monitor our business, prevent fraud or theft, remain in compliance with our credit facility covenants, and provide reliable financial reports, both to the public and to our lenders.
If our financial statements are not filed on a timely basis or we are required to restate our financial results, we could be in violation of covenants contained in the agreements governing our debt and other borrowings.
If our financial statements are not filed on a timely basis or we are required to restate our financial results, we could be in violation of covenants contained in the agreements governing our debt and other borrowings. Failure to achieve and maintain effective internal controls could have a material adverse effect on our business and on our stock price.
Although we believe we have an extensive customer base, if we were to lose one of these large customers or if one such customer were to materially reduce its purchases as a result of vertical integration, supplier diversification, or a shift in regional focus, our revenue, general financial condition and results of operations could be adversely affected. 12 Table of Contents Our credit facility contains certain operational restrictions, reporting requirements, and financial covenants that limit the aggregate availability of funds.
Although we believe we have an extensive customer base, if we were to lose one of these large customers or if one such customer were to materially reduce its purchases as a result of vertical integration, supplier diversification, a shift in regional focus, or concerns related to operational challenges, our revenue, general financial condition and results of operations could be adversely affected.
If such an event occurs at a facility belonging to us or one of our suppliers, we may be unable to timely and cost-effectively manufacture products for our customers. These declines in demand or impacts to our ability to manufacture our products could negatively impact our revenues, earnings, cash flow, and other operating results.
If such an event occurs at a facility belonging to one of our customers, we could see reduced demand for our products. If such an event occurs at a facility belonging to us or one of our suppliers, we may be unable to timely and cost-effectively manufacture products for our customers.
In particular, any outbreak or resurgence of COVID-19 or any other future variants, or governmental imposition of mandatory or voluntary closures in areas where our manufacturing facilities, suppliers or customers are located, could severely disrupt our operations and result in (a) plant slowdowns or shutdowns, (b) difficulty obtaining necessary supplies, and (c) reduced customer orders and revenues.
Our business could be materially and adversely affected by the occurrence of a widespread health epidemic or pandemic or governmental imposition of mandatory or voluntary closures in areas where our manufacturing facilities, suppliers or customers are located, could severely disrupt our operations and result in (a) plant slowdowns or shutdowns, (b) difficulty obtaining necessary supplies, and (c) reduced customer orders and revenues.
Allegations of violations of applicable anti-corruption laws, may result in internal, independent, or government investigations, and violations of anti-corruption laws may result in severe criminal or civil sanctions or other liabilities which could have a material adverse effect on our business, consolidated results of operations and financial condition.
Allegations of violations of applicable anti-corruption laws, may result in internal, independent, or government investigations, and violations of anti-corruption laws may result in severe criminal or civil sanctions or other liabilities which could have a material adverse effect on our business, consolidated results of operations and financial condition. 13 Table of Contents We may not have the right personnel in place to achieve our operating goals, and the location of some of our operations may make it difficult to locate or hire highly skilled employees.
If the cost of our raw materials increases, or if we are unable to procure the necessary raw materials required to manufacture our products, then we could experience a negative impact on our operating results, profitability, customer relationships and future cash flows. 11 Table of Contents Company Risks We have identified a material weakness in our internal control over financial reporting which may, if not remediated, result in material misstatements in our financial statements.
If the cost of our raw materials increases, or if we are unable to procure the necessary raw materials required to manufacture our products, then we could experience a negative impact on our operating results, profitability, customer relationships, and future cash flows.
Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows. 14 Table of Contents We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions.
These declines in demand or impacts to our ability to manufacture our products could negatively impact our revenues, earnings, cash flow, and other operating results. 14 Table of Contents Changes in taxation as well as the inherent difficulty in quantifying potential tax effects of business decisions could have a material adverse effect on the results of our operations, financial condition, or cash flows.
If supply chain interruptions or other disruptions result in the unavailability of raw materials or an increase to the price of raw materials or other commodities, we could experience a negative impact on our operating results, profitability and future cash flows.
If supply chain interruptions or other disruptions result in the unavailability of raw materials or an increase to the price of raw materials or other commodities, we could experience a negative impact on our operating results, profitability and future cash flows. 11 Table of Contents Our business will suffer if we are unable to adequately address potential supplier or customer pricing pressures, both with respect to OEMs that have significant pricing leverage over suppliers, and to large suppliers who have significant pricing leverage over their customers.
Goodwill totaled $574.7 million at October 31, 2024. The results of goodwill impairment testing are described in the accompanying notes to the audited financial statements, Note 7, “Goodwill and Intangible Assets” of the accompanying financial statements in this Annual Report on Form 10-K. We may not be able to protect our intellectual property.
The results of goodwill impairment testing are described in the accompanying notes to the audited financial statements, Note 7, “Goodwill and Intangible Assets” of the accompanying financial statements in this Annual Report on Form 10-K. Our credit facility contains certain operational restrictions, reporting requirements, and financial covenants that limit the aggregate availability of funds.
We could also be forced to pay higher prices for the supplies we purchase, which could negatively impact our results of operations and profitability. We may not have the right personnel in place to achieve our operating goals, and the rural location of some of our operations may make it difficult to locate or hire highly skilled employees.
We could also be forced to pay higher prices for the supplies we purchase, which could negatively impact our results of operations and profitability.
As a result of this material weakness, our management concluded that our internal control over financial reporting and related disclosure controls and procedures were not effective. We are actively engaged in developing a remediation plan designed to address this material weakness.
As disclosed in Item 9A, “Controls and Procedures,” our controls and procedures were not effective as a result of a material weakness in internal controls over financial reporting as of October 31, 2024. The material weakness was specifically related to the design and operation of the controls over the preparation and review of the statement of cash flows.
Removed
The impact of foreign trade relations and associated tariffs could result in a global trade war and adversely impact our business. We currently source a number of raw materials from international suppliers.
Added
Regional or global barriers to trade or a global trade war could increase the cost of our raw materials and other products in the markets we serve, which could adversely impact the financial results of businesses serving those markets, including Quanex.
Removed
Import tariffs, taxes, customs duties and/or other trading regulations imposed by the U.S. government on foreign countries, or by foreign countries on the U.S., could result in a global trade war which may significantly increase the prices we pay for certain raw materials, such as aluminum and wood, that are critical to our ability to manufacture our products.
Added
The state of relationships between other countries and the United States with respect to trade policies, government relations and tariffs may impact our business. The U.S. government has and continues to make significant changes in U.S. trade policy and has taken certain actions that could negatively impact U.S. trade, including imposing tariffs on certain goods imported into the United States.
Removed
In addition, we may be unable to find a domestic supplier to provide the necessary raw materials on an economical basis in the amounts we require.
Added
There is concern that the imposition of tariffs by the United States could result in the adoption of tariffs or retaliatory measures by other countries, leading to a global trade war.
Removed
The material weakness related to an error pertaining to the improper inclusion of the equity component of the Company’s purchase of Tyman in the statement of cash flows under “Cash used for Investing Activities” rather than its proper classification as a noncash item.
Added
Such tariffs or retaliatory measures could 10 Table of Contents raise the cost and reduce the supply of certain raw materials, such as aluminum and wood, which are critical to our ability to manufacture our products.
Removed
Russia, Europe’s largest provider of natural gas, has significantly reduced the export of natural gas compared to the beginning of the conflict resulting in the increase in natural gas prices and the potential for natural gas shortages. In many European countries, including Germany, alternatives to natural gas have limited capacity.
Added
In the event of a global trade war or regional dispute, local suppliers may choose to allocate their resources to local players in their markets and provide us with less favorable terms.
Removed
This has had and may continue to have a negative impact on the energy costs of our European manufacturing facilities and may also negatively impact our customers and their demand for our products.
Added
Raw material shortages and price increases could cause distribution delays and increase our costs, which in turn could reduce our competitiveness and impact our ability to do business with certain counterparties.
Removed
Our business will suffer if we are unable to adequately address potential supplier or customer pricing pressures, both with respect to OEMs that have significant pricing leverage over suppliers, and to large suppliers who have significant pricing leverage over their customers. Our primary customers are OEMs, who have substantial leverage in setting purchasing and payment terms.
Added
General geopolitical instability and the responses to it, such as the possibility of sanctions, trade restrictions and changes in tariffs, and the possibility of additional tariffs, non-tariff barriers or other trade restrictions between the United States and other countries where we might in the future manufacture, distribute or sell products, could adversely impact our business.
Removed
If our information technology systems fail, or if we experience an interruption in our operations due to an aging information system infrastructure, then our results of operations and financial condition could be materially adversely affected.
Added
Throughout 2025, the Company continued to implement a remediation plan designed to address this material weakness.
Removed
Our business could be materially and adversely affected by the occurrence of a widespread health epidemic or pandemic.
Added
However, this material weakness continued to exist as of October 31, 2025 and will not be considered remediated until such time as management designs and implements effective controls that operate for a sufficient period of time and concludes through testing, that these controls are effective.
Removed
Ongoing climate change has increased the frequency and severity of these events and the related risk of a catastrophic weather event affecting one of our plants, or a plant owned by one of our customers or suppliers. If such an event occurs at a facility belonging to one of our customers, we could see reduced demand for our products.
Added
In the third quarter of 2025, we tested goodwill for impairment as a result of the restructuring. The testing of our goodwill resulted in an goodwill impairment of $302.3 million. Goodwill totaled $271.3 million at October 31, 2025.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed6 unchanged
Biggest changeThe Company has information technology security practices to protect its information technology systems and data and to monitor for potential cybersecurity threats.
Biggest changeThe Audit Committee also receives updates on the results of assessments and audits of the Company’s information technology systems and controls. 15 The Company has information technology security practices to protect its information technology systems and data and to monitor for potential cybersecurity threats.
These practices are integrated into the Company’s risk management framework and include: 15 • cybersecurity controls embedded in the Company’s information technology systems; • implementation of changes to address potential threats and vulnerabilities of the Company’s information technology systems; • incident response programs, including proactive simulations, to identify and manage cybersecurity threats, risks or incidents; • participation in industry forums and collaboration with peers; • security awareness and data protection training for applicable employees; and • engaging third party services and tools to periodically assess and/or monitor cybersecurity threat environment and the company’s cybersecurity posture.
These practices are integrated into the Company’s risk management framework and include: • cybersecurity controls embedded in the Company’s information technology systems; • implementation of changes to address potential threats and vulnerabilities of the Company’s information technology systems; • incident response programs, including proactive simulations, to identify and manage cybersecurity threats, risks or incidents; • participation in industry forums and collaboration with peers; • security awareness and data protection training for applicable employees; and • engaging third party services and tools to periodically assess and/or monitor cybersecurity threat environment and the company’s cybersecurity posture.
The Board of Directors and Audit Committee receive updates from management regarding cybersecurity risks, cybersecurity threats that could impact the Company and cybersecurity initiatives to enhance the Company’s cybersecurity practices. The Audit Committee also receives updates on the results of assessments and audits of the Company’s information technology systems and controls.
The Board of Directors and Audit Committee receive updates from management regarding cybersecurity risks, cybersecurity threats that could impact the Company and cybersecurity initiatives to enhance the Company’s cybersecurity practices.

Item 2. Properties

Properties — owned and leased real estate

3 edited+2 added−2 removed0 unchanged
Biggest changeLocation Character and Use of Property Executive Offices Houston, Texas* Executive corporate office North American Fenestration Segment Akron, Ohio* Segment executive office and R&D facility Rice Lake, Wisconsin Fenestration products Cambridge, Ohio* Flexible spacer, solar adhesives and custom compound mixing Kent, Washington* Vinyl and composite extrusions European Fenestration Segment Denby, United Kingdom* Vinyl and composite extrusions Heinsberg, Germanyc Flexible spacer North American Cabinet Components Segment St.
Biggest changeLocation Character and Use of Property Executive Offices Houston, Texas* Executive corporate office Hardware Solutions Rice Lake, Wisconsin Screens & fenestration products Sioux Falls, South Dakota* Hardware products Budrio, Italy Hardware products Owatonna, Minnesota Hardware products Wolverhampton, United Kingdom* Hardware products Juarez, Mexico* Hardware products Monterrey, Mexico* Hardware products Extruded Solutions Derbyshire, United Kingdom* Vinyl profiles Heinsberg, Germany* Glass spacers Kent, Washington* Vinyl profiles Statesville, NC* Seals Custom Solutions Cambridge, Ohio* Mixing solutions St.
We believe our operating properties are in good condition and well maintained, and are generally suitable and adequate to carry on our business. In fiscal 2024, on a consolidated basis, our facilities operated at approximately 51% of machine capac ity. This capacity utilization is subject to variability by product line, seasonality, location, labor shortages and supply chain interruptions.
We believe our operating properties are in good condition and well maintained, and are generally suitable and adequate to carry on our business. In fiscal 2025, on a consolidated basis, our facilities operated at approximately 58% of machine capac ity. This capacity utilization is subject to variability by product line, seasonality, location, labor shortages and supply chain interruptions.
Item 2. Properties. The following table lists our principal properties by location, general character and use as of October 31, 2024.
Item 2. Properties. The following table lists our principal properties by location, general character and use as of October 31, 2025.
Removed
Cloud, Minnesota Hardwood doors and components for kitchen and bath Tyman Segment Owatonna, Minnesota Fenestration products Juarez, Mexico Fenestration products Statesville, NC Fenestration products Wolverhampton, United Kingdom* Fenestration products Budrio, Italy Fenestration products * These locations are leased as of October 31, 2024.
Added
Cloud, Minnesota Wood solutions * These locations are leased as of October 31, 2025.
Removed
In addition to the locations identified above, our North American Fenestration Segment maintains 13 additional facilities for the manufacture and distribution of fenestration, spacer and extrusion products within the continental U.S., our European Fenestration Segment maintains two additional locations for the production of spacers in the U.K., our North American Cabinet Components Segment maintains 10 additional locations to manufacture hardwood doors and other wood components for kitchen and bath cabinets, and our Tyman Segment maintains 12 additional locations to manufacture fenestration and commercial access products.
Added
In addition to the locations identified above, our Hardware Solutions Segment maintains 27 additional facilities for the manufacture and distribution of engineered window and door hardware, screens, and other fenestration components, our Extruded Solutions Segment maintains 9 additional locations for the production of insulating-glass spacers, vinyl and composite profiles, and sealing solutions used in the fabrication of windows, doors, conservatories, roofs, and related building applications, and our Custom Solutions Segment maintains 16 additional locations to manufacture engineered product solutions across wood, metal, and elastomeric materials.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+4 added−0 removed7 unchanged
Biggest changeWhile we believe that our product was not defective and that we would prevail in 17 Table of Contents these commercial sealant product claims if taken to trial, the timing, ultimate resolution and potential impact of these claims is not currently determinable.
Biggest changeWhile 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 17 Table of Contents not currently determinable.
Added
On September 19, 2025, a purported shareholder class action lawsuit against the Company and two of its officers was filed in federal court in the Southern District of Texas, titled Zanol v. Quanex Building Products Corporation et al, Case No. 4:25-cv-04453.
Added
The suit alleges certain violations of federal securities laws related to public disclosures made by the Company in 2025 principally related to our window and door operations in Mexico and seeks unspecified damages.
Added
While the ultimate outcome of any legal matter cannot be predicted with certainty, the Company strongly believes that this complaint is without merit, intends to vigorously defend itself and its officers against the allegations, and maintains insurance coverage for such matters.
Added
At present, the Company cannot reasonably estimate a range of loss, if any, for this action based on its early stage and the information available to the Company, and accordingly, the Company has not accrued any liability associated with this action.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−2 removed3 unchanged
Biggest changeDuring the years ended October 31, 2023 and 2022, we purchased 275,000 and 291,000 shares, respectively, at a cost of $5.6 million and $6.6 million, respectively, under these programs.
Biggest changeDuring the years ended October 31, 2025, 2024, and 2023, we purchased 1,709,119, zero, and 275,000 shares, respectively, at a cost of $32.4 million, zero, and $5.6 million, respectively, under these programs. As of October 31, 2025 we had a maximum of $30.4 million available to purchase shares under this program.
The new program does not have an expiration date or a limit on the number of shares that may be purchased. 19 Table of Contents Stock Performance Graph The following chart represents a comparison of the five year total return of our common stock to the Standard & Poor’s 600 Building Products Industry Index (S&P 600 Building Products), the Russell 2000 Index, and a peer group index selected by us, which includes companies offering similar products and services to ours.
This program does not have an expiration date or a limit on the number of shares that may be purchased. 19 Table of Contents Stock Performance Graph The following chart represents a comparison of the five year total return of our common stock to the Standard & Poor’s 600 Building Products Industry Index (S&P 600 Building Products), the Russell 2000 Index, and a peer group index selected by us, which includes companies offering similar products and services to ours.
There were appro ximately 2,697 holders of o ur common stock (excluding individual participants in securities positions listings) on record as of December 3, 2024.
There were appro ximately 2,587 holders of o ur common stock (excluding individual participants in securities positions listings) on record as of December 3, 2025.
Equity Compensation Plan Information The following table summarizes certain information regarding equity compensation to our employees, officers and directors under equity compensation plans as of October 31, 2024: (a) (b) (c) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 283,150 $ 19.45 2,542,429 (1) Column (a) includes securities that may be issued upon future vesting of performance restricted stock units that have been previously granted to key employees and officers.
Equity Compensation Plan Information The following table summarizes certain information regarding equity compensation to our employees, officers and directors under equity compensation plans as of October 31, 2025: (a) (b) (c) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 282,250 $ 19.38 2,255,404 (1) Column (a) includes securities that may be issued upon future vesting of performance restricted stock units that have been previously granted to key employees and officers.
The companies in our peer group for the year ended October 31, 2024 are AAON Inc., American Woodmark Corporation, Apogee Enterprises Inc., Armstrong Flooring Inc., CIRCOR International, Inc., CSW Industrials Inc., Gibraltar Industries Inc., Griffon Corporation, Insteel Industries Inc., L.B.
The companies in our peer group for the year ended October 31, 2025 are AAON Inc., American Woodmark Corporation, Apogee Enterprises Inc., Armstrong World Industries, CSW Industrials Inc., Fortune Brands, Gibraltar Industries Inc., Griffon Corporation, Hillenbrand, Inc., Insteel Industries Inc., JELD-WEN Holding, Inc., Kennametal Inc, L.B.
Issuer Purchases of Equity Securities During December 2021, our Board of Directors approved a new stock repurchase program that authorized the repurchase of up to $75.0 million worth of shares of our common stock.
Issuer Purchases of Equity Securities During December 2021, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to $75.0 million worth of shares of our common stock. Repurchases under the new program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors.
Foster Company, Masonite International Corporation, Mueller Water Products, Inc., PGT Innovations, Inc., Simpson Manufacturing Company Inc., Tredegar Corporation, and Trex Company Inc.
Foster Company, Masonite International Corp., MasterBrand, Inc., Mueller Water Products, Inc., Resideo Technologies, Inc., Simpson Manufacturing Co., Inc., and Trex Company, Inc.
INDEXED RETURNS For the Years Ended Company Name / Index 10/31/2019 10/31/2020 10/31/2021 10/31/2022 10/31/2023 10/31/2024 Quanex Building Products Corporation $ 100.00 $ 96.37 $ 111.19 $ 120.66 $ 148.14 $ 162.03 S&P 600 Building Products $ 100.00 $ 98.96 $ 142.27 $ 131.15 $ 146.74 $ 219.24 Russell 2000 Index $ 100.00 $ 99.86 $ 150.59 $ 122.67 $ 112.17 $ 150.39 Peer Group $ 100.00 $ 107.26 $ 150.23 $ 107.36 $ 135.09 $ 213.91 20 Table of Contents
INDEXED RETURNS For the Years Ended Company Name / Index 10/31/2020 10/31/2021 10/31/2022 10/31/2023 10/31/2024 10/31/2025 Quanex Building Products Corporation $ 100.00 $ 115.38 $ 125.20 $ 153.72 $ 168.13 $ 83.57 S&P 600 Building Products $ 100.00 $ 143.76 $ 132.53 $ 148.27 $ 221.53 $ 248.52 Russell 2000 Index $ 100.00 $ 150.80 $ 122.84 $ 112.32 $ 150.59 $ 172.30 Peer Group $ 100.00 $ 140.46 $ 97.90 $ 109.74 $ 164.72 $ 152.83 20 Table of Contents
Removed
Repurchases under the new program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors.
Removed
During the year ended October 31, 2024, we did not purchase any shares under this program and as of October 31, 2024 we had a maximum of $62.8 million available to purchase shares under this program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+74 added−33 removed51 unchanged
Biggest changeFor the Years Ended October 31, 2024 2023 $ Change % Change (Dollars in thousands) Net sales $ 1,277,862 $ 1,130,583 $ 147,279 13% Cost of sales (excluding depreciation and amortization) 972,238 853,059 119,179 14% Selling, general and administrative 190,470 123,957 66,513 54% Depreciation and amortization 60,328 42,866 17,462 41% Operating income 54,826 110,701 (55,875) (50)% Interest expense (20,593) (8,136) (12,457) (153)% Other, net 7,849 (5,519) 13,368 (242)% Income tax expense (9,023) (14,545) 5,522 38% Net income $ 33,059 $ 82,501 $ (49,442) (60)% Our year-over-year results by reportable segment follow.
Biggest changeFor the Years Ended October 31, 2024 2023 $ Change % Change (Dollars in thousands) Net sales $ 1,277,862 $ 1,130,583 $ 147,279 13% Cost of sales (excluding depreciation and amortization) 972,238 853,059 119,179 14% Selling, general and administrative 190,470 123,957 66,513 54% Depreciation and amortization 60,328 42,866 17,462 41% Operating income 54,826 110,701 (55,875) (50)% Interest expense (20,593) (8,136) (12,457) (153)% Other, net 7,849 (5,519) 13,368 (242)% Income tax expense (9,023) (14,545) 5,522 38% Net income $ 33,059 $ 82,501 $ (49,442) (60)% Changes Related to Operating Income by Reportable Segment: Hardware Solutions For the Years Ended October 31, 2024 2023 $ Change % Change (Dollars in thousands) Net sales $ 427,839 $ 296,959 $ 130,880 44% Cost of sales (excluding depreciation and amortization) 349,379 239,505 109,874 46% Selling, general and administrative 51,564 21,608 29,956 139% Depreciation and amortization 16,580 3,968 12,612 318% Operating income $ 10,316 $ 31,878 $ (21,562) (68)% Operating income margin 2 % 11 % Net Sales .
The aggregate consideration due pursuant to the Tyman Acquisition at closing comprised of 14,139,477 newly issued Quanex common shares (“New Quanex Shares”) and cash consideration of approximately $504.1 million (being the Pound Sterling amount of cash consideration of £392.2 million in respect of all of the Tyman Shares converted to U.S. Dollars at an exchange rate of 1.2855).
The aggregate consideration due pursuant to the Tyman Acquisition at closing comprised 14,139,477 newly issued Quanex common shares (“New Quanex Shares”) and cash consideration of approximately $504.1 million (being the Pound Sterling amount of cash consideration of £392.2 million in respect of all of the Tyman Shares converted to U.S. Dollars at an exchange rate of 1.2855).
We maintain a grouping called 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 and legal 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.
We continue to maintain a grouping called 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 and legal 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.
For a listing of potential risks and uncertainties which impact our business and industry, see “Item 1A. Risk Factors.” Actual results could differ from our expectations due to several factors which include, but are not limited to: the impact of market price and demand for our products, economic and competitive conditions, capital expenditures, new technology, regulatory changes and other uncertainties.
Actual results could differ from our expectations due to several factors which include, but are not limited to: the impact of market price and demand for our products, economic and competitive conditions, capital expenditures, new technology, regulatory changes and other uncertainties. For a listing of potential risks and uncertainties which impact our business and industry, see “Item 1A.
However, there is a risk that we may not identify all pre-acquisition contingencies or that our estimates may not reflect the actual results when realized. We use a a reasonable measurement period to record any adjustment related to the opening balance sheet (generally, less than one year).
However, there is a risk that we may not identify all pre-acquisition contingencies or that our estimates may not reflect the actual results when realized. We use a reasonable measurement period to record any adjustment related to the opening balance sheet (one year or less).
GAAP, which requires us to make use of estimates and judgements to allocate the purchase price paid for acquisitions to the fair value of the net assets and liabilities acquired. We use established valuation techniques and engage reputable valuation specialists to assist us with these valuations.
GAAP, which requires us to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the net assets and liabilities acquired. We use established valuation techniques and engage reputable valuation specialists to assist us with these valuations.
Like our vinyl extrusion business, we are exposed to short-term volatility in wood prices due to a lag in the timing of price updates which generally could extend for up to three months. In the Tyman business, contractual price adjustment mechanisms are in place for key commodities including stainless steel and zinc for most large U.S. customers, but not all.
Like our vinyl extrusion business, we are exposed to short-term volatility in wood prices due to a lag in the timing of price updates which generally could extend for up to three months. For our remaining businesses, contractual price adjustment mechanisms are in place for key commodities including stainless steel and zinc for most large U.S. customers, but not all.
We recorded income tax expense of $9.0 million on pre-tax income of $42.1 million for the twelve months ended October 31, 2024, an effective rate of 21.4%, and income tax expense of $14.5 million on pre-tax income of $97.0 million for the twelve months ended October 31, 2023, an effective rate of 15.0%.
We recorded income tax expense of $9.0 million on pre-tax income of $42.1 million for the twelve m onths ended October 31, 2024, an effective rate of 21.4%, and income tax expense of $14.5 million on pre-tax income of $97.0 million for the twelve months ended October 31, 2023 , an effective rate of 15.0%.
While we maintain surcharges and other adjusters to manage our exposure to changes in the prices of our critical raw materials, we use several commodities in our business that are not covered by contractual surcharges or adjusters for which pricing can fluctuate, including PVC compound micro ingredients, silicone, polypropylene and other inputs. 33 Table of Contents
While we maintain surcharges and other adjusters to manage our exposure to changes in the prices of our critical raw materials, we use several commodities in our business that are not covered by contractual surcharges or adjusters for which pricing can fluctuate, including PVC compound micro ingredients, silicone, polypropylene and other inputs.
We consider an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact to our financial position or results of operations. Business Combinations - Contingencies We apply the acquisition method of accounting for business combinations in accordance with U.S.
We consider an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact to our financial position or results of operations. 31 Table of Contents Business Combinations - Contingencies We apply the acquisition method of accounting for business combinations in accordance with U.S.
In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, water retention barriers, conservatory roof components, and commercial access solutions. We use low-cost production processes and engineering expertise to provide our customers with specialized products for their specific applications. We believe these capabilities provide us with unique competitive advantages.
In addition, we provide certain other components and products, which include solar panel sealants, trim moldings, vinyl decking, water retention barriers, conservatory roof components, and commercial access solutions. We use cost-effective production processes and engineering expertise to provide our customers with specialized products for their specific applications. We believe these capabilities provide us with unique competitive advantages.
Effects of Inflation We have experienced the impact of inflation on our cost of raw materials, labor, freight and overhead, particularly during the years ended October 31, 2024 and 2023.
Effects of Inflation We have experienced the impact of inflation on our cost of raw materials, labor, freight and overhead, particularly during the years ended October 31, 2025 and 2024.
We believe these funds should be adequate to provide for our working capital requirements, capital expenditures, and dividends, while continuing to meet our debt service requirements. Revolving Credit Facility and Term Loan Facility We maintain our $475 million Revolving Credit Facility and $500 million Term A Facility with Wells Fargo Bank acting as agent, swingline lender and issuing lender.
We believe these funds should be adequate to provide for our working capital requirements, capital expenditures, and dividends, while continuing to meet our debt service requirements. 30 Table of Contents Revolving Credit Facility and Term Loan Facility We maintain our $475 million Revolving Credit Facility and $500 million Term A Facility with Wells Fargo Bank acting as agent, swingline lender and issuing lender.
Annually, we evaluate our tax positions to determine if there have been any changes in uncertain tax positions or if there has been a lapse in the statute of limitations with regard to such positions. As of October 31, 2024 and 2023 our liability for uncertain tax positions was zero and $0.3 million, respectively.
Annually, we evaluate our tax positions to determine if there have been any changes in uncertain tax positions or if there has been a lapse in the statute of limitations with regard to such positions. As of October 31, 2025 and 2024 our liability for uncertain tax positions was $0.7 million and zero, respectively.
In addition, some of these commodities are in high demand, particularly in Europe, which can affect the cost of the raw materials, a portion of which we may not be able to fully recover. The global economy remains uncertain due to currency devaluations, political unrest, terror threats, global pandemics such as COVID-19, and the political landscape in the U.S.
In addition, some of these commodities are in high demand, particularly in Europe, which can affect the cost of the raw materials, a portion of which we may not be able to fully recover. The global economy remains uncertain due to currency devaluations, political unrest, terror threats, and the political landscape in the U.S.
Although the U.S. government has been less aggressively pursuing higher energy efficiency standards in recent years, other countries have implemented higher energy efficiency standards which should bode well for our fenestration-related business in these markets, particularly our warm-edge spacer products, window and door seals and tilt ‘n’ turn micro-ventilation products.
We are impacted by regulation of energy standards. Although the U.S. government has been less aggressively pursuing higher energy efficiency standards in recent years, other countries have implemented higher energy efficiency standards which should bode well for our fenestration-related business in these markets, particularly our warm-edge spacer products, window and door seals and tilt ‘n’ turn micro-ventilation products.
The conflicts in Ukraine and Gaza and their impacts on the global economy, including inflation and the price of raw materials, supply chain disruptions, and the volatility in interest rates including home mortgage rates, are unpredictable and there may be developments outside our control requiring us to adjust our operating plan.
Geopolitical tensions and their impacts on the global economy, including inflation and the price of raw materials, supply chain disruptions, and the volatility in interest rates including home mortgage rates, are unpredictable and there may be developments outside our control requiring us to adjust our operating plan.
Our selling, general and administrative expenses increased $23.8 million, or 176%, for the twelve months ended October 31, 2024 compared to the same period in 2023. This increase is primarily attributable to an increase in transaction fees year-over-year. Changes Related to Non-Operating Items: Interest Expense .
Our selling, general and administrative unallocated expenses increased $34.6 million, or 228%, for the twelve months ended October 31, 2024 compared to the same period in 2023. This increase is primarily attributable to an increase in transaction fees year-over-year. Changes Related to Non-Operating Items: Interest Expense .
During the years ended October 31, 2024 , 2023 and 2022, we purchased zero, 275,000 and 291,000 shares, respectively, at a cost of zero, $5.6 million and $6.6 million, respectively, under this program. Critical Accounting Policies and Estimates The preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America (U.S.
During the years ended October 31, 2025 , 2024 and 2023, we purchased 1,709,119, zero and 275,000 shares, respectively, at a cost of $32.4 million, zero and $5.6 million, respectively, under this program. Critical Accounting Policies and Estimates The preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America (U.S.
The first step in our annual goodwill assessment is to perform the optional qualitative assessment allowed by ASC Topic 350 “Intangibles - Goodwill and Other” (ASC 350).
The first step in our annual goodwill assessment is to perform the optional qualitative 32 Table of Contents assessment allowed by ASC Topic 350 “Intangibles - Goodwill and Other” (ASC 350).
Although the length and impact of these ongoing military conflicts are highly unpredictable, the conflicts could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
Although the length and impact of these ongoing military conflicts remain unpredictable, the conflicts can continue to lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.
The November 2022 Ducker forecast indicated that window shipments in the R&R market are expected to decrease approximately 5.9% and increase 4.0% in the calendar-years ended 2024 and 2025, respectively, and window shipments in the new construction market are expected to increase 0.9% and 1.6% in the calendar-years ended 2024 and 2025, respectively, resulting in overall window shipment decline of 2.7% in 2024 and increase 2.8% in 2025.
The November 2025 Ducker forecast indicated that window shipments in the R&R market are expected to decrease approximately 5.2% and 1.9% in the calendar-years ended 2025 and 2026, respectively, and window shipments in the new construction market are expected to decrease 5.0% and 0.8% in the calendar-years ended 2025 and 2026, respectively, resulting in overall window shipment decline of 5.1% in 2025 and 1.4% i n 2026.
In November 2024, the NAHB forecasted calendar-year housing starts (excluding manufactured units) to be 1.4 million in the 2024, 1.5 million in 2025, and 1.6 million in 2026 calendar-years.
In November 2025, the NAHB forecasted calendar-year housing starts (excluding manufactured units) to be 1.4 million in the 2025, 1.3 million in the 2026, and 1.4 million in the 2027 calendar-years.
Our selling, general and administrative expenses decreased by $0.3 million, or 1%, for the twelve months ended October 31, 2024 compared to the same period in 2023.
Selling, General and Administrative. Our selling, general and administrative expenses increased by $30.0 million, or 139%, for the twelve months ended October 31, 2024 compared to the same period in 2023.
Our supplemental benefit plan was terminated in June 2023. As a result, our liability for this plan was distributed in June 2024 in a ccordance with IRS requirements. As of October 31, 2024, our liability under the deferred compensation plan was approximately $4.7 million.
As a result, our liability for this plan was distributed in June 2024 in a ccordance with IRS requirements. As of October 31, 2025, our liability under the deferred compensation plan was approximately $4.1 million .
Other corporate general and administrative costs have been allocated to the reportable business segments, based upon a relative measure of profitability in order to more accurately reflect each reportable business segment's administrative costs. The accounting policies of our operating segments are the same as those used to prepare our accompanying consolidated financial statements.
Other corporate general and administrative costs have been allocated to the reportable business segments, based upon each segment’s relative operating activity. The accounting policies of our operating segments are the same as those used to prepare our accompanying consolidated financial statements.
Our total gross deferred tax assets as of October 31, 2024 and 2023 were $60.3 million and $18.1 million, respectively, for which we reserved a valuation allowance of $4.4 million and $0.6 million for the corresponding periods. The deferred tax assets, net of valuation allowance, offset the deferred liability within a jurisdiction.
Our total gross deferred tax assets as of October 31, 2025 and 2024 were $65.2 million and $60.3 million, respectively, for which we reserved a valuation allowance of $4.4 million for each of the corresponding periods, respectively. The deferred tax assets, net of valuation allowance, offset the deferred liability within a jurisdiction.
The company classifies interest on income tax as income tax expense and classifies penalties on income tax as other expenses.
The company classifies interest on income tax as income 33 Table of Contents tax expense and classifies penalties on income tax as other expenses.
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. Item 7A . Quantitative and Qualitative Disclosures About Market Risk.
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. Item 7A . Quantitative and Qualitative Disclosures About Market Risk.
These and other macro-economic factors have impacted the global financial markets, which may have contributed to significant changes in foreign currencies.
These and other macro-economic factors have impacted the global financial markets, which may have contributed to significant changes in foreign currencies. We continue to monitor our exposure to changes in exchange rates.
We performed a qualitative assessment for the reporting units in the NA Fenestration, EU Fenestration, and Tyman operating segments. This review included an analysis of historical goodwill test results, operating results relative to forecast, projected results over the next five years, and other measures and concluded that there were no indicators of potential impairment associated with these reporting units.
This review included an analysis of historical goodwill test results, operating results relative to forecast, projected results over the next five years, and other measures and concluded that there were no indicators of potential impairment associated with these reporting units.
These judgments may include the basis for capitalization, depreciation and amortization methods and the useful lives of the underlying assets. In accordance with U.S. GAAP, we review the carrying values of these assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
In accordance with U.S. GAAP, we review the carrying values of these assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Analysis of Cash Flow The following table summarizes our cash flow results for the years ended October 31, 2024, 2023, and 2022: Year Ended October 31, 2024 2023 2022 (In thousands) Cash flows provided by operating activities $ 88,812 $ 147,052 $ 97,965 Cash flows used for investing activities $ (420,594) $ (128,439) $ (32,962) Cash flows provided by (used for) financing activities $ 385,156 $ (16,151) $ (45,879) Our cash flow analysis for the fiscal years ended October 31, 2023 and 2022 for the prior year comparative periods can be found in the annual report on Form 10-K for the year ended October 31, 2023. 27 Table of Contents Operating Activities Cash provided by operating activities decreased $58.2 million for the year ended October 31, 2024 compared to the year ended October 31, 2023.
Analysis of Cash Flow The following table summarizes our cash flow results for the years ended October 31, 2025, 2024, and 2023: Year Ended October 31, 2025 2024 2023 (In thousands) Cash flows provided by operating activities $ 164,897 $ 88,812 $ 147,052 Cash flows used for investing activities $ (62,008) $ (420,594) $ (128,439) Cash flows provided by (used for) financing activities $ (127,480) $ 385,156 $ (16,151) Our cash flow analysis for the fiscal years ended October 31, 2024 and 2023 for the prior year comparative periods can be found in the annual report on Form 10-K for the year ended October 31, 2024.
Qualitative factors that indicate impairment could include, but are not limited to, (i) macroeconomic conditions, (ii) industry and market considerations, (iii) cost factors, (iv) overall financial performance of the reporting unit, and (v) other relevant entity-specific events.
We perform our annual goodwill assessment as of August 31, or more frequently if indicators of impairment exist. Qualitative factors that indicate impairment could include, but are not limited to, (i) macroeconomic conditions, (ii) industry and market considerations, (iii) cost factors, (iv) overall financial performance of the reporting unit, and (v) other relevant entity-specific events.
Interest expense increased $12.5 million, or 153%, for the twelve months ended October 31, 2024 compared to the same period in 2023 as primarily as result of higher borrowings outstanding during the period. Borrowings under credit facilities increased to $716.3 million as of October 31, 2024 compared with $15.0 million as of October 31, 2023. Other, net .
Interest expense increased $12.5 million , or 153% , for the twelve months ended October 31, 2024 compared to the same period in 2023 primarily as result of an increase in borrowings outstanding during the year ended October 31, 2024 compared to the prior year period. Other, net .
We believe our business model, our current cash reserves and the recent steps we have taken to strengthen our balance sheet leave us well-positioned to manage our business and remain in compliance with our debt covenants.
We expect to repatriate excess cash moving forward and use the funds to retire debt or meet current working capital needs. We believe our business model, our current cash reserves and the recent steps we have taken to strengthen our balance sheet leave us well-positioned to manage our business and remain in compliance with our debt covenants.
Based upon the balan ces of the variable rate debt at October 31, 2024, a hypothetical 1.0% increase or decrease in interest rates could result in approximately $7.2 million of additional pre-tax charges or credit to our operating results.
Based upon the balan ces of the variable rate debt at October 31, 2025, a hypothetical 1.0% increase or decrease in interest rates could result in approximately $6.4 million of additional pre-tax charges or credit to our operating results. This sensitivity pertains primarily to our outstanding revolving credit facility borrowings outstanding under the Credit Facility as of October 31, 2025.
The majority of these components can be categorized as window and door (fenestration) components and kitchen and bath cabinet components. Examples of fenestration components include energy-efficient flexible insulating glass spacers, extruded vinyl profiles, window and door screens, precision-formed metal and wood products, window and door seals, and window and door hardware.
Examples of window and door components include energy-efficient flexible insulating glass spacers, extruded vinyl profiles, window and door screens, precision-formed metal and wood products, window and door seals, and window and door hardware.
Net sales decreased $20.1 million, or 8%, when comparing the twelve months ended October 31, 2024 compared to the same period in 2023, which was primarily driven by an $18.4 million decrease in volumes largely due to softer market demand driven by weaker consumer confidence and base price decreases of $4.2 million, partially offset by favorable foreign currency rate change of $2.5 million.
Net sales increased $15.4 million, or 3%, when comparing the twelve months ended October 31, 2024 compared to the same period in 2023, which was primarily driven by an increase of $38.5 million related to the acquisition of the Tyman business and a $2.5 million of favorable foreign currency rate change, partially offset by a $20.0 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence and a $6.0 million decrease in price and raw material indexes.
Unless otherwise required by law, we undertake no obligation to publicly update any forward-looking statements, even if new information becomes available or other events occur in the future. Our Business We currently manufacture components for original equipment manufacturers in the building products industry.
Risk Factors.” Unless otherwise required by law, we undertake no obligation to publicly update any forward-looking statements, even if new information becomes available or other events occur in the future.
We have disposed of non-core businesses in the past, and continue to evaluate our business portfolio to ensure that we are investing in markets where we believe there is potential future growth.
We have disposed of non-core businesses in the past, and continue to evaluate our business portfolio to ensure that we are investing in markets where we believe there is potential future growth. On August 1, 2024, we completed the acquisition of Tyman plc (the “Tyman Acquisition”), a company incorporated in England and Wales (“Tyman”).
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. 28 Table of Contents 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 $35.0 million per year) and to conduct other transactions as further defined in the Credit Facility.
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 $35.0 million per year) and to conduct other transactions as further defined in the Credit Facility.
We continue to monitor our exposure to changes in exchange rates. 23 Table of Contents Comparison of the fiscal years ended October 31, 2024 and 2023 This table sets forth our consolidated results of operations for the twelve-month periods ended October 31, 2024 and 2023.
Comparison of the fiscal years ended October 31, 2025 and 2024 This table sets forth our consolidated results of operations for the twelve-month periods ended October 31, 2025 and 2024.
Net sales decreased $17.0 million, or 8%, for the twelve months ended October 31, 2024 compared to the same period in 2023, which was primarily driven by a $13.5 million decrease in volumes due to softer market demand driven by weaker consumer confidence and a $3.5 million decrease in price from lower raw material index impacts. Cost of Sales .
Net sales increased $11.1 million, or 4%, for the twelve months ended October 31, 2024 compared to the same period in 2023, which was primarily driven by an increase of $25.8 million related to the acquisition of the Tyman business, partially offset by an $11.2 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence and a $3.5 million decrease in price and raw material indexes.
A s of October 31, 2024, we had $97.7 million of cash and cash equivalents, $716.3 million outstanding under our credit facilities, $7.0 million of outstanding letters of credit and $60.7 million outstanding leases under finance leases and other debt. Of the $60.7 million outstanding under finance leases and other debt, $50.3 million relates to real estate leases.
As of October 31, 2025, we had $76.0 million of cash and cash equivalents, $641.3 million outstanding under our credit facilities, $6.2 million of outstanding letters of credit and $62.6 million outstanding leases under finance leases and other debt. Of the $62.6 million outstanding under finance leases and other debt, $56.4 million relates to real estate leases.
The effective rate for the twelve months ended October 31, 2023 was impacted due to the U.K. patent box benefit, tax return to accrual adjustments, and changes in uncertain tax positions, offset by state and local income tax, non U.S. income tax and nondeductible expenses. 26 Table of Contents Liquidity and Capital Resources Overview Historically, our principal sources of funds have been cash on hand, cash flow from operations, and borrowings under our credit facilities.
The effective rate for the twelve months ended October 31, 2023 was impacted due to the U.K. patent box benefit, tax return to accrual adjustments, and changes in uncertain tax positions, offset by state and local income tax, non U.S. income tax and nondeductible expenses.
Net sales decreased $17.4 million, or 3%, for the twelve months ended October 31, 2024 compared to the same period in 2023 , which was primarily driven by a $20.9 million decrease in volumes mainly due to softer market demand driven by lower consumer confidence, as well as the strategic sale of a plant in October 2024, partially offset by favorable price and surcharge impacts of $3.5 million.
Net sales increased $130.9 million, or 44%, for the twelve months ended October 31, 2024 compared to the same period in 2023, which was primarily driven by an increase of $148.5 million related to the acquisition of the Tyman business and a $5.3 million increase in price and raw material indexes, partially offset by a $22.9 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence.
We apply a variety of techniques to establish the carrying value of our intangible assets, including the relief from royalty and excess current year earnings methods. Goodwill We use the acquisition method to account for business combinations and, to the extent that the purchase price exceeds the fair value of the net assets acquired, we record goodwill.
We apply a variety of techniques to establish the carrying value of our intangible assets, including the relief from royalty and excess current year earnings methods.
We believe that we have sufficient funds and adequate financial resources available to meet our anticipated liquidity needs. We expect to use our cash flow from operations to fund operations for the next twelve months and the foreseeable future.
We expect to use our cash flow from operations to fund operations for the next twelve months and the foreseeable future.
From time to time, we enter into foreign exchange contracts associated with our operations to manage a portion of the foreign currency rate risk. Our outstanding forward foreign exchange contracts have a notional principal amount of $18.6 million at October 31, 2024. Hedge accounting is not applied to our foreign exchange contracts.
From time to time, we enter into foreign exchange contracts associated with our operations to manage a portion of the foreign currency rate risk and the potential impact to ongoing cash flows. Hedge accounting is not applied to our foreign exchange contracts.
During the years ended October 31, 2024 and 2023, we acquired Tyman and LMI, respectively. Liquidity Requirements Our strategy for deploying cash is to invest in organic growth opportunities, develop our infrastructure, and explore strategic acquisitions. Other uses of cash include paying cash dividends to our shareholders and repurchasing our own stock.
Liquidity Requirements Our strategy for deploying cash is to invest in organic growth opportunities, develop our infrastructure, and explore strategic acquisitions. Other uses of cash include paying cash dividends to our shareholders and repurchasing our own stock. We maintain cash balances in foreign countries which tota led $46.9 million an d $44.0 million as of October 31, 2025 and 2024.
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.
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. Our adoption of this standard effective for the fiscal year ending October 31, 2025 resulted in increased disclosures in the notes to the financial statements.
During the year ended October 31, 2024, we received a $0.9 million settlement reimbursement related to the 2023 contribution. 31 Table of Contents Contractual Obligations and Commercial Commitments Our contractual obligations and commercial commitments include unconditional purchase obligations which consist of commitments to buy miscellaneous parts, inventory, and expenditures related to capital projects in progress.
For the years ended October 31, 2025 and 2024, our inventory reserves are approximately 9% and 1% of gro ss inventory, respectively. Contractual Obligations and Commercial Commitments Our contractual obligations and commercial commitments include unconditional purchase obligations which consist of commitments to buy miscellaneous parts, inventory, and expenditures related to capital projects in progress.
The tax positions related to certain state tax items regarding the interpretation of tax laws and regulations. We believe we will have sufficient taxable income in the future to fully utilize our deferred tax assets recorded as of October 31, 2024, net of our valuation allowance.
The unrecognized tax benefits for 2025 primarily relate to transfer pricing matters. We believe we will have sufficient taxable income in the future to fully utilize our deferred tax assets recorded as of October 31, 2025, net of our valuation allowance.
The Term A Facility must be prepaid with 100% of the net cash proceeds of the issuance or incurrence of debt and 100% of the net cash proceeds of all asset sales, insurance and condemnation recoveries, and other asset dispositions.
The Term A Facility must be prepaid with 100% of the net cash proceeds of the issuance or incurrence of debt and 100% of the net cash proceeds of all asset sales, insurance and condemnation recoveries, and other asset dispositions. 29 Table of Contents Borrowings under the Facilities bear interest, at our option, at (1) the Base Rate plus an applicable margin or (2) Adjusted Term SOFR plus an applicable margin.
Commodity Price Risk We purchase PVC as the significant raw material consumed in the manufacture of vinyl extrusions. We have resin adjusters in place with a majority of our customers and our resin supplier that is adjusted based upon published indices for lagging resin prices.
We have resin adjusters in place with a majority of our customers and our resin supplier that is adjusted based upon published indices for lagging resin prices. These adjusters effectively share the base pass-through price changes of PVC with our customers commensurate with the market at large.
No impairment charges w ere incurred with regard to our property, plant and equipment for the years ended October 31, 2024, 2023 and 2022. We monitor relevant circumstances, including industry trends, general economic conditions, and the potential impact that such circumstances might have on the valuation of our identifiable intangibles.
We monitor relevant circumstances, including industry trends, general economic conditions, and the potential impact that such circumstances might have on the valuation of our identifiable intangibles.
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.
Recent Accounting Pronouncements 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. 34 Table of Contents Recent Accounting Pronouncements 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.
We believe the estimates and assumptions used in our impairment assessment are reasonable based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated during current or future periods. 30 Table of Contents At our annual testing date, August 31, 2024, we had seven reporting units with goodwill balances: three reporting units included in our NA Fenestration operating segment, two reporting units included in our EU Fenestration operating segment, one reporting unit included in our NA Cabinet Components operating segment, and one reporting unit included in our Tyman operating segment, which was acquired on August 1, 2024.
We believe the estimates and assumptions used in our impairment assessment are reasonable based on available market information, but variations in any of the assumptions could result in materially different calculations of fair value and determinations of whether or not an impairment is indicated during current or future periods.
In addition, we are subject to commitment fees for the unused portion of the Revolving Credit Facility. The weighted average interest rate of borrowings outstanding for the twelve-month periods ended October 31, 2024 and 2023 was 7.20% and 6.01%, respectively. We were in compliance with our debt covenants as of October 31, 2024.
The weighted average interest rate of borrowings outstanding for the twelve-month periods ended October 31, 2025 and 2024 was 6.83% and 7.20%, respectively. We were in compliance with our debt covenants as of October 31, 2025. For additional details of the Revolving Credit Facility, see Note 9, “Debt,” included elsewhere within this Annual Report on Form 10-K.
Cost of Sales. Cost of sales decreased $19.4 million, or 4%, for the twelve months ended October 31, 2024 compared to the same period in 2023. Cost of sales, including labor, decreased primarily due to lower volumes and deflation in the price of raw materials during the period. Selling, General and Administrati ve.
Cost of Sales. Cost of sales increased $109.9 million, or 46%, for the twelve months ended October 31, 2024 compared to the same period in 2023. Cost of sales, including labor, increased primarily due to the acquisition of the Tyman business and pricing and inflation of raw materials during the period partially offset by a decrease in volumes.
New Quanex Shares issued in connection with the Tyman Acquisition on the New York Stock Exchange took effect on August 2, 2024 and Tyman’s shares on the London Stock Exchange were canceled. On November 1, 2022, we entered into an Asset Purchase Agreement with LMI and the equity owners of LMI, Lauren International, Ltd. and Meteor-US-Beteiligungs GMBH.
New Quanex Shares issued in connection with the Tyman Acquisition on the New York Stock Exchange took effect on August 2, 2024 and Tyman’s shares on the London Stock Exchange were canceled.
We adjust the pricing of petroleum-based raw materials for the majority of our U.S. customers who purchase products using these materials. This is intended to offset the fluctuating cost of products which are highly correlated to the price of oil including butyl and other oil-based raw materials.
This is intended to offset the fluctuating cost of products which are highly correlated to the price of oil including butyl and other oil-based raw materials. This program is adjusted monthly based upon the 90-day average published price for Brent crude. The oil-based raw materials that we purchase are subject to similar pricing schemes.
Cost of Sales . The cost of sales decreased $13.9 million, or 9%, for the twe lve months ended October 31, 2024 compared to the same period in 2023. Cost of sales decreased primarily due to a decrease in volumes, deflation in the price of raw materials and foreign currency impacts. Selling, General and Administrative .
Cost of Sales . The cost of sales increased $11.0 million, or 3%, for the twelve months ended October 31, 2024 compared to the same period in 2023. Cost of sales increased primarily due to the acquisition of the Tyman business and foreign currency impacts; partially offset by decreases in volumes, pricing and deflation of raw materials during the period.
After the measurement period, changes to the opening balance sheet can result in the recognition of income or expense as period costs.
After the measurement period, changes to the opening balance sheet can result in the recognition of income or expense as period costs. If our purchase accounting estimates are not correct, or if we do not recognize contingent liabilities within the measurement period, we may incur losses.
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.
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.
If our purchase accounting estimates are not correct, or if we do not recognize contingent liabilities within the measurement period, we may incur losses. 29 Table of Contents Impairment or Disposal of Long-Lived Assets Property, Plant and Equipment and Intangible Assets with Defined Lives We make judgments and estimates in conjunction with the carrying value of our long-term assets, including property, plant and equipment, and identifiable intangibles.
Impairment or Disposal of Long-Lived Assets Property, Plant and Equipment and Intangible Assets with Defined Lives We make judgments and estimates in conjunction with the carrying value of our long-term assets, including property, plant and equipment, and identifiable intangibles. These judgments may include the basis for capitalization, depreciation and amortization methods and the useful lives of the underlying assets.
These adjusters effectively share the base pass-through price changes of PVC with our customers commensurate with the market at large. Our long-term exposure to changes in PVC prices is somewhat mitigated due to the contractual component of the resin adjuster program. However, there is a level of exposure to short-term volatility due to timing lags.
Our long-term exposure to changes in PVC prices is somewhat mitigated due to the contractual component of the resin adjuster program. However, there is a level of exposure to short-term volatility due to timing lags. 35 Table of Contents We adjust the pricing of petroleum-based raw materials for the majority of our customers who purchase products using these materials.
The cost of sales decreased $9.8 million, or 5%, for the twelve months ended October 31, 2024 compared to the same period in 2023, primaril y as a result of lower volumes year-over-year. Selling, General and Administrative .
Cost of Sales . The cost of sales increased $8.1 million, or 3%, for the twelve months ended October 31, 2024 compared to the same period in 2023.
Similarly, NA Cabinet Components includes a price index provision in the majority of its customer arrangements to insulate against significant fluctuations in the price for various hardwood products used as the primary raw material for kitchen and bathroom cabinet doors.
As such, our long-term exposure to increases in oil-based raw material prices is significantly reduced under this program. Similarly, we include a price index provision to insulate against significant fluctuations in the price for various hardwood products used as the primary raw material for kitchen and bathroom cabinet doors.
Our selling, general and administrative expense decreased $0.3 million, or 2%, for the twelve months ended October 31, 2024 compared to the same period in 2023. The decrease is primarily due to lower labor costs and professional fees year-over-year. 25 Table of Contents Tyman The Tyman reportable segment is comprised solely of the business acquired on August 1, 2024.
Our selling, general and administrative expense increased $25.6 million, or 44%, for the twelve months ended October 31, 2025 compared to the same period in 2024. The increase is primarily due to increases in labor costs and other miscellaneous selling and general administrative costs related to the acquisition of the Tyman business costs year-over-year. Goodwill impairment charges.
Investing Activities Cash used for investing activities for the year ended October 31, 2024 increased $292.2 million compared to the year ended October 31, 2023, primarily as a result of the acquisition of Tyman. At October 31, 2024, we had firm purchase commitments of approximately $2.5 million for the purchase or construction of capital assets.
Investing Activities Cash used for investing activities for the year ended October 31, 2025 decreased by $358.6 million compared to the year ended October 31, 2024, primarily as a result of the acquisition of Tyman in 2024.
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflicts currently ongoing in Ukraine and Gaza.
While the tariff situation remains fluid, we generally expect to pass along costs associated with tariffs to our customers through contractual or pricing mechanisms. U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions, including the ongoing military conflicts in Ukraine and Gaza.
We plan to fund these capital expenditures through cash from operations or borrowings under our revolving credit facility. Financing Activities Cash provided by financing activities was $385.2 million for the year ended October 31, 2024 compared to cash used for financing opportunities during the year ended October 31, 2023.
At October 31, 2025, we had firm purchase commitments of approximately $8.3 million for the purchase or construction of capital assets. We plan to fund these capital expenditures through cash from operations or borrowings under our revolving credit facility. Our supplemental benefit plan was terminated in June 2023.
Our selling, general and admi n istrative expense decreased $1.0 million, or 3%, for the twelve months ended October 31, 2024 compared to the same period in 2023. The decrease is primarily due to a decrease in professional fees, labor costs partially offset by a decrease in professional fees and foreign currency impacts year-over-year.
Selling, General and Administrative . Our selling, general and administrative expense decreased $4.2 million, or 7% , for the twelve months ended October 31, 2024 compared to the same period in 2023.
This sensitivity pertains primarily to our outstanding revolving credit facility borrowings outstanding under the Credit Facility as of October 31, 2024. 32 Table of Contents Foreign Currency Rate Risk Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in the Euro and the British Pound Sterling.
Foreign Currency Rate Risk Our international operations have exposure to foreign currency rate risks, due primarily to fluctuations in the Euro, the British Pound Sterling and the Mexican Peso (“MXN”) exchange rates, to the U.S. Dollar (“USD”).
The Term A Facility amortizes on a quarterly basis at 5% per annum of the original principal amount of the Term A Facility, with the remainder due at maturity.
During fiscal 2025, we remained in compliance with all covenants under this agreement. Additional information regarding the Facilities is included in Note 9, "Debt", to the consolidated financial statements. The Term A Facility amortizes on a quarterly basis at 5% per annum of the original principal amount of the Term A Facility, with the remainder due at maturity.
During the year ended October 31, 2024 and 2023, we recognized a loss of $0.3 million and zero, respectively, related to our forward foreign exchange contracts. The value of our forward foreign exchange contracts fluctuates based on exchange rate fluctuations against the USD and GBP.
During the year ended October 31, 2025 and 2024, we recognized a net loss of less than $0.1 million and $0.3 million, respectively, related to our forward foreign exchange contracts. Commodity Price Risk We purchase PVC as the significant raw material consumed in the manufacture of vinyl extrusions.
Borrowings under the Facilities bear interest, at our option, at (1) the Base Rate plus an applicable margin or (2) Adjusted Term SOFR plus an applicable margin. The applicable margin will range from 1.0% to 1.75% for Base Rate loans and 2.0 to 2.75% for Adjusted Term SOFR loans.
The applicable margin will range from 1.0% to 1.75% for Base Rate loans and 2.0% to 2.75% for Adjusted Term SOFR loans. In addition, we are subject to commitment fees for the unused portion of the Revolving Credit Facility.
Corporate general and administrative expenses allocated during the years ended October 31, 2024, 2023 and 2022 were $27.3 million, $23.5 million, and $24.5 million, respectively. 21 Table of Contents Recent Transactions and Events On August 1, 2024, we completed the acquisition of Tyman plc (the “Tyman Acquisition”), a company incorporated in England and Wales (“Tyman”).
Corporate general and administrative expenses allocated during the years ended October 31, 2025, 2024 and 2023 were $40.3 million , $27.3 million, and $23.5 million, respectively.

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