UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended January 31, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission File Number 1-33913
________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (713 ) 961-4600
________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. | ☐ | |||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the registrant's Common Stock as of February 27, 2026 was 45,933,814 .
QUANEX BUILDING PRODUCTS CORPORATION
INDEX
| PART I. | ||||||||
| Item 1: | ||||||||
Condensed Consolidated Balance Sheets – January 31, 2026 and October 31, 2025 | ||||||||
Condensed Consolidated Statements of Cash Flows – Three Months Ended January 31, 2026 and 2025 | ||||||||
Condensed Consolidated Statement of Stockholders’ Equity – Three Months Ended January 31, 2026 and 2025 | ||||||||
| Item 2: | ||||||||
| Item 3: | ||||||||
| Item 4: | ||||||||
| PART II. | ||||||||
| Item 1A: | ||||||||
| Item 5: | ||||||||
| Item 6: | ||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| January 31, 2026 | October 31, 2025 | ||||||||||
| (In thousands, except share amounts) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid assets | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deferred income tax assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
Other noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Income taxes payable | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Current operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Noncurrent operating lease liabilities | |||||||||||
| Deferred income taxes liabilities | |||||||||||
Other noncurrent liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in-capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Less: Treasury stock at cost, | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of the financial statements.
1
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands, except per share amounts) | |||||||||||
| Net sales | $ | $ | |||||||||
| Cost and expenses: | |||||||||||
| Cost of sales (excluding depreciation and amortization) | |||||||||||
| Selling, general and administrative | |||||||||||
Restructuring charges | |||||||||||
| Depreciation and amortization | |||||||||||
Operating income (loss) | ( | ||||||||||
Non-operating income (expense): | |||||||||||
| Interest expense | ( | ( | |||||||||
| Other, net | |||||||||||
Loss before income taxes | ( | ( | |||||||||
Income tax (expense) benefit | ( | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Basic and diluted loss per common share | $ | ( | $ | ( | |||||||
| Weighted-average common shares outstanding: | |||||||||||
Basic and diluted | |||||||||||
| Cash dividends per share | $ | $ | |||||||||
The accompanying notes are an integral part of the financial statements.
2
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Other comprehensive income: | |||||||||||
Foreign currency translation gain (loss), net of tax | ( | ||||||||||
Other comprehensive income (loss), net of tax | ( | ||||||||||
Comprehensive income (loss) | $ | $ | ( | ||||||||
The accompanying notes are an integral part of the financial statements.
3
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to cash used for operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation | |||||||||||
| Deferred income tax | |||||||||||
| Other, net | |||||||||||
| Changes in assets and liabilities: | |||||||||||
Decrease in accounts receivable | |||||||||||
Increase in inventory | ( | ( | |||||||||
Increase in other current assets | ( | ( | |||||||||
Decrease in accounts payable | ( | ( | |||||||||
Decrease in accrued liabilities | ( | ( | |||||||||
Decrease in income taxes payable | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
Cash used for operating activities | ( | ( | |||||||||
| Investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from disposition of capital assets | |||||||||||
| Cash used for investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
| Borrowings under credit facilities | |||||||||||
| Repayments of credit facility borrowings | ( | ( | |||||||||
| Repayments of other long-term debt | ( | ( | |||||||||
| Common stock dividends paid | ( | ( | |||||||||
| Issuance of common stock | |||||||||||
| Payroll tax paid to settle shares forfeited upon vesting of stock | ( | ( | |||||||||
| Purchase of treasury stock | ( | ||||||||||
Cash provided by (used for) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ||||||||||
Decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
The accompanying notes are an integral part of the financial statements.
4
QUANEX BUILDING PRODUCTS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended January 31, 2026 | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
| (In thousands, no per share amounts shown except in verbiage) | |||||||||||||||||||||||||||||||||||
| Balance at October 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net loss | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | |||||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
| Expense related to stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Restricted stock awards granted | — | ( | — | — | — | ||||||||||||||||||||||||||||||
| Other | ( | — | — | — | ( | ||||||||||||||||||||||||||||||
| Balance at January 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Three Months Ended January 31, 2025 | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||||||
| (In thousands, no per share amounts shown except in verbiage) | |||||||||||||||||||||||||||||||||||
| Balance at October 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
| Net income | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Common dividends ($ | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Treasury shares purchased, at cost | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Stock-based compensation activity: | |||||||||||||||||||||||||||||||||||
| Expense related to stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Stock options exercised | — | — | — | ||||||||||||||||||||||||||||||||
| Restricted stock awards granted | — | ( | — | — | — | ||||||||||||||||||||||||||||||
| Performance restricted stock units vested | — | ( | — | — | — | ||||||||||||||||||||||||||||||
| Other | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Balance at January 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of the financial statements.
5
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations, Basis of Presentation and Significant Accounting Policies
Quanex Building Products Corporation is a leading manufacturer and component supplier to original equipment manufacturers (OEMs) in the building products industry, including window, door, solar, refrigeration, custom mixing, building access, and cabinetry markets. We have organized our business into three reportable business segments: (1) Hardware Solutions, which manufactures window and door hardware and screens; (2) Extruded Solutions, which manufactures insulating glass spacers, vinyl window and door profiles, seals, and weatherstripping; and (3) Custom Solutions, which manufactures wood, mixing, and building access solutions. For additional discussion of our reportable business segments, see Note 12, “Segment Information.” We leverage efficient production and distribution processes and engineering expertise to provide our customers with specialized products for their specific hardware, extrusion, and custom applications. We believe these capabilities enhance our ability to provide value to our customers. We serve a primary customer base in North America and the United Kingdom (U.K.), and also serve customers in international markets through our operating locations in the U.K., Germany, Mexico, Canada, and Italy, as well as through sales and marketing efforts in other countries.
On August 1, 2024, we completed the acquisition of Tyman plc (“Tyman”), a company incorporated in England and Wales (“Tyman Acquisition”). The acquisition was accounted for as a business combination requiring all the acquired assets and liabilities to be remeasured to fair value resulting in a consolidated fair value of net assets and liabilities of $848.6 million. Tyman’s results are allocated to our Hardware Solutions, Extruded Solutions, and Custom Solutions segments in accordance with the nature of operations. For additional discussion of our reportable business segments, see Note 12, “Segment Information.”
Unless the context indicates otherwise, references to “Quanex,” the “Company,” “we,” “us,” and “our” refer to the consolidated business operations of Quanex Building Products Corporation and its subsidiaries.
Basis of Presentation and Principles of Consolidation
The accompanying interim unaudited condensed consolidated financial statements include the accounts of Quanex Building Products Corporation. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of October 31, 2025 was derived from audited financial information but does not include all disclosures required by U.S. GAAP. The accompanying financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025. In our opinion, the accompanying financial statements contain all adjustments (which consist of normal recurring adjustments, except as disclosed herein) necessary to fairly present our financial position, results of operations and cash flows for the interim periods. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year or for any future periods.
Use of Estimates
In preparing financial statements, we make informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. We review our estimates on an ongoing basis, including those related to impairment of long-lived assets and goodwill, contingencies and income taxes. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.
Revenue from Contracts with Customers
Revenue recognition
We recognize revenue that reflects the consideration we expect to receive for product sales upon transfer to customers. Revenue for product sales is recognized when control of the promised products is transferred to our customers, and we are entitled to consideration in exchange for such transfer. We account for a contract when a customer provides us with a firm purchase order that identifies the products to be provided, the payment terms for those products, and when collectability of the consideration due is reasonably assured.
6
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Performance obligations
A performance obligation is a promise to provide the customer with a good or service. Our performance obligations include product sales, with each product included in a customer contract being recognized as a separate performance obligation. For contracts with multiple performance obligations, the standalone selling price of each product is generally readily observable.
Revenue from product sales is recognized at a point in time when the product is transferred to the customer, in accordance with the shipping terms, which is generally upon shipment. We estimate a provision for sales returns and warranty allowances to account for product returns related to general returns and product nonconformance.
We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. Additionally, we do not disclose the value of unsatisfied performance obligations as our contract terms are less than one year.
Pricing and sales incentives
Pricing is established at or prior to the time of sale with our customers and we record sales at the agreed-upon net selling price, reflective of current and prospective discounts.
Shipping and handling costs
We account for shipping and handling services as fulfillment services; accordingly, freight revenue is combined with the product deliverable rather than being accounted for as a distinct performance obligation within the terms of the agreement. Shipping and handling costs incurred by us for the delivery of goods to customers are considered a cost to fulfill the contract and are included in cost of sales in the accompanying condensed consolidated statements of (loss) income.
Contract assets and liabilities
Deferred revenue, which is not significant, is recorded when we have remaining unsatisfied performance obligations for which we have received consideration.
Disaggregation of revenue
We manufacture and distribute a diverse portfolio of products for OEMs operating in hardware, extrusion, and custom markets worldwide. Our broad geographic reach exposes us to diverse economic conditions, which can impact demand, currency fluctuations, and supply chain dynamics.
The following table summarizes our product sales for the three months ended January 31, 2026 and 2025, into groupings by segment which we believe depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors. For further details regarding our results by segment, refer to Note 12, “Segment Information.”
7
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | |||||||||||
| Hardware Solutions: | |||||||||||
| Window and door hardware | $ | $ | |||||||||
| Screens | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
| Extruded Solutions: | |||||||||||
| Window profiles | |||||||||||
| Seals and gaskets | |||||||||||
| Spacers | |||||||||||
| Solar | |||||||||||
| Flashing Tape | |||||||||||
| Window and door hardware | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
| Custom Solutions: | |||||||||||
| Wood solutions | $ | $ | |||||||||
| Access solutions | |||||||||||
| Mixing solutions | |||||||||||
| $ | $ | ||||||||||
| Unallocated Corporate & Other: | |||||||||||
| Eliminations | $ | ( | $ | ( | |||||||
| $ | ( | $ | ( | ||||||||
| Net sales | $ | $ | |||||||||
Cash, Cash Equivalents and Restricted Cash
Cash equivalents include all highly liquid investments with an original maturity of three months or less. Such securities with an original maturity which exceeds three months are deemed to be short-term investments. Restricted cash represents cash held by our foreign subsidiary that is subject to foreign exchange and capital control regulations that may restrict the timing and manner of remittance of funds outside the country. We maintain cash, cash equivalents and restricted cash at several financial institutions, which at times may not be federally insured or may exceed federally insured limits. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risks on such accounts.
Allowance for Credit Losses
We have established an allowance for credit losses to estimate the risk of loss associated with our accounts receivable balances. Our policy for determining the allowance is based on factors that affect collectability, including historical trends of write-offs, recoveries and credit losses, and the credit quality of our customers. We believe our allowance is adequate to absorb any known or probable losses as of January 31, 2026. Different assumptions or changes in economic circumstances could result in changes to the allowance.
Related Party Transactions
Net sales to customers which are related parties with two of our non-employee directors for the three months ended January 31, 2026 was $0.3 million and $0.5 million for comparable prior year period. Purchases from a supplier which is a related party with one of our non-employee directors for the three months ended January 31, 2026 was $0.1 million and $0.2 million for the comparable prior year period. We performed a review of these transactions, of which no single transaction or series of related transactions exceeded $120,000 in amount, and determined that these transactions were enacted independently
8
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
of each other. We are not aware of any other related party transactions with any of our current non-employee directors or officers outside of their normal business functions or expected contractual duties.
Restructuring
We accrue one-time severance costs pursuant to an approved plan of restructuring at the communication date, when affected employees have been notified of the potential severance and sufficient information has been provided for the employee to calculate severance benefits, in the event the employee is involuntarily terminated. In addition, we accrue costs associated with the termination of contractual commitments including leases at the time the lease is terminated pursuant to the lease provisions or in accordance with another agreement with the landlord. Otherwise, we continue to recognize lease expense through the cease-use date. After the cease-use date, we determine if our operating lease payments are at market. We assume sublet of the facility at the market rate. To the extent our lease obligations exceed the fair value rentals, we discount to arrive at the present value and record a liability. If the facility is not sublet, we expense the amount of the assumed sublet in the current period. For other costs directly related to the restructuring effort, such as equipment moving costs, we expense in the period incurred.
During fiscal 2025, we restructured our reportable segments to integrate the acquisition of Tyman plc with our legacy Quanex operations. This restructuring aligns our business into three reportable segments: Hardware Solutions, Extruded Solutions, and Custom Solutions, which is how our Chief Operating Decision Maker (“CODM”) assesses the performance of our business, makes key operating decisions and allocates resources. For additional discussion of our reportable business segments, see Note 12, “Segment Information.”
2. Inventories
Inventories consisted of the following at January 31, 2026 and October 31, 2025 (in thousands):
| January 31, 2026 | October 31, 2025 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Finished goods and work in process | |||||||||||
| Supplies and other | |||||||||||
| Total | $ | $ | |||||||||
9
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following as of January 31, 2026 and October 31, 2025 (in thousands):
| January 31, 2026 | October 31, 2025 | ||||||||||
| Land and land improvements | $ | $ | |||||||||
| Buildings and building improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Construction in progress | |||||||||||
| Property, plant and equipment, gross | |||||||||||
| Less: Accumulated depreciation | |||||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
Depreciation expense, including amortization of finance leases, for the three months ended January 31, 2026 was $14.5 million and $13.9 million for the comparable prior year period.
If there are indicators of potential impairment, we evaluate our property, plant and equipment for recoverability over the remaining useful lives of the assets.
4. Goodwill and Intangible Assets
Goodwill
The change in the carrying amount of goodwill for the three months ended January 31, 2026 was as follows (in thousands):
| Three Months Ended | |||||
| January 31, 2026 | |||||
Beginning balance as of November 1, 2025 | $ | ||||
| Foreign currency translation adjustment | |||||
| Balance as of the end of the period | $ | ||||
As of January 31, 2026, we have ten reporting units, seven of which comprised our goodwill balance. These ten reporting units are aggregated into our three reportable segments. For additional information and discussion of our reporting units and a summary of the change in the carrying amount of goodwill by segment, see Note 12, “Segment Information.”
Identifiable Intangible Assets
Amortizable intangible assets consisted of the following as of January 31, 2026 and October 31, 2025 (in thousands):
| January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
| Customer relationships | $ | $ | $ | $ | |||||||||||||||||||
| Trademarks and trade names | |||||||||||||||||||||||
| Patents and other technology | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
We had amortization expense related to intangible assets for the three months ended January 31, 2026 of $9.8 million and $10.6 million for the comparable prior year period.
10
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for future fiscal years as of January 31, 2026 (in thousands):
| Estimated Amortization Expense | |||||
2026 (remaining nine months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
5. Debt and Finance Lease Obligations
| January 31, 2026 | October 31, 2025 | ||||||||||
| Term Loan A Facility | $ | $ | |||||||||
| Revolving Credit Facility | |||||||||||
| Finance lease obligations and other | |||||||||||
| Unamortized deferred financing fees | ( | ( | |||||||||
| Total debt | $ | $ | |||||||||
| Less: Current maturities of long-term debt | |||||||||||
| Long-term debt | $ | $ | |||||||||
Revolving Credit Facility and Term A Facility
On June 12, 2024, in connection with the Tyman Acquisition, the Company, Wells Fargo Bank, National Association (“Wells Fargo Bank”, acting as agent, swingline lender and issuing lender, the “Agent”), the other entities therein specified in the capacities therein specified, and the lenders parties thereto, entered into an amendment to the Second Amended and Restated Credit Agreement, dated as of July 6, 2022 (the “Existing Credit Agreement”, and the Existing Credit Agreement as so amended, the “Amended Credit Agreement”). The Amended Credit Agreement did not become effective until August 1, 2024 upon the completion of the Tyman Acquisition. Our previous credit facility is more fully described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.
The Amended Credit Agreement (i) increased the senior secured revolving credit facility to an aggregate principal amount of $475 million (the “Revolving Credit Facility”) and (ii) provides for a senior secured term loan A facility in an aggregate principal amount of $500 million (the “Term A Facility” and together with the Revolving Credit Facility, the “Facilities”). The Revolving Credit Facility will include alternative currency, letter of credit, and swing-line sub-facilities of $100 million, $30 million, and $15 million, respectively. We capitalized $13.8 million of deferred financing fees related to the Amended Credit Agreement. The maturity date of the Facilities will be five years after the acquisition effective date, maturing on August 1, 2029.
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. 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.
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 2.75 % for Adjusted Term SOFR loans. In addition, we are subject to commitment fees for the unused portion of the Revolving Credit Facility.
11
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The applicable margin percentages are based on the Consolidated Net Leverage Ratio outlined in the following table:
| Pricing Level | Consolidated Net Leverage Ratio | Commitment Fee | Term SOFR Loans, Eurocurrency Rate Loans and RFR Loans | Base Rate Loans | ||||||||||||||||||||||
| I | Less than or equal to 1.50 to 1.00 | |||||||||||||||||||||||||
| II | Greater than 1.50 to 1.00, but less than or equal to 2.25 to 1.00 | |||||||||||||||||||||||||
| III | Greater than 2.25 to 1.00, but less than or equal to 3.00 to 1.00 | |||||||||||||||||||||||||
| IV | Greater than 3.00 to 1.00 | |||||||||||||||||||||||||
In the event of default, outstanding borrowings accrue interest at the Default Rate, as defined, whereby the obligations will bear interest at a per annum rate equal to 2 % above the total per annum rate otherwise applicable.
The Facilities provide for incremental revolving credit commitments for a minimum principal amount of $10.0 million, up to an aggregate amount of the greater of (1) $310.0 million and (2) 100% of Consolidated EBITDA, subject to the lender's discretion to elect or decline the incremental increase. We can also borrow up to the lesser of $15.0 million or the revolving credit commitment, as defined, under a Swingline feature of the Credit Agreement.
The Facilities contain 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 the Consolidated Net Leverage Ratio, as defined, must be greater than 3.25 to 1.00.
In addition to maintaining these financial covenants, the Facilities also limit 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 other transactions as further defined in the Credit Facility. Some of these limitations, however, do not take effect so long as total leverage is less than or equal to 2.75 to 1.00 and available liquidity exceeds $25.0 million. Substantially all of our domestic assets, with the exception of real property, were used as collateral for the Credit Agreement.
As of January 31, 2026, we had $662.0 million borrowings outstanding under the Facilities (reduced by unamortized debt issuance costs of $10.3 million), $6.2 million of outstanding letters of credit, and $55.5 million outstanding primarily under finance leases and other debt. We had $269.3 million available for use under the Revolving Credit Facility at January 31, 2026. The borrowings outstanding as of January 31, 2026 under the Facilities accrue interest at 6.04 % per annum, and our weighted-average borrowing rate for borrowings outstanding during the three months ended January 31, 2026 and 2025 was 6.39 % and 6.85 %, respectively. We were in compliance with our debt covenants as of January 31, 2026.
6. Retirement Plans
We maintain a non-qualified deferred compensation plan covering members of the Board of Directors and certain key employees. As of January 31, 2026 and October 31, 2025, the liability associated with the deferred compensation plan was approximately $4.5 million and $4.1 million, respectively. We record the current portion of liabilities associated with these plans under the caption “Accrued liabilities,” and the long-term portion under the caption “Other liabilities” in the accompanying condensed consolidated balance sheets.
7. Income Taxes
To determine our income tax expense or benefit for interim periods, consistent with accounting standards, we apply the estimated annual effective income tax rate to year-to-date results, plus any applicable discrete items, which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitations, tax benefits on equity compensation, and increases or decreases in valuation allowances on deferred tax assets. Our estimated annual effective tax rates from continuing operations for the three months ended January 31, 2026 and 2025 were 4.4 % and 25.3 %, respectively. The difference between our estimated annual effective income tax rate and the U.S. federal statutory rate of 21 % principally results from discrete tax items, U.S. state taxes, a non-U.S. tax rate differential and other permanent differences. Total discrete tax expense recorded in the first quarter of fiscal 2026 was $1.1 million, primarily related to equity-based compensation award activity and state deferred tax remeasurement from legal entity reorganization activities. The primary discrete item affecting the 2025 effective rate was the benefit of $0.4 million related to equity-based compensation award activity.
12
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
We evaluate the likelihood of realization of our deferred tax assets by considering both positive and negative evidence. We maintain a valuation allowance for certain state net operating losses which totaled $0.8 3.6
On July 4, 2025, the One Big Beautiful Bill Act was enacted. There were multiple business tax provisions that have an impact to the company, including a reclass of our income tax payable and deferred tax liability related to the timing differences on fixed assets depreciation.
8. Contingencies
Remediation and Environmental Compliance Costs
Under applicable state and federal laws, we may be responsible for, among other things, all or part of the costs required to remove or remediate wastes or hazardous substances at locations we, or our predecessors, have owned or operated. From time to time, we also have been alleged to be liable for all or part of the costs incurred to clean up third-party sites where there might have been an alleged improper disposal of hazardous substances. Currently, we are not involved in any such matters.
From time to time, we incur routine expenses and capital expenditures associated with compliance with existing environmental regulations, including control of air emissions and water discharges, and plant decommissioning costs. We have not incurred any material expenses or capital expenditures related to environmental matters during the past three fiscal years, and do not expect to incur a material amount of such costs in fiscal 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.
Litigation
From time to time, we, along with our subsidiaries, are involved in various litigation matters arising in the ordinary course of our business, including those arising from or related to contractual matters, commercial disputes, intellectual property, personal injury, environmental matters, product performance or warranties, product liability, insurance coverage and personnel and employment disputes.
We regularly review with legal counsel the status of all ongoing proceedings, and we maintain insurance against these risks to the extent deemed prudent by our management and to the extent such insurance is available. However, there is no assurance that we will prevail in these matters or that our insurers will accept full coverage of these matters, and we could, in the future, incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome or insurability of matters we face, which could materially impact our results of operations.
We have been and are currently party to multiple claims, some of which are in litigation, relating to alleged defects in a commercial sealant product that was manufactured and sold during the 2000’s. While we believe that our product was not defective and that we would prevail in these commercial sealant product claims if taken to trial, the timing, ultimate resolution and potential impact of these claims is not currently determinable, and additional claims may be raised in the future that result in the Company bearing legal fees and/or judgment costs, if any. Nevertheless, after taking into account all currently available information, including our defenses, the advice of our counsel, and the extent and currently-expected availability of our existing insurance coverage, we believe that the eventual outcome of these commercial sealant claims will not have a material adverse effect on our overall financial condition, results of operations or cash flows, and we have not recorded any accrual with regard to these claims.
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. During the quarter ended January 31, 2026, Roofers’ Pension Fund was appointed lead plaintiff and the case was re‑styled as In re Quanex Building Products Corporation Securities Litigation. 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. 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. 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.
13
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
9. Fair Value Measurement of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market data developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to Level 1 and the lowest priority to Level 3. The three levels of the fair value hierarchy are described below:
•Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
•Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Carrying amounts reported on the balance sheet for cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. Our outstanding debt is variable rate debt that re-prices frequently, thereby limiting our exposure to significant change in interest rate risk. As a result, the fair value of our debt instrument approximates carrying value at January 31, 2026, and October 31, 2025 (Level 2 measurement).
10. Stock-Based Compensation
We have established and maintain an Omnibus Incentive Plan (2020 Plan) that provides for the granting of restricted stock awards, stock options, restricted stock units, performance share awards, performance restricted stock units, and other stock-based and cash-based awards. The 2020 Plan is administered by the Compensation and Management Development Committee of the Board of Directors.
The aggregate number of shares of common stock authorized for grant under the 2020 Plan is 3,139,895 as approved by the shareholders. Any officer, key employee and/or non-employee director is eligible for awards under the 2020 Plan. We grant restricted stock units to non-employee directors on the first business day of each fiscal year. As approved by the Compensation & Management Development Committee of our Board of Directors annually, we grant a mix of restricted stock awards, performance shares and/or performance restricted stock units to officers, management and key employees. We also historically granted stock options to certain officers, directors and key employees. Occasionally, we may make additional grants to key employees at other times during the year.
Restricted Stock Awards
Restricted stock awards are granted to key employees and officers annually, and typically cliff vest over a three-year period or a three-year graded vesting schedule with service and continued employment as the only vesting criteria. The recipient of the restricted stock award is entitled to all of the rights of a shareholder, except that the awards are nontransferable during the vesting period and dividends are not paid until the vesting. The fair value of the restricted stock award is established on the grant date and then expensed over the vesting period resulting in an increase in additional paid-in-capital. Shares are generally issued from treasury stock at the time of grant.
14
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
A summary of non-vested restricted stock award activity during the three months ended January 31, 2026 is presented below:
| Restricted Stock Awards | Weighted-Average Grant Date Fair Value per Share | ||||||||||
| Non-vested at October 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | ( | ||||||||||
| Vested | ( | ||||||||||
| Non-vested at January 31, 2026 | $ | ||||||||||
The total weighted-average grant-date fair value of restricted stock awards that vested during each of the three months ended January 31, 2026 and 2025 was $2.2 million and $1.9 million, respectively. As of January 31, 2026, total unrecognized compensation cost related to unamortized restricted stock awards was $6.0 million. We expect to recognize this expense over the remaining weighted average vesting period of 2.1 years.
Stock Options
Historically, stock options have been awarded to key employees, officers and non-employee directors. In December 2017, the Compensation & Management Development Committee of the Board of Directors approved a change to the long-term incentive award program eliminating the grant of stock options and replacing this award with a grant of performance restricted stock units as further described below. As a result, stock options were not granted during the three months ended January 31, 2026 and 2025. Stock options typically vested ratably over a three-year period with service and continued employment as the vesting conditions. Our stock options may be exercised up to a maximum of ten years from the date of grant. The fair value of the stock options was determined on the grant date and expensed over the vesting period resulting in an increase in additional paid-in-capital. For employees who were nearing retirement-eligibility, we recognized stock option expense ratably over the shorter of the vesting period or the period from the grant-date to the retirement-eligibility date.
We use a Black-Scholes pricing model to estimate the fair value of stock options. A description of the methodology for the valuation assumptions was disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
The following table summarizes our stock option activity for the three months ended January 31, 2026:
| Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (000s) | ||||||||||||||||||||
| Outstanding at October 31, 2025 | $ | ||||||||||||||||||||||
| Forfeited/Expired | ( | ||||||||||||||||||||||
| Outstanding at January 31, 2026 | $ | $ | |||||||||||||||||||||
| Vested at January 31, 2026 | $ | $ | |||||||||||||||||||||
| Exercisable at January 31, 2026 | $ | $ | |||||||||||||||||||||
Intrinsic value is the amount by which the market price of the common stock on the date of exercise exceeds the exercise price of the stock option. The total intrinsic value of our stock options that were exercised during the three months ended January 31, 2026 and 2025 was zero and $0.1 million, respectively.
Restricted Stock Units
Restricted stock units may be awarded to key employees and officers from time to time, and annually to non-employee directors. The non-employee director restricted stock units vest immediately but are payable only upon the director's cessation of service unless an election is made by the non-employee director to settle and pay the award on an earlier specified date. Restricted stock units awarded to employees and officers typically cliff vest after a three-year period with service and continued employment as the vesting conditions. Restricted stock units are not considered outstanding shares and do not have voting rights, although the holder does receive a cash payment equivalent to the dividend paid, on a one-for-one basis, on our outstanding common shares. Once the vesting criteria is met, each restricted stock unit is payable to the holder in cash based on the market value of one share of our common stock. Accordingly, we record a liability for the restricted stock units on our balance sheet and recognize any changes in the market value during each reporting period as compensation expense.
15
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
During the three months ended January 31, 2026 and 2025, non-employee directors received 64,360 and 28,240 restricted stock units, respectively, at a weighted-average grant date fair value of $14.92 per share and $29.02 per share, respectively. During the three months ended January 31, 2026 and 2025, 6,061 and 39,871 restricted stock units, which were awarded to key employees, vested, respectively, and 1,910 and zero restricted stock units were forfeited for the same periods, respectively. During the three months ended January 31, 2026, we paid $0.1 million and $1.0 million for the comparable prior year to settle vested restricted stock units awarded to key employees.
Performance Share Awards
We have awarded annual grants of performance shares to key employees and officers. The performance share awards granted in December 2023 vest with return on net assets (RONA) as the vesting condition and pay out 100 % in cash, and are accounted for as liability. The performance share awards granted in December 2024, March 2025 and December 2025 vest with adjusted earnings per share performance as the vesting condition and RONA as a performance modifier and pay out 100% in cash, and are accounted for as a liability.
The expected cash settlement of the performance share award is recorded as a liability and is being marked to market over the three-year term of the award and can fluctuate depending on the number of shares ultimately expected to vest. Depending on the achievement of the performance conditions, 0 % to 200 % of the December 2022 and December 2023 awarded performance shares may ultimately vest and 0% to 250% of the December 2024 performance shares may ultimately vest.
The following table summarizes our performance share grants and the grant date fair value for the RONA performance metric:
| Grant Date | Shares Awarded | Grant Date Fair Value | Shares Forfeited | |||||||||||||||||
| December 7, 2023 | $ | |||||||||||||||||||
| December 4, 2024 | $ | |||||||||||||||||||
| March 1, 2025 | $ | |||||||||||||||||||
| December 4, 2025 | $ | |||||||||||||||||||
As of January 31, 2025, none of the December 2023 grants are expected to vest. During the three months ended December 2025, no shares vested pursuant to the December 2022 grant.
Performance share awards are payable in cash based upon the number of performance shares ultimately earned, and are therefore not considered outstanding shares.
Performance Restricted Stock Units
We awarded performance restricted stock units to key employees and officers. These awards cliff vest upon a three-year service period with the absolute total shareholder return of our common stock over this three-year term as the vesting criteria. The number of performance restricted stock units earned is variable depending on the metric achieved, and the settlement method is 100 % in our common stock, with accrued dividends paid in cash at the time of vesting, assuming the shares had been outstanding throughout the performance period.
To value the performance restricted stock units, we utilized a Monte Carlo simulation model to arrive at a grant-date fair value. This amount will be adjusted for forfeitures and expensed over the three-year term of the award with a credit to additional paid-in-capital. Depending on the achievement of the performance conditions, a minimum of 0 % and a maximum of 150 % of the awarded performance restricted stock units may vest. Specifically, the awards vest on a continuum with the following Absolute Total Shareholder Return (A-TSR) milestones:
| Vesting Level | Vesting Criteria | Percentage of Award Vested | ||||||||||||
| Level 1 | A-TSR greater than or equal to 50% | |||||||||||||
| Level 2 | A-TSR less than 50% and greater than or equal to 20% | |||||||||||||
| Level 3 | A-TSR less than 20% and greater than or equal to -20% | |||||||||||||
| Level 4 | A-TSR less than -20% | |||||||||||||
16
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes our performance restricted stock unit grants and the grant date fair value for the A-TSR performance metric:
| Grant Date | Shares Awarded | Grant Date Fair Value | Shares Forfeited | |||||||||||||||||
| December 7, 2023 | $ | |||||||||||||||||||
| December 4, 2024 | $ | |||||||||||||||||||
| March 1, 2025 | $ | |||||||||||||||||||
| December 4, 2025 | $ | |||||||||||||||||||
As of January 31, 2025, none of the December 2023 grants are expected to vest. During the three months ended January 31, 2025, no performance restricted stock units vested pursuant to the December 2022 grant.
The performance restricted stock units are not considered outstanding shares, do not have voting rights, and are excluded from diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares. As of January 31, 2026, we have deemed 12,373 shares related to the December 2023 grant of performance restricted stock units as probable to vest.
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Restricted stock awards | $ | $ | |||||||||
| Restricted stock units | ( | ||||||||||
| Performance share awards | ( | ||||||||||
| Performance restricted stock units | |||||||||||
| Total compensation expense | $ | $ | |||||||||
Treasury Shares
We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Shares are generally issued from treasury stock at the time of grant of restricted stock awards, upon the exercise of stock options, and upon the vesting of performance restricted stock units. On the subsequent issuance of treasury shares, we record proceeds in excess of cost as an increase in additional paid in capital. A deficiency of such proceeds relative to costs would be applied to reduce paid-in-capital associated with prior issuances to the extent available, with the remainder recorded as a charge to retained earnings. There were no charges to retained earnings during the three months ended January 31, 2026.
The following table summarizes the treasury stock activity during the three months ended January 31, 2026:
| Three Months Ended | |||||
| January 31, 2026 | |||||
Beginning Balance as of November 1, 2025 | |||||
| Restricted stock awards granted | ( | ||||
| Balance at January 31, 2026 | |||||
17
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Other, net
Other income included under the caption “Other, net” on the condensed consolidated statements of (loss) income, consisted of the following for the three months ended January 31, 2026 and 2025 (in thousands):
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Foreign currency transaction gains | $ | $ | |||||||||
Foreign currency derivative gains | |||||||||||
| Interest income | |||||||||||
| Other | ( | ||||||||||
| Other, net | $ | $ | |||||||||
l2. Segment Information
In our Annual Report on Form 10-K as of October 31, 2024 and our Quarterly Reports on Form 10-Q as of January 31, 2025 and April 30, 2025, respectively, we presented four reportable business segments in accordance with ASC Topic 280-10-50, “Segment Reporting” (ASC 280): (1) NA Fenestration, comprising four operating segments primarily focused on the fenestration market in North America including vinyl profiles, insulating glass spacers, screens, custom compound mixing, and other fenestration components; (2) EU Fenestration, comprising our U.K.-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing insulating glass spacers; (3) NA Cabinet Components, comprising our cabinet door and components segment; and (4) Tyman, which was acquired on August 1, 2024, comprising a leading international supplier of engineered fenestration components and access solutions to the construction industry.
During the third quarter of 2025, we restructured our reportable segments due to changes in our organizational structure and how our CODM makes key operating decisions, allocates resources and assesses the performance of our business. As a result, we now report in three reportable segments: Hardware Solutions, which provides window and door hardware and screens; Extruded Solutions, which supplies insulating glass spacers, vinyl window and door profiles, seals, and weatherstripping; and Custom Solutions, which provides wood, mixing, and building access solutions. 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, inter-segment eliminations, and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during annual planning process. Other general and administrative costs associated with the corporate office are allocated to the reportable segments, based upon each segment’s relative operating activity. The accounting policies of our operating segments are the same as those used to prepare the accompanying condensed consolidated financial statements. Corporate general and administrative expenses allocated during the three month period ended January 31, 2026 was $12.1 million and $7.9 million for the comparable prior year period.
ASC Topic 280-10-50, “Segment Reporting” (ASC 280) permits aggregation of operating segments based on factors including, but not limited to: (1) similar nature of products serving the building products industry, primarily the fenestration business; (2) similar production processes, although there are some differences in the amount of automation amongst operating plants; (3) similar types or classes of customers, namely the primary OEMs; (4) similar distribution methods for product delivery, although the extent of the use of third-party distributors will vary amongst the businesses; (5) similar regulatory environment; and (6) converging long-term economic similarities.
Our CODM, the President and Chief Executive Officer, reviews several measures of segment profitability to assess performance and allocate resources. Segment operating income (loss) is the measure of segment profit or loss that is most consistent with GAAP and is used by the CODM to evaluate segment results, allocate resources, and monitor performance against the annual budget and forecasts. The CODM considers forecast-to-actual variances on a monthly basis using this measure for each segment when making decisions about allocating capital and personnel. In addition, the CODM uses this measure, along with net sales, to compare segment performance and in the compensation of certain employees.
The Company does not present segment asset information as such information is not provided to the CODM and accordingly, asset information is not used in assessing segment performance.
18
QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Selected segment information for the three months ended January 31, 2026 and 2025 was as follows (in thousands):
| Hardware Solutions | Extruded Solutions | Custom Solutions | Unallocated Corp. & Other | Total | |||||||||||||||||||||||||
| Three Months Ended January 31, 2026 | |||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | ( | ||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
| Operating (loss) income | $ | ( | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended January 31, 2025 | |||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | ( | ||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||
| Restructuring charges | |||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||
| Operating (loss) income | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following tables reconcile our segment presentation, as previously reported in our Quarterly Report on Form 10-Q for the three months ended January 31, 2025, to the current presentation (in thousands):
| NA Fenestration | EU Fenestration | NA Cabinet Components | Tyman | Unallocated Corp. & Other | Total | ||||||||||||||||||||||||||||||
Three Months Ended January 31, 2025 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | ( | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||||||||
| Restructuring charges | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Hardware Solutions(1) | Extruded Solutions(2) | Custom Solutions(3) | Unallocated Corp. & Other | Total | |||||||||||||||||||||||||||||||
Three Months Ended January 31, 2025 | |||||||||||||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | ( | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||||||||
| Restructuring charges | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||
Operating (loss) income | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||
| Capital expenditures | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
(1) The Hardware Solutions segment contains a portion of the previously reported NA Fenestration segment.
(2) The Extruded Solutions segment contains a portion of the NA Fenestration segment and the EU Fenestration segment.
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QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
| Hardware Solutions | Extruded Solutions | Custom Solutions | Unallocated Corp. & Other | Total | |||||||||||||||||||||||||
| Balance as of October 31, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Foreign currency translation adjustment | |||||||||||||||||||||||||||||
| Balance as of January 31, 2026 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
We did not allocate non-operating expense or income tax expense to the reportable segments. The following table reconciles operating income (loss) as reported above to net income for the three months ended January 31, 2026 and 2025 (in thousands):
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Operating income (loss) | $ | $ | ( | ||||||||
| Interest expense | ( | ( | |||||||||
| Other, net | |||||||||||
Income tax (expense) benefit | ( | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
13. Earnings Per Share
We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common shares include the weighted average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock as determined using the treasury stock method and contingent shares associated with performance share awards, if dilutive.
The computation of basic and diluted earnings per share for the three months ended January 31, 2026 and 2025 follows (in thousands, except per share data):
Net Loss | Weighted-Average Shares | Per Share | |||||||||||||||
| Three Months Ended January 31, 2026 | |||||||||||||||||
Basic and diluted loss per common share | $ | ( | $ | ( | |||||||||||||
| Three Months Ended January 31, 2025 | |||||||||||||||||
| Basic and diluted loss per common share | $ | ( | $ | ( | |||||||||||||
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QUANEX BUILDING PRODUCTS CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
14. New Accounting Guidance
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt as of the specified effective date. We did not adopt any new accounting pronouncements during the three months ended January 31, 2026.
Recent Accounting Standards Not Yet Adopted
In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires expanded disclosures of expense information, including the amounts of inventory purchases, employee compensation, depreciation and amortization within commonly presented expense captions during the period. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
15. Subsequent Events
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Unless the context indicates otherwise, references to “Quanex,” the “Company,” “we,” “us,” and “our” refer to the consolidated business operations of Quanex Building Products Corporation and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
Certain of the statements contained in this document and in documents incorporated by reference herein, including those made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include “forward-looking” statements as defined under the Private Securities Litigation Reform Act of 1995. Generally, the words “expect,” “believe,” “intend,” “estimate,” “anticipate,” “project,” “will,” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are statements as to matters that are not historical facts, and include statements about our plans, objectives, expectations and intentions, including (1) all statements which address future operating performance, (2) events or developments that we expect or anticipate will occur in the future, including statements relating to the Tyman Acquisition and statements relating to volume, sales, operating income, and earnings per share, and (3) statements expressing general outlook about future operating results. Forward-looking statements also include any statements relating to future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses, future prospects or business or management strategies, and the expansion and/or growth of the operations of the Company. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations. As and when made, we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, provided, that we cannot give any assurance that such expectations will prove to be correct. However, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to the following:
•impacts from public health issues on the economy, demand for our products or our operations, including the responses of governmental authorities to contain such public health issues;
•our ability to integrate and implement our plans, forecasts, expectations, and realize anticipated synergies with respect to the Tyman business we purchased in August 2024;
•changes in foreign trade relations and associated tariffs could result in a global trade war;
•changes in market conditions, particularly in the new home construction, and residential remodeling and replacement (R&R) activity markets in the United States, United Kingdom, Germany, Italy and elsewhere;
•changes in non-pass-through raw material costs;
•changes in domestic and international economic conditions;
•changes in availability and prices of raw material including inflationary pressures and supply chain challenges, which could be exacerbated by political or global unrest;
•our ability to attract and retain skilled labor;
•changes in purchases by our principal customers;
•fluctuations in foreign currency exchange rates;
•our ability to maintain an effective system of internal controls;
•our ability to successfully implement our internal operating plans and acquisition strategies;
•our ability to successfully implement our plans with respect to information technology (IT) systems and processes;
•our ability to control costs and increase profitability;
•changes in environmental laws and regulations;
•changes in warranty obligations;
•changes in energy costs and the availability of energy;
•changes in tax laws, and interpretations thereof;
•changes in interest rates;
•our ability to service our debt facilities and remain in good standing with our lenders;
•our ability to remediate any material weakness that we have identified or may identify in the future that could result in material misstatements in our financial statements;
•changes in the availability or applicability of our insurance coverage;
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•our ability to maintain good relationships with our suppliers, subcontractors, and key customers;
•potential future impairments of goodwill or our long-lived assets; and
•the resolution of litigation and other legal proceedings.
For information on additional factors that could cause actual results to differ materially, please refer to the section entitled “Item 1A. Risk Factors” within this Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
About Third-Party Information
In this report, we rely on and refer to information regarding industry data obtained from market research, publicly available information, industry publications, U.S. government sources and other third parties. Although we believe this information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains forward-looking statements based on our current assumptions, expectations, estimates and projections about our business and the homebuilding industry, and therefore, it should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and related notes as of January 31, 2026, and for the three months ended January 31, 2026 and 2025, included elsewhere herein. 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 additional information pertaining to our business, including risk factors which should be considered before investing in our common stock, refer to our Annual Report on Form 10-K for the fiscal year ended October 31, 2025.
Our Business
We are a leading manufacturer and component supplier to original equipment manufacturers (OEMs) in the building products industry, including window, door, solar, refrigeration, custom mixing, building access, and cabinetry markets. The majority of these components can be categorized as window and door components and kitchen and bath cabinet components. 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. 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. We serve a primary customer base in North America and the U.K., and also serve customers in international markets through our operating locations in the U.K., Germany, Mexico, Canada, and Italy, as well as through sales and marketing efforts in other countries.
We continue to invest in organic growth initiatives and we intend to continue evaluating business acquisitions that allow us to expand our existing fenestration and cabinet component footprint, enhance our product offerings, provide new complementary technology, enhance our leadership position within the markets we serve, and expand into new markets or service lines. 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.
In connection with the Tyman acquisition, we re-evaluated our reportable segment presentation during the third quarter of 2025 and adjusted our segment structure to better align our business operations. As a result, we now report three reportable segments: Hardware Solutions, Extruded Solutions, and Custom Solutions.
Our Hardware Solutions segment manufactures engineered window and door hardware, screens, and other fenestration components primarily serving the residential and light-commercial building markets. The majority of segment revenue is generated in North America, and as such, domestic housing starts and R&R activity remain the primary demand drivers. Long-term secular trends, including a structural undersupply of U.S. housing, an aging housing stock, and increasing home equity, are expected to support sustained demand for window and door replacement. Internationally, the segment serves a broad customer base of OEMs and distributors across Europe and Asia, where government incentives for energy efficiency and renovation activity are expected to support steady replacement demand over the medium term.
Our Extruded Solutions segment manufactures insulating-glass spacers, vinyl and composite profiles, and sealing solutions used in the fabrication of windows, doors, conservatories, roofs, and related building applications. This segment operates across North America and Europe, and its results are influenced by housing starts, energy-efficiency standards, and renovation activity in those regions. In the U.S., demand for insulating-glass spacers and vinyl profiles is supported by increasing adoption of high-performance window systems that improve thermal performance. In the U.K. and continental Europe, our vinyl business serves window fabricators and distributors with a broad offering of vinyl extrusions, decking, and roofing systems. The European market continues to benefit from government-sponsored retrofit programs and EU directives targeting energy efficiency and sustainability in existing building stock.
Our Custom Solutions segment delivers a diverse range of engineered product solutions across wood, metal, and elastomeric materials that serve residential, commercial, and industrial end markets. The segment’s portfolio includes interior building components, specialty access systems, and custom-formulated compounds designed for highly technical applications. Demand for these products is driven by overall levels of construction and remodeling activity, as well as broader trends in manufacturing, infrastructure investment, and industrial production. The segment’s ability to offer customized, high-performance solutions tailored to specific customer requirements positions it to participate in both residential and commercial growth cycles, while providing diversification beyond traditional fenestration markets.
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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. Other corporate general and administrative costs have been allocated to the reportable business segments, based upon each segment’s relative operating activity.
Recent Transactions and Events
We are monitoring evolving U.S. and global tariff and trade policies, including the recent decision by the U.S. Supreme Court that invalidates certain tariffs imposed under the International Emergency Economic Powers Act. We are assessing the potential impact of this decision and other trade policy developments on our operations, supply chain and cost structure and continue to work with our suppliers and customers to mitigate potential impacts on our business. We are also monitoring ongoing geopolitical tensions and conflicts in various regions of the world, which may contribute to volatility in global markets, supply chains, commodity pricing and foreign currency exchange rates. The extent and duration of current and potential tariff measures and geopolitical developments, and the resulting impact on general economic conditions and our operations, remain uncertain and depend on various factors, including negotiations between the U.S. and affected countries, responses by other governments, potential exemptions, and the availability and cost of alternative sources of supply.
Market Overview and Outlook
We believe the primary drivers of our operating results continue to be North American residential remodeling and replacement (R&R) and new home construction activity. In the U.K. and Continental Europe, our operating results are primarily influenced by repair, maintenance and improvement (RMI) and residential renovation activity, as well as new construction activity. We believe that housing starts and window shipments are indicators of activity levels in the homebuilding and window industries, and we use this data, as published by or derived from third-party sources, to evaluate the market. We have historically evaluated the market using data from the National Association of Homebuilders (NAHB) with regard to housing starts and R&R activity, and published reports by Ducker Worldwide, LLC (Ducker), a consulting and research firm, with regard to window shipments in the U.S.
In January 2026, the NAHB forecasted calendar-year housing starts to be approximately 1.3 million and 1.4 million in calendar-year 2026 and 2027. In February 2026, the Ducker forecast indicated that total window shipments are expected to decrease 2.5% in calendar-year 2026.
Our business is seasonal, as inclement weather during the winter months tends to slow construction and installation activity for exterior building 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.
Several commodities in our business are subject to pricing fluctuations, including polyvinyl resin (PVC), titanium dioxide (TiO2), petroleum products, stainless steel, zinc, aluminum and wood. For the majority of our customers and critical suppliers, we have price adjusters in place which effectively share the base pass-through price changes for our primary commodities with our customers commensurate with the market at large. Our long-term exposure to these price fluctuations is somewhat mitigated due to the contractual component of the adjuster program. However, these adjusters are not in place with all customers and for all commodities, and there is a level of exposure to such volatility due to the lag associated with the timing of price updates in accordance with our customer agreements, particularly with regard to hardwoods. 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, geopolitical tensions and conflicts, terror threats, and the political landscape in the U.S. 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.
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Results of Operations
Three Months Ended January 31, 2026 Compared to Three Months Ended January 31, 2025
This table sets forth our condensed consolidated results of operations for the three-month periods ended January 31, 2026 and 2025.
Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | 2025 | Change $ | % Variance | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 409,089 | $ | 400,044 | $ | 9,045 | 2% | ||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | 310,562 | 307,728 | 2,834 | 1% | |||||||||||||||||||
| Selling, general and administrative | 71,426 | 66,650 | 4,776 | 7% | |||||||||||||||||||
| Restructuring charges | — | 7,904 | (7,904) | —% | |||||||||||||||||||
| Depreciation and amortization | 24,249 | 24,740 | (491) | (2)% | |||||||||||||||||||
Operating income (loss) | 2,852 | (6,978) | 9,830 | (141)% | |||||||||||||||||||
| Interest expense | (12,367) | (14,186) | 1,819 | (13)% | |||||||||||||||||||
| Other, net | 5,617 | 1,229 | 4,388 | 357% | |||||||||||||||||||
Income tax (expense) benefit | (173) | 5,050 | (5,223) | (103)% | |||||||||||||||||||
Net loss | $ | (4,071) | $ | (14,885) | $ | 10,814 | (73)% | ||||||||||||||||
Our period-over-period results by reportable segment follow.
Changes Related to Operating Income by Reportable Segment:
Hardware Solutions
Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Variance | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 189,112 | $ | 184,740 | $ | 4,372 | 2% | ||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | 150,724 | 150,785 | (61) | —% | |||||||||||||||||||
| Selling, general and administrative | 34,180 | 33,357 | 823 | 2% | |||||||||||||||||||
| Restructuring charges | — | 6,119 | (6,119) | (100)% | |||||||||||||||||||
| Depreciation and amortization | 11,547 | 11,470 | 77 | 1% | |||||||||||||||||||
Operating loss | $ | (7,339) | $ | (16,991) | $ | 9,652 | (57)% | ||||||||||||||||
Operating loss margin | (4) | % | (9) | % | |||||||||||||||||||
Net Sales. Net sales increased $4.4 million, or 2%, for the three months ended January 31, 2026 compared to the same period in 2025. The increase was primarily attributable to $5.8 million of favorable tariff-related pricing adjustments and a $4.3 million favorable impact from foreign currency translation, partially offset by a $6.7 million decline in volumes due to softer market demand.
Cost of Sales. Cost of sales decreased $0.1 million, for the three months ended January 31, 2026 compared to the same period in 2025. Cost of sales decreased primarily due to lower volumes, largely offset by the impact of pricing actions, tariff recoveries, and foreign currency movements.
Selling, General and Administrative. Selling, general and administrative expenses increased $0.8 million, or 2%, for the three months ended January 31, 2026 compared to the same period in 2025. The increase is primarily due to increases in labor costs and other miscellaneous selling and general administrative costs year-over-year.
Restructuring Charges. Restructuring charges decreased 6.1 million, or 100%, for the three months ended January 31, 2026 compared to the same period in 2025. This decrease is primarily attributable to the restructuring of our operating segments in fiscal 2025. For additional discussion of the restructuring, see the “restructuring” section of Note 1, “Nature of Operations, Basis of Presentation and Significant Accounting Policies”.
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Extruded Solutions
Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Variance | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 139,800 | $ | 139,630 | $ | 170 | —% | ||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | 97,709 | 97,680 | 29 | —% | |||||||||||||||||||
| Selling, general and administrative | 21,141 | 18,508 | 2,633 | 14% | |||||||||||||||||||
| Depreciation and amortization | 7,339 | 7,640 | (301) | (3.9)% | |||||||||||||||||||
Operating income | $ | 13,611 | $ | 15,802 | $ | (2,191) | (14)% | ||||||||||||||||
Operating income margin | 10 | % | 11 | % | |||||||||||||||||||
Net Sales. Net sales increased $0.2 million, for the three months ended January 31, 2026 compared to the same period in 2025 primarily due to a $3.3 million of favorable foreign currency rate change, a $0.4 million increase in price and raw material indexes, partially offset by a $3.5 million decrease in volumes mainly due to softer market demand.
Cost of Sales. Cost of sales remained flat for the three months ended January 31, 2026 compared to the same period in 2025.
Selling, General and Administrative. Selling, general and administrative expense increased $2.6 million, or 14%, for the three months ended January 31, 2026 compared to the same period in 2025. The increase is primarily due to increases in labor costs and miscellaneous selling and general administrative costs year-over-year.
Custom Solutions
Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | Variance % | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | 89,142 | $ | 85,038 | $ | 4,104 | 5% | ||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | 71,424 | 68,298 | 3,126 | 5% | |||||||||||||||||||
| Selling, general and administrative | 13,150 | 11,598 | 1,552 | 13% | |||||||||||||||||||
| Depreciation and amortization | 5,222 | 5,540 | (318) | (6)% | |||||||||||||||||||
Operating loss | $ | (654) | $ | (398) | $ | (256) | 64% | ||||||||||||||||
Operating loss margin | (1) | % | — | % | |||||||||||||||||||
Net Sales. Net sales increased $4.1 million, or 5%, for the three months ended January 31, 2026 compared to the same period in 2025. The increase was primarily driven by a $2.0 million increase in volumes, a $1.7 million favorable impact from pricing and raw material index adjustments, and $0.2 million of favorable tariff-related pricing adjustments.
Cost of Sales. Cost of sales increased $3.1 million, or 5%, for the three months ended January 31, 2026 compared to the same period in 2025. Cost of sales increased primarily due to higher volumes, pricing and raw material index impacts, and foreign currency movements during the period.
Selling, General and Administrative. Selling, general and administrative expenses increased $1.6 million, or 13%, for the three months ended January 31, 2026 compared to the same period in 2025. The increase is primarily due to increases in labor costs, information technology costs, and other miscellaneous selling and general administrative costs year-over-year.
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Unallocated Corporate & Other
Three Months Ended January 31, | |||||||||||||||||||||||
| 2026 | 2025 | $ Change | Variance % | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Net sales | $ | (8,965) | $ | (9,364) | $ | 399 | (4)% | ||||||||||||||||
| Cost of sales (excluding depreciation and amortization) | (9,295) | (9,035) | (260) | 3% | |||||||||||||||||||
| Selling, general and administrative | 2,955 | 3,187 | (232) | (7)% | |||||||||||||||||||
| Restructuring charges | — | 1,785 | (1,785) | (100)% | |||||||||||||||||||
| Depreciation and amortization | 141 | 90 | 51 | 57% | |||||||||||||||||||
| Operating loss | $ | (2,766) | $ | (5,391) | $ | 2,625 | (49)% | ||||||||||||||||
Net Sales. Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended January 31, 2026 and 2025.
Cost of Sales. Cost of sales for Corporate & Other consists of the elimination of inter-segment sales, profit in inventory, and other costs.
Selling, General and Administrative. Selling, general and administrative expenses decreased $0.2 million, or 7%, for the three months ended January 31, 2026 compared to the same period in 2025. This decrease is primarily attributable to a decrease in reorganization costs, which occurred in 2025, partially offset by higher compensation expense, including the valuations of our stock-based compensation awards during the three months ended January 31, 2026 as compared to the prior year period.
Restructuring Charges. Restructuring charges decreased $1.8 million, or 100%, for the three months ended January 31, 2026 compared to the same period in 2025. This decrease is primarily attributable to the restructuring of our operating segments in fiscal 2025. For additional discussion of the restructuring, see the “restructuring” section of Note 1, “Nature of Operations, Basis of Presentation and Significant Accounting Policies”.
Changes Related to Non-Operating Items:
Interest Expense. Interest expense decreased $1.8 million for the three months ended January 31, 2026 compared to the same period in 2025 primarily as a result of a decrease in borrowings outstanding during the three months ended January 31, 2026 as compared to the prior year period.
Income Taxes. We recorded an income tax expense of $0.2 million on pre-tax loss of $3.9 million for the three months ended January 31, 2026, an effective rate of (4.4)%, and income tax benefit of $5.1 million on pre-tax loss of $19.9 million for the three months ended January 31, 2025, an effective rate of 25.3%. The decrease in the effective tax rate compared to the prior year was primarily driven by a lower pre-tax loss in the current year, partially offset by a $1.1 million of discrete tax expense, primarily related to equity-based compensation award activity and state deferred tax remeasurement from legal entity reorganization activities, which reduced the expected tax benefit for the period.
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. As of January 31, 2026, we had $62.3 million of cash and equivalents, $662.0 million outstanding under the Facilities, $6.2 million of outstanding letters of credit, and $55.5 million outstanding under finance leases and other debt. Of the $55.5 million outstanding under finance leases and other debt, $49.3 million relates to real estate leases. We had $269.3 million available for use under the revolving credit facility at January 31, 2026.
On August 1, 2024, the Amended Credit Agreement increased our borrowing capacity and established a $475 million revolving credit facility and a $500 million term loan A facility, each maturing on August 1, 2029. As of January 31, 2026, we remained in compliance with all covenants under this agreement. Additional information regarding the Facilities is included in Note 5, “Debt”, to the condensed 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. 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.
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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. In addition, we are subject to commitment fees for the unused portion of the Revolving Credit Facility.
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.
Analysis of Cash Flow
The following table summarizes our cash flow results for the three months ended January 31, 2026 and 2025:
| Three Months Ended | |||||||||||
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Cash used for operating activities | $ | (20,208) | $ | (12,510) | |||||||
| Cash used for investing activities | $ | (11,239) | $ | (11,455) | |||||||
| Cash provided by (used for) financing activities | $ | 15,920 | $ | (21,972) | |||||||
Operating Activities. Cash used for operating activities increased $7.7 million for the three months ended January 31, 2026 compared to the same period in 2025. The increase in cash used was primarily driven by unfavorable changes in working capital, including a smaller decrease in accounts receivable compared to the prior year and higher inventory levels, partially offset by smaller decreases in accounts payable and accrued liabilities. The impact of working capital changes was partially mitigated by a reduction in net loss.
Investing Activities. Cash used for investing activities decreased $0.2 million for the three months ended January 31, 2026 compared to the same period in 2025, primarily due to lower capital expenditures, partially offset by lower proceeds from disposition of assets.
Financing Activities. Cash provided by financing activities increased $37.9 million for the three months ended January 31, 2026 compared to the same period in 2025. The change in financing cash flows is primarily as a result of an increase in net borrowings of long-term debt and a decrease in the purchase of treasury shares during the three months ended January 31, 2026 compared to the prior year period.
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. During the three months ended January 31, 2026 and 2025, we repatriated $5.8 million and $11.5 million, respectively, of foreign earnings from our foreign locations. We maintain cash balances in foreign countries which totaled $52.2 million as of January 31, 2026.
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. GAAP) requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. Estimates and assumptions about future events and their effects cannot be perceived with certainty. Estimates may change as new events occur, as more experience is acquired, as additional information becomes available and as our operating environment changes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and that we believe provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. We must use our judgment with regard to uncertainties in order to make these estimates. Actual results could differ from these estimates.
For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended October 31, 2025. Our critical accounting policies and estimates have not changed materially during the three months ended January 31, 2026.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The following discussion of our exposure to various market risks contains “forward looking statements” regarding our estimates, assumptions and beliefs concerning our exposure. Although we believe these estimates and assumptions are reasonable in light of information currently available to us, we cannot provide assurance that these estimates will not materially differ from actual results due to the inherent unpredictability of interest rates, foreign currency rates and commodity prices as well as other factors. We do not use derivative financial instruments for speculative or trading purposes.
Interest Rate Risk
Our debt bears interest at variable rates and accordingly is sensitive to changes in interest rates. Based upon the balances of the variable rate debt at January 31, 2026, a hypothetical 1.0% increase or decrease in interest rates could result in approximately $6.6 million of additional pretax charges or credit to our net income per year. This sensitivity pertains primarily to our outstanding revolving credit facility borrowings outstanding under the Credit Facility as of January 31, 2026.
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 (“GBP”) and the Mexican Peso (“MXN”) exchange rates, to the U.S. Dollar (“USD”). 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. As of January 31, 2026, we have outstanding forward foreign exchange contracts to hedge our foreign currency exposures against the MXN to the USD, with a notional principal amount of $5.0 million. As of January 31, 2026, we have no outstanding forward foreign exchange contracts. During the three months ended January 31, 2026 and 2025, we recognized a net gain of $0.6 million and $0.1 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. 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. 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.
We adjust the pricing of petroleum-based raw materials for the majority of our 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 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. 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. 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. For those customers not covered by contractual mechanisms, we have successfully implemented surcharges and general price increases to share the impact of price changes with our customers. Like our other businesses, there is exposure to short-term volatility due to a lag in the timing of implementing price increases.
We have begun implementing additional programs for other raw materials to facilitate more accurate pricing and reduce our exposure to changing material costs when necessary, however these are also subject to timing lags. 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.
Certain raw materials and commodities we use to manufacture our products are subject to tariffs. Currently, there is an uncertainty on how recently enacted tariffs and potential future tariffs may affect the price of these raw materials and commodities. We are constantly assessing potential supply chain vulnerability and implementing strategies (i.e. surcharges) to
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mitigate potential tariff impacts. We are also utilizing local supply chains where possible to reduce supply and cost risks. Additionally, we continue to explore alternative supply sources and evaluate shifts in demand. Further discussion of our industry risks is included within our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 and the section entitled “Item 1A. Risk Factors” within this Form 10-Q.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (1934 Act) as of January 31, 2026.
As previously disclosed in our Annual Report on Form 10-K for the year ended October 31, 2025, we identified a material weakness in our internal controls over financial reporting in the design and operation of controls over the preparation and review of our Statement of Cash Flows. During the three months ended January 31, 2026, we implemented remediation efforts related to this material weakness and continue to monitor the effectiveness of these procedures. Our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of January 31, 2026.
We are actively engaged in remediation efforts to address the identified material weakness related to the Statement of Cash Flows. We will continue to monitor the effectiveness of these procedures and expect to conclude with our October 31, 2026 control evaluation. These efforts include:
•Enhanced review procedures over the preparation and validation of the statement of cash flows;
•Enhanced review of the non-cash transaction checklist to improve classification accuracy;
•Strengthening of quarterly and annual close procedures through additional review controls; and
•Provision of targeted training for finance personnel involved in the financial close and reporting process.
Notwithstanding the identified material weakness, our management has concluded that the financial statements included in this Form 10-Q fairly present in all material respects the financial position, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.
Changes in Internal Control over Financial Reporting
During the three months ended January 31, 2026, we implemented additional review procedures for the Statement of Cash Flow as part of our remediation efforts. We will continue to monitor the effectiveness of our efforts as part of our ongoing evaluation of internal control over financial reporting.
Other than the ongoing remediation efforts, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the 1934 Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1A. Risk Factors
In addition to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2025 (Part I, Item 1A), additional risks and uncertainties are as below.
Company Risks
Challenges related to the development, adoption and use of artificial intelligence (“AI”) technologies, whether by us or by third parties, could result in competitive disadvantage, operational risks and reputational harm.
AI technologies are rapidly evolving and are increasingly being adopted across companies to enhance operational efficiencies, lower costs, improve forecasting and pricing capabilities, accelerate product innovation, and enhance customer engagement. The development, deployment and oversight of AI technologies may require significant investment, introduce operational disruptions or involve inherent risks, including inaccurate, incomplete or unintended outputs. If we are unable to effectively evaluate, implement or utilize AI technologies where appropriate, we may be at a competitive disadvantage, which could adversely affect our business, financial condition, and results of operations.
Additionally, our suppliers, vendors and other third parties may incorporate AI into their systems or offerings and their use could introduce operational, data security or reputational risks to our business. The use of AI by us or others associated with our Company, may create data privacy concerns, intellectual property risks, and cybersecurity vulnerabilities. In addition, the legal and regulatory landscape governing AI is rapidly evolving and is uncertain. Compliance with new or changing laws, regulations or industry standards may increase costs, require modifications to business practices or limit the use of certain AI applications. Any failure to appropriately manage AI-related risks could adversely affect our operations, reputation and long-term competitive position.
Item 5. Other Information
During the three months ended January 31, 2026, none of our directors or executive officers adopted terminated
Item 6. Exhibits
The exhibits required to be furnished pursuant to Item 6 are listed in the Exhibit Index filed herewith, which Exhibit Index is incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| QUANEX BUILDING PRODUCTS CORPORATION | |||||||||||
| Date: | March 6, 2026 | /s/ Scott M. Zuehlke | |||||||||
| Scott M. Zuehlke | |||||||||||
| Senior Vice President - Chief Financial Officer & Treasurer (Principal Financial Officer) | |||||||||||
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| EXHIBIT INDEX | |||||||||||
| Exhibit Number | Description of Exhibits | ||||||||||
| *101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
| *101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||
| *101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
| *101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
| *101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
| *101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
* Filed herewith
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant has not filed with this Quarterly Report on Form 10-Q certain instruments defining the rights of holders of long-term debt of the Registrant and its subsidiaries because the total amount of securities authorized under any of such instruments does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such agreements to the Securities and Exchange Commission upon request.
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