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Investing.com -- Quanex Building Products Corporation (NYSE:NX) shares plunged 14.8% after the company reported third-quarter adjusted earnings that fell short of analyst expectations and lowered its full-year guidance amid operational challenges and macroeconomic headwinds.
The building products manufacturer posted adjusted earnings per share of $0.69 for the quarter ended July 31, missing analyst estimates of $0.85. Revenue came in at $495.3 million, slightly above the consensus estimate of $492.52 million and representing a 76.7% increase YoY, primarily due to the Tyman acquisition that closed on August 1, 2024. Excluding Tyman’s contribution, organic sales growth was just 1.4%.
The company also reported a significant net loss of $276 million, or -$6.04 per diluted share, largely due to a $302.3 million non-cash goodwill impairment related to business re-segmentation.
"Although macroeconomic uncertainty and low consumer confidence, as well as operational issues related to the legacy Tyman window and door hardware business in Mexico that are ongoing but temporary in nature, posed challenges for us in our third quarter, we remain optimistic about our prospects for profitable growth and value creation," said George Wilson, Chairman, President and Chief Executive Officer.
Quanex lowered its fiscal 2025 revenue guidance to approximately $1.82 billion, below the analyst consensus of $1.849 billion. The company now expects to generate adjusted EBITDA of around $235 million.
Despite the challenges, Quanex reported strong cash flow that enabled it to repay over $51 million in bank debt during the quarter. The company also repurchased 100,000 shares for approximately $2.1 million during the period.
Wilson added that the company continues to make progress on the Tyman integration and now believes "there is a path to realizing approximately $45 million in cost synergies over time," above its initial projection of $30 million, despite adjustments for lower expected volumes and delayed procurement savings.
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