What changed in this filing

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Item 1. Business

2024-12-16 compared with 2023-12-15 · 32 added, 31 removed, 125 unchanged (34% of the section changed)

Quanex was incorporated in Delaware on December 12, 2007, as Quanex Building Products Corporation.

We currently manufacture components for original equipment manufacturers (OEM) in the building products industry.

We currently manufacture and distribute components for original equipment manufacturers (OEM) in the building products industry.

The majority of these components can be categorized as window and door (fenestration) components, and kitchen and bath cabinet components.

Examples of fenestration components include (1) energy-efficient flexible insulating glass spacers, (2) extruded vinyl profiles, (3) window and door screens, and (4) precision-formed metal and wood products.

In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, vinyl fencing, water retention barriers, and conservatory roof components.

Examples of fenestration components include energy-efficient flexible insulating glass spacers, extruded vinyl profiles, window and door screens, precision-formed metal and wood products, window and door seals, and window and door hardware.

In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, water retention barriers, conservatory roof components, and commercial access solutions.

We use low-cost production processes and engineering expertise to provide our customers with specialized products for their specific applications.

We believe these capabilities provide us with unique competitive advantages.

We serve a primary customer base in North America and the United Kingdom (U.K.), and also serve customers in international markets through our operating plants in the U.K.

and Germany, as well as through sales and marketing efforts in other countries.

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.

Our predecessor company, Quanex Corporation, was organized in Michigan in 1927 as Michigan Seamless Tube Company, and was later reincorporated in Delaware in 1968.

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Since the spin-off in 2008, we have evolved our business by making investments in organic growth initiatives and taking a disciplined approach to new business and strategic acquisition opportunities, while disposing of non-core businesses.

As of October 31, 2023, we oper ated 28 manufacturing facilities located in 15 states in the U.S., two facilities in the U.K., and one in Germany.

These facilities feature efficient plant design and flexible manufacturing processes, enabling us to produce a wide variety of custom engineered products and components primarily f ocused on the window and door segment of the residential building products markets.

On August 1, 2024, we completed our acquisition of Tyman plc, a company incorporated in England and Wales.

This strategic acquisition creates an enlarged group with significant cross-selling opportunities amongst a highly complementary customer base, increases the Company’s global reach by adding Tyman’s international footprint, enhances scale, optimizes the Company’s asset portfolio, and moves Quanex closer to being a comprehensive solutions provider.

As of October 31, 2024, we operated 35 manufacturing facilities located in 18 states in the U.S., seven facilities in the U.K., three facilities in Mexico, two facilities in Italy, one facility in Germany, and one facility in Canada.

These facilities feature efficient plant design and flexible manufacturing processes, enabling us to produce a wide variety of custom engineered products and components primarily focused on the window and door segment of the residential building products markets.

We are able to maintain minimal levels of finished goods inventories at most locations because we typically manufacture products upon order to customer specifications.

We believe the primary drivers of our operating results are residential remodeling and replacement activity and new home construction in the markets we serve.

Our business is largely based in North America and dependent upon the spending and growth activity levels of our customers which include national and regional residential window, door and cabinet manufacturers.

Our international presence includes vinyl extruded lineals for large house systems to smaller individual customers.

We also have insulating glass businesses in the U.K.

Our international presence includes vinyl extruded lineals for large house systems to smaller individual customers, as well as window and door hardware, seals, an d extrusions to OEMs, system houses, and distributors.

Additionally, we also have insulating glass and window and door hardware businesses in the U.K., Germany and Italy.

We use data related to housing starts and window shipments in the U.S., as published by or derived from third-party sources, to evaluate the fenestration market.

We also use data related to cabinet demand in the U.S.

to evaluate the residential cabinet market.

to evaluate the residential cabinet market, and commercial building starts to evaluate the commercial access market.

The following table presents calendar-year annual housing starts information as of November 2024 from the National Association of Home Builders (NAHB) (units in thousands):

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Derived from reports published by Ducker, the overall decrease in window shipments for the trailing twelve months ended September 30, 2024 was 0.7%.

During this period, new construction activity decreased 13% and R&R replacement decreased 3% respectively.

During this period, new construction activity decreased 2.5% and R&R replacement increased 1.1% respectively.

We have noted the following trends which we believe affect our industry:

• the recent growth in the housing market over the past several years has been predominately in new construction which has outpaced the growth in the residential remodeling and replacement sector;

• the recent growth in the hous ing market over the past several years has been predominately in new construction which has outpaced the growth in the residential remodeling and replacement sector;

• programs in the U.S.

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oil products such as butyl, which affects our insulating glass products;

and aluminum, wood and silicone products used by our other businesses;

• higher energy efficiency standards in Europe should favorably impact sales of our insulating glass spacer products in the short- to mid-term.

Our vision is to be the preferred supplier to our customers in each market we serve.

and stainless steel, zinc, aluminum, wood, polypropylene and silicone products used by our other businesses;

• higher energy efficiency standards in Europe should favorably impact sales of our insulating glass spacer and weather seal products in the short- to mid-term.

Our vision is to be the preferred supplier to our customers in each market we serve and exceed expectations of all stakeholders.

Our strategy to achieve this vision includes the following:

• focus on growth with a purpose and explore markets that are synergistic with existing manufacturing capabilities and expand our market share with national and regional customers and collaborative partnerships by providing:

• focus on growth with a purpose and explore markets that are synergistic with existing manufacturing capabilities and expand our market share with our customers and collaborative partnerships by providing:

(1) a quality product;

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Raw Materials and Supplies

We purchase a diverse range of raw materials, which include PVC resin, epoxy resin, butyl, titanium dioxide (TiO2) desiccant powder, silicone and EPDM rubber compounds, coated and uncoated aluminum sheet and wood (both hardwood and softwood).

We purchase a diverse range of raw materials, which include PVC resin, epoxy resin, butyl, titanium dioxide (TiO2) desiccant powder, silicone and EPDM rubber compounds, polypropylene, coated and uncoated aluminum sheet, steel, stainless steel, zinc and wood (both hardwood and softwood).

These raw materials are generally available from several suppliers at market prices.

We may enter into sole sourcing arrangements with our suppliers from time to time if we believe we can realize beneficial savings, but only after we have determined that the vendor can reliably supply our raw material requirements.

These sole sourcing arrangements generally have termination clauses to protect us if a sole sourced vendor could not provide raw materials timely and on economically feasible terms.

We believe there are other qualified suppliers from which we could purchase raw materials and supplies.

Our products are sold under highly competitive conditions.

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We believe the primary competitive factors in the markets we serve include price, product quality, delivery performance, and the ability to manufacture to customer specifications.

The volume of engineered building products that we manufacture represents a small percentage of annual domestic consumption.

The volume of engineered building products that we sell in the U.S.

represents a small percentage of annual domestic consumption.

Similarly, our subsidiaries in the U.K.

compete against some larger vinyl producers and smaller window manufacturers.

and International fenestration components market is highly fragmented and we compete with a large number of other component suppliers.

For our kitchen and bathroom cabinet door business, we believe we are the largest supplier to OEMs in the U.S., but we compete with other national and regional businesses, including OEMs who are vertically integrated.

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Competition is largely based on regional presence, custom engineering, product development, quality, service and price.

Primary competitors in the North American Fenestration business include, but are not limited to, Veka, Deceuninck, Energi, Vision Extrusions, GED Integrated Solutions, Technoform, Swiss Spacer, Thermix, RiteScreen, Allmetal, Endura, Klinger, Thermoseal and Fenzi Group.

Competitors in the vinyl extrusion business in the U.K.

include Epwin, Veka, Profine UK Extrusions Ltd., Eurocell and others.

include Epwin, Veka, Profine U.K.

Extrusions Ltd., Eurocell and others.

Primary competitors in the cabinet door business in the U.S.

include Conestoga, Appalachian Wood, Olon, Northern Contours and others.

Sales, Marketing, and Distribution

Primary competitors in the U.K.

and European hardware and seals businesses include Assa Abloy, Roto, Siegenia, Hoppe, GU, Maco, and Tecseal.

Sales, Marketing, and Distri bution

We sell our products to customers in various countries.

Therefore, we have sales representatives whose territories essentially cover the U.S., Canada, Europe, and to a lesser extent, the Middle East, Latin and South America, Australia, New Zealand and Asia.

Our sales force is tasked with selling and marketing our complete range of components, products and systems to national and regional OEMs through a direct sales force in North America and Europe, supplemented with the limited use of distributors and independent sales agents.

Certain of our businesses or product lines are largely dependent on a relatively few large customers.

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We consider the following marks, design marks and associated trade names to be valuable in the conduct of our business:

HOMESHIELD, TRUSEAL TECHNOLOGIES, EDGETECH, MIKRON, WOODCRAFT and QUANEX.

AMESBURYTRUTH, ASHLAND,BILCO, EDGETECH, ERA, GIESSE, HOMESHIELD, HOWE GREEN, LAWRENCE, MIKRON, REGUITTI, SAFEGAURD, SECUREGAURD, SCHLEGEL, TRUSEAL TECHNOLOGIES, TRUTH HARDWARE, TYMAN, QUANEX, and ZOO.

Through Liniar, we hold a number of registered designs, patents and trademarks registered in the U.K., which include:

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These policies include extensive employee training and education, as well as internal policies embodied in our Code of Business Conduct and Ethics.

We have a Director of Environmental, Health and Safety and maintain a company-wide committee, comprising leaders from across the organization, which meets regularly to discuss safety issues and drive safety improvements.

We have a Vice President of Environmental, Health and Safety and maintain a company-wide committee, comprising leaders from across the organization, which meets regularly to discuss safety issues and drive safety improvements.

We plan to continue to focus on safety in particular as a core strategy to improve our operational efficiency and financial performance.

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We track hum an capital metrics that we consider to be key to our business, including employee headcount, temporary workers, health and safety, and turnover.

As of October 31, 2023, we had 3,792 employees.

Of these employees, 3,053 were domiciled in the U.S., 632 in the U.K., and 107 in Germany.

As of October 31, 2024, we had 7,068 employees located throughout our global organization.

Generally, the total number of employees of Quanex and its subsidiaries does not significantly fluctuate throughout the year.

Currently, none of our employees are subject to collective bargaining agreements.

Employee turnover rates are monitored monthly a t the division and plant levels.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business