What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-06 compared with 2025-03-11 · 150 added, 51 removed, 170 unchanged (54% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of January 31, 2025, and for the three months ended January 31, 2025 and 2024, included elsewhere herein.

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of April 30, 2025, and for the three and six months ended April 30, 2025 and 2024, included elsewhere herein.

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, 2024.

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Recent Transactions and Events

We are monitoring the rapidly evolving tariff and global trade policies and we are working with our suppliers to mitigate potential impacts on our business.

We are monitoring the rapidly evolving tariff and global trade policies and we are working with our suppliers and customers to mitigate potential impacts on our business.

The extent and duration of the tariffs and the resulting impact on general economic conditions on our business are uncertain and depend on various factors, such as negotiations between the U.S.

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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 February 2025 , the NAHB forecasted calendar-year housing starts to be approximately 1.3 million and 1.4 million in the 2025 and 2026 calendar-years, respectively.

I n February 2025 , the Ducker forecast indicated that total window shipments are expected to decrease 2.5% in calendar-year 2025.

In April 2025 , the NAHB forecasted calendar-year housing starts to be approximately 1.4 million in the 2025 and 2026 calendar-years and 1.5 million in 2027.

In May 2025 , the Ducker forecast indicated that total window shipments are expected to decrease 2.6% in calendar-year 2025 and increase 1.2% in 2026.

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.

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Results of Operations

Three Months Ended January 31, 2025 Compared to Three Months Ended January 31, 2024

Three Months Ended January 31,

Three Months Ended April 30, 2025 Compared to Three Months Ended April 30, 2024

Three Months Ended April 30,

2025 2024 Change $ % Variance

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Depreciation and amortization 19,192 10,894 8,298 76 %

Operating (loss) income (6,978) 7,917 (14,895) (188) %

Operating income 40,921 20,637 20,284 98 %

Interest expense (13,940) (950) (12,990) 1,367 %

Other, net (159) 4 (163) (4,075) %

Income tax benefit (expense) 5,050 (1,642) 6,692 (408) %

Net (loss) income $ (14,885) $ 6,249 $ (21,134) (338) %

Income tax expense (6,307) (4,314) (1,993) 46 %

Net income $ 20,515 $ 15,377 $ 5,138 33 %

Our period-over-period results by reportable segment follow.

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NA Fenestration

Three Months Ended January 31,

Three Months Ended April 30,

2025 2024 $ Change % Variance

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Operating income margin 11 % 12 %

Net sales decreased $13.7 million, or 9%, for the three months ended January 31, 2025 compared to the same period in 2024, which was primarily driven by a $15.3 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence partially offset by a $1.6 million increase in price and raw material indexes.

Net s ales decreased $8.7 million, or 5%, for the three months ended April 30, 2025 compared to the same period in 2024, which was primarily driven by a $10.4 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence partially offset by a $1.7 million increase in price and raw material indexes.

Cost of Sales.

The cost of sales decreased $11.8 million, or 10%, for the three months ended January 31, 2025 as compared to the same period in 2024.

The cost of sales decreased $8.5 million, or 7%, for the three months ended April 30, 2025 compared to the same period in 2024.

Cost of sales decreased primarily due to decrease in volumes partially offset by pricing and inflation of raw materials during the period.

Selling, General and Administrative.

S elling, general and administrative expenses increased $2.2 million, or 16%, for the three months ended April 30, 2025 compared to the sa me period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

EU Fenestration

Three Months Ended April 30,

2025 2024 $ Change % Variance

(Dollars in thousands)

Net sales $ 61,257 $ 56,583 $ 4,674 8%

Cost of sales (excluding depreciation and amortization) 39,001 35,694 3,307 9%

Selling, general and administrative 9,038 7,873 1,165 15%

Depreciation and amortization 2,659 2,538 121 5%

Operating income $ 10,559 $ 10,478 $ 81 1%

Operating income margin 17 % 19 %

Net sales increased $4.7 million, or 8%, for the three months ended April 30, 2025 compared to the same period in 2024 primarily due to a $5.1 million increase in volumes due to improved demand period over period and $0.2 million of favorable foreign currency rate change partially offset by $0.6 million of base price decreases.

Cost of Sales.

The cost of sales increased $3.3 million, or 9%, for the three months ended April 30, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to an increase in volumes and foreign currency impacts, partially offset by deflation in the price of raw materials.

Selling, General and Administrative.

Selling, general and administrative expense increased $1.2 million, or 15%, for the three months ended April 30, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

NA Cabinet Components

Three Months Ended April 30,

2025 2024 $ Change Variance %

(Dollars in thousands)

Net sales $ 51,237 $ 51,078 $ 159 —%

Cost of sales (excluding depreciation and amortization) 42,405 42,624 (219) (1)%

Selling, general and administrative 5,725 5,066 659 13%

Depreciation and amortization 3,015 3,082 (67) (2)%

Operating income $ 92 $ 306 $ (214) (70)%

Operating income margin — % 1 %

N et sales increased $0.2 million for the three months ended April 30, 2025 compared to the same period in 2024, which was driven by a $1.7 million increase in raw material surcharges partially offset by a $1.5 million decrease in volumes due to softer market demand driven by weaker consumer confidence.

Cost of Sales .

Cost of sales decreased $0.2 million, or 1%, for the three months ended April 30, 2025 compared to the same period in 2024.

Cost of sales decreased primarily due to inflation of raw materials partially offset by lower volumes year-over-year.

Selling, General and Administrative .

S elling, general and administrative expenses increased $0.7 million , or 13.0%, for the three months ended April 30, 2025 compared to the sa me period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

The Tyman reportable segment is composed solely of the Tyman business acquired on August 1, 2024.

For additional discussion of our acquisition of Tyman, see Note 2, “Acquisition.” The results for the three months ended April 30, 2025 are summarized in the following table (including the $0.9 million of reorganization charges incurred to support the acquisition during the three months ended April 30, 2025):

Three Months Ended April 30, 2025

(Dollars in thousands)

Net sales 190,107

Cost of sales (excluding depreciation and amortization) 126,743

Selling, general and administrative 37,271

Restructuring charges 936

Depreciation and amortization 8,775

Operating income $ 16,382

Operating income margin 9 %

Unallocated Corporate & Other

Three Months Ended April 30,

2025 2024 $ Change Variance %

(Dollars in thousands)

Net sales $ (1,149) $ (1,234) $ 85 (7)%

Cost of sales (excluding depreciation and amortization) (813) (616) (197) 32%

Selling, general and administrative 2,361 8,038 (5,677) (71)%

Depreciation and amortization 76 56 20 36%

Operating loss $ (2,773) $ (8,712) $ 5,939 (68)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended April 30, 2025 and 2024.

Cost of Sales .

Cost of sales for Unallocated 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 $5.7 million, or 71%, for the three months ended April 30, 2025 compared to the same period in 2024.

This decrease is primarily attributable to a decrease in transaction and advisory fees and lower compensation expense including the valuations of our stock-based compensation awards partially offset by an increase in medical expenses during the three months ended April 30, 2025 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $13.0 million for the three months ended April 30, 2025 compared to the same period in 2024 as a result of an increase in borrowings outstanding during the three months ended April 30, 2025 as compared to the prior year period.

Income Taxes .

We recorded income tax expense of $6.3 million on pre-tax income of $26.8 million for the three months ended April 30, 2025, an effective rate of 23.5%, and income tax expense of $4.3 million on pre-tax income of $19.7 million for the three months ended April 30, 2024, an effective rate of 21.9%.

The increase in the effective tax rate year-over-year was primarily driven by discrete items.

Six Months Ended April 30, 2025 Compared to Six Months Ended April 30, 2024

Six Months Ended April 30,

2025 2024 Change $ % Variance

(Dollars in thousands)

Net sales $ 852,522 $ 505,356 $ 347,166 69 %

Cost of sales (excluding depreciation and amortization) 628,824 387,686 241,138 62 %

Selling, general and administrative 136,983 67,070 69,913 104 %

Restructuring charges 8,840 — 8,840 100 %

Depreciation and amortization 43,932 22,046 21,886 99 %

Operating income 33,943 28,554 5,389 19 %

Interest expense (28,126) (2,018) (26,108) 1,294 %

Other, net 1,070 1,046 24 2 %

Income tax expense (1,257) (5,956) 4,699 (79) %

Net income $ 5,630 $ 21,626 $ (15,996) (74) %

Our period-over-period results by reportable segment follow.

Changes Related to Operating Income by Reportable Segment:

NA Fenestration

Six Months Ended April 30,

2025 2024 $ Change % Variance

(Dollars in thousands)

Net sales $ 285,359 $ 307,769 $ (22,410) (7)%

Cost of sales (excluding depreciation and amortization) 220,327 240,629 (20,302) (8)%

Selling, general and administrative 32,071 29,640 2,431 8%

Depreciation and amortization 9,446 10,693 (1,247) (12)%

Operating income $ 23,515 $ 26,807 $ (3,292) (12)%

Operating income margin 8 % 9 %

Net sales decreased $22.4 million, or 7%, for the six months ended April 30, 2025 compared to the same period in 2024, which was primarily driven by a $25.8 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence partially offset by a $3.4 million increase in price and raw material indexes.

Cost of Sales.

The cost of sales decreased $20.3 million, or 8%, for the six months ended April 30, 2025 as compared to the same period in 2024.

Cost of sales, including labor, decreased primarily due to a decrease in volumes partially offset by inflation of raw materials during the period.

Se lling, General and Administrative.

S elling, general and administrative expenses increased $0.2 million, or 1%, for the three months ended January 31, 2025 as compared to the same period in 2024.

S elling, general and administrative expenses increased $2.4 million, or 8%, for the six months ended April 30, 2025 as compared to the same period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

EU Fenestration

Three Months Ended January 31,

Six Months Ended April 30,

2025 2024 $ Change Variance %

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Operating income margin 16 % 17 %

Net sales decreased $1.0 million, or 2%, comparing the three months ended January 31, 2025 to the same period in 2024, which was primarily driven by a $0.5 million decrease in volumes largely due to softer market demand driven by weaker consumer confidence and $0.9 million of negative foreign currency rate change, partially offset by $0.4 million of base price increases.

Net sales increased $3.7 million, or 3%, comparing the six months ended April 30, 2025 to the same period in 2024, which was primarily driven by a $4.6 million increase in volumes largely due to improved demand year over year and $0.2 million of favorable foreign currency rate change partially offset by $1.1 million of base price decreases.

Cost of Sales.

The cost of sales decreased $1.1 million, or 3%, for the three months ended January 31, 2025 compared to the same period in 2024.

Cost of sales decreased primarily due to a decrease in volumes and foreign currency impacts, partially offset by inflation in the price of raw materials.

The cost of sales increased $2.2 million, or 3%, for the six months ended April 30, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to an increase in volumes and foreign currency impacts, partially offset by deflation in the price of raw materials.

Selling, General and Administrative.

Selling, general and administrative expense increased $0.2 million, or 2%, for the three months ended January 31, 2025 compared to the same period in 2024.

The increase is primarily an increases in labor costs year-over-year.

Selling, general and administrative expense increased $1.3 million, or 9%, for the six months ended April 30, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

NA Cabinet Components

Three Months Ended January 31,

Six Months Ended April 30,

2025 2024 $ Change Variance %

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Operating loss margin (4) % (4) %

Net sales increased $0.7 million, or 2%, for the three months ended January 31, 2025 compared to the same period in 2024, which was driven by a $2.1 million increase in raw material surcharges partially offset by a $1.4 million decrease in volumes due to softer market demand driven by weaker consumer confidence.

Net sales increased $0.8 million, or 1%, for the six months ended April 30, 2025 compared to the same period in 2024, which was driven by a $3.7 million increase in raw material surcharges partially offset by a $2.9 million decrease in volumes due to softer market demand driven by weaker consumer confidence.

Cost of Sales .

Cost of sales increased $0.7 million, or 2%, for the three months ended January 31, 2025 compared with the same period in 2024.

Cost of sales increased $0.5 million, or 1%, for the six months ended April 30, 2025 compared with the same period in 2024.

Cost of sales increased primarily as a result of inflation of raw materials partially offset by lower volumes year-over-year.

Selling, General and Administrative .

Selling, general and administrative expense increased $0.1 million, or 3%, for the three months ended January 31, 2025 compared to the same period in 2024.

This increase is primarily due to a decrease in labor costs and professional fees year-over-year.

Selling, general and administrative expense increased $0.8 million, or 8%, for the six months ended April 30, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs partially offset by a decrease in professional fees year-over-year.

The Tyman reportable segment is comprised solely of the business acquired on August 1, 2024.

For additional discussion of our acquisition of Tyman, see Note 2, “Acquisition.” The results for the three months ended January 31, 2025 are summarized in the following table (including the effect of the amortization of the step-up of inventory of approximately $9.0 million and $7.9 million of reorganization charges incurred to support the acquisition during the three months ended January 31, 2025 ):

Three Months Ended January 31, 2025

The results for the six months ended April 30, 2025 are summarized in the following table (including the effect of the amortization of the step-up of inventory of approximately $9.0 million and $8.8 million of reorganization charges incurred to support the acquisition during the six months ended April 30, 2025):

Six Months Ended April 30, 2025

(Dollars in thousands)

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Depreciation and amortization 23,038

Operating loss $ (13,665)

Operating loss margin (8) %

Operating income $ 2,717

Operating income margin 1 %

Unallocated Corporate & Other

Three Months Ended January 31,

Six Months Ended April 30,

2025 2024 $ Change Variance %

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Operating loss $ (6,361) $ (12,671) $ 6,310 (50)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended January 31, 2025 and 2024.

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the six months ended April 30, 2025 and 2024.

Cost of Sales .

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Selling, General and Administrative .

Selling, general and administrative expenses decreased $0.6 million, or 18%, for the three months ended January 31, 2025 compared to the same period in 2024.

This decrease is primarily attributable to a lower compensation expense including the valuations of our stock-based compensation awards partially offset by reorganization costs during the three months ended January 31, 2025 as compared to the prior year period.

Selling, general and administrative expenses decreased $6.3 million, or 54%, for the six months ended April 30, 2025 compared to the same period in 2024.

This decrease is primarily attributable to a decrease in transaction and advisory fees and lower compensation expense including the valuations of our stock-based compensation awards partially offset by an increase in medical expenses during the six months ended April 30, 2025 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $13.1 million for the three months ended January 31, 2025 compared to the same period in 2024 primarily as a result of higher borrowings outstanding during the three months ended January 31, 2025 as compared to the prior year period.

Interest expense increased $26.1 million for the six months ended April 30, 2025 compared to the same period in 2024 primarily as a result of higher borrowings outstanding during the six months ended April 30, 2025 as compared to the prior year period.

Income Taxes .

We recorded 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%, and income tax expense of $1.6 million on a pre-tax income of $7.9 million for the three months ended January 31, 2024, an effective rate of 20.8%.

The increase in the effective tax rate year-over-year was primarily driven by a reduction in tax credits and tax deductions.

We recorded income tax expense of $1.3 million on pre-tax income of $6.9 million for the six months ended April 30, 2025, an effective rate of 18.3%, and income tax expense of $6.0 million on a pre-tax income of $27.6 million for the six months ended April 30, 2024, an effective rate of 21.6%.

The decrease in the effective tax rate year-over-year was primarily driven by discrete items.

Liquidity and Capital Resources

Historic ally, our principal sources of funds have been cash on hand, cash flow from operations, and borrowings under our credit facilities.

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”).

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 Company’s 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 became effective on August 1, 2024 upon the completion of the Tyman Acquisition.

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In addition, we are subject to commitment fees for the unused portion of the Revolving Credit Facility.

As of January 31, 2025, we had $50.0 million of cash and equivalents, $705.0 million outstanding under the Facilities $6.0 million of outstanding letters of credit and $59.3 million outstanding under finance leases and other debt.

As of April 30, 2025, we had $62.6 million of cash and equivalents, $723.8 million outstanding under the Facilities, $6.1 million of outstanding letters of credit, and $61.3 million outstanding under finance leases and other debt.

Of the $61.3 million outstanding under finance leases and other debt, $57.4 million relates to real estate leases.

We had $251.5 million available for use under the Revolving Credit Agreement at January 31, 2025.

We had $226.4 million available for use under the Revolving Credit Agreement at April 30, 2025.

During December 2021, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to $75.0 million worth of shares of our common stock.

Repurchases under the program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors.

During the three months ended January 31, 2025, we purchased 150,000 shares under this program and as of January 31, 2025 we have a maximum of $59.1 million available to purchase shares under this program.

During the three months ended April 30, 2025, we purchased 1,259,407 shares under this program and as of April 30, 2025 we have a maximum of $35.6 million available to purchase shares under this program.

The program does not have an expiration date or a limit on the number of shares that may be purchased.

We repatriated $11.5 million and $3.6 million of f oreign cash during the three months ended January 31, 2025 and 2024, respectively.

We repatriated $23.0 million and $15.3 million of f oreign cash during the six months ended April 30, 2025 and 2024, respectively.

We expect to repatriate excess cash moving forward and use the funds to retire debt or meet current working capital needs.

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Analysis of Cash Flow

The following table summarizes our cash flow results for the three months ended January 31, 2025 and 2024:

Three Months Ended

The following table summarizes our cash flow results for the six months ended April 30, 2025 and 2024:

Six Months Ended

(Dollars in thousands)

Cash (used for) provided by operating activities $ (12,510) $ 3,854

Cash provided by operating activities $ 15,987 $ 36,945

Cash used for investing activities $ (26,168) $ (17,090)

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Operating Activities .

Cash provided by operating activities decreased $16.4 million for the three months ended January 31, 2025 compared to the same period in 2024.

Cash provided by operating activities decreased $21.0 million for the six months ended April 30, 2025 compared to the same period in 2024.

The decrease in operating cash flow is primarily due to a decrease in net income as a result of restructuring charges and amortization of inventory step-up charges related to the acquisition of Tyman, as well as year-over-year and unfavorable changes to net working capital.

Investing Activities.

Cash used for investing activities increased $1.9 million for the three months ended January 31, 2025 compared to the same period in 2024, primarily as a result of an increase in capital expenditures during the three months ended January 31, 2025 compared to the prior year period.

Cash used for investing activities increased $9.1 million for the six months ended April 30, 2025 compared to the same period in 2024, primarily as a result of an increase in capital expenditures during the six months ended April 30, 2025 compared to the prior year period.

Financing Activities.

Cash used for financing activities increased $12.9 million for the three months ended January 31, 2025 compared to the same period in 2024.

The change in investing cash flows is primarily as a result of an increase in the repayment of long-term debt and the purchase of treasury shares.

Cash used for financing activities increased $8.4 million for the six months ended April 30, 2025 compared to the same period in 2024.

The change in investing cash flows is primarily as a result of an increase in the purchase of treasury shares partially offset by an increase in borrowings in long-term debt.

Liquidity Requirements

1 unchanged sentence

Other uses of cash include paying cash dividends to our shareholders and repurchasing our common stock.

During the three months ended January 31, 2025 and 2024, we repatriated $11.5 million and $3.6 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $37.3 million as of January 31, 2025.

During the six months ended April 30, 2025 and 2024, we repatriated $23.0 million and $15.3 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $46.0 million as of April 30, 2025.

Critical Accounting Policies and Estimates

7 unchanged sentences

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, 2024.

Our critical accounting policies and estimates have not changed materially during the three months ended January 31, 2025.

Our critical accounting policies and estimates have not changed materially during the six months ended April 30, 2025.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt as of the specified effective date.

We did not adopt any new accounting pronouncements during the three months ended January 31, 2025.

We did not adopt any new accounting pronouncements during the three and six months ended April 30, 2025.

Accounting Standards Not Yet Adopted

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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-Q

Item 2. Management’s Discussion and Analysis