What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-09-05 compared with 2025-06-06 · 149 added, 130 removed, 190 unchanged (59% 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 April 30, 2025, and for the three and six months ended April 30, 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 July 31, 2025, and for the three and nine months ended July 31, 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.

We are a leading manufacturer and component supplier to original equipment manufacturers (OEMs) in various industries, including window, door, solar, refrigeration, custom mixing, building access, and cabinetry markets.

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

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

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 building access solutions.

We have organized our business into three reportable business segments:

Hardware Solutions, which manufactures window and door hardware and screens;

Extruded Solutions, which manufacturers insulating glass spacers, vinyl window and door profiles, seals, and weatherstripping;

and Custom Solutions, which manufactures wood, mixing, and building access solutions.

For additional discussion of our reportable business segments, see Note 14, “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.

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We have disposed of non-core businesses in the past, and continue to evaluate our business portfolio to ensure that we are investing in markets where we believe there is potential future growth.

We currently have four reportable business segments:

(1) North American Fenestration segment (“NA Fenestration”), comprising four operating segments, consisting of vinyl profiles, IG spacers, screens, custom compound mixing and other fenestration components;

(2) European Fenestration segment (“EU Fenestration”), comprising our U.K.-based vinyl extrusion business, manufacturing vinyl profiles and conservatories, and the European insulating glass business manufacturing IG spacers;

(3) North American Cabinet Components segment (“NA Cabinet Components”), comprising our North American cabinet door and components business and two wood-manufacturing plants, 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.

We maintain a grouping called Unallocated Corporate & Other, which includes transaction expenses, stock-based compensation, long-term incentive awards based on the performance of our common stock and other factors, certain severance and legal costs not deemed to be allocable to all segments, depreciation of corporate assets, interest expense, other, net, income taxes and inter-segment eliminations, and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during the annual planning process.

During the three months ended July 31, 2025, in connection with our announced restructuring , we re-evaluated our reportable operating segment presentation and adjusted our segment structure to better align our business operations.

As a result, we now report three reportable operating segments:

Hardware Solutions, Extruded Solutions, and Custom 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 and inter-segment eliminations, and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during the annual planning process.

Other general and administrative costs associated with the corporate office are allocated to the reportable segments, based upon a relative measure of profitability in order to more accurately reflect each reportable business segment's administrative costs.

Recent Transactions and Events

During the three months ended July 31, 2025, we restructured our reportable operating segments which triggered the requirement to assess our goodwill for potential impairment.

The testing of our goodwill resulted in an asset impairment of $302.3 million.

Of the goodwill impairment amount recorded in the third quarter, $44.8 million relates to tax-deductible goodwill, the remaining charge was not deductible for tax purposes and no deferred tax asset was recognized.

For additional discussion of our goodwill, see Note 6, “Goodwill and Intangibles.” For additional information and discussion of changes in reporting units and a summary of the change in the carrying amount of goodwill by segment, see Note 14, “Segment Information.”

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.

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On August 1, 2024, we completed the acquisition of Tyman plc, a company incorporated in England and Wales (the “Tyman Acquisition”).

The aggregate consideration due pursuant to the Tyman Acquisition at closing comprised of 14,139,477 New Quanex Shares and cash consideration of approximately $504.1 million (being the Pound Sterling amount of cash consideration of £392.2 million in respect of all of the Tyman Shares converted to U.S.

The aggregate consideration due pursuant to the Tyman Acquisition at closing comprised 14,139,477 New Quanex Shares and cash consideration of approximately $504.1 million (being the Pound Sterling amount of cash consideration of £392.2 million in respect of all of the Tyman Shares converted to U.S.

Dollars at an exchange rate of 1.2855).

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and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflicts currently ongoing in Ukraine and Gaza.

Although the length and impact of these ongoing military conflicts

are highly unpredictable, the conflicts could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

Although the length and impact of these ongoing military conflicts are highly unpredictable, the conflicts could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

Russia, Europe’s largest provider of natural gas, has significantly reduced the export of natural gas compared to the beginning of the conflict resulting in the increase in natural gas prices and the potential for natural gas shortages.

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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 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.

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

In May 2025 , the Ducker forecast indicated that total window shipments are expected to decrease 4.3% and 1.5% in calendar-year 2025 and 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 April 30, 2025 Compared to Three Months Ended April 30, 2024

Three Months Ended April 30,

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

Three Months Ended July 31,

2025 2024 Change $ % Variance

5 unchanged sentences

Depreciation and amortization 33,882 10,953 22,929 209%

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

Asset impairment charges 302,284 — 302,284 —%

Operating (loss) income (270,835) 23,442 (294,277) (1,255)%

Interest expense (14,218) (878) (13,340) 1,519%

Other, net 855 9,474 (8,619) (91)%

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

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

Income tax benefit (expense) 8,191 (6,688) 14,879 (222)%

Net (loss) income $ (276,007) $ 25,350 $ (301,357) (1,189)%

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

Changes Related to Operating Income by Reportable Segment:

NA Fenestration

Three Months Ended April 30,

Hardware Solutions

Three Months Ended July 31,

2025 2024 $ Change % Variance

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Selling, general and administrative 32,954 6,906 26,048 377%

Restructuring charges 1,140 — 1,140 —%

Depreciation and amortization 16,987 1,225 15,762 1,287%

Operating income $ 16,661 $ 18,565 $ (1,904) (10)%

Operating income margin 11 % 12 %

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.

Asset impairment charges 163,198 — 163,198 —%

Operating (loss) income $ (157,445) $ 8,237 $ (165,682) (2,011)%

Operating (loss) income margin (69) % 11 %

Net sales increased $151.7 million, or 201%, for the three months ended July 31, 2025 compared to the same period in 2024, which was primarily driven by an increase of $150.8 million related to the acquisition of the Tyman business and a $2.3 million increase in price and raw material indexes, partially offset by a $1.4 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence.

Cost of Sales.

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.

The cost of sales increased $111.2 million, or 188%, for the three months ended July 31, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to the acquisition of the Tyman business and pricing and inflation of raw materials during the period partially offset by a decrease in volumes.

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,

S elling, general and administrative expenses increased $26.0 million, or 377%, for the three months ended July 31, 2025 compared to the sa me period in 2024.

The increase is primarily due to increases in labor costs and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $163.2 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

Extruded Solutions

Three Months Ended July 31,

2025 2024 $ Change % Variance

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Selling, general and administrative 20,740 15,648 5,092 33%

Restructuring charges 34 — 34 —%

Depreciation and amortization 6,989 5,460 1,529 28.0%

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.

Asset impairment charges 54,934 — 54,934 —%

Operating (loss) income $ (24,867) $ 20,654 $ (45,521) (220)%

Operating (loss) income margin (14) % 15 %

Net sales increased $39.9 million, or 30%, for the three months ended July 31, 2025 compared to the same period in 2024 primarily due an increase of $39.9 million related to the acquisition of the Tyman business, a $0.9 million increase in price and raw material indexes, and $2.6 million of favorable foreign currency rate change, partially offset by a $3.5 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence.

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.

The cost of sales increased $23.8 million, or 26%, for the three months ended July 31, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to the acquisition of the Tyman business, pricing and inflation of raw materials, and foreign currency impacts, partially offset by a decrease in volumes.

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,

Selling, general and administrative expense increased $5.1 million, or 33%, for the three months ended July 31, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $54.9 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

Custom Solutions

Three Months Ended July 31,

2025 2024 $ Change Variance %

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Selling, general and administrative 11,708 6,559 5,149 79%

Restructuring charges 26 — 26 —%

Depreciation and amortization 4,716 4,211 505 12%

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.

Asset impairment charges 84,152 — 84,152 —%

Operating (loss) income $ (76,093) $ 1,924 $ (78,017) (4,055)%

Operating (loss) income margin (74) % 3 %

N et sales increased $29.6 million, or 41%, for the three months ended July 31, 2025 compared to the same period in 2024, which was primarily driven by an increase of $27.4 million related to the acquisition of the Tyman business, a $1.7 million increase in price and raw material indexes, and a $0.5 million increase in volumes.

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

Cost of sales increased $17.8 million, or 30%, for the three months ended July 31, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to the acquisition of the Tyman business, pricing and inflation of raw materials during the period, and an increase in volumes.

Selling, General and Administrative .

Restructuring charges 936

Depreciation and amortization 8,775

Operating income $ 16,382

Operating income margin 9 %

S elling, general and administrative expenses increased $5.1 million , or 79%, for the three months ended July 31, 2025 compared to the sa me period in 2024.

The increase is primarily due to increases in labor costs

and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $84.2 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

Unallocated Corporate & Other

Three Months Ended April 30,

Three Months Ended July 31,

2025 2024 $ Change Variance %

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Selling, general and administrative 5,868 7,396 (1,528) (21)%

Restructuring charges 167 — 167 —%

Depreciation and amortization 5,190 57 5,133 9,005%

Operating loss $ (12,430) $ (7,373) $ (5,057) 69%

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

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

Cost of Sales .

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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.

Selling, general and administrative expenses decreased $1.5 million, or 21%, for the three months ended July 31, 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 restructuring costs and medical expenses during the three months ended July 31, 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.

Interest expense increased $13.3 million for the three months ended July 31, 2025 compared to the same period in 2024 as a result of an increase in borrowings outstanding during the three months ended July 31, 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,

We recorded an income tax benefit of $8.2 million on pre-tax loss of $284.2 million for the three months ended July 31, 2025, an effective rate of 2.9%, and income tax expense of $6.7 million on pre-tax income of $32.0 million for the three months ended July 31, 2024, an effective rate of 20.9%.

The decrease in the effective tax rate year-over-year was primarily driven by discrete items including the asset impairment charges related to goodwill impairment.

Nine Months Ended July 31, 2025 Compared to Nine Months Ended July 31, 2024

Nine Months Ended July 31,

2025 2024 Change $ % Variance

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Depreciation and amortization 77,814 32,999 44,815 136%

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

Asset impairment charges 302,284 — 302,284 —%

Operating (loss) income (236,892) 51,996 (288,888) (556)%

Interest expense (42,344) (2,896) (39,448) 1,362%

Other, net 1,925 10,520 (8,595) (82)%

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

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

Income tax benefit (expense) 6,934 (12,644) 19,578 (155)%

Net (loss) income $ (270,377) $ 46,976 $ (317,353) (676)%

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

Changes Related to Operating Income by Reportable Segment:

NA Fenestration

Six Months Ended April 30,

Hardware Solutions

Nine Months Ended July 31,

2025 2024 $ Change % Variance

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Selling, general and administrative 98,570 18,704 79,866 427%

Restructuring charges 8,155 — 8,155 —%

Depreciation and amortization 38,818 3,531 35,287 999%

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.

Asset impairment charges 163,198 — 163,198 —%

Operating (loss) income $ (160,550) $ 15,940 $ (176,490) (1,107)%

Operating (loss) income margin (26) % 8 %

Net sales increased $410.7 million, or 201%, for the nine months ended July 31, 2025 compared to the same period in 2024, which was primarily driven by an increase of $413.4 million related to the acquisition of the Tyman business and a $6.5 million increase in price and raw material indexes, partially offset by a $9.4 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence.

Costs of Sales.

The cost of sales increased $300.6 million, or 181%, for the nine months ended July 31, 2025 as compared to the same period in 2024.

Cost of sales, including labor, increased primarily due to the acquisition of the Tyman business and pricing and inflation of raw materials during the period partially offset by a decrease in volumes.

Se lling, General and Administrative.

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

Six Months Ended April 30,

S elling, general and administrative expenses increased $79.9 million, or 427%, for the nine months ended July 31, 2025 as compared to the same period in 2024.

The increase is primarily due to increases in labor costs and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $163.2 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

Extruded Solutions

Nine Months Ended July 31,

2025 2024 $ Change Variance %

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Selling, general and administrative 60,921 45,733 15,188 33%

Restructuring charges 34 — 34 —%

Depreciation and amortization 22,066 16,616 5,450 33%

Asset impairment charges 54,934 — 54,934 —%

Operating income $ 14,155 $ 54,404 $ (40,249) (74)%

Operating income margin 3 % 14 %

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.

Net sales increased $98.2 million, or 26%, comparing the nine months ended July 31, 2025 to the same period in 2024, which was primarily due to an increase of $115.2 million related to the acquisition of the Tyman business and a $2.9 million of favorable foreign currency rate change, partially offset by a $17.9 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence and a $2.0 million decrease in price and raw material indexes.

Cost of Sales.

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.

The cost of sales increased $62.8 million, or 24%, for the nine months ended July 31, 2025 compared to the same period in 2024.

Cost of sales increased primarily due to the acquisition of the Tyman business partially, offset by decrease in volumes, pricing and deflation of raw materials during the period and foreign currency impacts.

Selling, General and Administrative.

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

Six Months Ended April 30,

Selling, general and administrative expense increased $15.2 million, or 33%, for the nine months ended July 31, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $54.9 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

Custom Solutions

Nine Months Ended July 31,

2025 2024 $ Change Variance %

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Selling, general and administrative 34,156 19,456 14,700 76%

Restructuring charges 26 — 26 —%

Depreciation and amortization 15,693 12,685 3,008 24%

Operating loss $ (3,790) $ (3,491) $ (299) 9%

Operating loss margin (4) % (4) %

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.

Asset impairment charges 84,152 — 84,152 —%

Operating (loss) income $ (68,973) $ 1,695 $ (70,668) (4,169)%

Operating (loss) income margin (24) % 1 %

Net sales increased $76.6 million, or 37%, for the nine months ended July 31, 2025 compared to the same period in 2024, which was primarily due to an increase of $74.2 million related to the acquisition of the Tyman business and a $5.3 million increase in price and raw material indexes, partially offset by a $2.9 million decrease in volumes mainly due to softer market demand driven by weaker consumer confidence.

Cost of Sales .

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 $0.8 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.

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)

Net sales $ 365,783

Cost of sales (excluding depreciation and amortization) 259,539

Cost of sales increased $45.4 million, or 26%, for the nine months ended July 31, 2025 compared with the same period in 2024.

Cost of sales increased primarily due to the acquisition of the Tyman business and pricing and inflation of raw materials during the period partially offset by a decrease in volumes.

Selling, General and Administrative .

Restructuring charges 8,840

Depreciation and amortization 23,038

Operating income $ 2,717

Operating income margin 1 %

Selling, general and administrative expense increased $14.7 million, or 76%, for the nine months ended July 31, 2025 compared to the same period in 2024.

The increase is primarily due to increases in labor costs and other miscellaneous selling, general administrative costs related to the acquisition of the Tyman business costs year-over-year.

Asset impairment charges.

Asset impairment charges of $84.2 million relate to goodwill impairment incurred during the three months ended July 31, 2025.

For additional discussion of our goodwill, see Note 6, “Goodwill and Intangibles.” For additional information and discussion of change in reporting units and a summary of the change in the carrying amount of goodwill by segment, see Note 14, “Segment Information.”

Unallocated Corporate & Other

Six Months Ended April 30,

Nine Months Ended July 31,

2025 2024 $ Change Variance %

3 unchanged sentences

Selling, general and administrative 14,606 19,686 (5,080) (26)%

Restructuring charges 1,992 — 1,992 —%

Depreciation and amortization 1,237 167 1,070 641%

Operating loss $ (21,524) $ (20,043) $ (1,481) 7%

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

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

Cost of Sales .

1 unchanged sentence

Selling, General and Administrative .

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.

Selling, general and administrative expenses decreased $5.1 million, or 26%, for the nine months ended July 31, 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 restructuring costs and medical expenses during the nine months ended July 31, 2025 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

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.

Interest expense increased $39.4 million for the nine months ended July 31, 2025 compared to the same period in 2024 primarily as a result of higher borrowings outstanding during the nine months ended July 31, 2025 as compared to the prior year period.

Income Taxes .

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.

We recorded income tax benefit of $6.9 million on pre-tax loss of $277.3 million for the nine months ended July 31, 2025, an effective rate of 2.5%, and income tax expense of $12.6 million on a pre-tax income of $59.6 million for the nine months ended July 31, 2024, an effective rate of 21.2%.

The decrease in the effective tax rate year-over-year was primarily driven by discrete items including the asset impairment charges related to goodwill impairment.

Liquidity and Capital Resources

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The Amended Credit Agreement became effective on August 1, 2024 upon the completion of the Tyman Acquisition.

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”).

principal amount of $500 million (the “Term Loan A Facility” and together with the Revolving Credit Facility, the “Facilities”).

The Revolving Credit Facility includes alternative currency, letter of credit, and swing-line sub-facilities of $100 million, $30 million, and $15 million, respectively.

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

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

As of July 31, 2025, we had $66.3 million of cash and equivalents, $672.5 million outstanding under the Facilities, $6.1 million of outstanding letters of credit, and $61.2 million outstanding under finance leases and other debt.

Of the $61.2 million outstanding under finance leases and other de bt, $58.9 million relates to real estate leases.

We had $271.4 million avail able for use under the Revolving Credit Agreement at July 31, 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 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.

During the three months ended July 31, 2025, we purchased 100,000 shares under this program and as of July 31, 2025 we have a maximum of $33.6 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 $23.0 million and $15.3 million of f oreign cash during the six months ended April 30, 2025 and 2024, respectively.

We repatriated $42.4 million and $33.2 million of f oreign cash during the nine months ended July 31, 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 six months ended April 30, 2025 and 2024:

Six Months Ended

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

Nine Months Ended

(Dollars in thousands)

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Operating Activities .

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.

Cash provided by operating activities decreased $6.7 million for the nine months ended July 31, 2025 compared to the same period in 2024.

The decrease in operating cash flow is primarily due to unfavorable changes in working capital, partially offset by an increase in net income excluding the impact of non-cash items such as asset impairment charges and depreciation and amortization.

Unfavorable changes in working capital are primarily due to unfavorable changes in prepaid expenses, accounts receivable, accrued liabilities and other long-term liabilities, partially offset by favorable changes in accounts payable and inventory.

Investing Activities.

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.

Cash used for investing activities increased $17.3 million for the nine months ended July 31, 2025 compared to the same period in 2024, primarily as a result of an increase in capital expenditures during the nine months ended July 31, 2025 compared to the prior year period.

Capital expenditures have increased primarily due to spending for businesses acquired in the Tyman Acquisition.

Financing Activities.

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.

Cash used for financing activities increased $61.9 million for the nine months ended July 31, 2025 compared to the same period in 2024.

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

Liquidity Requirements

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

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.

During the nine months ended July 31, 2025 and 2024, we repatriated $42.4 million and $33.2 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $42.0 million as of July 31, 2025.

Critical Accounting Policies and Estimates

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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 six months ended April 30, 2025.

Our critical accounting policies and estimates have not changed materially during the nine months ended July 31, 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 and six months ended April 30, 2025.

We did not adopt any new accounting pronouncements during the three and nine months ended July 31, 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