Quanex 2025 Q2 Earnings Strong Revenue Growth but EPS Decline

Quanex (NX) reported its fiscal 2025 Q2 earnings on Jun 06th, 2025. Quanex exceeded revenue expectations, achieving a significant year-over-year increase of 70%. However, EPS fell slightly short of analysts' expectations. The company reaffirmed its full-year guidance, indicating confidence in its strategic direction and continued growth prospects.

Revenue

Quanex's revenue surged by 70.0% to $452.48 million in 2025 Q2, compared to $266.20 million in the same quarter of 2024.

Earnings/Net Income

Quanex's EPS decreased by 6.4% to $0.44 in 2025 Q2 from $0.47 in 2024 Q2, while net income grew by 33.4% to $20.52 million, reflecting a solid performance despite the EPS decline.

Post-Earnings Price Action Review

The post-earnings strategy of buying NX when revenues exceed expectations and holding for 30 days has underperformed significantly. This approach resulted in a negative return of -38.40%, falling well below the benchmark return of 43.03%, leading to an excess return of -81.43%. The compounded annual growth rate (CAGR) was -11.20%, indicating substantial losses over the backtested period. Furthermore, the strategy experienced a considerable maximum drawdown of -61.11%, coupled with a Sharpe ratio of -0.28, which highlights the considerable risk and negative returns associated with this trading tactic. Overall, the strategy's performance underscores the challenges and volatility of relying on revenue beats as a sole indicator for investment decisions in Quanex’s stock.

CEO Commentary

George Wilson, CEO, expressed satisfaction with the company’s fiscal second-quarter results, highlighting a seasonal uptick in volumes despite global macroeconomic uncertainties. He noted successful integration of the Tyman acquisition, with cost synergies now expected to reach approximately $45 million, a 50% increase from the original target. Wilson emphasized the well-functioning new operating segments and outlined the next phase of integration focused on market expansion, operational optimization, and product development. He acknowledged challenges in North America due to low consumer confidence and tariffs but remained confident in Quanex's ability to manage these risks, stating, “the team continues to control the controllable.”

Guidance

Quanex reaffirms its fiscal 2025 net sales guidance of approximately $1.84 billion to $1.86 billion and adjusted EBITDA guidance of $270 million to $280 million. For the third quarter, the company expects revenue growth of 8% to 10% compared to the second quarter and anticipates adjusted EBITDA margin expansion of 250 to 300 basis points.

Additional News

Quanex has been actively engaging in strategic activities beyond earnings. Recently, the company announced a $23 million share repurchase program, demonstrating its commitment to returning value to shareholders and capitalizing on its undervalued stock. Furthermore, Quanex declared a quarterly cash dividend of $0.08 per share, reinforcing its stable dividend policy. In addition, the company participated in the Wells Fargo Industrials & Materials Conference, where CEO George Wilson shared insights on the integration of Tyman and the expected synergies. These developments highlight Quanex's focus on strategic growth, shareholder value, and maintaining strong investor relations.