What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-09-04 compared with 2020-06-05 · 269 added, 202 removed, 626 unchanged (43% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

2020 October 31,

(In thousands, except share

2 unchanged sentences

Accounts receivable, net of allowance for doubtful accounts of $ 344 and $ 393

84,479 82,946

Inventories, net 63,939 67,159

2 unchanged sentences

Property, plant and equipment, net of accumulated depreciation of $ 334,664 and $ 317,568

186,830 193,600

Operating lease right-of-use assets 49,644 —

Goodwill 146,932 145,563

Intangible assets, net 96,957 107,297

Other assets 9,007 8,324

Total assets $ 686,791 $ 645,110

LIABILITIES AND STOCKHOLDERS' EQUITY

23 unchanged sentences

Treasury stock at cost, 4,502,628 and 4,348,613 shares, respectively

( 78,749 ) ( 76,746 )

Total stockholders’ equity 339,938 330,187

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands, except per share amounts)

Net sales $ 212,096 $ 238,461 $ 596,168 $ 653,472

Cost and expenses:

7 unchanged sentences

Interest expense ( 1,165 ) ( 2,570 ) ( 4,310 ) ( 7,614 )

Other, net ( 220 ) 259 116 461

Income (loss) before income taxes 15,178 16,799 23,242 ( 9,856 )

3 unchanged sentences

Diluted earnings (loss) per common share:

$ 0.33 $ 0.36 $ 0.50 $ ( 0.48 )

Weighted-average common shares outstanding:

Basic 32,610 32,899 32,716 32,984

Diluted 32,739 33,162 32,845 32,984

Cash dividends per share

$ 0.08 $ 0.08 $ 0.24 $ 0.24

The accompanying notes are an integral part of the financial statements.

QUANEX BUILDING PRODUCTS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

Six Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands)

1 unchanged sentence

Other comprehensive income:

Foreign currency translation (loss) gain

Foreign currency translation gain (loss) 7,344 ( 10,147 ) 3,088 ( 7,565 )

Change in pension from net unamortized gain (loss) adjustment (pretax) — — 2,519 ( 11 )

Change in pension from net unamortized gain (loss) adjustment tax (expense) benefit — — ( 609 ) 7

Other comprehensive (loss) gain

Comprehensive (loss) income

Other comprehensive income (loss) 7,344 ( 10,147 ) 4,998 ( 7,569 )

Comprehensive income (loss) $ 18,177 $ 1,694 $ 21,342 $ ( 23,351 )

The accompanying notes are an integral part of the financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(In thousands)

6 unchanged sentences

Asset impairment charges — 29,978

Other, net 762 1,724

Changes in assets and liabilities:

Decrease in accounts receivable

Increase in inventory

Increase in other current assets

Decrease in accounts payable

(Increase) decrease in accounts receivable ( 1,852 ) 323

Decrease (increase) in inventory 3,553 ( 14,747 )

Decrease (increase) in other current assets 1,218 ( 1,022 )

(Decrease) increase in accounts payable ( 1,878 ) 1,562

Decrease in accrued liabilities ( 7,611 ) ( 15,366 )

(Decrease) increase in income taxes payable

Increase in income taxes payable 107 396

Increase in deferred pension and postretirement benefits 573 2,351

Decrease in other long-term liabilities ( 181 ) ( 143 )

Other, net ( 276 ) 250

Cash provided by operating activities 47,561 30,036

11 unchanged sentences

Purchase of treasury stock ( 6,693 ) ( 6,336 )

Cash provided by financing activities

Cash used for financing activities ( 17,394 ) ( 30,548 )

Effect of exchange rate changes on cash and cash equivalents 580 ( 1,171 )

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six Months Ended April 30, 2020

Comprehensive Loss

Nine Months Ended July 31, 2020 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive Loss Treasury

Stockholders’

1 unchanged sentence

Balance at October 31, 2019 $ 374 $ 254,673 $ 185,703 $ ( 33,817 ) $ ( 76,746 ) $ 330,187

Net income — — 10 — — 10

Foreign currency translation adjustment — — — 2,743 — 2,743

7 unchanged sentences

Performance share awards vested — ( 495 ) — — 495 —

Other ( 1 ) ( 454 ) — — — ( 455 )

Balance at January 31, 2020 $ 373 $ 252,495 $ 182,989 $ ( 29,164 ) $ ( 76,760 ) $ 329,933

Net income — — 5,501 — — 5,501

Foreign currency translation adjustment — — — ( 6,999 ) — ( 6,999 )

6 unchanged sentences

Balance at April 30, 2020 $ 373 $ 252,717 $ 185,779 $ ( 36,163 ) $ ( 78,749 ) $ 323,957

Six Months Ended April 30, 2019

Comprehensive Loss

Net income — — 10,833 — — 10,833

Foreign currency translation adjustment — — — 7,344 — 7,344

Common dividends ($0.08 per share) — — ( 2,623 ) — — ( 2,623 )

Stock-based compensation activity:

Expense related to stock-based compensation — 427 — — — 427

Balance at July 31, 2020 $ 373 $ 253,144 $ 193,989 $ ( 28,819 ) $ ( 78,749 ) $ 339,938

Nine Months Ended July 31, 2019 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive Loss Treasury

Stockholders’

1 unchanged sentence

Balance at October 31, 2018 $ 374 $ 254,678 $ 243,904 $ ( 30,705 ) $ ( 73,029 ) $ 395,222

Net loss — — ( 3,649 ) — — ( 3,649 )

Foreign currency translation adjustment — — — 4,066 — 4,066

5 unchanged sentences

Restricted stock awards granted — ( 1,649 ) ( 496 ) — 2,145 —

Other — ( 322 ) — ( 4 ) — ( 326 )

Balance at January 31, 2019 $ 374 $ 252,931 $ 237,049 $ ( 26,643 ) $ ( 72,838 ) $ 390,873

Net income — — ( 23,974 ) — — ( 23,974 )

Foreign currency translation adjustment — — — ( 1,484 ) — ( 1,484 )

5 unchanged sentences

Balance at April 30, 2019 $ 374 $ 253,679 $ 210,406 $ ( 28,127 ) $ ( 75,444 ) $ 360,888

Net income — — 11,841 — — 11,841

Foreign currency translation adjustment — — — ( 10,147 ) — ( 10,147 )

Common dividends ($0.04 per share) — — ( 2,655 ) — — ( 2,655 )

Purchase of treasury stock — — — — ( 1,634 ) ( 1,634 )

Change in pension from net unamortized loss (net of tax expense of $7)

Stock-based compensation activity:

Expense related to stock-based compensation — 381 — — — 381

Stock options exercised 1 — ( 252 ) — 2,935 2,684

Other ( 1 ) ( 7 ) — — — ( 8 )

Balance at July 31, 2019 $ 374 $ 254,053 $ 219,340 $ ( 38,274 ) $ ( 74,143 ) $ 361,350

The accompanying notes are an integral part of the financial statements.

28 unchanged sentences

Revenue recognition

We recognize revenue that reflects only the consideration we expect to receive for product sales upon transfer to customers.

We recognize revenue that reflects the consideration we expect to receive for product sales upon transfer to customers.

Revenue for product sales is recognized when control of the promised products is actually transferred to our customers, and we expect to be entitled to consideration in exchange for such transfer.

25 unchanged sentences

In addition, we produce certain non-fenestration products, including kitchen and bath cabinet doors and components, flooring and trim moldings, solar edge tape, plastic decking, fencing, water retention barriers, conservatory roof components, and other products.

The following table summarizes our product sales for the three and six months ended April 30, 2020 and 2019 into groupings by segment which we believe depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.

The following table summarizes our product sales for the three and nine months ended July 31, 2020 and 2019 into groupings by segment which we believe depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.

For further details regarding our results by segment, refer to Note 12, “Segment Information”.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Three Months Ended

Six Months Ended

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands)

4 unchanged sentences

International - non-fenestration 1,390 5,624 6,275 12,381

$ 122,386 $ 136,259 $ 341,432 $ 360,654

European Fenestration:

1 unchanged sentence

International - non-fenestration 6,361 7,984 16,498 19,165

$ 38,265 $ 44,326 $ 104,230 $ 121,203

North American Cabinet Components:

2 unchanged sentences

International - non-fenestration 410 616 1,335 1,774

$ 51,925 $ 58,689 $ 152,634 $ 175,377

Unallocated Corporate & Other

Eliminations $ ( 480 ) $ ( 813 ) $ ( 2,128 ) $ ( 3,762 )

$ ( 480 ) $ ( 813 ) $ ( 2,128 ) $ ( 3,762 )

Net sales $ 212,096 $ 238,461 $ 596,168 $ 653,472

Restructuring

9 unchanged sentences

As a result, during the first quarter of fiscal 2020, we began to restructure our operations within that segment by announcing the closure of one of our plants.

We incurred expenses for severance, equipment moves, and other exit activities of $ 0.1 million and $ 0.3 million related to this plant closure during the three and six months ended April 30, 2020 and we may incur costs related to additional restructuring activities in future periods.

We incurred expenses for severance, equipment moves, and other exit activities of $ 0.3 million related to this plant closure during the nine months ended July 31, 2020 and we may incur costs related to additional restructuring activities in future periods.

COVID-19 Impact

1 unchanged sentence

In response to this declaration and the rapid global spread of COVID-19, national, state, and local governments have taken extraordinary and continuously evolving measures to limit the outbreak and spread of the virus, including travel bans, quarantines, "stay-at-home" orders and similar mandates imposing varying degrees of restrictions on social and non-essential commercial activity to promote social distancing.

Measures providing for business shutdowns generally exclude certain essential services such as construction, and those essential services commonly include critical infrastructure and the

Measures providing for business shutdowns generally exclude certain essential services commonly including critical infrastructure such as construction and the

QUANEX BUILDING PRODUCTS CORPORATION

1 unchanged sentence

businesses that support that critical infrastructure.

To date, we have not experienced significant challenges or expenses implementing crisis management plans intended to meet government requirements for social distancing.

We believe that we incurred a reduction to net sales of $ 20 million to $ 25 million related to the pandemic and the resulting containment for the three and six months ended April 30, 2020.

To date, we have not experienced significant challenges or expenses implementing crisis management plans intended to meet government requirements for containment and prevention.

The COVID-19 pandemic and actions taken in response thereto are continuing to have an adverse effect on many sectors of the economy.

Given our short-lead time products and the role of our products within the supply chain for new home building and repair and remodel service providers and other customers within our segments, we reduced operating schedules and implemented furloughs to balance production and demand.

Additionally, government shutdown orders in the United Kingdom forced us to close both U.K.

plants for a number of weeks, though those plants have now been reopened.

While this reduction in production is currently expected to be temporary, the duration of the COVID-19 pandemic, the actions to contain the pandemic and treat its impacts, and the effects on our operations are highly uncertain and cannot be predicted at this time.

Therefore, while we expect the reduced production to negatively impact our business, results of operations, cash flows and financial position, the related financial impact cannot be reasonably estimated at this time.

In March 2020, we borrowed $50 million under our revolving credit facility as a precautionary measure to ensure funds are available to meet our obligations for a substantial period of time in response to the COVID-19 pandemic.

As of April 30, 2020, we had $ 80.3 million of cash and cash equivalents.

We initially reduced operating schedules and implemented furloughs to balance production and demand, but all facilities were reopened during May 2020.

However, the duration and severity of the COVID-19 pandemic, the actions to contain the pandemic and treat its impacts, and the effects on our operations are highly uncertain and cannot be predicted at this time.

Therefore, while we expect some negative impacts on our business, results of operations, cash flows and financial position, the overall financial impact cannot be reasonably estimated at this time.

Additionally, in response to the current business environment as impacted by COVID-19, we are reducing capital expenditures and discretionary spending as well as closely monitoring our working capital needs.

16 unchanged sentences

Total lease costs recorded include fixed operating lease costs and variable lease costs.

Most of our real estate leases require we pay certain expenses, such as common area mainenance costs, of which the fixed portion is included in operating lease costs.

Most of our real estate leases require we pay certain expenses, such as common area maintenance costs, of which the fixed portion is included in operating lease costs.

We recognize operating lease costs on a straight-line basis over the lease term.

6 unchanged sentences

Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required.

The table below presents the lease-related assets and liabilities recorded on the balance sheet at July 31, 2020 (in thousands):

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The table below presents the lease-related assets and liabilities recorded on the balance sheet at April 30, 2020 (in thousands):

Classification

April 30, 2020

Operating lease assets

Operating lease right-of-use assets

Finance lease assets

Property, plant and equipment (less accumulated depreciation of $597)

Leases Classification July 31, 2020

Operating lease assets Operating lease right-of-use assets $ 49,644

Finance lease assets Property, plant and equipment (less accumulated depreciation of $821) 14,960

Total lease assets $ 64,604

Current operating lease liabilities

Current maturities of long-term debt

Noncurrent operating lease liabilities

Long-term debt

Operating Current operating lease liabilities $ 7,307

Finance Current maturities of long-term debt 961

Operating Noncurrent operating lease liabilities 42,740

Finance Long-term debt 14,637

Total lease liabilities $ 65,645

The table below presents the components of the lease costs for the three and six months ended April 30, 2020 (in thousands):

Three Months Ended

Six Months Ended

April 30, 2020

The table below presents the components of the lease costs for the three and nine months ended July 31, 2020 (in thousands):

Three Months Ended Nine Months Ended

July 31, 2020 July 31, 2020

Components of lease costs

5 unchanged sentences

Total lease cost $ 2,871 $ 8,316

The table below presents supplemental cash flow information related to leases for the six months ended April 30, 2020 (in thousands):

Six Months Ended

April 30, 2020

The table below presents supplemental cash flow information related to leases for the six months ended July 31, 2020 (in thousands):

Nine Months Ended

July 31, 2020

Supplemental Cash Flow Information

6 unchanged sentences

Finance Leases $ 398

The table below presents the weighted average remaining lease terms and weighted average discount rates for the Company's leases as of April 30, 2020 :

The table below presents the weighted average remaining lease terms and weighted average discount rates for the Company's leases as of July 31, 2020:

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

April 30, 2020

July 31, 2020

Weighted average remaining lease term (in years)

4 unchanged sentences

Financing leases 3.62 %

The table below presents the maturity of the lease liabilities as of April 30, 2020 (in thousands):

Operating Leases

Finance Leases

The table below presents the maturity of the lease liabilities as of July 31, 2020 (in thousands):

Operating Leases Finance Leases

(in thousands)

2020 (remaining six months)

2020 (remaining three months) $ 2,271 $ 378

2021 8,762 1,510

2022 8,028 1,463

2023 7,592 1,364

2024 6,816 1,260

Thereafter 24,292 14,114

Total lease payments 57,761 20,089

4 unchanged sentences

Commitments as of October 31, 2019 were as follows:

Operating Leases

Capital Leases

Operating Leases Capital Leases

(in thousands)

2020 $ 9,121 $ 1,020

2021 6,981 810

2022 6,012 815

2023 5,506 973

2024 4,699 713

Thereafter 15,220 11,392

Total 47,539 15,723

amount representing interest 5,064

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventories consisted of the following at April 30, 2020 and October 31, 2019 :

Inventories consisted of the following at July 31, 2020 and October 31, 2019:

2020 October 31,

(In thousands)

2 unchanged sentences

Supplies and other 2,470 2,593

Total 71,093 70,949

Inventory reserves 7,154 3,790

2 unchanged sentences

Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the six months ended April 30, 2020 was as follows:

Six Months Ended

April 30, 2020

The change in the carrying amount of goodwill for the nine months ended July 31, 2020 was as follows:

Nine Months Ended

July 31, 2020

(In thousands)

7 unchanged sentences

As a result of this analysis, we determined that our goodwill was not more likely than not impaired and no quantitative assessment was necessary.

During the three months ended July 31, 2020, we determined that there were no further triggering events related to the impacts of COVID-19 or any other areas of our operations.

However, the long term effects of the COVID-19 pandemic on the demand and pricing of our products may result in future impairment charges.

1 unchanged sentence

Identifiable Intangible Assets

Amortizable intangible assets consisted of the following as of April 30, 2020 and October 31, 2019 :

April 30, 2020

October 31, 2019

Gross Carrying

Amortizable intangible assets consisted of the following as of July 31, 2020 and October 31, 2019:

July 31, 2020 October 31, 2019

Gross Carrying

Amount Accumulated

Amortization Gross Carrying

Amount Accumulated

(In thousands)

2 unchanged sentences

Patents and other technology 22,502 20,869 22,386 19,471

We had aggregate amortization expense related to intangible assets for the three and six months ended April 30, 2020 of $ 3.6 million and $ 7.4 million , respectively, and $ 3.7 million and $ 7.9 million , respectively, for the comparable prior year periods.

Total $ 222,796 $ 125,839 $ 232,081 $ 124,784

During the three months ended July 31, 2020, we retired identifiable intangibles of $ 9.9 million related to fully amortized customer relationships.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

We had aggregate amortization expense related to intangible assets for the three and nine months ended July 31, 2020 of $ 3.4 million and $ 10.8 million, respectively, and $ 3.7 million and $ 11.6 million, respectively, for the comparable prior year periods.

Estimated remaining amortization expense, based on current intangible balances, for each of the fiscal years ending October 31, is as follows (in thousands):

Amortization Expense

2020 (remaining six months)

2020 (remaining three months) $ 3,474

Thereafter 47,108

Total $ 96,957

Debt and Finance Lease Obligations

Debt consisted of the following at April 30, 2020 and October 31, 2019 :

Debt consisted of the following at July 31, 2020 and October 31, 2019:

2020 October 31,

(In thousands)

2 unchanged sentences

Unamortized deferred financing fees ( 977 ) ( 1,205 )

Total debt $ 152,752 $ 157,160

Current maturities of long-term debt 690 746

3 unchanged sentences

The Credit Facility has a five-year term, maturing on October 18, 2023, and requires interest payments calculated, at our election and depending upon our Consolidated Leverage Ratio, at either a Base Rate plus an applicable margin or the LIBOR Rate plus an applicable margin.

The Credit Facility contains appropriate provisions to substitute LIBOR with a replacement rate if necessary.

The Credit Facility contains appropriate provisions to substitute LIBOR with a replacement rate upon transition away from LIBOR.

These provisions include a temporary conversion of applicable interest for all borrowings outstanding to be calculated as base rate loans until such time that the replacement rate is agreed upon.

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

The applicable margin and commitment fees are outlined in the following table:

Pricing Level

Consolidated Leverage Ratio

Commitment Fee

LIBOR Rate Loans

Base Rate Loans

Less than or equal to 1.50 to 1.00

Greater than 1.50 to 1.00, but less than or equal to 2.25 to 1.00

Greater than 2.25 to 1.00, but less than or equal to 3.00 to 1.00

Greater than 3.00 to 1.00

Pricing Level Consolidated Leverage Ratio Commitment Fee LIBOR Rate Loans Base Rate Loans

I Less than or equal to 1.50 to 1.00 0.200 % 1.25 % 0.25 %

II Greater than 1.50 to 1.00, but less than or equal to 2.25 to 1.00 0.225 % 1.50 % 0.50 %

III Greater than 2.25 to 1.00, but less than or equal to 3.00 to 1.00 0.250 % 1.75 % 0.75 %

IV Greater than 3.00 to 1.00 0.300 % 2.00 % 1.00 %

In the event of default, outstanding borrowings would accrue interest at the Default Rate, as defined, whereby the obligations will bear interest at a per annum rate equal to 2 % above the total per annum rate otherwise applicable.

The Credit Facility contains a:

(1) Consolidated Interest Coverage Ratio requirement whereby we must not permit the Consolidated Interest Coverage Ratio, as defined, to be less than 2.25 to 1.00, and (2) Consolidated Leverage Ratio requirement, whereby we must not permit the Consolidated Leverage Ratio, as defined, to be greater than 3.25 to 1.00.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

pay dividends (limited to $ 20.0 million per year) and other transactions as further defined in the Credit Facility.

The Credit Facility contains a:

In addition to maintaining these financial covenants, the Credit Facility also limits our ability to enter into certain business transactions, such as to incur indebtedness or liens, to acquire businesses or dispose of material assets, make restricted payments, pay dividends (limited to $ 20.0 million per year) and other transactions as further defined in the Credit Facility.

Substantially all of our domestic assets, with the exception of real property, are utilized as collateral for the Credit Facility.

As of April 30, 2020 , we had $ 216.0 million of borrowings outstanding under the Credit Agreement (reduced by unamortized debt issuance costs of $ 1.1 million ), $ 4.8 million of outstanding letters of credit and $ 15.4 million outstanding primarily under finance leases and other debt.

We had $ 104.2 million available for use under the Credit Agreement at April 30, 2020 .

As of July 31, 2020, we had $ 138.0 million of borrowings outstanding under the Credit Agreement (reduced by unamortized debt issuance costs of $ 1.0 million), $ 4.8 million of outstanding letters of credit and $ 15.7 million outstanding primarily under finance leases and other debt.

We had $ 182.2 million available for use under the Credit Agreement at July 31, 2020.

Outstanding borrowings under the Credit Agreement accrue interest at 1.91 % per annum.

Our weighted average borrowing rate for borrowings outstanding during the six months ended April 30, 2020 and 2019 was 3.03 % and 4.14 % , respectively.

We were in compliance with our debt covenants as of April 30, 2020 .

In May 2020, we repaid $50.0 million of borrowings outstanding on the Credit Facility which were borrowed in March 2020 as a result of COVID-19.

Our weighted average borrowing rate for borrowings outstanding during the nine months ended July 31, 2020 and 2019 was 2.62 % and 4.16 %, respectively.

We were in compliance with our debt covenants as of July 31, 2020.

During the three months ended July 31, 2020, we repaid $78.0 million of borrowings outstanding on the Credit Facility, including $50.0 million of precautionary borrowings in March 2020 as a result of COVID-19.

In the future, we may be required to borrow additional funds in order to be prepared for any unforeseen impacts of the COVID-19 pandemic.

4 unchanged sentences

Our non-contributory, single employer defined benefit pension plan covers a majority of our employees in the U.S.

T he net periodic pension cost for this plan for the three and six months ended April 30, 2020 and 2019 was as follows:

Three Months Ended

Six Months Ended

The net periodic pension cost for this plan for the three and nine months ended July 31, 2020 and 2019 was as follows:

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands)

Service cost $ 242 $ 907 $ 1,022 $ 2,722

Interest cost 280 364 853 1,092

9 unchanged sentences

During September 2019, we contributed $ 0.7 million to fund our plan, and we expect to make a contribution to our plan in September 2020 of approximately $ 3.7 million.

We also have a supplemental benefit plan covering certain executive officers and key employees and a non-qualified deferred compensation plan covering members of the Board of Directors and certain key employees.

As of April 30, 2020 and October 31, 2019 , our liability under the supplemental benefit plan was approximately $ 4.4 million and $ 4.2 million , respectively.

As of April 30, 2020 and October 31, 2019 , the liability associated with the deferred compensation plan was approximately $ 3.0 million and $ 3.8 million , respectively.

We record the current portion of liabilities associated with these plans under the caption "Accrued

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Liabilities," and the long-term portion under the caption "Other Liabilities" in the accompanying condensed consolidated balance sheets.

As of July 31, 2020 and October 31, 2019, our liability under the supplemental benefit plan was approximately $ 2.4 million and $ 4.2 million, respectively.

As of July 31, 2020 and October 31, 2019, the liability associated with the deferred compensation plan was approximately $ 3.4 million and $ 3.8 million, respectively.

We record the current portion of liabilities associated with these plans under the caption "Accrued Liabilities," and the long-term portion under the caption "Other Liabilities" in the accompanying condensed consolidated balance sheets.

To determine our income tax expense or benefit for interim periods, consistent with accounting standards, we apply the estimated annual effective income tax rate to year-to-date results.

Our estimated annual effective tax rates for the six months ended April 30, 2020 and 2019 was 25.8 % and 24.3 % , respectively, excluding discrete items.

Our estimated annual effective tax rates for the nine months ended July 31, 2020 and 2019 was 27.4 % and 24.8 %, respectively, excluding discrete items.

The 2020 effective rate was primarily impacted by a discrete charge of $0.5 million related to the vesting or exercise of equity-based compensation awards.

The 2019 effective rate was primarily impacted by the goodwill impairment charge recorded during the six months ended April 30, 2019, which did not generate a significant tax benefit.

As of April 30, 2020 , our liability for uncertain tax positions (UTP) of $ 0.6 million relates to certain state tax items regarding the interpretation of tax laws and regulations.

The 2019 effective rate was primarily impacted by the goodwill impairment charge recorded during the nine months ended July 31, 2019, which did not generate a significant tax benefit.

As of July 31, 2020, our liability for uncertain tax positions (UTP) of $ 0.6 million relates to certain state tax items regarding the interpretation of tax laws and regulations.

Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns.

2 unchanged sentences

The disallowance of the UTP would not materially affect the annual effective tax rate.

We do not believe any of the UTP at April 30, 2020 will be recognized within the next twelve months.

We do not believe any of the UTP at July 31, 2020 will be recognized within the next twelve months.

We evaluate the likelihood of realization of our deferred tax assets by considering both positive and negative evidence.

We maintain a valuation allowance for certain state net operating losses which totaled $ 1.6 million at April 30, 2020 and October 31, 2019.

We maintain a valuation allowance for certain state net operating losses which totaled $ 1.6 million at July 31, 2020 and October 31, 2019.

Final regulations were published by the Internal Revenue Service regarding Uniform Capitalization (UNICAP) that became effective during fiscal 2020.

12 unchanged sentences

We regularly review with legal counsel the status of all ongoing proceedings, and we maintain insurance against these risks to the extent deemed prudent by our management and to the extent such insurance is available.

However, there is no assurance that we will prevail in these matters or that our insurers will accept full coverage of these matters, and we could, in the future, incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome or insurability of matters we face, which could materially impact our results of operations.

However, there is no

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

assurance that we will prevail in these matters or that our insurers will accept full coverage of these matters, and we could, in the future, incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome or insurability of matters we face, which could materially impact our results of operations.

We have been and are currently party to multiple claims, some of which are in litigation, relating to alleged defects in a commercial sealant product that was manufactured and sold during the 2000's.

11 unchanged sentences

• Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

As of April 30, 2020 and October 31, 2019 , foreign currency derivatives were being measured on a recurring basis.

As of July 31, 2020 and October 31, 2019, foreign currency derivatives were being measured on a recurring basis.

Less than $ 0.1 million of foreign currency derivatives were included in total assets as of October 31, 2019.

There were no outstanding foreign currency derivatives as of April 30, 2020 .

There were no outstanding foreign currency derivatives as of July 31, 2020.

All of our derivative contracts are valued using quoted market prices from brokers or exchanges and are classified within Level 2 of the fair value hierarchy.

1 unchanged sentence

Our outstanding debt is variable rate debt that re-prices frequently, thereby limiting our exposure to significant change in interest rate risk.

As a result, the fair value of our debt instrument approximates carrying value at April 30, 2020 , and October 31, 2019 (Level 2 measurement).

As a result, the fair value of our debt instrument approximates carrying value at July 31, 2020, and October 31, 2019 (Level 2 measurement).

The liability portion of our performance share awards are marked-to-market on a quarterly basis during a three-year vesting period based on market data (Level 2 measurement).

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Occasionally, we may make additional grants to key employees at other times during the year.

Restricted Stock Awards

Restricted stock awards are granted to key employees and officers annually, and typically cliff vest over a three year period with service and continued employment as the only vesting criteria.

The recipient of the restricted stock award is entitled to all

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

of the rights of a shareholder, except that the award is nontransferable during the vesting period.

Restricted Stock Awards

Restricted stock awards are granted to key employees and officers annually, and typically cliff vest over a three year period with service and continued employment as the only vesting criteria.

The recipient of the restricted stock award is entitled to all of the rights of a shareholder, except that the award is nontransferable during the vesting period.

The fair value of the restricted stock award is established on the grant date and then expensed over the vesting period resulting in an increase in additional paid-in-capital.

Shares are generally issued from treasury stock at the time of grant.

A summary of non-vested restricted stock awards activity during the six months ended April 30, 2020 is presented below:

Restricted Stock Awards

Weighted Average

A summary of non-vested restricted stock awards activity during the nine months ended July 31, 2020 is presented below:

Restricted Stock Awards Weighted Average

Grant Date Fair Value per Share

Non-vested at October 31, 2019 230,100 $ 17.02

Non-vested at April 30, 2020

The total weighted average grant-date fair value of restricted stock awards that vested during each of the six month periods ended April 30, 2020 and 2019 was $ 1.1 million and $ 1.3 million , respectively.

As of April 30, 2020 , total unrecognized compensation cost related to unamortized restricted stock awards was $ 1.8 million .

Granted 59,700 $ 18.82

Forfeited ( 42,800 ) $ 17.30

Vested ( 55,000 ) $ 19.45

Non-vested at July 31, 2020 192,000 $ 16.82

The total weighted average grant-date fair value of restricted stock awards that vested during each of the nine month periods ended July 31, 2020 and 2019 was $ 1.1 million and $ 1.3 million, respectively.

As of July 31, 2020, total unrecognized compensation cost related to unamortized restricted stock awards was $ 1.4 million.

We expect to recognize this expense over the remaining weighted average vesting period of 1.9 years.

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During December 2017, the Compensation & Management Development Committee of the Board of Directors approved a change to the long-term incentive award program eliminating the grant of stock options and replacing this award with a grant of performance restricted stock units as further described below.

As a result, stock options were not granted during the years ended October 31, 2018, October 31, 2019, or during the six months ended April 30, 2020 .

As a result, stock options were not granted during the years ended October 31, 2018, October 31, 2019, or during the nine months ended July 31, 2020.

Employee stock options typically vest ratably over a three-year period with service and continued employment as the vesting conditions.

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A description of the methodology for the valuation assumptions was disclosed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019.

The following table summarizes our stock option activity for the six months ended April 30, 2020 :

Stock Options

Weighted Average

Exercise Price

Weighted Average

The following table summarizes our stock option activity for the nine months ended July 31, 2020:

Stock Options Weighted Average

Exercise Price Weighted Average

Remaining Contractual

Term (in years)

Term (in years) Aggregate

Outstanding at October 31, 2019 1,416,186 $ 18.71

Granted — $ —

Exercised ( 178,033 ) $ 16.93

Forfeited/Expired ( 93,734 ) $ 20.40

Outstanding at April 30, 2020

Vested or expected to vest at April 30, 2020

Exercisable at April 30, 2020

Outstanding at July 31, 2020 1,144,419 $ 18.85 3.7 $ 16

Vested or expected to vest at July 31, 2020 1,144,419 $ 18.85 3.7 $ 16

Exercisable at July 31, 2020 1,144,419 $ 18.85 3.7 $ 16

Intrinsic value is the amount by which the market price of the common stock on the date of exercise exceeds the exercise price of the stock option.

The total intrinsic value of stock options exercised during the six months ended April 30, 2020 and 2019 was $ 0.5 million and less than $ 0.1 million , respectively.

The weighted-average grant date fair value of stock options that vested during the six months ended April 30, 2020 and 2019 was $ 0.4 million and $ 1.1 million , respectively.

As of April 30, 2020 , all compensation cost related to stock options has been recognized.

The total intrinsic value of stock options exercised during the nine months ended July 31, 2020 and 2019 was $ 0.5 million and $ 0.3 million, respectively.

The weighted-average grant date fair value of stock options that vested

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

during the nine months ended July 31, 2020 and 2019 was $ 0.4 million and $ 1.1 million, respectively.

As of July 31, 2020, all compensation cost related to stock options has been recognized.

Restricted Stock Units

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Accordingly, we record a liability for the restricted stock units on our balance sheet and recognize any changes in the market value during each reporting period as compensation expense.

During the six months ended April 30, 2020 and 2019 , non-employee directors received 25,326 and 29,065 restricted stock units, respectively, at a grant date fair value of $ 19.02 per share and $ 15.29 per share, respectively, which vested immediately.

As of April 30, 2020 , there were 26,390 non-vested restricted stock units, which were awarded in June 2019 and January 2020 to key employees at a weighted average grant date fair value of $ 17.01 .

During the six months ended April 30, 2019 , we paid approximately $ 0.1 million to settle previously vested restricted stock units;

there were no corresponding payments to settle vested restricted stock units during the six months ended April 30, 2020 .

During the nine months ended July 31, 2020 and 2019, non-employee directors received 25,326 and 29,065 restricted stock units, respectively, at a grant date fair value of $ 19.02 per share and $ 15.29 per share, respectively, which vested immediately.

As of July 31, 2020, there were 26,390 non-vested restricted stock units, which were awarded in June 2019 and January 2020 to key employees at a weighted average grant date fair value of $ 17.01 .

During the nine months ended July 31, 2019, we paid approximately $ 0.4 million to settle previously vested restricted stock units;

there were no corresponding payments to settle vested restricted stock units during the nine months ended July 31, 2020.

Performance Share Awards

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Grant Date Fair Value

Shares Awarded

Shares Forfeited

Grant Date Shares Awarded EPS R-TSR RONA Shares Forfeited

December 7, 2017 146,500 $ 20.70 $ 21.81 $ — 54,008

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On November 30, 2019, a total of 56,103 shares vested pursuant to the November 2016 grant, which were settled with 28,051 shares of common stock and a cash payment of $ 0.6 million.

We recorded compensation expense of $0.1 million for the three months ended April 30, 2020 and a decrease in compensation expense of $ 0.4 million for the six months ended April 30, 2020 related to the expected payout of our performance share awards that are outstanding as of April 30, 2020 .

During the three and

We recorded compensation expense of $0.1 million for the three months ended July 31, 2020 and a decrease in compensation expense of $ 0.3 million for the nine months ended July 31,

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

six months ended April 30, 2019 , we recorded compensation expense of $ 0.4 million and less than $ 0.1 million , respectively, related to the expected payouts of performance share awards that were outstanding as of April 30, 2019 .

2020 related to the expected payout of our performance share awards that are outstanding as of July 31, 2020.

For each of the three and nine months ended July 31, 2019, we recorded compensation expense of $ 0.5 million related to the expected payouts of performance share awards that were outstanding as of July 31, 2019.

Performance share awards are not considered outstanding shares and do not have voting rights, although dividends are accrued over the performance period and will be payable in cash based upon the number of performance shares ultimately earned.

The performance shares are excluded from the diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares.

As of April 30, 2020 , we have deemed 17,342 shares related to the December 2017 grants of performance shares as probable to vest.

As of July 31, 2020, we have deemed 17,342 shares related to the December 2017 grants of performance shares as probable to vest.

Performance Restricted Stock Units

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Specifically, the awards vest on a continuum with the following Absolute Total Shareholder Return (A-TSR) milestones:

Vesting Level

Vesting Criteria

Percentage of Award Vested

A-TSR greater than or equal to 50%

A-TSR less than 50% and greater than or equal to 20%

A-TSR less than 20% and greater than or equal to -20%

A-TSR less than -20%

Vesting Level Vesting Criteria Percentage of Award Vested

Level 1 A-TSR greater than or equal to 50% 150 %

Level 2 A-TSR less than 50% and greater than or equal to 20% 100 %

Level 3 A-TSR less than 20% and greater than or equal to -20% 50 %

Level 4 A-TSR less than -20% — %

The following table summarizes our performance restricted stock unit grants and the grant date fair value for the A-TSR performance metric:

Shares Awarded

Grand Date Fair Value

Shares Forfeited

Grant Date Shares Awarded Grand Date Fair Value Shares Forfeited

December 7, 2017 78,200 $ 17.76 28,854

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December 5, 2019 35,000 $ 19.40 —

During the three and six months ended April 30, 2020 , we recorded compensation expense of approximately $ 0.1 million and $ 0.3 million , respectively, and $ 0.1 million and $ 0.3 million , respectively, for the comparable prior year period related to our performance share restricted units.

During the three and nine months ended July 31, 2020, we recorded compensation expense of approximately $ 0.1 million and $ 0.4 million, respectively, and $ 0.2 million and $ 0.6 million, respectively, for the comparable prior year period related to our performance share restricted units.

Similar to performance shares, the performance restricted stock units are not considered outstanding shares, do not have voting rights, and are excluded from diluted weighted-average shares used to calculate earnings per share until the performance criteria is probable to result in the issuance of contingent shares.

As of April 30, 2020 , we have deemed 24,673 shares related to the December 2017 grants of performance restricted stock units as probable to vest.

As of July 31, 2020, we have deemed 24,673 shares related to the December 2017 grants of performance restricted stock units as probable to vest.

Treasury Shares

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On the subsequent issuance of treasury shares, we record proceeds in excess of cost as an increase in additional paid in capital.

A deficiency of such proceeds relative to costs would be applied to reduce paid-in-capital associated with prior issuances to the extent available, with the remainder recorded

A deficiency of such proceeds relative to costs would be applied to reduce paid-in-capital associated with prior issuances to the extent available,

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

as a charge to retained earnings.

We recorded a charge to retained earnings of $ 0.1 million during the six months ended April 30, 2020 .

The following table summarizes the treasury stock activity during the six months ended April 30, 2020 :

Six Months Ended

April 30, 2020

with the remainder recorded as a charge to retained earnings.

We recorded a charge to retained earnings of $ 0.1 million during the nine months ended July 31, 2020.

The following table summarizes the treasury stock activity during the nine months ended July 31, 2020:

Nine Months Ended

July 31, 2020

Beginning balance as of November 1, 2019 4,348,613

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Treasury stock repurchases 419,799

Balance at January 31, 2020

Other income (loss), included under the caption "Other, net" on the accompanying condensed consolidated statements of income (loss), consisted of the following for the three and six months ended April 30, 2020 and 2019 :

Three Months Ended

Six Months Ended

Balance at April 30, 2020 4,502,628

Other (loss) income, included under the caption "Other, net" on the accompanying condensed consolidated statements of income (loss), consisted of the following for the three and nine months ended July 31, 2020 and 2019:

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands)

Foreign currency transaction gains (losses)

Foreign currency derivative losses

Pension service benefit (cost)

Foreign currency transaction (losses) gains $ ( 458 ) $ 101 $ ( 375 ) $ 75

Foreign currency derivative gains (losses) — 11 ( 15 ) ( 8 )

Pension service benefit 232 130 449 328

Interest income 5 15 24 59

Other 1 2 33 7

Other, net $ ( 220 ) $ 259 $ 116 $ 461

Segment Information

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The accounting policies of our operating segments are the same as those used to prepare the accompanying condensed consolidated financial statements.

Corporate general and administrative expense allocated during the three and six month period ended April 30, 2020 was $ 4.6 million and $ 10.2 million , respectively, and $ 4.6 million and $ 9.5 million for the comparable prior year periods.

Corporate general and administrative expense allocated during the three and nine month period ended July 31, 2020 was $ 5.2 million and $ 15.4 million, respectively, and $ 4.8 million and $ 14.6 million for the comparable prior year periods.

ASC 280 permits aggregation of operating segments based on factors including, but not limited to:

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(3) similar types or classes of customers, namely the primary OEMs;

(4) similar distribution methods for product delivery, although the extent of the use of third-party distributors will vary amongst the businesses;

(5) similar regulatory environment;

and (6) converging long-term economic similarities.

(4) similar distribution methods for product delivery, although the extent of the use of third-party

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Segment information for the three and six months ended April 30, 2020 and 2019 , and total assets as of April 30, 2020 and October 31, 2019 are summarized in the following table (in thousands):

NA Fenestration

EU Fenestration

NA Cabinet Comp.

distributors will vary amongst the businesses;

(5) similar regulatory environment;

and (6) converging long-term economic similarities.

Segment information for the three and nine months ended July 31, 2020 and 2019, and total assets as of July 31, 2020 and October 31, 2019 are summarized in the following table (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

Unallocated Corp.

Three Months Ended April 30, 2020

& Other Total

Three Months Ended July 31, 2020

Net sales $ 122,386 $ 38,265 $ 51,925 $ ( 480 ) $ 212,096

Depreciation and amortization 5,371 2,307 3,264 118 11,060

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Capital expenditures 1,963 1,787 602 8 4,360

Three Months Ended April 30, 2019

Three Months Ended July 31, 2019

Net sales $ 136,259 $ 44,326 $ 58,689 $ ( 813 ) $ 238,461

Depreciation and amortization 6,578 2,213 3,258 133 12,182

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Capital expenditures 2,299 485 942 236 3,962

Six Months Ended April 30, 2020

Nine Months Ended July 31, 2020

Net sales $ 341,432 $ 104,230 $ 152,634 $ ( 2,128 ) $ 596,168

Depreciation and amortization 18,311 7,045 10,139 356 35,851

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Capital expenditures 13,199 3,413 3,946 115 20,673

Six Months Ended April 30, 2019

Nine Months Ended July 31, 2019

Net sales $ 360,654 $ 121,203 $ 175,377 $ ( 3,762 ) $ 653,472

Depreciation and amortization 20,208 6,669 9,902 379 37,158

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Capital expenditures 8,672 4,825 3,251 236 16,984

As of April 30, 2020

As of July 31, 2020

Total assets $ 257,606 $ 220,460 $ 173,797 $ 34,928 $ 686,791

As of October 31, 2019

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2020 (in thousands):

NA Fenestration

EU Fenestration

NA Cabinet Comp.

Total assets $ 226,243 $ 212,239 $ 181,416 $ 25,212 $ 645,110

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the nine months ended July 31, 2020 (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

Unallocated Corp.

& Other Total

Balance as of October 31, 2019 $ 38,712 $ 67,704 $ 39,147 $ — $ 145,563

Foreign currency translation adjustment — 1,369 — — 1,369

Balance as of April 30, 2020

Balance as of July 31, 2020 $ 38,712 $ 69,073 $ 39,147 $ — $ 146,932

For further details of Goodwill, see Note 4, "Goodwill & Intangible Assets", located herewith.

We did not allocate non-operating loss or income tax benefit to the reportable segments.

The following table reconciles operating income (loss) as reported above to net income (loss) for the three and six months ended April 30, 2020 and 2019 :

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Three Months Ended

Six Months Ended

We did not allocate non-operating loss or income tax benefit to the reportable segments.

The following table reconciles operating income (loss) as reported above to net income (loss) for the three and nine months ended July 31, 2020 and 2019:

Three Months Ended Nine Months Ended

July 31, July 31,

2020 2019 2020 2019

(In thousands)

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Interest expense ( 1,165 ) ( 2,570 ) ( 4,310 ) ( 7,614 )

Other, net ( 220 ) 259 116 461

Income tax expense ( 4,345 ) ( 4,958 ) ( 6,898 ) ( 5,926 )

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GAAP and contingent shares associated with performance share awards, if dilutive.

Basic and diluted earnings (loss) per share for the three and six months ended April 30, 2020 and 2019 were calculated as follows (in thousands, except per share data):

Basic and diluted earnings (loss) per share for the three and nine months ended July 31, 2020 and 2019 were calculated as follows (in thousands, except per share data):

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Net Income (Loss)

Weighted Average Shares

Three Months Ended April 30, 2020

Net Income (Loss) Weighted Average Shares Per Share

Three Months Ended July 31, 2020

Basic earnings per common share $ 10,833 32,610 $ 0.33

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Diluted earnings per common share $ 10,833 32,739 $ 0.33

Three Months Ended April 30, 2019

Three Months Ended July 31, 2019

Basic loss per common share $ 11,841 32,899 $ 0.36

Diluted loss per common share

Excluded effect of dilutive securities (1) :

Effect of dilutive securities:

Stock options 77

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Performance shares 68

Six Months Ended April 30, 2020

Diluted loss per common share $ 11,841 33,162 $ 0.36

Nine Months Ended July 31, 2020

Basic earnings per common share $ 16,344 32,716 $ 0.50

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Diluted earnings per common share $ 16,344 32,845 $ 0.50

Six Months Ended April 30, 2019

Nine Months Ended July 31, 2019

Basic loss per common share $ ( 15,782 ) 32,984 $ ( 0.48 )

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This is always the case when an entity incurs a net loss.

We had common stock equivalents that were potentially dilutive in future earnings per share calculations of 1,174,419 and 1,115,541 for the three and six months ended April 30, 2020, respectively, and 1,450,041 and 1,694,464 , respectively, for the comparable prior year periods.

We also had 50,700 restricted stock award equivalents that were potentially dilutive in future earnings per calculations for the three and six months ended April 30, 2020, respectively, and no corresponding equivalents for the corresponding prior year.

We had common stock equivalents that were potentially dilutive in future earnings per share calculations of 1,139,419 and 1,106,891 for the three and nine months ended July 31, 2020, respectively, and 1,155,941 and 1,419,408 , respectively, for the comparable prior year periods.

We also had 50,700 restricted stock award equivalents that were potentially dilutive in future earnings per calculations for the three and nine months ended July 31, 2020, respectively, and no corresponding equivalents for the corresponding prior year.

Such dilution will be dependent on the excess of the market price of our stock over the exercise price and other components of the treasury stock method.

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Accounting Standards Recently Adopted

Effective November 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), using the modified retrospective approach and did not have a cumulative-effect adjustment in retained earnings as a result of the adoption.

QUANEX BUILDING PRODUCTS CORPORATION

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government sources and other third parties.

Although we believe this information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.

Although we believe this

information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.

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 1. Financial Statements