What changed in this filing

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Item 1. Financial Statements

2021-09-03 compared with 2021-06-04 · 134 added, 114 removed, 614 unchanged (29% of the section changed)

49 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended

April 30, April 30,

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

21 unchanged sentences

QUANEX BUILDING PRODUCTS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

April 30, April 30,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

1 unchanged sentence

Net income $ 13,679 $ 10,833 $ 36,082 $ 16,344

Other comprehensive income (loss):

Foreign currency translation gain (loss) 1,032 ( 6,999 ) 9,632 ( 4,256 )

Other comprehensive income:

Foreign currency translation gain 424 7,344 10,056 3,088

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

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

Other comprehensive income (loss) 1,032 ( 6,999 ) 9,632 ( 2,346 )

Comprehensive income (loss) $ 15,583 $ ( 1,498 ) $ 32,035 $ 3,165

Other comprehensive income 424 7,344 10,056 4,998

Comprehensive income $ 14,103 $ 18,177 $ 46,138 $ 21,342

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)

1 unchanged sentence

Net income $ 36,082 $ 16,344

Adjustments to reconcile net income to cash (used for) provided by operating activities:

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 32,543 35,851

3 unchanged sentences

Changes in assets and liabilities:

(Increase) decrease in accounts receivable ( 6,726 ) 14,682

Increase in inventory ( 18,265 ) ( 8,363 )

Increase in other current assets ( 2,013 ) ( 559 )

Increase in accounts receivable ( 8,277 ) ( 1,852 )

(Increase) decrease in inventory ( 32,113 ) 3,553

(Increase) decrease in other current assets ( 2,768 ) 1,218

Increase (decrease) in accounts payable 1,600 ( 1,878 )

Increase (decrease) in accrued liabilities 12,521 ( 7,611 )

Decrease in income taxes payable ( 4,071 ) ( 4,052 )

(Decrease) increase in income taxes payable ( 5,158 ) 107

(Decrease) increase in deferred pension and postretirement benefits ( 158 ) 573

14 unchanged sentences

Purchase of treasury stock ( 5,741 ) ( 6,693 )

Cash (used for) provided by financing activities ( 24,272 ) 63,515

Cash used for financing activities ( 43,480 ) ( 17,394 )

Effect of exchange rate changes on cash and cash equivalents 955 580

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six Months Ended April 30, 2021 Common

Nine Months Ended July 31, 2021 Common

Stock Additional

9 unchanged sentences

— — ( 2,637 ) — — ( 2,637 )

Treasury shares purchased, at cost — — — — ( 1,927 ) ( 1,927 )

Purchase of treasury stock — — — — ( 1,927 ) ( 1,927 )

Stock-based compensation activity:

14 unchanged sentences

Balance at April 30, 2021 $ 373 $ 253,147 $ 230,590 $ ( 23,392 ) $ ( 65,621 ) $ 395,097

Six Months Ended April 30, 2020 Common

Net income — — 13,679 — — 13,679

Foreign currency translation adjustment — — — 424 — 424

Common dividends ($ 0.08 per share)

— — ( 2,687 ) — — ( 2,687 )

Purchase of treasury stock — — — — ( 1,773 ) ( 1,773 )

Stock-based compensation activity:

Expense related to stock-based compensation — 500 — — — 500

Stock options exercised — 15 — — 134 149

Balance at July 31, 2021 $ 373 $ 253,662 $ 241,582 $ ( 22,968 ) $ ( 67,260 ) $ 405,389

Nine Months Ended July 31, 2020 Common

Stock Additional

29 unchanged sentences

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

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

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

57 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our product sales for the three and six months ended April 30, 2021 and 2020 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, 2021 and 2020 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 11, “Segment Information”.

Three Months Ended Six Months Ended

April 30, April 30,

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

32 unchanged sentences

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

While we could 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.

The health and safety of our employees are high priority.

In response to the COVID-19 pandemic, we have taken additional measures to limit possible infections at the workplace by implementing social distancing, sanitizing the workspace, and requiring employees to wear masks and other measures necessary to ensure safety as infection surges dictate.

In response to the COVID-19 pandemic, we have taken additional measures to limit possible infections at the workplace by implementing social distancing, sanitizing the workspace, and requiring employees to report any COVID-19 symptoms to ensure safety as infection surges dictate.

We continue to assess and refine these measures on an ongoing basis as public health guidance and applicable laws and regulations continue to evolve.

2 unchanged sentences

As a result of the economic and business impact of COVID-19, we may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of goodwill, intangibles, right-of-use assets, long-lived assets, accounts receivable (including allowances for credit losses), and inventory, which could have a material adverse effect on our financial position and results of operations.

Inventories consisted of the following at April 30, 2021 and October 31, 2020 (in thousands):

Inventories consisted of the following at July 31, 2021 and October 31, 2020 (in thousands):

2021 October 31,

7 unchanged sentences

Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the six months ended April 30, 2021 was as follows (in thousands):

Six Months Ended

April 30, 2021

The change in the carrying amount of goodwill for the nine months ended July 31, 2021 was as follows (in thousands):

Nine Months Ended

July 31, 2021

Beginning balance as of November 1, 2020 $ 146,154

2 unchanged sentences

At our last annual test date, August 31, 2020, we evaluated the recoverability of goodwill at each of our five reporting units with goodwill balances and determined that our goodwill was no t impaired.

We evaluated for indicators of impairment during the three and six months ended April 30, 2021 and determined that there were no 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.

We evaluated for indicators of impairment during the three and nine months ended July 31, 2021 and determined that there were no triggering events.

For a summary of the change in the carrying amount of goodwill by segment, see Note 11, “Segment Information.”

Identifiable Intangible Assets

Amortizable intangible assets consisted of the following as of April 30, 2021 and October 31, 2020 (in thousands):

April 30, 2021 October 31, 2020

Amortizable intangible assets consisted of the following as of July 31, 2021 and October 31, 2020 (in thousands):

July 31, 2021 October 31, 2020

Gross Carrying

6 unchanged sentences

Total $ 226,031 $ 140,005 $ 232,135 $ 139,067

We had aggregate amortization expense related to intangible assets for the three and six months ended April 30, 2021 of $ 3.3 million and $ 6.7 million, respectively, and $ 3.6 million and $ 7.4 million, respectively, for the comparable prior year periods.

We retired fully amortized identifiable assets of $ 9.9 million related to customer relationships during the six months ended April 30, 2021.

We had aggregate amortization expense related to intangible assets for the three and nine months ended July 31, 2021 of $ 3.0 million and $ 9.7 million, respectively, and $ 3.4 million and $ 10.8 million, respectively, for the comparable prior year periods.

We retired fully amortized identifiable assets of $ 9.9 million related to customer relationships during the nine months ended July 31, 2021.

QUANEX BUILDING PRODUCTS CORPORATION

2 unchanged sentences

Amortization Expense

2021 (remaining six months) $ 6,105

2021 (remaining three months) $ 3,057

Thereafter 39,252

1 unchanged sentence

Debt and Finance Lease Obligations

Long-term debt consisted of the following at April 30, 2021 and October 31, 2020 (in thousands):

Long-term debt consisted of the following at July 31, 2021 and October 31, 2020 (in thousands):

2021 October 31,

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The 2018 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.

At the time of the initial borrowing, the applicable rate was LIBOR + 1.50%.

As of July 31, 2021, the applicable rate was LIBOR + 1.25%.

In addition, we are subject to commitment fees for the unused portion of the 2018 Credit Facility.

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

As of April 30, 2021, we ha d $ 73.0 million of borrowings outstanding under the 2018 Credit Facility (reduced by unamortized debt issuance costs of $0.7 million ), $ 4.5 million of outstanding letters of credit and $ 15.7 million outstanding primarily under finance leases and other debt.

We had $ 247.5 million available for use under the 2018 Credit Facility at April 30, 2021.

As of July 31, 2021, we ha d $ 58.0 million of borrowings outstanding under the 2018 Credit Facility (reduced by unamortized debt issuance costs of $0.7 million), $ 4.5 million of o utstanding letters of credit and $ 16.0 million outstanding primarily under finance leases and other debt.

We had $ 262.5 million availa ble for use under the 2018 Credit Facility at July 31, 2021.

Outstanding borrowings under the 2018 Credit Facility accrue interes t at 1.34 % per annum.

Our weighted average borrowing rate for borrowings outstanding during the six months ended April 30, 2021 and 2020 was 1.47 % and 3.03 %, respectively.

We were in compliance with our debt covenants as of April 30, 2021.

Our weighted average borrowing rate for borrowings outstanding during the nine months ended July 31, 2021 and 2020 was 1.43 % and 2.62 %, respectively.

We were in compliance with our debt covenants as of July 31, 2021.

Retirement Plans

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

The net periodic pension cost for this plan for the three and six months ended April 30, 2021 and 2020 was as follows (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

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

The net periodic pension cost for this plan for the three and nine months ended July 31, 2021 and 2020 was as follows (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

8 unchanged sentences

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, 2021 and October 31, 2020, our liability under the supplemental benefit plan was approximat ely $ 2.8 million and $ 2.6 million, respectively.

As of April 30, 2021 and October 31, 2020, the liability associated with the deferred compensation plan was approximately $ 4.6 million and $ 3.3 million, respectively.

As of July 31, 2021 and October 31, 2020, our liability under the supplemental benefit plan was approximat ely $ 2.8 million and $ 2.6 million, respectively.

As of July 31, 2021 and October 31, 2020, the liability associated with the deferred compensation plan was approximately $ 3.6 million and $ 3.3 million, respectively.

We record the current portion of liabilities as sociated 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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, 2021 and 2020 were 27.3 % and 25.8 %, respectively, excluding discrete items.

The 2021 effective tax rate is higher than the U.S.

Statutory rate of 21 % primarily due to state income taxes and the $ 0.8 million true-up of our deferred taxes from prior year filings, partially offset by a discrete benefit of $ 0.6 million related to the vesting or exercise of equity-based compensation awards.

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, adjusted for any applicable discrete items.

Our estimated annual effective tax rates from continuing operations for the nine months ended July 31, 2021 and 2020 were 32.5 % and 29.7 % , respectively.

The difference between our effective income tax rate and the U.S.

federal statutory rate of 21 % principally result from discrete tax items, U.S.

state tax, non-U.S.

tax rate differential and other permanent differences.

The primary discrete items affecting the 2021 effective rate were the $ 3.1 million measurement of our deferred income tax assets and liabilities related to the increase in the corporate tax rate in the U.K.

from 19 % to 25 %, a charge of $ 0.6 million related to the vesting or exercise of equity-based compensation awards and a benefit of $ 0.6 million for the true-up of our accruals and related deferred taxes from prior year filings.

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

As of April 30, 2021, our liability for uncertain tax p ositions (UTP ) of $ 0.5 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.

The outcome of the future tax consequences of legal proceedings, if any, as well as the outcome of competent authority proceedings, changes in regulatory tax laws, or interpretation of those tax laws could impact our financial statements.

We are subject to the effect of these matters occurring in various jurisdictions.

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, 2021 will be recognized within the next twelve months.

As of July 31, 2021, our liability for uncertain tax positions (UTP) of $ 0.5 million relates to certain U.S.

state tax items regarding the interpretation of tax laws and regulations, including $ 0.2 million of interest and penalties.

We include all interest and penalties related to uncertain tax benefits within our income tax provision account.

Our total unrecognized tax benefits, if recognized, would not materially affect our effective tax rate.

We do not believe any of the UTP at July 31, 2021 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 $ 1.5 million as o f April 30, 2021 and October 31, 2020.

We maintain a valuation allowance for certain state net operating losses which totaled $ 1.5 million as of July 31, 2021 and October 31, 2020.

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

9 unchanged sentences

From time to time, we incur routine expenses and capital expenditures associated with compliance with existing environmental regulations, including control of air emissions and water discharges, and plant decommissioning costs.

We have not incurred any material expenses or capital expenditures related to environmental matters during the past six fiscal years, and do not expect to incur a material amount of such costs in fiscal 2021.

We have not incurred any material expenses or capital expenditures related to environmental matters during the past three fiscal years, and do not expect to incur a material amount of such costs in fiscal 2021.

While we will continue to have future expenditures related to environmental matters, any such amounts are impossible to reasonably estimate at this time.

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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, 2021, and October 31, 2020 (Level 2 measurement).

As a result, the fair value of our debt instrument approximates carrying value at July 31, 2021, and October 31, 2020 (Level 2 measurement).

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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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of non-vested restricted stock awards activity during the six months ended April 30, 2021 is presented below:

A summary of non-vested restricted stock awards activity during the nine months ended July 31, 2021 is presented below:

Restricted Stock Awards Weighted Average

4 unchanged sentences

Vested ( 44,400 ) 20.70

Non-vested at April 30, 2021 216,400 $ 17.28

The total weighted average grant-date fair value of restricted stock awards that vested during each of the six months ended April 30, 2021 and 2020 was $ 0.9 million and $ 1.1 million , respectively.

As of April 30, 2021, total unrecognized compensation cost related to unamortized restricted stock awards was $ 2.1 million.

Non-vested at July 31, 2021 216,400 $ 17.28

The total weighted average grant-date fair value of restricted stock awards that vested during each of the nine months ended July 31, 2021 and 2020 was $ 0.9 million and $ 1.1 million, respectively.

As of July 31, 2021, total unrecognized compensation cost related to unamortized restricted stock awards was $ 1.8 million.

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

9 unchanged sentences

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, 2020.

The following table summarizes our stock option activity for the six months ended April 30, 2021:

The following table summarizes our stock option activity for the nine months ended July 31, 2021:

Stock Options Weighted Average

3 unchanged sentences

Outstanding at October 31, 2020 1,095,329 $ 18.88

Granted — $ —

Exercised ( 865,393 ) 18.80

Forfeited/Expired ( 2,500 ) 18.22

Outstanding at April 30, 2021 234,936 $ 19.22 3.8 $ 1,896

Vested at April 30, 2021 234,936 $ 19.22 3.8 $ 1,896

Exercisable at April 30, 2021 234,936 $ 19.22 3.8 $ 1,896

Outstanding at July 31, 2021 227,436 $ 19.20 3.5 $ 1,283

Vested at July 31, 2021 227,436 $ 19.20 3.5 $ 1,283

Exercisable at July 31, 2021 227,436 $ 19.20 3.5 $ 1,283

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, 2021 and 2020 was $ 4.2 million and $ 0.5 million, respectively.

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

The total intrinsic value of stock options exercised during the nine months ended July 31, 2021 and 2020 was $ 4.2 million and $ 0.5 million, respectively.

The weighted-average grant date fair value of stock options that vested during the nine months ended July 31, 2020 was $ 0.4 million.

Restricted Stock Units

8 unchanged sentences

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, 2021 and 2020, non-employee directors received 28,826 and 25,326 restricted stock units, respectively, at a grant date fair value of $ 18.79 per share and $ 19.02 per share, respectively, which vested immediately.

As of April 30, 2021, there were 21,774 non-vested restricted stock units, which were awarded in January 2020 to key employees at a weighted average grant date fair value of $ 17.08 .

During the six months ended April 30, 2021 we paid $ 0.8 million to settle vested restricted stock units.

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

During the nine months ended July 31, 2021 and 2020, non-employee directors received 28,826 and 25,326 restricted stock units, respectively, at a grant date fair value of $ 18.79 per share and $ 19.02 per share, respectively, which vested immediately.

As of July 31, 2021, there were 21,774 non-vested restricted stock units, which were awarded in January 2020 to key employees at a weighted average grant date fair value of $ 17.08 .

During the nine months ended July 31, 2021 we paid $ 0.8 million to settle vested restricted stock units.

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

Performance Share Awards

We have awarded annual grants of performance shares to key employees and officers.

Beginning with the fiscal year ended October 31, 2019, performance share awards issued vest with return on net assets (RONA) as the vesting condition and pay out 100 % in cash, and are accounted for as liability.

Beginning with the fiscal year ended October 31, 2019, performance share awards vest with return on net assets (RONA) as the vesting condition and pay out 100 % in cash, and are accounted for as liability.

The expected cash settlement of the performance share award is recorded as a liability and is being marked to market over the three-year term of the award and can fluctuate depending on the number of shares ultimately expected to vest.

1 unchanged sentence

The following table summarizes our performance share grants and the grant date fair value for the RONA performance metrics:

Grant Date Shares Awarded Return on Net Assets Shares Forfeited

Grant Date Shares Awarded Grant Date Fair Value Shares Forfeited

December 5, 2018 132,400 $ 13.63 40,900

2 unchanged sentences

In December 2020, the December 2017 grant vested, however, no shares were awarded as performance criteria were not met.

We recorded compensation expense of $ 0.6 million and $ 3.3 million, respectively , for the three and six months ended April 30, 2021 related to the expected payout of our performance share awards that were outstanding as of April 30, 2021.

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 were outstanding as of April 30, 2020.

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.

We recorded compensation exp ense of $ 0.7 million and $ 4.0 million, respectively, for the three and nine months ended July 31, 2021 related to the expected payout of our performance share awards that w ere outstanding as of July 31, 2021.

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

Performance share awards are payable in cash based upon the number of performance shares ultimately earned, and are therefore not considered outstanding shares.

Performance Restricted Stock Units

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December 2, 2020 38,400 $ 20.68 —

During the six months ended April 30, 2021 , 32,322 perfo rmance restricted stock units vested.

We recorded compensation expense related to our performance restricted stock units of approximately $ 0.2 million and $ 0.4 million, respec tively, for the three and six months ending April 30, 2021 and $ 0.1 million and $ 0.3 million, respectively, for the comparable prior year periods.

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, 2021, we have de emed 91,460 shares related to the December 2018 grant of performance restricted stock units as probable to vest.

During the nine months ended July 31, 2021 , 32,322 performance restricted stock units vested.

We recorded compensation expense related to our performance restricted stock units of approximately $ 0.1 million and $ 0.5 million, respectively, for the three and nine months ending July 31, 2021 and $ 0.1 million and $ 0.4 million, respectively, for the comparable prior year periods.

The performance restricted stock units are not considered outstanding shares, do not have voting rights, and are exclud ed 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 July 31, 2021, we have de emed 92,104 shares related to the December 2018 grant of performance restricted stock units as probable to vest.

Treasury Shares

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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 as a charge to retained earnings.

There were no charges to retained earnings during the six months ended April 30, 2021.

The following table summarizes the treasury stock activity during the six months ended April 30, 2021:

Six Months Ended

April 30, 2021

There were no charges to retained earnings during the nine months ended July 31, 2021.

The following table summarizes the treasury stock activity during the nine months ended July 31, 2021:

Nine Months Ended

July 31, 2021

Beginning Balance as of November 1, 2020 4,491,429

3 unchanged sentences

Treasury stock repurchases 231,308

Balance at April 30, 2021 3,684,965

Balance at July 31, 2021 3,751,722

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other income, included under the caption “Other, net” on the accompanying condensed consolidated statements of income, consisted of the following for the three and six months ended April 30, 2021 and 2020 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

Other, net on the condensed consolidated statements of income consisted of the following for the three and nine months ended July 31, 2021 and 2020 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

Foreign currency transaction gains (losses) $ ( 4 ) $ 132 $ ( 82 ) $ 83

Foreign currency transaction losses $ ( 79 ) $ ( 458 ) $ ( 161 ) $ ( 375 )

Foreign currency derivative losses — — — ( 15 )

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The accounting polic ies 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, 2021 was $ 5.4 million and $ 10.7 million, respectively, and $ 4.6 million and $ 10.2 million for the comparable prior year periods.

Corporate general and administrative expense allocated during the three and nine month period ended July 31, 2021 was $ 4.9 million and $ 15.6 million, respectively, and $ 5.2 million and $ 15.4 million for the comparable prior year periods.

ASC Topic 280-10-50, “Segment Reporting” (ASC 280) permits aggregation of operating segments based on factors including, but not limited to:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Segment information for the three and six months ended April 30, 2021 and 2020, and total assets as of April 30, 2021 and October 31, 2020 are summarized in the following table (in thousands):

Segment information for the three and nine months ended July 31, 2021 and 2020, and total assets as of July 31, 2021 and October 31, 2020 are summarized in the following table (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

1 unchanged sentence

& Other Total

Three Months Ended April 30, 2021

Three Months Ended July 31, 2021

Net sales $ 147,818 $ 71,114 $ 61,936 $ ( 991 ) $ 279,877

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Capital expenditures 2,651 2,285 1,115 156 6,207

Three Months Ended April 30, 2020

Three Months Ended July 31, 2020

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

2 unchanged sentences

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

Six Months Ended April 30, 2021

Nine Months Ended July 31, 2021

Net sales $ 422,077 $ 181,862 $ 179,492 $ ( 3,050 ) $ 780,381

2 unchanged sentences

Capital expenditures 7,472 4,025 4,228 281 16,006

Six Months Ended April 30, 2020

Nine Months Ended July 31, 2020

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

2 unchanged sentences

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

As of April 30, 2021

As of July 31, 2021

Total assets $ 264,286 $ 244,381 $ 176,625 $ 33,900 $ 719,192

1 unchanged sentence

Total assets $ 252,703 $ 223,248 $ 174,713 $ 40,921 $ 691,585

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2021 (in thousands):

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the nine months ended July 31, 2021 (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

3 unchanged sentences

Foreign currency translation adjustment — 4,333 — — 4,333

Balance as of April 30, 2021 $ 38,712 $ 72,443 $ 39,147 $ — $ 150,302

Balance as of July 31, 2021 $ 38,712 $ 72,628 $ 39,147 $ — $ 150,487

For further details of Goodwill, see Note 3, “Goodwill & Intangible Assets”, located herewith.

2 unchanged sentences

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

The following table reconciles operating income as reported above to net income for the three and six months ended April 30, 2021 and 2020 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

The following table reconciles operating income as reported above to net income for the three and nine months ended July 31, 2021 and 2020 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

10 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Basic and diluted earnings per share for the three and six months ended April 30, 2021 and 2020 were calculated as follows (in thousands, except per share data):

Basic and diluted earnings per share for the three and nine months ended July 31, 2021 and 2020 were calculated as follows (in thousands, except per share data):

Net Income Weighted Average Shares Per Share

Three Months Ended April 30, 2021

Three Months Ended July 31, 2021

Basic earnings per common share $ 13,679 33,359 $ 0.41

4 unchanged sentences

Diluted earnings per common share $ 13,679 33,650 $ 0.41

Three Months Ended April 30, 2020

Three Months Ended July 31, 2020

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

5 unchanged sentences

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

Six Months Ended April 30, 2021

Nine Months Ended July 31, 2021

Basic earnings per common share $ 36,082 33,194 $ 1.09

4 unchanged sentences

Diluted earnings per common share $ 36,082 33,518 $ 1.08

Six Months Ended April 30, 2020

Nine Months Ended July 31, 2020

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

7 unchanged sentences

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

The following table shows anti-dilutive instruments for the three and six months ended April 30, 2021 and 2020 (shares in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

The following table shows anti-dilutive instruments for the three and nine months ended July 31, 2021 and 2020 (shares in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2021 2020 2021 2020

24 unchanged sentences

• changes in domestic and international economic conditions;

• changes in availability of raw materials;

• changes in availability and prices of raw materials;

• our ability to attract and retain skilled labor;

• changes in purchases by our principal customers;

18 unchanged sentences

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