What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-12-17 compared with 2020-12-11 · 17 added, 17 removed, 156 unchanged (18% of the section changed)

3 unchanged sentences

Examples of fenestration components include (1) energy-efficient flexible insulating glass spacers, (2) extruded vinyl profiles, (3) window and door screens, and (4) precision-formed metal and wood products.

In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components.

In addition, we provide certain other non-fenestration components and products, which include solar panel sealants, trim moldings, vinyl decking, vinyl fencing, water retention barriers, and conservatory roof components.

We use low-cost production processes and engineering expertise to provide our customers with specialized products for their specific window, door, and cabinet applications.

29 unchanged sentences

2023 1,111 —% 440 —% 115 1% 1,666

Ducker Worldwide LLC, a consulting and research firm, indicated in November 2020 that window shipments in the residential remodeling and replacement (R&R) market are expected to decrease slightly during the remaining calendar year 2020, increase 2% during 2021 and increase 3% during 2022.

Derived from reports published by Ducker, the overall decline in window shipments for the trailing twelve months ended September 30, 2020 was 0.3%.

During this period, new construction activity increased 1.1% and R&R replacement decreased 1.4% respectively.

Ducker Worldwide LLC, a consulting and research firm, indicated in November 2021 that window shipments in the residential remodeling and replacement (R&R) mark et are expected to increase approximately 4.5% for the calendar-year 2021 and approximately 4% in 2022 and 3% during 2023.

Derived from re ports published by Ducker, the overall increase in window shipments for the trailing twelve months ended September 30, 2021 was 8.9%.

During this period, new construction activity increased 14.2% and R&R replacement increased 4.7% respectively.

According to data from Catalina Research, a consulting and research firm, U.S.

residential cabinet demand is expected to increase through 2022.

Projections from Catalina Research as of November 2020 include growth rates for the stock, semi-custom (the cabinet market we primarily operate in) and custom cabinet markets, which are presented in the table below:

Proje ctions from Catalina Research as of November 2021 include growth rates for the stock, semi-custom (the cabinet market we primarily operate in) and custom cabinet markets, which are presented in the table below:

Cabinet Market Annual Growth Rates

9 unchanged sentences

• the recent growth in the housing market over the past several years has been predominately in new construction which has outpaced the growth in the residential remodeling and replacement sector;

• the recovery of the housing market has slowed due primarily to the declining growth of multi-family units;

• programs in the U.S.

such as Energy Star have improved customer awareness of the technological advances in window and door energy-efficiency, but the government has been reluctant to enforce stricter energy standards;

• supply chain disruptions and inflationary pressures related to transportation, labor, and raw materials have increased causing delays in production and higher prices;

• foreign currency rates in the U.K.

19 unchanged sentences

• offer logistics solutions that provide our customers with just-in-time service which can reduce their processing costs;

• recognizing the importance of sustainability and corporate social responsibility by continually looking for ways to reduce our environmental impact, protect the health and safety of our employees and communities, and engage diverse workers and leaders;

• pursue targeted business acquisitions that allow us to expand our existing footprint, enhance our existing product offerings, acquire complementary technology, enhance our leadership position within the markets we serve, and expand into adjacent markets or service lines;

1 unchanged sentence

Our Strengths

We believe our strengths include design expertise, new technology development capability, high quality manufacturing, just-in-time delivery systems, customer service, the ability to generate unique patented products and participation in industry advocacy.

We believe our strengths include design expertise, new technology development capability, high quality manufacturing, just-in-time delivery systems, customer service and the ability to generate unique patented products.

Raw Materials and Supplies

15 unchanged sentences

Competition is largely based on regional presence, custom engineering, product development, quality, service and price.

Primary competitors include, but are not limited to, Veka, Deceuninck, Energi, Vision Extrusions, GED Integrated Solutions, Technoform, Swiss Spacer, Thermix, RiteScreen, Allmetal, and Endura.

Primary competitors include, but are not limited to, Veka, Deceuninck, Energi, Vision Extrusions, GED Integrated Solutions, Technoform, Swiss Spacer, Thermix, RiteScreen, Allmetal, Endura, Klinger, Thermoseal and Fenzi Group.

Competitors in the vinyl extrusion business in the U.K.

7 unchanged sentences

Certain of our businesses or product lines are largely dependent on a relatively few large customers.

See Note 1, "Nature of Operations, Basis of Presentation and Significant Accounting Policies - Concentration of Credit Risk and Allowance for Doubtful Accounts," of the accompanying financial statements in this Annual Report on Form 10-K for related disclosure.

See Note 1, “Nature of Operations, Basis of Presentation and Significant Accounting Policies - Concentration of Credit Risk and Allowance for Credit Losses,” of the accompanying financial statements in this Annual Report on Form 10-K for related disclosure.

Sales Backlog

Given the short lead times involved in our business, we have a relatively low backlog, approximately $30 million as of October 31, 2020.

The criteria for revenue recognition has not been met with regard to sales backlog, and therefore, we have not recorded revenue or deferred revenue pursuant to these sales orders.

Given the short lead times involved in our business, we have a backlog of approximatel y $83 million as of October 31, 2021.

The criteria for revenue recognition has not been met with regard to sales backlog, and therefore, we ha ve not recorded revenue or deferred revenue pursuant to these sales orders.

If these sales orders result in a sale, we will record revenue during fiscal 2022 in accordance with our revenue recognition accounting policy.

14 unchanged sentences

We consider the following marks, design marks and associated trade names to be valuable in the conduct of our business:

HOMESHIELD, TRUSEAL TECHNOLOGIES, EDGETECH, MIKRON, WOODCRAFT and QUANEX.

HOMESHIELD, TRUSEAL TECHNOLOGIES, EDGETECH, MIKRON,

WOODCRAFT and QUANEX.

Through Liniar, we hold a number of registered designs, patents and trademarks registered in the U.K., which include:

4 unchanged sentences

Our window sealant business unit relies on patents to protect the design of several of its window spacer products.

Although we hold

numerous patents, the proprietary process technology that has been developed is also considered a source of competitive advantage.

Although we hold numerous patents, the proprietary process technology that has been developed is also considered a source of competitive advantage.

Environmental and Employee Safety Matters

We are subject to extensive laws and regulations concerning worker safety, the discharge of materials into the environment and the remediation of chemical contamination.

To satisfy such requirements, we must make capital and other expenditures on an on-going basis.

To satisfy such requirements, we must make capital and other expenditures on an ongoing basis.

The cost of worker safety and environmental matters has not had a material adverse effect on our operations or financial condition in the past, and we are not currently aware of any existing conditions that we believe are likely to have a material adverse effect on our operations, financial condition, or cash flows.

27 unchanged sentences

We periodically file or furnish documents to the Securities and Exchange Commission (SEC), including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports as required.

These reports are also available free of charge from the Investor Relations Section of our website at http://www.quanex.com, as soon

as reasonably practicable after we file such material or furnish it to the SEC.

These reports are also available free of charge from the Investor Relations Section of our website at http://www.quanex.com, as soon as reasonably practicable after we file such material or furnish it to the SEC.

As permitted by the SEC rules, we post relevant information on our website.

1 unchanged sentence

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-K

Item 1. Business