What changed in this filing

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Item 1. Financial Statements

2022-06-03 compared with 2022-03-04 · 160 added, 95 removed, 567 unchanged (31% of the section changed)

49 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

(In thousands, except per share amounts)

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

(In thousands)

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Net income $ 37,761 $ 22,403

Adjustments to reconcile net income to cash used for operating activities:

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

Depreciation and amortization 20,820 21,860

3 unchanged sentences

Changes in assets and liabilities:

Decrease in accounts receivable 8,340 7,103

Increase in accounts receivable ( 13,008 ) ( 6,726 )

Increase in inventory ( 39,771 ) ( 18,265 )

Increase in other current assets ( 3,541 ) ( 2,013 )

Decrease in accounts payable ( 8,391 ) ( 14,577 )

Decrease in accrued liabilities ( 18,248 ) ( 2,692 )

Increase in accounts payable 7,381 5,584

(Decrease) increase in accrued liabilities ( 15,984 ) 994

Increase (decrease) in income taxes payable 1,679 ( 4,071 )

Decrease in deferred pension and postretirement benefits ( 159 ) ( 104 )

Increase (decrease) in other long-term liabilities 404 ( 399 )

Increase in other long-term liabilities 443 642

Other, net ( 743 ) 298

Cash used for operating activities ( 21,651 ) ( 3,395 )

Cash (used for) provided by operating activities ( 1,881 ) 28,960

Investing activities:

18 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended January 31, 2022 Common

Six Months Ended April 30, 2022 Common

Stock Additional

16 unchanged sentences

Balance at January 31, 2022 $ 373 $ 250,204 $ 268,370 $ ( 24,929 ) $ ( 69,519 ) $ 424,499

Three Months Ended January 31, 2021 Common

Net income — — 26,522 — — 26,522

Foreign currency translation adjustment — — — ( 11,268 ) — ( 11,268 )

Common dividends ($ 0.08 per share)

— — ( 2,671 ) — — ( 2,671 )

Purchase of treasury stock — — — — ( 1,569 ) ( 1,569 )

Stock-based compensation activity:

Expense related to stock-based compensation — 572 — — — 572

Stock options exercised — 9 — — 109 118

Other — ( 29 ) — — — ( 29 )

Balance at April 30, 2022 $ 373 $ 250,756 $ 292,221 $ ( 36,197 ) $ ( 70,979 ) $ 436,174

Six Months Ended April, 2021 Common

Stock Additional

17 unchanged sentences

Balance at January 31, 2021 $ 373 $ 252,277 $ 218,732 $ ( 24,424 ) $ ( 69,250 ) $ 377,708

Net income — — 14,551 — — 14,551

Foreign currency translation adjustment — — — 1,032 — 1,032

Common dividends ($ 0.08 per share)

— — ( 2,693 ) — — ( 2,693 )

Purchase of treasury stock — — — — ( 2,041 ) ( 2,041 )

Stock-based compensation activity:

Expense related to stock-based compensation — 447 — — — 447

Stock options exercised — 423 — — 5,670 6,093

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

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 months ended January 31, 2022 and 2021 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 six months ended April 30, 2022 and 2021 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

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

(In thousands)

27 unchanged sentences

Related Parties

N et sales for the three months ended January 31, 2022 included approximately $ 0.4 million of transactions with a customer which is a related party with one of our non-employee directors.

N et sales for the six months ended April 30, 2022 included approximately $ 1.1 million of transactions with a customer which is a related party with one of our non-employee directors.

We performed a review of these transactions, of which no single transaction or series of related transactions exceeded $ 120,000 in amount, and determined that these transactions were enacted independently of each other in fair transactions.

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

The health and safety of our employees are high priority.

The health and safety of our employees are high priorities.

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.

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 January 31, 2022 and October 31, 2021 (in thousands):

As a result of the economic and business impact of COVID-19, including inflation and supply chain impact, 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, 2022 and October 31, 2021 (in thousands):

2022 October 31,

7 unchanged sentences

Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended January 31, 2022 was as follows (in thousands):

Three Months Ended

January 31, 2022

The change in the carrying amount of goodwill for the six months ended April 30, 2022 was as follows (in thousands):

Six Months Ended

April 30, 2022

Beginning balance as of November 1, 2021 $ 149,205

2 unchanged sentences

At our last annual test date, August 31, 2021, 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 months ended January 31, 2022 and determined that there were no triggering events.

We evaluated for indicators of impairment during the three and six months ended April 30, 2022 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.”

2 unchanged sentences

Identifiable Intangible Assets

Amortizable intangible assets consisted of the following as of January 31, 2022 and October 31, 2021 (in thousands):

January 31, 2022 October 31, 2021

Amortizable intangible assets consisted of the following as of April 30, 2022 and October 31, 2021 (in thousands):

April 30, 2022 October 31, 2021

Gross Carrying

6 unchanged sentences

Total $ 220,745 $ 147,164 $ 225,169 $ 142,759

We had aggregate amortization expense related to intangible assets for the three months ended January 31, 2022 of $ 3.0 million and $ 3.4 million for the comparable prior year period.

We had aggregate amortization expense related to intangible assets for the three and six months ended April 30, 2022 of $ 3.0 million and $ 6.0 million, respectively, and $ 3.3 million and $ 6.7 million 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

2022 (remaining nine months) $ 9,049

2022 (remaining six months) $ 5,939

Thereafter 27,851

1 unchanged sentence

Debt and Finance Lease Obligations

Long-term debt consisted of the following at January 31, 2022 and October 31, 2021 (in thousands):

Long-term debt consisted of the following at April 30, 2022 and October 31, 2021 (in thousands):

2022 October 31,

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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 January 31, 2022, we ha d $ 63.0 million of borrowings outstanding under the Credit Facility (reduced by unamortized debt issuance costs of $0.5 million), $ 4.5 million of outstanding letters of credit and $ 15.0 million outstanding primarily under finance leases and other debt.

We had $ 257.5 million available for use under the 2018 Credit Facility at January 31, 2022.

As of April 30, 2022, we ha d $ 63.0 million of borrowings outstanding under the Credit Facility (reduced by unamortized debt issuance costs of $0.4 million), $ 4.4 million of outstanding letters of credit and $ 14.0 million outstanding primarily under finance leases and other debt.

We had $ 257.6 million available for use under the 2018 Credit Facility at April 30, 2022.

Outstanding borrowings under the 2018 Credit Facility accrue interest at 1.93 % per annum.

Our weighted average borrowing rate for borrowings outstanding during the three months ended January 31, 2022 and 2021 was 1.35 % and 1.56 %, respectively.

We were in compliance with our debt covenants as of January 31, 2022.

Our weighted average borrowing rate for borrowings outstanding during the six months ended April 30, 2022 and 2021 was 1.48 % and 1.47 %, respectively.

We were in compliance with our debt covenants as of April 30, 2022.

QUANEX BUILDING PRODUCTS CORPORATION

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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 months ended January 31, 2022 and 2021 was as follows (in thousands):

Three Months Ended

The net periodic pension cost for this plan for the three and six months ended April 30, 2022 and 2021 was as follows (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

Service cost $ 214 $ 212 $ 430 $ 425

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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 January 31, 2022 and October 31, 2021, our liability under the supplemental benefit plan was approximat ely $ 2.9 million.

As of January 31, 2022 and October 31, 2021, the liability associated with the deferred compensation plan was approximately $ 3.4 million.

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.

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 three months ended January 31, 2022 and 2021 were 25.3 % and 26.0 % , respectively.

As of April 30, 2022 and October 31, 2021, our liability under the supplemental benefit plan was approxim ately $ 2.9 million.

As of April 30, 2022 and October 31, 2021, the liability associated with the deferred compensation plan was approximately $ 3.2 million and $ 3.4 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 t o year-to-date results, plus any applicable discrete items, which are recorded in the period in which they occur.

Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statutes of limitations, tax benefits on equity compensation, and increase or decrease in valuation allowances on deferred tax assets.

Our annual effective tax rates from continuing operations for the six months ended April 30, 2022 and 2021 were 25.2 % and 27.3 %, respectively.

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

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tax rate differential and other permanent differences.

The primary discrete items affecting the 2022 effective rate were a charge of $ 0.5 million related to the vesting or exercise of equity-based compensation awards and a benefit of $ 0.3 million for the true-up of our acc ruals and related deferred taxes from prior year.

The 2021 effective tax rate was primarily impacted by a discrete benefit of $ 0.5 million related to the vesting or exercise of equity-based compensation awards and a charge of $ 0.8 million for the true-up of our deferred taxes from prior year filings.

As of January 31, 2022 , our liability for uncertain tax positions (UTP) of $ 1.4 million relates to certain U.S.

The primary discrete items affecting the 2022 effective rate were a benefit of $ 0.2 million related to the vesting or exercise of equity-based compensation awards and a benefit of $ 1.0 million for the true-up of our accruals and related deferred taxes from prior year.

The 2021 effective tax rate was primarily impacted by 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.

As of April 30, 2022, our liability for uncertain tax positions (UTP) of $ 1.4 million relates to certain U.S.

federal and state tax items regarding the interpretation of tax laws and regulations, including a minimal amount of interest and penalties.

4 unchanged sentences

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 $ 1.3 million as of January 31, 2022 and October 31, 2021.

We maintain a valuation allowance for certain state net operating losses which totaled $ 1.3 million as of April 30, 2022 and October 31, 2021.

QUANEX BUILDING PRODUCTS CORPORATION

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

Carrying amounts reported on the balance sheet for cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.

Our outstanding debt is variable rate debt that re-

As of April 30, 2022, 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 April 30, 2022.

There were no outstanding foreign currency

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 January 31, 2022, and October 31, 2021 (Level 2 measurement).

derivatives as of October 31, 2021.

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.

Carrying amounts reported on the balance sheet for cash, cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.

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, 2022, and October 31, 2021 (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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Shares are generally issued from treasury stock at the time of grant.

A summary of non-vested restricted stock awards activity during the three months ended January 31, 2022 is presented below:

A summary of non-vested restricted stock awards activity during the six months ended April 30, 2022 is presented below:

Restricted Stock Awards Weighted Average

4 unchanged sentences

Vested ( 88,700 ) 13.74

Non-vested at January 31, 2022 216,600 $ 20.75

The total weighted average grant-date fair value of restricted stock awards that vested during each of the three months ended January 31, 2022 and 2021 was $ 1.1 million and $ 0.9 million, respectively.

As of January 31, 2022, total unrecognized compensation cost related to unamortized restricted stock awards was $ 3.0 million.

Non-vested at April 30, 2022 212,100 $ 20.86

The total weighted average grant-date fair value of restricted stock awards that vested during each of the six months ended April 30, 2022 and 2021 was $ 1.2 million and $ 0.9 million, respectively.

As of April 30, 2022, total unrecognized compensation cost related to unamortized restricted stock awards was $ 2.7 million.

We expect to recognize this expense over the remaining weighted average vesting period of 2.1 years.

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Our stock options may be exercised up to a maximum of ten years from the date of grant.

The fair value of the stock options was determined on the grant date and expensed over the vesting period resulting in an increase in additional paid-in-capital.

For employees who were nearing retirement-eligibility, we recognized stock option expense ratably over the shorter of the vesting period or the period from the grant-date to the retirement-eligibility date.

The fair value of the stock options was determined on the grant date and expensed over the vesting period resulting in an

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

increase in additional paid-in-capital.

We use a Black-Scholes pricing model to estimate the fair value of stock options.

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, 2021.

The following table summarizes our stock option activity for the three months ended January 31, 2022:

The following table summarizes our stock option activity for the six months ended April 30, 2022:

Stock Options Weighted Average

3 unchanged sentences

Outstanding at October 31, 2021 218,304 $ 19.37

Granted — $ —

Exercised ( 8,737 ) 19.85

Forfeited/Expired ( 500 ) 15.08

Outstanding at January 31, 2022 215,054 $ 19.37 3.2 $ 520

Vested at January 31, 2022 215,054 $ 19.37 3.2 $ 520

Exercisable at January 31, 2022 215,054 $ 19.37 3.2 $ 520

Outstanding at April 30, 2022 209,067 $ 19.36 3.0 $ 38

Vested at April 30, 2022 209,067 $ 19.36 3.0 $ 38

Exercisable at April 30, 2022 209,067 $ 19.36 3.0 $ 38

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 three months ended January 31, 2022 and 2021 was less than $ 0.1 million and $ 2.3 million, respectively.

The total intrinsic value of stock options exercised during the six months ended April 30, 2022 and 2021 was less than $ 0.1 million and $ 4.2 million, respectively.

Restricted Stock Units

5 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 three months ended January 31, 2022 and 2021, non-employee directors received 33,579 and 28,826 restricted stock units, respectively, at a grant date fair value of $ 22.54 per share and $ 18.79 per share, respectively, which vested immediately.

As of January 31, 2022, 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 three months ended January 31, 2022 and January 31, 2021, we paid $ 0.1 million to settle vested restricted stock units.

During the six months ended April 30, 2022 and 2021, non-employee directors received 36,669 and 28,826 restricted stock units, respectively, at a weighted average grant date fair value of $ 22.52 per share and $ 18.79 per share, respectively, which vested immediately.

As of April 30, 2022, 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, 2022 we paid $ 1.0 million and $ 0.8 million for the comparable prior year to settle vested restricted stock units.

Performance Share Awards

3 unchanged sentences

Depending on the achievement of the performance conditions, 0 % to 200 % of the awarded performance shares may ultimately vest.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

3 unchanged sentences

December 9, 2021 80,900 $ 22.54 —

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In December 2021, 183,000 shares vested pursuant to the December 2018 grant, which were settled with a cash payment of $ 3.8 million.

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December 9, 2021 50,900 $ 21.06 —

During the three months ended January 31, 2022 , 87,919 performance restricted stock units vested.

During the six months ended April 30, 2022 , 87,919 performance restricted stock units vested.

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 January 31, 2022, we have de emed 33,093 shares related to the December 2019 grant of performance restricted stock units as probable to vest.

As of April 30, 2022, we have de emed 27,979 shares related to the December 2019 grant of performance restricted stock units as probable to vest.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes amounts expensed as selling, general and administrative expense related to restricted stock awards, stock options, restricted stock units, performance share awards and performance restricted stock units for the three months ended January 31, 2022 and 2021 (in thousands):

Three Months Ended

The following table summarizes amounts expensed as selling, general and administrative expense related to restricted stock awards, stock options, restricted stock units, performance share awards and performance restricted stock units for the three and six months ended April 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

Restricted stock awards $ 360 $ 304 $ 708 $ 606

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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 three months ended January 31, 2022.

The following table summarizes the treasury stock activity during the three months ended January 31, 2022:

Three Months Ended

January 31, 2022

There were no charges to retained earnings during the six months ended April 30, 2022.

The following table summarizes the treasury stock activity during the six months ended April 30, 2022:

Six Months Ended

April 30, 2022

Beginning Balance as of November 1, 2021 3,998,725

2 unchanged sentences

Stock options exercised ( 8,737 )

Balance at January 31, 2022 3,823,656

Other, net on the condensed consolidated statements of income consisted of the following for the three months ended January 31, 2022 and 2021 (in thousands):

Three Months Ended

Foreign currency transaction losses $ ( 41 ) $ ( 78 )

Treasury stock repurchases 75,000

Balance at April 30, 2022 3,892,669

Other, net on the condensed consolidated statements of income consisted of the following for the three and six months ended April 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

Foreign currency transaction gains (losses) $ 123 $ ( 4 ) $ 82 $ ( 82 )

Foreign currency derivative gains 5 — 5 —

Pension service benefit 294 265 589 530

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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 month period ended January 31, 2022 was $ 5.8 million, and $ 5.2 million for the comparable prior year period.

Corporate general and administrative expense allocated during the three and six month period ended April 30, 2022 was $ 5.5 million and $ 11.3 million, respectively, and $ 5.4 million and $ 10.7 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:

5 unchanged sentences

and (6) converging long-term economic similarities.

Segment information for the three months ended January 31, 2022 and 2021, and total assets as of January 31, 2022 and October 31, 2021 are summarized in the following table (in thousands):

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Segment information for the three and six months ended April 30, 2022 and 2021, and total assets as of April 30, 2022 and October 31, 2021 are summarized in the following table (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

1 unchanged sentence

& Other Total

Three Months Ended January 31, 2022

Three Months Ended April 30, 2022

Net sales $ 177,908 $ 73,427 $ 72,878 $ ( 1,320 ) $ 322,893

2 unchanged sentences

Capital expenditures 3,632 1,252 1,499 32 6,415

Three Months Ended January 31, 2021

Three Months Ended April 30, 2021

Net sales $ 146,143 $ 61,657 $ 63,562 $ ( 1,005 ) $ 270,357

2 unchanged sentences

Capital expenditures 2,001 1,268 1,160 124 4,553

As of January 31, 2022

Six Months Ended April 30, 2022

Net sales $ 324,539 $ 132,341 $ 135,231 $ ( 2,178 ) $ 589,933

Depreciation and amortization 8,177 5,091 7,380 172 20,820

Operating income (loss) 34,372 20,412 ( 885 ) ( 5,223 ) 48,676

Capital expenditures 8,937 2,206 2,572 70 13,785

Six Months Ended April 30, 2021

Net sales $ 274,259 $ 110,748 $ 117,556 $ ( 2,059 ) $ 500,504

Depreciation and amortization 9,957 5,125 6,575 203 21,860

Operating income (loss) 26,986 18,437 ( 297 ) ( 11,911 ) 33,215

Capital expenditures 4,821 1,740 3,113 125 9,799

As of April 30, 2022

Total assets $ 295,186 $ 225,703 $ 186,940 $ 32,661 $ 740,490

1 unchanged sentence

Total assets $ 268,773 $ 236,755 $ 178,671 $ 33,124 $ 717,323

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the three months ended January 31, 2022 (in thousands):

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the six months ended April 30, 2022 (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

3 unchanged sentences

Foreign currency translation adjustment — ( 5,937 ) — — ( 5,937 )

Balance as of January 31, 2022 $ 38,712 $ 69,934 $ 39,147 $ — $ 147,793

Balance as of April 30, 2022 $ 38,712 $ 65,409 $ 39,147 $ — $ 143,268

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 months ended January 31, 2022 and 2021 (in thousands):

Three Months Ended

The following table reconciles operating income as reported above to net income for the three and six months ended April 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2022 2021 2022 2021

Operating income $ 34,550 $ 21,380 $ 48,676 $ 33,215

7 unchanged sentences

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

Basic and diluted earnings per share for the three months ended January 31, 2022 and 2021 were calculated as follows (in thousands, except per share data):

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Basic and diluted earnings per share for the three and six months ended April 30, 2022 and 2021 were calculated as follows (in thousands, except per share data):

Net Income Weighted Average Shares Per Share

Three Months Ended January 31, 2022

Three Months Ended April 30, 2022

Basic earnings per common share $ 26,522 33,157 $ 0.80

4 unchanged sentences

Diluted earnings per common share $ 26,522 33,291 $ 0.80

Three Months Ended January 31, 2021

Three Months Ended April 30, 2021

Basic earnings per common share $ 14,551 33,355 $ 0.44

4 unchanged sentences

Diluted earnings per common share $ 14,551 33,637 $ 0.43

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Six Months Ended April 30, 2022

Basic earnings per common share $ 37,761 33,140 $ 1.14

Effect of dilutive securities:

Stock options — 29 —

Restricted stock awards — 95 —

Performance restricted stock units — 28 —

Diluted earnings per common share $ 37,761 33,292 $ 1.13

Six Months Ended April 30, 2021

Basic earnings per common share $ 22,403 33,110 $ 0.68

Effect of dilutive securities:

Stock options — 135 —

Restricted stock awards — 108 —

Performance restricted stock units — 91 —

Diluted earnings per common share $ 22,403 33,444 $ 0.67

We do not include equity instruments in our calculation of diluted earnings per share if those instruments would be anti-dilutive.

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.

There were no anti-dilutive instruments for the three months ended January 31, 2022 and 2021.

There were no anti-dilutive instruments for the three and six months ended April 30, 2022 and 2021.

New Accounting Guidance

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standards setting bodies that we adopt as of the specified effective date.

We did not adopt any new accounting pronouncements during the three months ended January 31, 2022.

As of January 31, 2022, we believe the impact of any recently issued standards that are not yet effective are either not applicable to us at this time or will not have a material impact on our condensed consolidated financial statements upon adoption.

We did not adopt any new accounting pronouncements during the three and six months ended April 30, 2022.

As of April 30, 2022, we believe the impact of any recently issued standards that are not yet effective are either not applicable to us at this time or will not have a material impact on our condensed consolidated financial statements upon adoption.

Unless the context indicates otherwise, references to “Quanex”, the “Company”, “we”, “us” and “our” refer to the consolidated business operations of Quanex Building Products Corporation and its subsidiaries.

34 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