What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-09-02 compared with 2022-06-03 · 85 added, 86 removed, 190 unchanged (47% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of April 30, 2022, and for the three and six months ended April 30, 2022 and 2021, included elsewhere herein.

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes as of July 31, 2022, and for the three and nine months ended July 31, 2022 and 2021, included elsewhere herein.

For additional information pertaining to our business, including risk factors which should be considered before investing in our common stock, refer to our Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

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and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.

Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.

Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market or operational disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

Russia, Europe’s largest provider of natural gas, has significantly reduced the export of natural gas compared to the same time last year resulting in the increase in natural gas prices and the potential for natural gas shortages.

If this trend continues, this would not only negatively impact our European manufacturing facilities, this may also impact our customers and their demand for our products.

We continue to monitor these situations and their impact on our business.

On March 11, 2020, the WHO declared the outbreak of COVID-19 to be a global pandemic and recommended containment and mitigation measures.

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As federal, state and local governments react to the public health crisis, significant uncertainties have been created in the economy.

The COVID-19 pandemic and its related effects continue to have a significant adverse effect on many sectors of the economy and we may be further impacted.

pandemic and its related effects continue to have a significant adverse effect on many sectors of the economy and we may be further impacted.

The war in Ukraine and the impact of COVID-19 on the global economy including inflation and the price of raw materials, supply chain disruptions, and the volatility in interest rates including home mortgage rates are unpredictable and there may be developments outside our control requiring us to adjust our operating plan.

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residential wood cabinet demand.

In May 2022, the NAHB forecasted calendar-year housing starts to be 1.7 million in 2022 and 1.6 million in both 2023 and 2024 calendar-years.

In May 2022, the Ducker forecast indicated that total window shipments are expected to increase approximately 5% for calendar-year 2022 and 2% in 2023.

The estimated increase in window shipments for the year ended December 31, 2022 includes an increase in both new construction shipments and R&R shipments of approximately 5%.

In May 2022, Catalina Research estimated that residential semi-custom cabinet demand in the U.S.

is estimated to increase 2% in 2022.

In August 2022, the NAHB forecasted calendar-year housing starts to be 1.5 million in both the 2022 and 2023 calendar-years and 1.6 million in 2024.

In August 2022, the Ducker forecast indicated that total window shipments are expected to remain essentially flat for calendar-year 2022 and increase 1.9% in 2023.

In August 2022, Catal ina Research estimated that residential semi-custom cabinet sales in the U.S.

is estimated to increase 8.4% in 2022 and decrease 3.8% in 2023.

Several commodities in our business are subject to pricing fluctuations, including polyvinyl resin (PVC), titanium dioxide (TiO2), petroleum products, aluminum and wood.

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However, these adjusters are not in place with all customers and for all commodities, and there is a level of exposure to such volatility due to the lag associated with the timing of price updates in accordance with our customer agreements, particularly with regard to hardwoods.

In addition, some of these commodities, such as silicone, are in high demand, particularly in Europe, which can affect the cost of the raw materials, a portion of which we may not be able to fully recover.

In addition, some of these commodities are in high demand, particularly in Europe, which can affect the cost of the raw materials, a portion of which we may not be able to fully recover.

The global economy remains uncertain due to currency devaluations, political unrest, terror threats, global pandemics such as COVID-19, and even the political landscape in the U.S.

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Results of Operations

Three Months Ended April 30, 2022 Compared to Three Months Ended April 30, 2021

Three Months Ended April 30,

Three Months Ended July 31, 2022 Compared to Three Months Ended July 31, 2021

Three Months Ended July 31,

2022 2021 Change $ % Variance

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NA Fenestration

Three Months Ended April 30,

Three Months Ended July 31,

2022 2021 $ Change % Variance

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Operating income margin 13 % 9 %

Net sales increased $31.7 million, or 22%, for the three months ended April 30, 2022 compared to the same period in 2021, which was primarily driven by an increase in price and raw material surcharges of $21.5 million and a $10.2 million increase in volumes.

Net sales increased $37.1 million, or 25%, for the three months ended July 31, 2022 compared to the same period in 2021, which was primarily driven by an increase in price and raw material surcharges of $19.6 million and a $17.5 million increase in volumes.

Cost of Sales.

The cost of sales increased $25.1 million, or 22%, for the three months ended April 30, 2022 compared to the same period in 2021.

The cost of sales increased $26.5 million, or 23%, for the three months ended July 31, 2022 compared to the same period in 2021.

Cost of sales, including labor, increased primarily due to higher volumes during the period as well as the inflation of raw materials.

Selling, General and Administrative.

S elling, general and administrative expenses increased $0.9 million, or 7%, for the three months ended April 30, 2022 compared to the sam e period in 2021, primarily due to increased general expenses year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense decreased $0.8 million for the three months ended April 30, 2022 compared to the same period in 2021, reflecting the run-off of depreciation expense related to existing assets and disposals during the period.

S elling, general and administrative expenses increased $1.3 million, or 10%, for the three months ended July 31, 2022 compared to the sam e period in 2021, primarily due an increase in compensation expense, professional fees and general expenses year-over-year.

EU Fenestration

Three Months Ended April 30,

Three Months Ended July 31,

2022 2021 $ Change % Variance

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Operating income margin 15 % 16 %

Net sales increased $11.8 million, or 19%, for the three months ended April 30, 2022 compared to the same period in 2021, which was primarily driven by $14.8 million of base price increases and a $0.3 million increase in volumes partially offset by $3.3 million of foreign currency rate changes.

Net sales decreased $3.5 million, or 5%, for the three months ended July 31, 2022 compared to the same period in 2021, which was primarily driven by a $7.9 million decrease in volumes and $8.9 million of foreign currency rate changes partially offset by $13.3 million of base price increases.

Cost of Sales.

The cost of sales increased $8.3 million, or 20%, for the three months ended April 30, 2022 compared to the same period in 2021.

Cost of sales, including labor, increased primarily due to higher volumes during the period as well as the inflation of raw materials.

The cost of sales decreased $2.2 million, or 4%, for the three months ended July 31, 2022 compared to the same period in 2021.

Cost of sales decreased primarily due to lower volumes and foreign currency rate changes during the period partially offset by inflation of raw materials.

Selling, General and Administrative.

Selling, general and administrative expense increased $1.2 million, or 16%, for the three months ended April 30, 2022 compared to the same period in 2021.

The increase is primarily due to higher compensation, general expenses and foreign currency impacts year-over-year.

Selling, general and administrative expense increased $0.7 million, or 9%, for the three months ended July 31, 2022 compared to the same period in 2021.

The increase is primarily due to higher compensation and general expenses partially offset by a decrease in professional fees and foreign currency impacts year-over-year.

NA Cabinet Components

Three Months Ended April 30,

Three Months Ended July 31,

2022 2021 $ Change Variance %

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Operating income (loss) margin 3 % (2) %

N et sales increased $9.3 million, or 15%, for the three months ended April 30, 2022 compared to the same period in 2021, which was driven by an increase in price and raw material indexes of $18.3 million partially offset by a $9.0 million decrease in volumes due to labor and material shortages throughout the supply chain.

N et sales increased $10.5 million, or 17%, for the three months ended July 31, 2022 compared to the same period in 2021, which was driven by an increase in price and raw material indexes of $15.0 million partially offset by a $4.5 million decrease in volumes due to labor and material shortages throughout the supply chain.

Cost of Sales .

Cost of sales increased $8.1 million, or 15%, for the three months ended April 30, 2022 compared to the same period in 2021.

Cost of sales increased $7.2 million, or 13%, for the three months ended July 31, 2022 compared to the same period in 2021.

Cost of sales increased primarily due to rising lumber prices, which are recovered on a lag, partially offset by lower volumes during the period.

Selling, General and Administrative .

Selling, general and administrative expense was similar to the three months ended April 30, 2022 compared to the same period in 2021.

Selling, general and administrative expense was similar to the three months ended July 31, 2022 compared to the same period in 2021.

Unallocated Corporate & Other

Three Months Ended April 30,

Three Months Ended July 31,

2022 2021 $ Change Variance %

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Operating loss $ (1.2) $ (2.2) $ 1.0 45%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended April 30, 2022 and 2021.

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended July 31, 2022 and 2021.

Cost of Sales .

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Selling, General and Administrative .

Selling, gen eral and administrative expenses decreased $3.5 million, or 95%, for the three months ended April 30, 2022 compared to the same period in 2021.

This decrease is primarily attributable to $2.3 million of lower compensation expense including the valuations of our stock based compensation awards, a decrease of $0.8 million related to medical expense claims, and a decrease of $0.5 million related to workers’ compensation claims during the three months ended April 30, 2022 as compared to the prior year period.

Selling, gen eral and administrative expenses decreased $1.1 million, or 65%, for the three months ended July 31, 2022 compared to the same period in 2021.

This decrease is primarily attributable to a decrease of $2.6 million related to medical expense claims partially offset by $1.0 million of higher compensation expense including the valuations of our stock based compensation awards and a $0.5 million increase in professional fees during the three months ended July 31, 2022 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Expense .

Interest expenses were similar to the three months ended April 30, 2022 compared to the same period in 2021.

Income Taxes .

We recorded income tax expense of $7.9 million on pre-tax income of $34.4 million for the three months ended April 30, 2022, an effective rate of 22.9%, and income tax expense of $6.5 million on pre-tax income of $21.0 million for the three months ended April 30, 2021, an effective rate of 30.7% .

The $1.4 million increase in income tax expense year-over-year primarily corresponds with the increase in pre-tax income partially offset by a benefit for the true-up of deferred taxes from prior year filings.

Six Months Ended April 30, 2022 Compared to Six Months Ended April 30, 2021

Six Months Ended April 30,

We recorded inco me tax expense of $7.8 million on pre-tax income of $33.7 million for the three months ended July 31, 2022, an effective rate of 23.1%, and income tax expense of $7.5 million on pre-tax income of $21.2 million for the three months ended July 31, 2021, an effective rate of 35.3%.

The increase in income tax expense year-over-year was primarily driven by the increase in pre-tax book income during the t hree months ended July 31, 2022, relative to the three months ended July 31, 2021.

The decrease in the effective tax rate for the t hree months ended July 31, 2022, was primarily driven by a non-recurring tax detriment that occurred during the three months ended July 31, 2021, associated with the remeasurement of U.K.

deferred taxes from a 19% to 25% tax rate as a result of an enacted tax law change during the period.

Nine Months Ended July 31, 2022 Compared to Nine Months Ended July 31, 2021

Nine Months Ended July 31,

2022 2021 Change $ % Variance

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NA Fenestration

Six Months Ended April 30,

Nine Months Ended July 31,

2022 2021 $ Change % Variance

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Operating income margin 11 % 10 %

Ne t sales increased $50.2 million, or 18%, for the six months ended April 30, 2022 compared to the same period in 2021, which was primarily driven by an increase in price and raw material surcharges of $32.8 million and a $17.4 million increase in volumes.

Ne t sales increased $87.3 million, or 21%, for the nine months ended July 31, 2022 compared to the same period in 2021, which was primarily driven by an increase in price and raw material surcharges of $52.6 million and a $34.7 million increase in volumes.

Cost of Sales.

The cost of sales increased $41.7 million, or 20%, for the six months ended April 30, 2022 as compared to the same period in 2021.

The cost of sales increased $68.2 million, or 21%, for the nine months ended July 31, 2022 as compared to the same period in 2021.

Cost of sales, including labor, increased primarily due to higher volumes during the period as well as the inflation of raw materials.

Selling, General and Administrative.

S elling, general and administrative expenses increased $2.9 million, or 11%, for the six months ended April 30, 2022 as compared to the same period in 2021.

This increase was due primarily to higher professional fees and general expenses year-over-year.

S elling, general and administrative expenses increased $4.2 million, or 11%, for the nine months ended July 31, 2022 as compared to the same period in 2021.

This increase was primarily due to higher compensation expense, professional fees and general expenses year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense decreased $1.8 million, or 18%, for the six months ended April 30, 2022 as compared to the same period in 2021, reflecting the run-off of depreciation expense related to existing assets and disposals during the period.

Depreciation and amortization expense decreased $2.2 million, or 15%, for the nine months ended July 31, 2022 as compared to the same period in 2021, reflecting the run-off of depreciation expense related to existing assets and disposals during the period.

EU Fenestration

Six Months Ended April 30,

Nine Months Ended July 31,

2022 2021 $ Change Variance %

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Operating income margin 15 % 16 %

Net sales increased $21.6 million, o r 20%, comparing the six months ended April 30, 2022 to the same period in 2021, which was primarily driven by $23.1 million of base price increases and a $2.2 million increase in volumes partially offset by $3.7 million of foreign currency rate changes.

Net sales increased $18.1 million, o r 10%, comparing the nine months ended July 31, 2022 to the same period in 2021, which was primarily driven by $35.8 million of base price increases partially offset by $11.7 million of foreign currency rate changes and $6.0 million decrease in volumes.

Cost of Sales.

The cost of sales increased $17.7 million, or 24%, for the six months ended April 30, 2022 compared to the same period in 2021.

Cost of sales increased primarily due to higher volumes during the period as well as the inflation of raw materials.

The cost of sales increased $15.5 million, or 13%, for the nine months ended July 31, 2022 compared to the same period in 2021.

Cost of sales increased primarily due to inflation of raw materials partially offset by a decrease in volumes and foreign currency impacts.

Selling, General and Administrative.

Selling, general an d administrative expense increased $1.9 million, or 14%, for the six months ended April 30, 2022 compared to the same period in 2021.

The increase is primarily due to higher compensation, general expenses and foreign currency impacts year-over-year.

Selling, general an d administrative expense increased $2.6 million, or 12%, for the nine months ended July 31, 2022 compared to the same period in 2021.

The increase is primarily due to higher compensation and general expenses partially offset by foreign currency impacts year-over-year.

NA Cabinet Components

Six Months Ended April 30,

Nine Months Ended July 31,

2022 2021 $ Change Variance %

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Depreciation and amortization 10.7 10.0 0.7 (7)%

Operating loss $ (0.7) $ (0.2) $ (0.5) (250)%

Operating loss margin (1) % — %

Net sales increased $17.7 million, or 15%, for the six months ended April 30, 2022 compared to the same period in 2021, which was driven by a $32.6 million increase in price and raw material indexes partially offset by $14.9 million decrease in volumes due to labor and material shortages throughout the supply chain.

Operating income (loss) $ 1.4 $ (1.3) $ 2.7 208%

Operating income (loss) margin 1 % (1) %

Net sales increased $28.2 million, or 16%, for the nine months ended July 31, 2022 compared to the same period in 2021, which was driven by a $47.7 million increase in price and raw material indexes partially offset by $19.5 million decrease in volumes due to labor and material shortages throughout the supply chain.

Cost of Sales .

Cost of sales increased $17.2 million, or 17%, for the six months ended April 30, 2022 compared with the same period in 2021, primarily as a result of lumber price inflation, which is recovered on a lag, partially offset by lower volumes during the period.

Cost of sales increased $24.4 million, or 16%, for the nine months ended July 31, 2022 compared with the same period in 2021, primarily as a result of lumber price inflation, which is recovered on a lag, partially offset by lower volumes during the period.

Selling, General and Administrative .

Selling, general and administrative expense increased $0.3 million, or 3%, for the six months ended April 30, 2022 compared to the same period in 2021 due to an increase in general expenses year-over-year.

Selling, general and administrative expense increased $0.4 million, or 3%, for the nine months ended July 31, 2022 compared to the same period in 2021 due to an increase in general expenses year-over-year.

Unallocated Corporate & Other

Six Months Ended April 30,

Nine Months Ended July 31,

2022 2021 $ Change Variance %

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Operating loss $ (6.5) $ (14.1) $ 7.6 54%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the six months ended April 30, 2022 and 2021.

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the nine months ended July 31, 2022 and 2021.

Cost of Sales .

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Selling, General and Administrative .

Selling, general and administrative expenses decreased $6.6 million, or 62%, for the six months ended April 30, 2022 compared to the same period in 2021.

This decrease is primarily attributable to $4.6 million of decreased compensation expense including the valuations of our stock based compensation awards, a decrease of $0.5 million related to workers’ compensation claims and a decrease of $0.2 million related to medical expense claims during the six months ended April 30, 2022 as compared to the prior year period.

Additionally, we recorded a $1.4 million loss on the sale of a plant during the six months ended April 30, 2021, for which we did not have a comparable expense in the corresponding six months ended April 30, 2022.

Selling, general and administrative expenses decreased $7.7 million, or 62%, for the nine months ended July 31, 2022 compared to the same period in 2021.

This decrease is primarily attributable to $3.7 million of decreased compensation expense including the valuations of our stock based compensation awards, a decrease of $2.9 million related to medical expense claims and a decrease of $0.5 million related to workers’ compensation claims partially offset by an increase of $0.8 million professional fees during the nine months ended July 31, 2022 as compared to the prior year period.

Additionally, we recorded a $1.4 million loss on the sale of a plant during the nine months ended July 31, 2021, for which we did not have a comparable expense in the corresponding nine months ended July 31, 2022.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense decreased $0.3 million for the six months ended April 30, 2022 compared to the same period in 2021 as a result of lower borrowings outstanding during the period.

Income Taxes .

We recorded income tax expense of $10.3 million on pre-tax income of $48.1 million for the six months ended April 30, 2022, an effective rate of 21.4%, and income tax expense of $9.9 million on a pre-tax income of $32.3 million for the six months ended April 30, 2021, an effective rate of 30.6%.

The $0.4 million increase in income tax expense year-over-year corresponds with the increase in pre-tax income partially offset by a benefit for the true-up of deferred taxes from prior year filings and a benefit related to the vesting or exercise of equity based compensation.

We recorded income tax expense of $18.1 million on pre-tax income of $81.8 million for the nine months ended July 31, 2022, an effective rate of 22.2%, and income tax expense of $17.4 million on a pre-tax income of $53.4 million for the nine months ended July 31, 2021, an effective rate of 32.5%.

The increase in income tax expense year-over-year was primarily driven by the increase in pre-tax book income during the nine months ended July 31, 2022, relative to the nine months ended July 31, 2021.

The decrease in the effective tax rate for the nine months ended July 31, 2022, was primarily driven by a non-recurring tax detriment that occurred during the nine months ended July 31, 2021, associated with the remeasurement of U.K.

deferred taxes from a 19% to 25% tax rate as a result of an enacted tax law change during the period as well as a charge related to the vesting or exercise of equity-based compensation awards.

Liquidity and Capital Resources

Historically, our principal sources of funds have been cash on hand, cash flow from operations, and borrowings under our credit facilities.

We maintain a $325.0 million revolving credit facility (the Credit Facility) that matures in 2023 (5-year term) and requires interest payments calculated at a variable market rate depending upon our Consolidated Leverage Ratio.

The applicable rate during the six months ended April 30, 2022 was LIBOR + 1.25%.

Our cost of capital could increase depending upon the Consolidated Leverage Ratio at the end of any given quarter.

In addition to the Con solidated Leverage Ratio covenant, we are required to meet a Consolidated Interest Coverage Ratio covenant, and there are limitations on certain transactions including our ability to incur indebtedness, incur liens, dispose of material assets, acquire businesses, make restricted payments and pay dividends (limited to $20.0 million per year).

We maintain a $325.0 million revolving credit facility (the Credit Facility) that matures in 2027 (5-year term) and requires interest payments calculated at a variable market rate depending upon our Consolidated Net Leverage Ratio.

The applicable rate during the nine months ended July 31, 2022 was RFR Rate + 1.25%.

Our cost of capital could increase depending upon the Consolidated Net Leverage Ratio at the end of any given quarter.

In addition to the Con solidated Net Leverage Ratio covenant, we are required to meet a Consolidated Interest Coverage Ratio covenant, and there are limitations on certain transactions including our ability to incur indebtedness, incur liens, dispose of material assets, acquire businesses, make restricted payments and pay dividends (limited to $25.0 million per year).

We are amortizing deferred financing fees of $1.6 million straight-line over the remaining term of the facility.

For further details of the Credit Facility, refer to Note 4, “Debt and Finance Lease Obligations” to the accompanying unaudited condensed consolidated financial statements contained elsewhere herein.

As of April 30, 2022, w e had $38.9 million of cash and equivalents, $63.0 million outstanding under the Credit Facility, $4.4 million of outstanding letters of credit and $14.0 million outstanding under finance leases and other debt.

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

We repatriated $4.1 million and $8.8 million of f oreign cash during the six months ended April 30, 2022 and 2021, respectively.

As of July 31, 2022, w e had $50.0 million of cash and equivalents, $38.0 million outstanding under the Credit Facility, $5.1 million of outstanding letters of credit and $20.1 million outstanding under finance leases and other debt.

We had $281.9 million available for use under the Credit Facility at July 31, 2022.

We repatriated $18.2 million and $17.7 million of f oreign cash during the nine months ended July 31, 2022 and 2021, respectively.

We expect to repatriate excess cash moving forward and use the funds to retire debt or meet current working capital needs.

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Analysis of Cash Flow

The following table summarizes our cash flow results for the six months ended April 30, 2022 and 2021:

Six Months Ended

The following table summarizes our cash flow results for the nine months ended July 31, 2022 and 2021:

Nine Months Ended

(In millions)

Cash (used for) provided by operating activities $ (1.9) $ 29.0

Cash provided by operating activities $ 49.9 $ 47.4

Cash used for investing activities $ (19.4) $ (12.9)

Cash provided by (used for) financing activities $ 16.5 $ (24.3)

Cash used for financing activities $ (17.9) $ (43.5)

Operating A ctivities .

Operating cash flows for the six months ended April 30, 2022 declined approximately $30.9 million compared to the six months ended April 30, 2021.

The decline in operating cash flows is primarily due to unfavorable changes in working capital partially offset by higher net income year-over-year due to increased demand.

The unfavorable changes in working capital was largely driven by an increase in inventory value due to raw material price inflation and a higher payout of accrued incentives.

Cash provided by operating activities increased $2.5 million for the nine months ended July 31, 2022 compared to the nine months ended July 31, 2021.

The increase in operating cash flows is primarily due to higher net income year-over-year due to increased demand partially offset by unfavorable changes in working capital.

The unfavorable changes in working capital were largely driven by an increase in inventory value due to raw material price inflation and a higher payout of accrued incentives.

Investing Activities.

Cash used f or investing activities increased $5.6 million for the six months ended April 30, 2022 compared to the same period in 2021, primarily as a result of an increase in capital expenditures and a decrease in proceeds from dispositions.

Cash used f or investing activities increased $6.5 million for the nine months ended July 31, 2022 compared to the same period in 2021, primarily as a result of an increase in capital expenditures and a decrease in proceeds from dispositions.

Financing Activities.

Cash provided by financing activities was $16.5 million for the six months ended April 30, 2022, which included $24.6 million of net debt borrowings partially offset by $5.3 million of dividends paid to our shareholders, $1.6 million purchase of treasury stock and $1.4 million of payroll tax paid to settle shares forfeited upon vesting of stock.

Cash provided by financing activities was $17.9 million for the nine months ended July 31, 2022, which included $7.9 million of dividends paid to our shareholders, $6.6 million purchase of treasury stock, $1.4 million of payroll tax paid to settle shares forfeited upon vesting of stock, $1.3 million of net repayment of long-term debt and $1.2 million of debt issuance costs.

Liquidity Requirements

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Other uses of cash include paying cash dividends to our shareholders and repurchasing our common stock.

During the six months ended April 30, 2022 and 2021, we repatriated $4.1 million and $8.8 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $10.6 million as of April 30, 2022.

During the nine months ended July 31, 2022 and 2021, we repatriated $18.2 million and $17.7 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $14.9 million as of July 31, 2022.

Critical Accounting Policies and Estimates

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For a description of our critical accounting policies and estimates, see our Annual Report on Form 10-K for the fiscal year ended October 31, 2021.

Our critical accounting policies and estimates have not changed materially during the six months ended April 30, 2022.

Our critical accounting policies and estimates have not changed materially during the nine months ended July 31, 2022.

While there have been no changes in the application of principles, methods, and assumptions used to determine our significant estimates, we may be required to revise certain accounting estimates and judgments related to the economic and business impact of the COVID-19 pandemic, such as, but not limited to, those related to the valuation of goodwill, intangibles, long-lived assets, accounts receivable, and inventory, which could have a material adverse effect on our financial position and results of operations.

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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 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.

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

As of July 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.

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 2. Management’s Discussion and Analysis