What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-09-01 compared with 2023-06-02 · 80 added, 78 removed, 203 unchanged (44% 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, 2023, and for the three and six months ended April 30, 2023 and 2022, 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, 2023, and for the three and nine months ended July 31, 2023 and 2022, 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, 2022.

3 unchanged sentences

We also manufacture cabinet doors and other components for OEMs in the kitchen and bathroom cabinet industry.

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

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

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

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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.

Russia, Europe’s largest provider of natural gas, has significantly reduced the export of natural gas compared to the beginning of the conflict 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

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residential wood cabinet demand.

In May 2023 , the NAHB forecasted calendar-year housing starts to be 1.3 million in the 2023 and 2024 calendar-years and 1.5 million in 2025.

In May 2023 , the Ducker forecast indicated that total window shipments are expected to decrease 5.9% in calendar-year 2023 and 2.8% in 2024.

In August 2023 , the NAHB forecasted calendar-year housing starts to be 1.4 million in the 2023 and 2024 calendar-years and 1.5 million in 2025.

In August 2023 , the Ducker forecast indicated that total window shipments are expected to decrease 6.6% in calendar-year 2023 and increase 2.9% in 2024.

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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Results of Operations

Three Months Ended April 30, 2023 Compared to Three Months Ended April 30, 2022

Three Months Ended April 30,

Three Months Ended July 31, 2023 Compared to Three Months Ended July 31, 2022

Three Months Ended July 31,

2023 2022 Change $ % Variance

12 unchanged sentences

NA Fenestration

Three Months Ended April 30,

Three Months Ended July 31,

2023 2022 $ Change % Variance

6 unchanged sentences

Operating income margin 13 % 12 %

Net sales decreased $20.9 million, or 12%, for the three months ended April 30, 2023 compared to the same period in 2022, which was primarily driven by a $33.1 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, customer destocking, and a decrease in price and raw material surcharges of $5.6 million, partially offset by a $17.8 million contribution from the addition of LMI in 2023.

Net s ales decreased $7.7 million, or 4%, for the three months ended July 31, 2023 compared to the same period in 2022, which was primarily driven by a $22.3 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, and a decrease in price and raw material surcharges of $5.2 million, partially offset by a $19.8 million contribution from the addition of LMI in 2023.

Cost of Sales.

The cost of sales decreased $15.1 million, or 11%, for the three months ended April 30, 2023 compared to the same period in 2022.

The cost of sales decreased $7.8 million, or 5%, for the three months ended July 31, 2023 compared to the same period in 2022.

Cost of sales, including labor, decreased primarily due to lower volumes and deflation of raw materials during the period partially offset by LMI’s cost of sales in 2023.

Selling, General and Administrative.

S elling, general and administrative expenses increased $0.1 million, or 1%, for the three months ended April 30, 2023 compared to the sam e period in 2022, which was essentially flat year-over-year.

S elling, general and administrative expenses decreased $0.4 million, or 3%, for the three months ended July 31, 2023 compared to the same period in 2022 primarily due to decreases in labor costs and professional fees year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense increased $1.0 million, or 25%, for the three months ended April 30, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

Depreciation and amortization expense increased $1.0 million, or 24%, for the three months ended July 31, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

EU Fenestration

Three Months Ended April 30,

Three Months Ended July 31,

2023 2022 $ Change % Variance

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Operating income margin 24 % 15 %

Net sales decreased $9.7 million, or 13%, for the three months ended April 30, 2023 compared to the same period in 2022, which was primarily driven by a $7.7 million decrease in volumes largely due to softer market demand, a return to normal seasonality, customer destocking, and $4.8 million of foreign currency rate change, partially offset by $2.8 million of base price increases.

Net sales increased $0.3 million for the three months ended July 31, 2023 compared to the same period in 2022, w hich was primarily driven by a $2.2 million benefit from foreign currency rate change and $2.1 million of base price inc reases, partially offset by a $4.0 million decrease in volumes largely due to softer market demand, and a return to normal seasonality.

Cost of Sales.

The cost of sales decreased $9.3 million, or 19%, for the three months ended April 30, 2023 compared to the same period in 2022.

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

The cost of sales decreased $5.9 million, or 13%, for the three months ended July 31, 2023 compared to the same period in 2022.

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

Selling, General and Administrative.

Selling, general and administrative expense decreased $0.1 million, or 2%, for the three months ended April 30, 2023 compared to the same period in 2022.

The decrease is primarily due to a decrease in professional fees, labor costs and foreign currency impacts year-over-year.

Selling, general and administrative expense decreased $0.2 million, or 3%, for the three months ended July 31, 2023 compared to the same period in 2022.

The decrease is primarily due to a decrease in insurance expense and foreign currency impacts, partially offset by an increase in labor costs year-over-year.

NA Cabinet Components

Three Months Ended April 30,

Three Months Ended July 31,

2023 2022 $ Change Variance %

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Operating income margin 4 % 3 %

N et sales decreased $19.4 million, or 27%, for the three months ended April 30, 2023 compared to the same period in 2022, which was driven by an $18.1 million decrease in volumes due to softer market demand driven by weaker consumer confidence and a $1.3 million decrease in price and raw material indexes.

N et sales decreased $17.1 million, or 24%, for the three months ended July 31, 2023 compared to the same period in 2022, which was driven by an $11.5 million decrease in volumes due to softer market demand driven by weaker consumer confidence and a $5.6 million decrease in price and raw material indexes.

Cost of Sales .

Cost of sales decreased $19.4 million, or 31%, for the three months ended April 30, 2023 compared to the same period in 2022.

Cost of sales decreased $16.6 million, or 27%, for the three months ended July 31, 2023 compared to the same period in 2022.

Cost of sales decreased primarily due to lower volumes during the period and lumber price deflation.

Selling, General and Administrative .

Selling, general and administrative expense increased $0.8 million, or 14%, for the three months ended April 30, 2023 compared to the same period in 2022.

The increase is primarily due to a loss on an asset caused by wind damage to a manufacturing facility and an increase in professional fees partially offset by a decrease in labor costs.

Selling, general and administrative expense decreased $0.2 million, or 4%, for the three months ended July 31, 2023 compared to the same period in 2022 primarily due to a decrease in labor costs year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense decreased $0.9 million , or 24% , for the three months ended April 30, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to

existing assets.

Depreciation and amortization expense decreased $0.2 million , or 6% , for the three months ended July 31, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to existing assets.

Unallocated Corporate & Other

Three Months Ended April 30,

Three Months Ended July 31,

2023 2022 $ Change Variance %

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Depreciation and amortization 45 90 (45) 50%

Operating income (loss) $ 689 $ (835) $ 1,524 183%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended April 30, 2023 and 2022.

Operating loss $ (3,626) $ (1,198) $ (2,428) (203)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the three months ended July 31, 2023 and 2022.

Cost of Sales .

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Selling, General and Administrative .

Selling, general and administrative expenses decreased $1.4 million, or 622%, for the three months ended April 30, 2023 compared to the same period in 2022.

This decrease is primarily attributable to a decrease in medical expense claims and lower compensation expense including the valuations of our stock-based compensation awards during the three months ended April 30, 2023 as compared to the prior year period.

Selling, general and administrative expenses increased $2.5 million, or 433%, for the three months ended July 31, 2023 compared to the same period in 2022.

This increase is primarily attributable to an increase in medical claims expense and higher compensation expense including the valuations of our stock-based compensation awards during the three months ended July 31, 2023 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $1.6 million for the three months ended April 30, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Interest expense increased $1.3 million for the three months ended July 31, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Income Taxes .

We recorded inco me tax expense of $5.6 million on pre-tax income of $27.1 million for the three months ended April 30, 2023, an effective rate of 20.5%, and 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%.

The decrease in income tax expense year-over-year was primarily driven by the decrease in pre-tax book income during the three months ended April 30, 2023, relative to the three months ended April 30, 2022.

Six Months Ended April 30, 2023 Compared to Six Months Ended April 30, 2022

Six Months Ended April 30,

We recorded inco me tax expense of $4.1 million on pre-tax income of $35.8 million for the three months ended July 31, 2023, an effective rate of 11.5%, and income 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%.

The decrease in income tax expense year-over-year was primarily driven by a benefit for tax provision accrual to tax return filings, as well as a shift of income to lower tax jurisdictions.

Nine Months Ended July 31, 2023 Compared to Nine Months Ended July 31, 2022

Nine Months Ended July 31,

2023 2022 Change $ % Variance

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NA Fenestration

Six Months Ended April 30,

Nine Months Ended July 31,

2023 2022 $ Change % Variance

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Operating income margin 10 % 11 %

Ne t sales decreased $14.6 million, or 4%, for the six months ended April 30, 2023 compared to the same period in 2022, which was primarily driven by a $48.3 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, customer destocking, and an decrease in price and raw material surcharges of $0.5 million, partially offset by a $34.2 million contribution from the addition of LMI in 2023.

Ne t sales decreased $22.2 million, or 4%, for the nine months ended July 31, 2023 compared to the same period in 2022, which was primarily driven by a $70.5 million decrease in volumes mainly due to softer market demand, a return to normal seasonality, customer destocking, and a decrease in price and raw material surcharges of $5.7 million, partially offset by a $54.0 million contribution from the addition of LMI in 2023.

Cost of Sales.

The cost of sales decreased $6.3 million, or 3%, for the six months ended April 30, 2023 as compared to the same period in 2022.

The cost of sales decreased $14.2 million, or 4%, for the nine months ended July 31, 2023 as compared to the same period in 2022.

Cost of sales, including labor, decreased primarily due to lower volumes and deflation of raw materials during the period partially offset by LMI’s cost of sales in 2023.

Selling, General and Administrative.

S elling, general and administrative expenses decreased $1.0 million, or 4%, for the six months ended April 30, 2023 as compared to the same period in 2022.

This decrease was primarily due to a decrease in labor costs year-over-year.

S elling, general and administrative expenses decreased $1.4 million, or 3%, for the nine months ended July 31, 2023 as compared to the same period in 2022 primarily due to decreases in labor costs and professional fees year-over-year.

Depreciation and Amortization.

Depreciation and amortization expense increased $2.1 million, or 26%, for the six months ended April 30, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

Depreciation and amortization expense increased $3.1 million, or 25%, for the nine months ended July 31, 2023 as compared to the same period in 2022, primarily due to the acquisition of LMI’s property, plant and equipment and intangible assets.

EU Fenestration

Six Months Ended April 30,

Nine Months Ended July 31,

2023 2022 $ Change Variance %

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Operating income margin 19 % 15 %

Net sales decreased $13.6 million, or 10%, comparing the six months ended April 30, 2023 to the same period in 2022, which was primarily driven by a $12.0 million decrease in volumes largely due to softer market demand, a return to normal seasonality, customer destocking, and $10.8 million of foreign currency rate change, partially offset by $9.2 million of base price increases.

Net sales decreased $13.4 million, or 7%, comparing the nine months ended July 31, 2023 to the same period in 2022, which was primarily driven by a $16.1 million decrease in volumes largely due to softer market demand, a return to normal seasonality, and customer destocking, and $8.6 million of foreign currency rate change, partially offset by $11.3 million of base price increases.

Cost of Sales.

The cost of sales decreased $12.8 million, or 14%, for the six months ended April 30, 2023 compared to the same period in 2022.

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

The cost of sales decreased $18.7 million, or 14%, for the nine months ended July 31, 2023 compared to the same period in 2022.

Cost of sales decreased primarily due to a decrease in volumes, deflation in the price of raw materials and foreign currency impacts.

Selling, General and Administrative.

Selling, general and administrative expense increased $0.1 million, for the six months ended April 30, 2023 compared to the same period in 2022, which was essentially flat year-over-year.

Selling, general and administrative expense decreased $0.2 million, or 1%, for the nine months ended July 31, 2023 compared to the same period in 2022.

The decrease is primarily due to a decrease in professional fees and foreign currency impacts, partially offset by an increase in labor costs year-over-year.

NA Cabinet Components

Six Months Ended April 30,

Nine Months Ended July 31,

2023 2022 $ Change Variance %

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Depreciation and amortization 8,988 10,653 (1,665) 16%

Operating loss $ (343) $ (885) $ 542 61%

Operating loss margin — % (1) %

Net sales decreased $27.0 million, or 20%, for the six months ended April 30, 2023 compared to the same period in 2022, which was driven by a $29.1 million decrease in volumes due to softer market demand driven by weaker consumer confidence partially offset by a $2.1 million increase in price and raw material indexes.

Operating income $ 1,928 $ 1,444 $ 484 34%

Operating income margin 1 % 1 %

Net sales decreased $44.1 million, or 21%, for the nine months ended July 31, 2023 compared to the same period in 2022, which was driven by a $40.6 million decrease in volumes due to softer market demand driven by weaker consumer confidence partially offset by a $3.5 million decrease in raw material indexes.

Cost of Sales .

Cost of sales decreased $26.5 million, or 22%, for the six months ended April 30, 2023 compared with the same period in 2022, primarily as a result of lower volumes year-over-year and lumber price deflation.

Cost of sales decreased $43.1 million, or 24%, for the nine months ended July 31, 2023 compared with the same period in 2022, primarily as a result of lower volumes year-over-year and lumber price deflation.

Selling, General and Administrative .

Selling, general and administrative expense increased $0.4 million, or 3%, for the six months ended April 30, 2023 compared to the same period in 2022 primarily due to a loss on an asset caused by wind damage to a manufacturing facility and an increase in professional fees partially offset by a decrease in labor costs.

Selling, general and administrative expense increased $0.1 million, or 1%, for the nine months e nded July 31, 2023 compared to the same period in 2022.

This increase is primarily due to a the loss on an asset caused by wind damage to a manufacturing facility and an increase in professional fees partially offset by a decrease in labor costs.

Depreciation and Amortization.

Depreciation and amortization expense decreased $1.5 million , or 20%, for the six months ended April 30, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to

existing assets.

Depreciation and amortization expense decreased $1.7 million , or 16%, for the nine months ended July 31, 2023 as compared to the same period in 2022, reflecting the run-off of depreciation expense related to existing assets.

Unallocated Corporate & Other

Six Months Ended April 30,

Nine Months Ended July 31,

2023 2022 $ Change Variance %

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Operating loss $ (14,464) $ (6,420) $ (8,044) (125)%

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the six months ended April 30, 2023 and 2022.

Net sales for Unallocated Corporate & Other represents the elimination of inter-segment sales for the nine months ended July 31, 2023 and 2022.

Cost of Sales .

1 unchanged sentence

Selling, General and Administrative .

Selling, general and administrative expenses increased $5.8 million, or 140%, for the six months ended April 30, 2023 compared to the same period in 2022.

This increase is primarily attributable an increase in transaction fees and compensation expense including the valuations of our stock-based compensation awards, partially offset by a decrease related to medical expense claims during the six months ended April 30, 2023 as compared to the prior year period.

Selling, general and administrative expenses increased $8.3 million, or 177%, for the nine months ended July 31, 2023 compared to the same period in 2022.

This increase is primarily attributable to an increase in transaction fees and compensation expense including the valuations of our stock-based compensation awards during the nine months ended July 31, 2023 as compared to the prior year period.

Changes related to Non-Operating Items:

Interest Exp ense .

Interest expense increased $3.4 million for the six months ended April 30, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Interest expense increased $4.7 million for the nine months ended July 31, 2023 compared to the same period in 2022 as a result of higher borrowings outstanding during the period and an increase in interest rates.

Income Taxes .

We recorded income tax expense of $6.0 million on pre-tax income of $29.4 million for the six months ended April 30, 2023, an effective rate of 20.4%, and income tax expense of $10.3 million on a pre-tax income of $48.1 million for the six months ended April 30, 2022, an effective rate of 21.4%.

The decrease in income tax expense year-over-year was primarily driven by the decrease in pre-tax book income during the six months ended April 30, 2023, relative to the six months ended April 30, 2022.

We recorded income tax expense of $10.1 million on pre-tax income of $65.2 million for the nine months ended July 31, 2023, an effective rate of 15.5%, and income tax expense of $18.1 million on a pre-tax income of $81.8 million for the nine months ended July 31, 2022, an effective rate of 22.1%.

The decrease in income tax expense year-over-year was primarily driven by a benefit for tax provision accrual to tax return filings, as well as a shift of income to lower tax jurisdictions.

Liquidity and Capital Resources

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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 six months ended April 30, 2023 was RFR Rate + 1.25%.

The applicable rate during the nine months ended July 31, 2023 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.

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For further details of the Credit Facility, refer to Note 6, “Debt and Finance Lease Obligations” to the accompanying unaudited condensed consolidated financial statements contained elsewhere herein.

As of April 30, 2023, we had $43.5 million of cash and equivalents, $80.0 million outstanding under the Credit Facility, $5.1 million of outstanding letters of credit and $55.6 million outstanding under finance leases and other debt.

As of July 31, 2023, we had $73.3 million of cash and equivalents, $55.0 million outstanding under the Credit Facility, $5.1 million of outstanding letters of credit and $55.8 million outstanding under finance leases and other debt.

Of the $55.8 million outstanding under finance leases and other debt, $52.9 million relates to real estate leases.

We had $239.9 million available for use under the Credit Facility at April 30, 2023.

We repatriated $21.2 million and $4.1 million of f oreign cash during the six months ended April 30, 2023 and 2022, respectively.

We had $264.9 million available for use under the Credit Facility at July 31, 2023.

During December 2021, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to $75.0 million worth of shares of our common stock.

Repurchases under the program will be made in open market transactions or privately negotiated transactions, subject to market conditions, applicable legal requirements and other relevant factors.

During the three months ended July 31, 2023, we did not purchase any shares under this program and as of July 31, 2023 we had a maximum of $62.8 million available to purchase shares under this program.

The program does not have an expiration date or a limit on the number of shares that may be purchased.

We repatriated $30.2 million and $18.2 million of f oreign cash during the nine months ended July 31, 2023 and 2022, 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, 2023 and 2022:

Six Months Ended

The following table summarizes our cash flow results for the nine months ended July 31, 2023 and 2022:

Nine Months Ended

(Dollars in thousands)

Cash provided by (used for) operating activities $ 38,460 $ (1,881)

Cash provided by operating activities $ 102,559 $ 49,854

Cash used for investing activities $ (113,569) $ (19,354)

Cash provided by financing activities $ 54,313 $ 16,502

Cash provided by (used for) financing activities $ 26,687 $ (17,937)

Operating A ctivities .

Cash provided by operating activities increased $40.3 million for the six months ended April 30, 2023 compared to the six months ended April 30, 2022.

Cash provided by operating activities increased $52.7 million for the nine months ended July 31, 2023 compared to the nine months ended July 31, 2022.

The increase in operating cash flows is primarily due to favorable changes to working capital partially offset by lower net income year-over-year due to a decrease in customer demand.

The favorable changes in working capital were largely driven by an increase in inventory value due to raw material price inflation and a decrease in accounts receivable partially offset by a decrease in accounts payable.

The favorable changes in working capital were largely driven by a decrease in inventory value due to raw material price deflation and a decrease in accounts receivable partially offset by a decrease in accounts payable.

Investing Activities.

Cash used f or investing activities increased $92.5 million for the six months ended April 30, 2023 compared to the same period in 2022, primarily as a result of the Acquisition of LMI.

Cash used f or investing activities increased $94.2 million for the nine months ended July 31, 2023 compared to the same period in 2022, primarily as a result of the Acquisition of LMI.

Financing Activities.

Cash provided by financing activities was $54.3 million for the six months ended April 30, 2023, which included $65.7 million of net borrowings of long-term debt, $5.6 million related to the purchase of treasury stock $5.3 million of dividends paid to our shareholders, and $0.6 million of payroll tax paid to settle shares forfeited upon vesting of stock.

Cash provided by financing activities was $26.7 million for the nine months ended July 31, 2023, which included $40.0 million of net borrowings of long-term debt, $8.0 million of dividends paid to our shareholders, and $5.6 million related to the purchase of treasury stock.

Liquidity Requirements

1 unchanged sentence

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

During the six months ended April 30, 2023 and 2022, we repatriated $21.2 million and $4.1 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $13.1 million as of April 30, 2023.

During the nine months ended July 31, 2023 and 2022, we repatriated $30.2 million and $18.2 million, respectively, of foreign earnings from our foreign locations.

We maintain cash balances in foreign countries which total $21.2 million as of July 31, 2023.

Critical Accounting Policies and Estimates

7 unchanged sentences

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, 2022.

Our critical accounting policies and estimates have not changed materially during the six months ended April 30, 2023.

Our critical accounting policies and estimates have not changed materially during the nine months ended July 31, 2023.

New Accounting Pronouncements

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, 2023.

As of April 30, 2023, 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, 2023.

As of July 31, 2023, 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