What changed in this filing

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Item 1. Financial Statements

2024-06-07 compared with 2024-03-08 · 242 added, 99 removed, 557 unchanged (38% 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,

2024 2023 2024 2023

(In thousands, except per share amounts)

20 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

(In thousands)

1 unchanged sentence

Other comprehensive income:

Foreign currency translation gain 6,081 11,372

Other comprehensive income 6,081 11,372

Foreign currency translation (loss) gain ( 2,571 ) 3,082 3,510 14,454

Other comprehensive (expense) income ( 2,571 ) 3,082 3,510 14,454

Comprehensive income $ 12,806 $ 24,594 $ 25,136 $ 37,875

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

12 unchanged sentences

Decrease in accrued liabilities ( 4,602 ) ( 14,407 )

Increase in income taxes payable 264 536

Decrease (increase) in income taxes receivable 1,856 ( 1,754 )

Increase in deferred pension benefits — 17

14 unchanged sentences

Payroll tax paid to settle shares forfeited upon vesting of stock ( 1,193 ) ( 567 )

Purchase of treasury stock — ( 5,593 )

Cash (used for) provided by financing activities ( 21,887 ) 54,313

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended January 31, 2024 Common

Three Months Ended April 30, 2024 Common

Stock Additional

16 unchanged sentences

Balance at January 31, 2024 $ 371 $ 248,715 $ 412,922 $ ( 32,060 ) $ ( 74,919 ) $ 555,029

Three Months Ended January 31, 2023 Common

Net income — — 15,377 — — 15,377

Foreign currency translation adjustment — — — ( 2,571 ) — ( 2,571 )

Common dividends ($ 0.08 per share)

— — ( 2,649 ) — — ( 2,649 )

Stock-based compensation activity:

Expense related to stock-based compensation — 782 — — — 782

Stock options exercised — 5 — — 149 154

Balance at April 30, 2024 $ 371 $ 249,502 $ 425,650 $ ( 34,631 ) $ ( 74,770 ) $ 566,122

Three Months Ended April 30, 2023 Common

Stock Additional

16 unchanged sentences

Balance at January 31, 2023 $ 372 $ 249,730 $ 336,704 $ ( 38,050 ) $ ( 73,068 ) $ 475,688

Net income — — 21,512 — — 21,512

Foreign currency translation adjustment — — — 3,082 — 3,082

Common dividends ($ 0.08 per share)

— — ( 2,659 ) — — ( 2,659 )

Purchase of treasury stock — — — — ( 5,593 ) ( 5,593 )

Stock-based compensation activity:

Expense related to stock-based compensation — 719 — — — 719

Other — ( 22 ) — — — ( 22 )

Balance at April 30, 2023 $ 372 $ 250,427 $ 355,557 $ ( 34,968 ) $ ( 78,661 ) $ 492,727

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

59 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our product sales for the three months ended January 31, 2024 and 2023 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, 2024 and 2023 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 12, “Segment Information.”

Three Months Ended

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

(In thousands)

27 unchanged sentences

Related Parties

N et sales include transactions with a customer which is a related party with one of our non-employee directors for the three months ended January 31, 2024 and 2023 of approxim ately $ 0.2 million, respectively .

N et sales include transactions with a customer which is a related party with one of our non-employee directors for the six months ended April 30, 2024 and 2023 of approxim ately $ 0.5 million and $ 0.6 million, respectively .

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.

7 unchanged sentences

In connection with the Acquisition, we amended our existing financ e lease with Lauren Real Estate Holding LLC for the purpose of adding an additional lease renewal option and increasing rental space by approximately 60,000 square feet of rental space which was added to the 313,595 square feet of rentable area located in Cambridge, Ohio.

Inventories consisted of the following at January 31, 2024 and October 31, 2023 (in thousands):

Inventories consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):

2024 October 31,

4 unchanged sentences

Fixed costs related to excess manufacturing capacity, if any, have been expensed in the period they were incurred and, therefore, are not capitalized into inventory.

We recognize a right-of-use (ROU) asset and lease liability for each operating and finance lease with a contractual term greater than 12 months at the time of lease inception.

We include ROU assets and lease liabilities for leases that exist within other contracts.

Leases with an original term of 12 months or less are not recognized on the balance sheet, and the rent expense related to those short-term leases is recognized over the lease term.

We do not account for lease and non-lease (e.g., common area maintenance) components of contracts separately for any underlying asset class.

We lease certain manufacturing plants, warehouses, office space, vehicles and equipment under finance and operating leases.

Lease commencement occurs on the date we take possession or control of the property or equipment.

Original terms for our real estate-related leases are generally between five years and twenty years .

Original terms for equipment-related leases, primarily manufacturing equipment and vehicles, are generally between one year and ten years .

Some of our leases also include rental escalation clauses.

Renewal options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital.

If readily determinable, the rate implicit in the lease is used to discount lease payments to present value;

however, substantially all of our leases do not provide a readily determinable implicit rate.

When the implicit rate is not determinable, our estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement.

Total lease costs recorded include fixed operating lease costs and variable lease costs.

Most of our real estate leases require we pay certain expenses, such as common area maintenance costs, of which the fixed portion is included in operating lease costs.

We recognize operating lease costs on a straight-line basis over the lease term.

In addition to the above costs, variable lease costs are recognized when probable and are not included in determining the present value of our lease liability.

The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date and initial direct costs.

For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method.

For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term.

Interest expense on each finance lease liability is recognized utilizing the effective interest method.

ROU assets are tested for impairment in the same manner as long-lived assets.

Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The table below presents the lease-related assets and liabilities recorded on the balance sheet at April 30, 2024 and October 31, 2023 (in thousands):

Leases Classification April 30,

2024 October 31,

Operating lease assets Operating lease right-of-use assets $ 65,019 $ 46,620

Finance lease assets Property, plant and equipment (less accumulated depreciation of $ 8,528 and $ 6,691 )

60,135 58,496

Total lease assets $ 125,154 $ 105,116

Operating Current operating lease liabilities $ 6,433 $ 7,224

Finance Current maturities of long-term debt 2,957 2,676

Operating Noncurrent operating lease liabilities 59,965 40,361

Finance Long-term debt 52,260 52,309

Total lease liabilities $ 121,615 $ 102,570

The table below presents the components of lease costs for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

Operating lease cost

$ 2,520 $ 2,239 $ 4,953 $ 4,408

Finance lease cost

Amortization of leased assets 907 815 1,781 1,614

Interest on lease liabilities 618 602 1,231 1,202

Variable lease costs

487 467 938 790

Total lease cost $ 4,532 $ 4,123 $ 8,903 $ 8,014

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The table below presents supplemental cash flow information related to leases for the six months ended April 30, 2024 and 2023 was as follows (in thousands):

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

Finance leases - financing cash flows $ 1,382 $ 1,145

Finance leases - operating cash flows $ 1,231 $ 1,202

Operating leases - operating cash flows $ 4,550 $ 4,513

Right-of-use assets obtained in exchange for lease liabilities:

Operating leases $ 21,834 $ 2,169

Finance leases $ 1,228 $ 25,206

The table below presents the weighted-average remaining lease terms and weighted-average discount rates for the Company's leases as of April 30, 2024 and October 31, 2023:

2024 October 31,

Weighted-average remaining lease term (in years)

Operating leases 10.8 10.7

Financing leases 18.0 18.7

Weighted-average discount rate

Operating leases 4.62 % 4.09 %

Financing leases 4.56 % 4.52 %

The table below presents the maturity of the lease liabilities as of April 30, 2024 (in thousands):

Operating Leases Finance Leases

2024 (remaining six months) $ 4,580 $ 2,687

2025 9,198 5,295

2026 9,055 5,136

2027 8,064 4,980

2028 7,248 4,817

Thereafter 48,531 58,406

Total lease payments 86,676 81,321

present value discount 20,278 26,104

Total lease liabilities $ 66,398 $ 55,217

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended January 31, 2024 was as follows (in thousands):

Three Months Ended

January 31, 2024

The change in the carrying amount of goodwill for the six months ended April 30, 2024 was as follows (in thousands):

Six Months Ended

April 30, 2024

Beginning balance as of November 1, 2023 $ 182,956

2 unchanged sentences

At our last annual test date, August 31, 2023, 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 for all reporting units during the three months ended January 31, 2024 and determined that there were no triggering events.

We evaluated for indicators of impairment for all reporting units during the three and six months ended April 30, 2024 and determined that there were no triggering events.

For additional discussion of change in reporting units and a summary of the change in the carrying amount of goodwill by segment, see Note 12, “Segment Information.”

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Identifiable Intangible Assets

Amortizable intangible assets consisted of the following as of January 31, 2024 and October 31, 2023 (in thousands):

January 31, 2024 October 31, 2023

Amortizable intangible assets consisted of the following as of April 30, 2024 and October 31, 2023 (in thousands):

April 30, 2024 October 31, 2023

Gross Carrying

6 unchanged sentences

Total $ 239,604 $ 170,937 $ 238,275 $ 164,160

We had aggregate amortization expense related to intangible assets for the three months ended January 31, 2024 of $ 3.2 million and $ 3.1 million for the comparable prior year period.

Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for future fiscal years as of January 31, 2024 (in thousands):

We had aggregate amortization expense related to intangible assets for the three and six months ended April 30, 2024 of $ 3.0 million and $ 6.2 million, respectively, and $ 3.0 million and $ 6.1 million for the comparable prior year periods.

Estimated remaining amortization expense, assuming current intangible balances and no new acquisitions, for future fiscal years as of April 30, 2024 (in thousands):

Amortization Expense

2024 (remaining nine months) $ 8,540

2024 (remaining six months) $ 5,561

Thereafter 27,804

Total $ 68,667

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Debt and Finance Lease Obligations

Long-term debt consisted of the following at January 31, 2024 and October 31, 2023 (in thousands):

Long-term debt consisted of the following at April 30, 2024 and October 31, 2023 (in thousands):

2024 October 31,

13 unchanged sentences

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The applicable margin and commitment fees are outlined in the following table:

12 unchanged sentences

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

As of January 31, 2024, we had $ 10.0 million of borrowings outstanding under the Credit Facility (reduced by unamortized debt issuance costs of $1.1 million), $ 5.1 million of outstanding letters of credit and $ 55.2 million outstanding primarily under finance leases and other debt.

We had $ 309.9 million available for use under the Credit Facility at January 31, 2024.

Outstanding borrowings under the Credit Facility accrue interest at 6.68 % per annum.

Our weighted-average borrowing rate for borrowings outstanding during the three months ended January 31, 2024 and 2023 was 6.69 % and 5.43 %, respectively.

We were in compliance with our debt covenants as of January 31, 2024.

As of April 30, 2024, we had no borrowings outstanding under the Credit Facility, unamortized debt issuance costs of $1.0 million, $ 3.7 million of outstanding letters of credit and $ 55.2 million outstanding primarily under finance leases and other

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

We had $ 321.3 million available for use under the Credit Facility at April 30, 2024.

Our weighted-average borrowing rate for borrowings outstanding during the six months ended April 30, 2024 and 2023 was 6.69 % and 5.71 %, respectively.

We were in compliance with our debt covenants as of April 30, 2024.

Retirement Plans

2 unchanged sentences

2023, we terminated our defined contribution plan and settled the obligation during the three months ended October 31, 2023.

The net periodic pension (benefit) cost for this plan for the three months ended January 31, 2024 and 2023 was as follows (in thousands):

Three Months Ended

The net periodic pension (benefit) cost for this plan for the three and six months ended April 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

Service cost $ — $ 96 $ — $ 192

5 unchanged sentences

We also have a supplemental benefit plan covering certain executive officers and key employees and a non-qualified deferred compensation plan covering members of the Board of Directors and certain key employees.

As of January 31, 2024 and October 31, 2023, our liability under the supplemental benefit plan was approximately $ 2.0 million.

As of April 30, 2024 and October 31, 2023, our liability under the supplemental benefit plan was approximately $ 2.0 million.

During the year ended October 31, 2023, the supplemental benefit plan was terminated.

Benefits associated with this plan will be distributed in June 2024 in accordance with Internal Revenue Service regulations.

As of January 31, 2024 and October 31, 2023, the liability associated with the deferred compensation plan was approximately $ 4.5 million and $ 3.9 million, respectively.

As of April 30, 2024 and October 31, 2023, the liability associated with the deferred compensation plan was approximately $ 4.7 million and $ 3.9 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 three months ended January 31, 2024 and 2023 were 20.8 % and 19.2 %, respectively.

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

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 increases or decreases in valuation allowances on deferred tax assets.

Our estimated annual effective tax rates from continuing operations for the six months ended April 30, 2024 and 2023 were 21.6 % and 19.7 %, respectively.

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

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

state tax, non-U.S.

state taxes, a non-U.S.

tax rate differential and other permanent differences.

The primary discrete items affecting the 2024 effective rate were the benefit of $ 0.4 million related to the vesting or exercise of equity-based compensation awards, and a charge of $ 0.6 million related to the true up of the deferred tax rate.

The primary discrete item affecting the 2023 effective rate was a benefit of $ 0.2 million related to foreign entities true up.

As of January 31, 2024, our liability for uncertain tax positions (UTP) of $ 0.3 million relates to certain U.S.

The primary discrete item affecting the 2023 effective rate was a benefit of $ 0.2 million related to the rate change on deferred taxes.

As of April 30, 2024, our liability for uncertain tax positions (UTP) of $ 0.3 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.

2 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 $ 0.6 million as of January 31, 2024 and October 31, 2023, respectively.

We maintain a valuation allowance for certain state net operating losses which totaled $ 0.6 million as of April 30, 2024 and October 31, 2023, respectively.

QUANEX BUILDING PRODUCTS CORPORATION

27 unchanged sentences

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 January 31, 2024, and October 31, 2023 (Level 2 measurement).

As a result, the fair value of our debt instrument approximates carrying value at April 30, 2024, and October 31, 2023 (Level 2 measurement).

QUANEX BUILDING PRODUCTS CORPORATION

2 unchanged sentences

For further information, refer to Note 11, “Stock-Based Compensation - Performance Share Awards.”

We used recognized valuation techniques to determine the preliminary fair value of the assets and liabilities, including the excess earnings method for customer relationships and relief from royalty method for trade names and other technology with a discount rate that reflects the risk of the expected future cash flows (Level 3 measurement).

For further information, refer to Note 2, “Acquisition.”

Stock-Based Compensation

12 unchanged sentences

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, 2024 is presented below:

A summary of non-vested restricted stock awards activity during the six months ended April 30, 2024 is presented below:

Restricted Stock Awards Weighted-Average

4 unchanged sentences

Vested ( 66,600 ) 20.68

Non-vested at January 31, 2024 236,800 $ 25.85

The total weighted-average grant-date fair value of restricted stock awards that vested during each of the three months ended January 31, 2024 and 2023 was $ 1.4 million and $ 0.9 million, respectively.

As of January 31, 2024, total unrecognized compensation cost related to unamortized restricted stock awards was $ 4.0 million.

Non-vested at April 30, 2024 236,800 $ 25.85

The total weighted-average grant-date fair value of restricted stock awards that vested during each of the six months ended April 30, 2024 and 2023 was $ 1.4 million and $ 0.9 million, respectively.

As of April 30, 2024, total unrecognized compensation cost related to unamortized restricted stock awards was $ 3.5 million.

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

5 unchanged sentences

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

increase in additional paid-in-capital.

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 recognize stock option expense ratably over the shorter of the vesting period or the period from the grant-date to the retirement-eligibility date.

1 unchanged sentence

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, 2023.

The following table summarizes our stock option activity for the three months ended January 31, 2024:

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our stock option activity for the six months ended April 30, 2024:

Stock Options Weighted-Average

4 unchanged sentences

Exercised ( 28,280 ) 19.58

Outstanding at January 31, 2024 87,250 $ 19.43 2.2 $ 1,028

Vested at January 31, 2024 87,250 $ 19.43 2.2 $ 1,028

Exercisable at January 31, 2024 87,250 $ 19.43 2.2 $ 1,028

Outstanding at April 30, 2024 79,250 $ 19.45 2.0 $ 1,092

Vested at April 30, 2024 79,250 $ 19.45 2.0 $ 1,092

Exercisable at April 30, 2024 79,250 $ 19.45 2.0 $ 1,092

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, 2024 and 2023 was $ 0.2 million and less than $ 0.1 million, respectively.

The total intrinsic value of stock options exercised during the six months ended April 30, 2024 and 2023 was $ 0.4 million and less than $ 0.1 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, 2024 and 2023, non-employee directors received 26,215 and 38,704 restricted stock units, respectively, at a weighted-average grant date fair value of $ 26.70 per share and $ 20.67 per share, respectively, which vested immediately.

During the three months ended January 31, 2023, 21,774 restricted stock units, which were awarded to key employees, vested.

D uring the three months ended January 31, 2024, we paid $ 0.1 million and $ 0.4 million for the comparable prior year to settle vested restricted stock units.

During the six months ended April 30, 2024 and 2023, non-employee directors received 26,215 and 38,704 restricted stock units, respectively, at a weighted-average grant date fair value of $ 26.70 per share and $ 20.67 per share, respectively, which vested immediately.

During the six months ended April 30, 2023, 21,774 restricted stock units, which were awarded to key employees, vested.

D uring the six months ended April 30, 2024, we paid $ 0.6 million and $ 0.4 million for the comparable prior year to settle vested restricted stock units.

Performance Share Awards

8 unchanged sentences

December 7, 2023 72,200 $ 32.15 —

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In December 2023, 122,400 shares vested pursuant to the December 2020 grant, which were settled with a cash payment of $ 3.4 million.

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Performance Restricted Stock Units

16 unchanged sentences

December 7, 2023 40,700 $ 30.35 —

During the three months ended January 31, 2024 , 49,228 performance restricted stock units vested.

During the six months ended April 30, 2024 , 49,228 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, 2024, we have de emed 58,957 shares related to the December 2021 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, 2024 and 2023 (in thousands):

Three Months Ended

As of April 30, 2024, we have de emed 65,669 shares related to the December 2021 grant of performance restricted stock units as probable to vest.

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, 2024 and 2023 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

Restricted stock awards $ 502 $ 464 $ 819 $ 902

3 unchanged sentences

Total compensation expense $ 1,493 $ 360 $ 4,069 $ 5,169

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Treasury Shares

We record treasury stock purchases under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.

Shares are generally issued from treasury stock at the time of grant of restricted stock awards, upon the exercise of stock options, and upon the vesting of performance shares and performance restricted stock units.

Shares are generally issued from treasury stock at the time of grant of restricted stock awards, upon the exercise of stock options, and upon the vesting of performance restricted stock units.

On the subsequent issuance of treasury shares, we record proceeds in excess of cost as an increase in additional paid in capital.

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, 2024.

The following table summarizes the treasury stock activity during the three months ended January 31, 2024:

Three Months Ended

January 31, 2024

There were no charges to retained earnings during the six months ended April 30, 2024.

The following table summarizes the treasury stock activity during the six months ended April 30, 2024:

Six Months Ended

April 30, 2024

Beginning Balance as of November 1, 2023 4,165,839

2 unchanged sentences

Stock options exercised ( 28,280 )

Balance at January 31, 2024 4,023,431

Balance at April 30, 2024 4,015,431

Segment Information

6 unchanged sentences

The accounting p olicies 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, 2024 was $ 7.3 million and $ 4.3 million for the comparable prior year period.

Corporate general and administrative expense allocated during the three and six month period ended April 30, 2024 was $ 6.9 million and $ 14.2 million, respectively, and $ 6.1 million and $ 10.8 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:

2 unchanged sentences

(3) similar types or classes of customers, namely the primary OEMs;

(4) similar distribution methods for product

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

delivery, although the extent of the use of third-party distributors will vary amongst the businesses;

(4) similar distribution methods for product delivery, although the extent of the use of third-party distributors will vary amongst the businesses;

(5) similar regulatory environment;

and (6) converging long-term economic similarities.

Segment information for the three months ended January 31, 2024 and 2023, and total assets as of January 31, 2024 and October 31, 2023 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, 2024 and 2023, and total assets as of April 30, 2024 and October 31, 2023 are summarized in the following table (in thousands):

NA Fenestration EU Fenestration NA Cabinet Components Unallocated Corp.

& Other Total

Three Months Ended January 31, 2024

Three Months Ended April 30, 2024

Net sales $ 159,774 $ 56,583 $ 51,078 $ ( 1,234 ) $ 266,201

2 unchanged sentences

Capital expenditures 5,739 605 1,099 160 7,603

Three Months Ended January 31, 2023

Three Months Ended April 30, 2023

Net sales $ 156,975 $ 63,763 $ 53,518 $ ( 721 ) $ 273,535

Depreciation and amortization 5,050 2,353 2,970 83 10,456

Operating income 15,295 12,506 846 689 29,336

Capital expenditures 4,859 1,100 1,481 52 7,492

Six Months Ended April 30, 2024

Net sales $ 307,769 $ 106,020 $ 94,215 $ ( 2,648 ) $ 505,356

Depreciation and amortization 10,693 5,096 6,147 110 22,046

Operating income (loss) 26,807 17,909 ( 3,491 ) ( 12,671 ) 28,554

Capital expenditures 11,460 2,406 2,935 382 17,183

As of January 31, 2024

Six Months Ended April 30, 2023

Net sales $ 309,955 $ 118,715 $ 108,192 $ ( 1,411 ) $ 535,451

Depreciation and amortization 10,295 4,701 5,904 176 21,076

Operating income (loss) 25,018 19,902 ( 343 ) ( 10,838 ) 33,739

Capital expenditures 8,472 3,056 3,341 205 15,074

As of April 30, 2024

Total assets $ 392,108 $ 239,277 $ 154,833 $ 50,995 $ 837,213

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Total assets $ 379,286 $ 239,333 $ 158,824 $ 53,700 $ 831,143

The following table summarizes the change in the carrying amount of goodwill by reportable business segment for the three months ended January 31, 2024 (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, 2024 (in thousands):

NA Fenestration EU Fenestration NA Cabinet Comp.

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Foreign currency translation adjustment — 1,525 — — 1,525

Balance as of January 31, 2024 $ 80,105 $ 66,187 $ 39,147 $ — $ 185,439

Balance as of April 30, 2024 $ 80,105 $ 65,229 $ 39,147 $ — $ 184,481

For further details of Goodwill, see Note 5, “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, 2024 and 2023 (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, 2024 and 2023 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

2024 2023 2024 2023

Operating income $ 20,637 $ 29,336 $ 28,554 $ 33,739

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We compute basic earnings per share by dividing net income by the weighted-average number of common shares outstanding during the period.

Diluted earnings per common and potential common shares include the weighted-average of additional shares associated with the incremental effect of dilutive employee stock options, non-vested restricted stock as

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

determined using the treasury stock method prescribed by U.S.

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

Basic and diluted earnings per share for the three months ended January 31, 2024 and 2023 were calculated as follows (in thousands, except per share data):

Basic and diluted earnings per share for the three and six months ended April 30, 2024 and 2023 were calculated as follows (in thousands, except per share data):

Net Income Weighted-Average Shares Per Share

Three Months Ended January 31, 2024

Three Months Ended April 30, 2024

Basic earnings per common share $ 15,377 32,870 $ 0.47

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Diluted earnings per common share $ 15,377 33,103 $ 0.46

Three Months Ended January 31, 2023

Three Months Ended April 30, 2023

Basic earnings per common share $ 21,512 32,858 $ 0.65

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Diluted earnings per common share $ 21,512 33,017 $ 0.65

Six Months Ended April 30, 2024

Basic earnings per common share $ 21,626 32,847 $ 0.66

Effect of dilutive securities:

Stock options — 37 —

Restricted stock awards — 126 —

Performance restricted stock units — 66 —

Diluted earnings per common share $ 21,626 33,076 $ 0.65

Six Months Ended April 30, 2023

Basic earnings per common share $ 23,421 32,905 $ 0.71

Effect of dilutive securities:

Stock options — 28 —

Restricted stock awards — 109 —

Performance restricted stock units — 28 —

Diluted earnings per common share $ 23,421 33,070 $ 0.71

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, 2024 and 2023.

There were no anti-dilutive instruments for the three and six months ended April 30, 2024 and 2023.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, 2024.

We did not adopt any new accounting pronouncements during the three and six months ended April 30, 2024.

Accounting Standards Not Yet Adopted

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We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

Subsequent Events

On April 22, 2024, we announced that we reached an agreement with Tyman plc, a company incorporated in England and Wales (LSE:TYMN) (“Tyman”) on the terms of a cash and share offer (the “Tyman Acquisition”), under which we will acquire the entire issued and to be issued share capital of Tyman for approximately $ 1.1 billion (based on the each of the £/US$ exchange rate and the Company’s last reported trading price as of April 19, 2024) in enterprise value.

Under the terms of the Tyman Acquisition, Tyman shareholders will be entitled to elect to receive:

(i) 240 pence in cash and 0.05715 of a share of Quanex common stock, par value of $0.01 per share, to be newly issued in connection with the Tyman Acquisition (the “New Quanex Shares”) for each Tyman ordinary share (such shares, the “Tyman Shares” and such option, the “Main Offer”) or (ii) under an alternative to the Main Offer, New Quanex Shares at an exchange ratio of 0.14288 of a New Quanex Share for each Tyman Share (such option, the “Capped All-Share Alternative”), provided that the Capped All-Share Alternative shall be made available for up to 25 % of the Tyman Shares outstanding.

The Tyman Acquisition will be implemented by means of a court-sanctioned scheme of arrangement under the UK Companies Act 2006, as amended (the” Scheme”).

The Tyman Acquisition has been unanimously approved by the Boards of Directors of both Quanex and Tyman and is currently expected to close in the second half of calendar year 2024, subject to the satisfaction of customary closing conditions, including shareholder approval from both Tyman and Quanex shareholders and regulatory approvals.

On May 2, 2024, we entered into a deal contingent foreign exchange forward currency contract to manage our exposure to foreign currency exchange rate fluctuations against the USD and GBP for approximately $ 605 million of the $1.1 billion purchase consideration for the proposed Tyman Acquisition.

This forward contract will expire if the Tyman Acquisition terminates or does not close by March 18, 2025.

This forward contract will be accounted for as a derivative and will be classified in other current assets and other current liabilities on the consolidated balance sheet, with changes in fair value recognized in the consolidated income statement.

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.

Cautionary Note Regarding Forward-Looking Statements

Certain of the statements contained in this document and in documents incorporated by reference herein, including those made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are “forward-looking” statements as defined under the Private Securities Litigation Reform Act of 1995.

Certain of the statements contained in this document and in documents incorporated by reference herein, including those made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” include “forward-looking” statements as defined under the Private Securities Litigation Reform Act of 1995.

Generally, the words “expect,” “believe,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature.

Forward looking statements are (1) all statements which address future operating performance, (2) events or developments that we expect or anticipate will occur in the future, including statements relating to volume, sales, operating income and earnings per share, and (3) statements expressing general outlook about future operating results.

Forward-looking statements are statements as to matters that are not historical facts, and include statements about our plans, objectives, expectations and intentions, including (1) all statements which address future operating performance, (2) events or developments that we expect or anticipate will occur in the future, including statements relating to the Tyman Acquisition and statements relating to volume, sales, operating income, and earnings per share, and (3) statements expressing general outlook about future operating results.

Forward-looking statements also include any statements relating to future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses, future prospects or business or management strategies, and the expansion and/or growth of the operations of the Company.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations.

As and when made, we believe that these forward-looking statements are reasonable.

As and when made, we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, provided, that we cannot give any assurance that such expectations will prove to be correct.

However, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur.

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• impacts from public health issues (including pandemics, such as the COVID-19 pandemic and quarantines) on the economy, demand for our products or our operations, including the responses of governmental authorities to contain such public health issues;

• uncertainty as to whether or when the Tyman Acquisition may be completed, if at all;

• our ability to integrate and implement our plans, forecasts and other expectations with respect to Tyman;

• changes in market conditio ns, particularly in the new home construction, and residential remodeling and replacement (R&R) activity markets in the United States, United Kingdom, Germany and elsewhere;

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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