What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-09-06 compared with 2024-06-07 · 178 added, 132 removed, 667 unchanged (32% of the section changed)

49 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended

April 30, April 30,

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

April 30, April 30,

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

2 unchanged sentences

Other comprehensive income:

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

Foreign currency translation gain, net of tax 4,500 3,078 8,010 17,532

Other comprehensive income, net of tax 4,500 3,078 8,010 17,532

Comprehensive income $ 29,850 $ 34,776 $ 54,986 $ 72,651

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(In thousands)

5 unchanged sentences

Deferred income tax ( 2,321 ) 177

Gain on deal contingent foreign exchange forward currency contract

Other, net 886 2,423

2 unchanged sentences

(Increase) decrease in inventory ( 183 ) 23,864

Increase in other current assets ( 1,124 ) ( 1,746 )

Decrease (increase) in other current assets 1,646 ( 439 )

Decrease in accounts payable ( 9,634 ) ( 15,471 )

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

Increase (decrease) in accrued liabilities 948 ( 5,152 )

Decrease (increase) in income taxes receivable 6,659 ( 3,534 )

18 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 935 2,482

Decrease in cash and cash equivalents ( 2,325 ) ( 11,597 )

Increase in cash and cash equivalents 35,492 18,159

Cash and cash equivalents at beginning of period 58,474 55,093

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended April 30, 2024 Common

Nine Months Ended July 31, 2024 Common

Stock Additional

24 unchanged sentences

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

Three Months Ended April 30, 2023 Common

Net income — — 25,350 — — 25,350

Foreign currency translation adjustment — — — 4,500 — 4,500

Common dividends ($ 0.08 per share)

— — ( 2,649 ) — — ( 2,649 )

Stock-based compensation activity:

Expense related to stock-based compensation — 794 — — — 794

Stock options exercised — 1 — — 18 19

Balance at July 31, 2024 $ 371 $ 250,297 $ 448,351 $ ( 30,131 ) $ ( 74,752 ) $ 594,136

Nine Months Ended July 31, 2023 Common

Stock Additional

25 unchanged sentences

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

Net income — — 31,698 — — 31,698

Foreign currency translation adjustment — — — 3,078 — 3,078

Common dividends ($ 0.08 per share)

— — ( 2,632 ) — — ( 2,632 )

Stock-based compensation activity:

Expense related to stock-based compensation — 430 — — — 430

Stock options exercised — 25 — — 629 654

Balance at July 31, 2023 $ 372 $ 250,882 $ 384,623 $ ( 31,890 ) $ ( 78,032 ) $ 525,955

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 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.

The following table summarizes our product sales for the three and nine months ended July 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.

For further details regarding our results by segment, refer to Note 13, “Segment Information.”

Three Months Ended Six Months Ended

April 30, April 30,

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

28 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 six months ended April 30, 2024 and 2023 of approxim ately $ 0.5 million and $ 0.6 million, respectively .

N et sales include transactions with a customer which is a related party with one of our non-employee directors for three and nine months ended July 31, 2024 of was $ 0.3 million and $ 0.8 million, respectively, and $ 0.3 million and $ 0.9 million for the comparable prior year periods.

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.

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and Meteor-US-Beteiligungs GMBH.

Under the Purchase Agreement, we acquired substantially all of the operating assets comprising LMI’s polymer mixing and rubber compound production business (collectively, the “Purchased Assets”) and also agreed to assume certain liabilities relating to the Purchased Assets (collectively, the “Acquisition”).

As consideration for the Purchased Assets, we paid $ 91.3 million in cash utilizing funds borrowed under our Credit Facility.

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 April 30, 2024 and October 31, 2023 (in thousands):

In connection with the LMI 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 July 31, 2024 and October 31, 2023 (in thousands):

2024 October 31,

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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,

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

Leases Classification July 31,

2024 October 31,

8 unchanged sentences

Total lease liabilities $ 120,541 $ 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,

The table below presents the components of lease costs for the three and nine months ended July 31, 2024 and 2023 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

9 unchanged sentences

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

The table below presents supplemental cash flow information related to leases for the nine months ended July 31, 2024 and 2023 (in thousands):

Nine Months Ended

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

5 unchanged sentences

Finance leases $ 1,308 $ 25,723

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:

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

2024 October 31,

5 unchanged sentences

Financing leases 4.69 % 4.52 %

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

The table below presents the maturity of the lease liabilities as of July 31, 2024 (in thousands):

Operating Leases Finance Leases

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

2024 (remaining three months) $ 2,341 $ 1,379

2025 9,299 5,436

9 unchanged sentences

Goodwill and Intangible Assets

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

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

Nine Months Ended

July 31, 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 and six months ended April 30, 2024 and determined that there were no triggering events.

We evaluated for indicators of impairment for all reporting units during the three and nine months ended July 31, 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 13, “Segment Information.”

Identifiable Intangible Assets

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

April 30, 2024 October 31, 2023

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

July 31, 2024 October 31, 2023

Gross Carrying

6 unchanged sentences

Total $ 241,035 $ 174,429 $ 238,275 $ 164,160

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):

We had aggregate amortization expense related to intangible assets for the three and nine months ended July 31, 2024 of $ 2.8 million and $ 9.0 million, respectively, and $ 3.0 million and $ 9.1 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 July 31, 2024 (in thousands):

Amortization Expense

2024 (remaining six months) $ 5,561

2024 (remaining three months) $ 2,797

Thereafter 28,195

3 unchanged sentences

Debt and Finance Lease Obligations

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

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

2024 October 31,

5 unchanged sentences

Long-term debt $ 51,406 $ 66,435

Revolving Credit Facility

On July 6, 2022, we entered into our Second Amended and Restated Credit Agreement (the “Credit Facility”) with Wells Fargo Securities, LLC, as Agent, Swingline Lender and Issuing Lender, and BofA Securities, Inc.

Credit Agreement

On August 1, 2024, we completed our previously announced acquisition (the “Tyman Acquisition”) of Tyman plc, a company incorporated in England and Wales (“Tyman”).

On June 12, 2024, in connection with the Tyman Acquisition, the Company, Wells Fargo Bank, National Association (“Wells Fargo Bank”, acting as agent, swingline lender and issuing lender, the “Agent”), the other entities therein specified in the capacities therein specified, and the lenders parties thereto, entered into an amendment to the Second Amended and Restated Credit Agreement, dated as of July 6, 2022 (the “Existing Credit Agreement”, and the Existing Credit Agreement as so amended, the “Amended Credit Agreement”).

The Amended Credit Agreement did not become effective until August 1, 2024 upon the completion the Tyman Acquisition.

For further information regarding the Tyman Acquisition and the Amended Credit Agreement, refer to Note 16, “Subsequent Events.”

On July 6, 2022, we entered into our Existing Credit Agreement with Wells Fargo Securities, LLC, as Agent, Swingline Lender and Issuing Lender, and BofA Securities, Inc.

serving as Syndication Agent.

1 unchanged sentence

This $ 325.0 million revolving credit facility has a five -year term, maturing on July 6, 2027, and replaces our previous credit facility.

Our previous credit facility is more fully described in our Annual Report on Form 10-K for the fiscal year ended October 31, 2023.

Interest payments for the Credit Facility are calculated, at our election and depending upon the Consolidated Net Leverage Ratio, at a Base Rate (as defined within the Credit Facility) plus an applicable margin or at the same rate as Risk-Free Rate (“RFR”) Loans for domestic borrowings or Eurocurrency Rate Loans plus an applicable margin.

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

Interest payments for the Existing Credit Agreement are calculated, at our election and depending upon the Consolidated Net Leverage Ratio, at a Base Rate (as defined within the Existing Credit Agreement) plus an applicable margin or at the same rate as Risk-Free Rate (“RFR”) Loans for domestic borrowings or Eurocurrency Rate Loans plus an applicable margin.

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

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

5 unchanged sentences

In the event of default, outstanding borrowings would accrue interest at the Default Rate, as defined, whereby the obligations will bear interest at a per annum rate equal to 2 % above the total per annum rate otherwise applicable.

The Credit Facility provides for incremental revolving credit commitments for a minimum principal amount of $ 10.0 million, up to an aggregate amount of $ 150.0 million or 100% of Consolidated EBITDA, subject to the lender's discretion to elect or decline the incremental increase.

We can also borrow up to the lesser of $ 15.0 million or the revolving credit commitment, as defined, under a Swingline feature of the Credit Facility.

The Credit Facility contains a:

The Existing Credit Agreement provides for incremental revolving credit commitments for a minimum principal amount of $ 10.0 million, up to an aggregate amount of $ 150.0 million or 100% of Consolidated EBITDA, subject to the lender's discretion to elect or decline the incremental increase.

We can also borrow up to the lesser of $ 15.0 million or the revolving credit commitment, as defined, under a Swingline feature of the Existing Credit Agreement.

The Existing Credit Agreement contains a:

(1) Consolidated Interest Coverage Ratio requirement whereby we must not permit the Consolidated Interest Coverage Ratio, as defined, to be less than 3.00 to 1.00, and (2) Consolidated Net Leverage Ratio requirement, whereby we must not permit the Consolidated Net Leverage Ratio, as defined, to be greater than 3.25 to 1.00.

In addition to maintaining these financial covenants, the Credit Facility also limits our ability to enter into certain business transactions, such as to incur indebtedness or liens, to acquire businesses or dispose of material assets, make restricted payments, pay dividends (limited to $ 25.0 million per year) and other transactions as further defined in the Credit Facility.

Some of these limitations, however, do not take effect so long as Consolidated Net Leverage Ratio is less than or equal to 2.75 to 1.00 and available liquidity exceeds $ 25.0 million.

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

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

In addition to maintaining these financial covenants, the Existing Credit Agreement also limits our ability to enter into certain business transactions, such as to incur indebtedness or liens, to acquire businesses or dispose of material assets, make

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.

restricted payments, pay dividends (limited to $ 25.0 million per year) and other transactions as further defined in the Existing Credit Agreement.

Some of these limitations, however, do not take effect so long as Consolidated Net Leverage Ratio is less than or equal to 2.75 to 1.00 and available liquidity exceeds $ 25.0 million.

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

As of July 31, 2024, we had no borrowings outstanding under the Existing Credit Agreement , unamortized debt issuance costs of $0.9 million, $ 3.7 million of outstanding letters of credit and $ 55.0 million outstanding primarily under finance leases and other debt.

We had $ 321.3 million available for use under the Existing Credit Agreement at July 31, 2024.

Our weighted-average borrowing rate for borrowings outstanding during the nine months ended July 31, 2024 and 2023 was 6.69 % and 5.91 %, respectively.

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

Retirement Plans

Our non-contributory, single employer defined benefit pension plan covered certain of our employees in the U.S.

During the year ended October 31.

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 and six months ended April 30, 2024 and 2023 was as follows (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

During the year ended October 31, 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 and nine months ended July 31, 2024 and 2023 was as follows (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

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

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

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 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.

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

As of July 31, 2024 and October 31, 2023, the liability associated with the deferred compensation plan was approximately $ 4.9 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.

1 unchanged sentence

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.

Our estimated annual effective tax rates from continuing operations for the nine months ended July 31, 2024 and 2023 were 21.2 % and 18.2 %, respectively.

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

3 unchanged sentences

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 $ 0.7 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 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.

The primary discrete item affecting the 2023 effective rate was a benefit of $ 1.7 million related to a true-up of tax provision accrual to tax return filings.

As of July 31, 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.

We include all interest and penalties related to uncertain tax benefits within our income tax provision account.

To the extent interest and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

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 April 30, 2024 and October 31, 2023, respectively.

To the extent interest

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

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 July 31, 2024 and October 31, 2023, respectively.

Contingencies

21 unchanged sentences

quoted prices for identical or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

inputs other than quoted prices that are observable for the

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

asset or liability (e.g., interest rates) and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

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

1 unchanged sentence

Our outstanding debt is variable rate debt that re-prices frequently, thereby limiting our exposure to significant change in interest rate risk.

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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, as part of the $ 1.1 billion purchase consideration for the Tyman Acquisition.

Our deal contingent forward contract is adjusted to fair value by recording gains and losses to “Other, net,” and we record the related asset to “Other Current Assets” in the accompanying condensed consolidated statement of income and condensed consolidated balance sheets, respectively.

During the three months ended July 31, 2024, we recognized a gain of $ 9.2 million related to this foreign exchange forward currency contract and the contract was concluded in August 2024 as a result of the completion of the Tyman Acquisition.

The value of our foreign exchange forward currency contract fluctuated based on exchange rate fluctuations against the USD and GBP (Level 2 measurement).

For further information regarding the Tyman Acquisition, refer to Note 16, “Subsequent Events.”

Our performance share awards are marked-to-market on a quarterly basis during a three-year vesting period based on market data (Level 2 measurement).

14 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 six months ended April 30, 2024 is presented below:

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of non-vested restricted stock awards activity during the nine months ended July 31, 2024 is presented below:

Restricted Stock Awards Weighted-Average

4 unchanged sentences

Vested ( 66,600 ) 20.68

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.

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

The total weighted-average grant-date fair value of restricted stock awards that vested during each of the nine months ended July 31, 2024 and 2023 was $ 1.4 million and $ 1.0 million, respectively.

As of July 31, 2024, total unrecognized compensation cost related to unamortized restricted stock awards was $ 3.0 million.

We expect to recognize this expense over the remaining weighted-average vesting period of 1.9 years.

9 unchanged sentences

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.

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:

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

Stock Options Weighted-Average

4 unchanged sentences

Exercised ( 29,280 ) 19.58

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

Outstanding at July 31, 2024 78,250 $ 19.45 1.7 $ 1,092

Vested at July 31, 2024 78,250 $ 19.45 1.7 $ 1,092

Exercisable at July 31, 2024 78,250 $ 19.45 1.7 $ 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 six months ended April 30, 2024 and 2023 was $ 0.4 million and less than $ 0.1 million, respectively.

The total intrinsic value of stock options exercised during the nine months ended July 31, 2024 and 2023 was $ 0.4 million and $ 0.3 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 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.

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

D uring the nine months ended July 31, 2024, we paid $ 0.6 million and $ 0.4 million for the comparable prior year to settle vested restricted stock units.

Performance Share Awards

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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

11 unchanged sentences

Level 4 A-TSR less than -20% — %

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes our performance restricted stock unit grants and the grant date fair value for the A-TSR performance metric:

3 unchanged sentences

December 7, 2023 40,700 $ 30.35 —

During the six months ended April 30, 2024 , 49,228 performance restricted stock units vested.

During the nine months ended July 31, 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 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,

As of July 31, 2024, we have de emed 67,626 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 nine months ended July 31, 2024 and 2023 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

4 unchanged sentences

Total compensation expense $ 1,277 $ 2,466 $ 5,346 $ 7,635

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Treasury Shares

3 unchanged sentences

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 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

There were no charges to retained earnings during the nine months ended July 31, 2024.

The following table summarizes the treasury stock activity during the nine months ended July 31, 2024:

Nine Months Ended

July 31, 2024

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

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Stock options exercised ( 29,280 )

Balance at April 30, 2024 4,015,431

Balance at July 31, 2024 4,014,431

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other, net on the condensed consolidated statements of income consisted of the following for the three and nine months ended July 31, 2024 and 2023 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

Foreign currency transaction (losses) gains $ ( 38 ) $ 126 $ ( 94 ) $ 36

Foreign currency derivative gains 9,200 16 9,200 1

Pension service benefit — 309 903 494

Interest income 300 81 772 114

Other 12 ( 130 ) ( 261 ) ( 54 )

Other, net $ 9,474 $ 402 $ 10,520 $ 591

Segment Information

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and (3) NA Cabinet Components, comprising our cabinet door and components operations.

Additionally, we maintain an Unallocated Corporate & Other which includes transaction expenses, stock-based compensation, long-term incentive awards based on the performance of our common stock and other factors, certain severance, legal, and other costs not deemed to be allocable to all segments, depreciation of corporate assets, interest expense, other, net, income taxes and inter-segment eliminations, and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during the annual planning process.

Additionally, we maintain an Unallocated Corporate & Other which includes transaction expenses;

stock-based compensation;

long-term incentive awards based on the performance of our common stock and other factors;

certain severance, legal and other costs not deemed to be allocable to all segments;

depreciation of corporate assets;

interest expense;

income taxes and inter-segment eliminations;

and executive incentive compensation and medical expense fluctuations relative to planned costs as determined during the annual planning process.

Other general and administrative costs associated with the corporate office are allocated to the reportable segments, based upon a relative measure of profitability in order to more accurately reflect each reportable business segment's administrative costs.

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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 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.

Corporate general and administrative expense allocated during the three and nine month period ended July 31, 2024 was $ 6.6 million and $ 20.8 million, respectively, and $ 6.3 million and $ 17.1 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:

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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):

Segment information for the three and nine months ended July 31, 2024 and 2023, and total assets as of July 31, 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 April 30, 2024

Three Months Ended July 31, 2024

Net sales $ 170,258 $ 59,617 $ 51,448 $ ( 978 ) $ 280,345

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Capital expenditures 4,339 847 1,024 42 6,252

Three Months Ended April 30, 2023

Three Months Ended July 31, 2023

Net sales $ 177,081 $ 67,889 $ 55,385 $ ( 715 ) $ 299,640

Depreciation and amortization 5,033 2,434 3,084 45 10,596

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

Operating income (loss) 22,668 16,150 2,271 ( 3,626 ) 37,463

Capital expenditures 3,201 2,244 1,744 187 7,376

Six Months Ended April 30, 2024

Nine Months Ended July 31, 2024

Net sales $ 478,027 $ 165,637 $ 145,663 $ ( 3,626 ) $ 785,701

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Capital expenditures 15,799 3,253 3,959 424 23,435

Six Months Ended April 30, 2023

Nine Months Ended July 31, 2023

Net sales $ 487,036 $ 186,604 $ 163,577 $ ( 2,126 ) $ 835,091

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Capital expenditures 11,673 5,300 5,085 392 22,450

As of April 30, 2024

As of July 31, 2024

Total assets $ 389,715 $ 242,228 $ 149,862 $ 90,645 $ 872,450

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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 six months ended April 30, 2024 (in thousands):

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

NA Fenestration EU Fenestration NA Cabinet Comp.

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Foreign currency translation adjustment — 3,239 — — 3,239

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

Balance as of July 31, 2024 $ 80,105 $ 66,943 $ 39,147 $ — $ 186,195

For further details of Goodwill, see Note 5, “Goodwill & Intangible Assets,” located herewith.

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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 and six months ended April 30, 2024 and 2023 (in thousands):

Three Months Ended Six Months Ended

April 30, April 30,

The following table reconciles operating income as reported above to net income for the three and nine months ended July 31, 2024 and 2023 (in thousands):

Three Months Ended Nine Months Ended

July 31, July 31,

2024 2023 2024 2023

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Net income $ 25,350 $ 31,698 $ 46,976 $ 55,119

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Earnings Per Share

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

QUANEX BUILDING PRODUCTS CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

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

Net Income Weighted-Average Shares Per Share

Three Months Ended April 30, 2024

Three Months Ended July 31, 2024

Basic earnings per common share $ 25,350 32,876 $ 0.77

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Diluted earnings per common share $ 25,350 33,106 $ 0.77

Three Months Ended April 30, 2023

Three Months Ended July 31, 2023

Basic earnings per common share $ 31,698 32,716 $ 0.97

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Diluted earnings per common share $ 31,698 32,919 $ 0.96

Six Months Ended April 30, 2024

Nine Months Ended July 31, 2024

Basic earnings per common share $ 46,976 32,857 $ 1.43

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Diluted earnings per common share $ 46,976 33,087 $ 1.42

Six Months Ended April 30, 2023

Nine Months Ended July 31, 2023

Basic earnings per common share $ 55,119 32,841 $ 1.68

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

We had zero and 1,364 of anti-dilutive restricted stock award equivalents for the three and nine months ended July 31, 2024, respectively, and no corresponding equivalents for the comparable prior year periods .

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 and six months ended April 30, 2024 and 2023.

QUANEX BUILDING PRODUCTS CORPORATION

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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, 2024.

We did not adopt any new accounting pronouncements during the three and nine months ended July 31, 2024.

Accounting Standards Not Yet Adopted

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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.

On August 1, 2024, we completed the Tyman Acquisition of Tyman plc, a company incorporated in England and Wales (“Tyman”).

The aggregate consideration due pursuant to the Tyman Acquisition at closing comprised of 14,139,477 newly issued Quanex common shares (“New Quanex Shares”) and cash consideration of approximately $ 504.1 million (being the Pound Sterling amount of cash consideration of £ 392.2 million in respect of all of the Tyman Shares converted to U.S.

Dollars at an exchange rate of 1.2855 ).

New Quanex Shares issued in connection with the Tyman Acquisition on the New York Stock Exchange took effect on August 2, 2024 and Tyman’s shares on the London Stock Exchange were canceled.

The Amended Credit Agreement did not become effective until August 1, 2024 upon the completion of the Tyman Acquisition.

The Amended Credit Agreement will (i) increase the senior secured revolving credit facility to an aggregate principal amount of $ 475 million (the “Revolving Credit Facility”) and (ii) provide for a senior secured term loan A facility in an aggregate principal amount of $ 500 million (the “Term A Facility” and together with the Revolving Credit Facility, the “Facilities”).

The Revolving Credit Facility will include alternative currency, letter of credit, and swing-line sub-facilities of $ 100 million, $ 30 million, and $ 15 million, respectively.

The maturity date of the Facilities will be five years after the acquisition effective date, maturing on August 1, 2029.

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.

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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;

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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