Quanex Building Products (NX) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

Basis of Presentation

The accompanying unaudited pro forma condensed consolidated balance sheet and statements of income (loss) were prepared based on the Company’s historical financial information, and gives effect to the sale of Nichols to the Buyer on April 1, 2014, for $110.0 million in cash, subject to customary purchase price adjustments. The Company will provide certain transition services through May 31, 2014. No pro forma adjustments are presented herein with respect to the transition services agreement, as the amount is not deemed to be significant to the Company.

The unaudited pro forma balance sheet at January 31, 2014, reflects the pro forma effect of the Nichols disposition as if the transaction was consummated on that date. The unaudited pro forma condensed consolidated statements of income (loss) for the three months ended January 31, 2014 and the years ended October 31, 2013, 2012 and 2011, reflect the pro forma effect of the Nichols disposition as if the transaction was consummated on November 1, 2010. The historical balance sheet and statement of income (loss) for the three months ended January 31, 2014 were included in the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2014. The historical statements of income (loss) for the years ended October 31, 2013, 2012 and 2011 were provided in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013. The accompanying unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the referenced filings.

The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) are presented in tabular format as follows: (i) historical consolidated results, as previously filed; (ii) less results of Nichols (the disposal group); (iii) plus pro forma adjustments, to arrive at the pro forma results. The results for Nichols were adjusted for LIFO inventory reserve, incurred but not reported costs related to workers’ compensation insurance and an effective tax rate adjustment in order to present the disposal group on a stand-alone basis for this pro forma presentation.

The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) include pro forma adjustments which reflect transactions and events that are directly attributable to the sale and are factually supportable. These pro forma adjustments are described in the notes which accompany these unaudited pro forma condensed consolidated financial statements.

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JANUARY 31, 2014

	Consolidated As Reported		Disposal Group		Pro Forma Adjustments			Pro Forma
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	25,807	$	2	$	110,000	(a)	$	135,805
Accounts receivable, net		72,459		31,110		—			41,349
Inventories, net		74,498		21,314		—			53,184
Deferred income taxes		24,769		2,102		—			22,667
Prepaid and other current assets		7,352		5,970		—			1,382
Total current assets		204,885		60,498		110,000			254,387
Property, plant and equipment, net		160,531		50,342		—			110,189
Deferred income taxes		13,277		7,713		—			5,564
Goodwill		71,838		—		—			71,838
Intangible assets, net		76,969		—		—			76,969
Other assets		13,543		8,179		—			5,364
Total assets	$	541,043	$	126,732	$	110,000		$	524,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	67,278	$	29,702	$	—		$	37,576
Accrued liabilities		29,679		7,997		2,500	(a)		24,182
Income tax payable		—		—		9,930	(a)		9,930
Current maturities of long-term debt		187		24		—			163
Total current liabilities		97,144		37,723		12,430			71,851
Long-term debt		721		35		—			686
Deferred pension and postretirement benefits		4,506		310		—			4,196
Liability for uncertain tax positions		5,435		—		—			5,435
Non-current environmental reserves		8,862		8,862		—			—
Other liabilities		12,114		673		—			11,441
Total liabilities		128,782		47,603		12,430			93,609
Commitments and contingencies
Stockholders’ equity		412,261		79,129		97,570	(a)		430,702
Total liabilities and stockholders’ equity	$	541,043	$	126,732	$	110,000		$	524,311

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED JANUARY 31, 2014

	Consolidated As Reported			Disposal Group			Pro Forma Adjustments			Pro Forma
	(In thousands, except per share data)
Net sales	$	202,362		$	79,491		$	3,508	(b)	$	126,379
Cost and expenses:
Cost of sales (exclusive of items shown separately below)		171,904			80,319			3,508	(b)		95,093
Selling, general and administrative		24,767			2,264			221	(c)		22,724
Depreciation and amortization		10,294			1,750			—			8,544
Asset impairment charges		510			505			—			5
Operating income (loss)		(5,113	)		(5,347	)		(221	)		13
Non-operating income (expense):
Interest expense		(158	)		(17	)		—			(141	)
Other, net		96			—			—			96
Income (loss) before income taxes		(5,175	)		(5,364	)		(221	)		(32	)
Income tax benefit (expense)		1,275			1,984			77	(c)		(632	)
Net income (loss)	$	(3,900	)	$	(3,380	)	$	(144	)	$	(664	)
Earnings(loss) per common share:
Basic	$	(0.11	)							$	(0.02	)
Diluted	$	(0.11	)							$	(0.02	)
Weighted-average common shares outstanding:
Basic		37,003									37,003
Diluted		37,003									37,003
Cash dividends declared per share	$	0.04								$	0.04

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2013

	Consolidated As Reported			Disposal Group			Pro Forma Adjustments			Pro Forma
	(In thousands, except per share data)
Net sales	$	952,642		$	410,380		$	12,718	(b)	$	554,980
Cost and expenses:
Cost of sales (exclusive of items shown separately below)		799,077			391,948			12,718	(b)		419,847
Selling, general and administrative		109,325			10,357			2,172	(c)		101,140
Depreciation and amortization		60,504			6,983			—			53,521
Asset impairment charges		1,465			—			—			1,465
Operating income (loss)		(17,729	)		1,092			(2,172	)		(20,993	)
Non-operating income (expense):
Interest expense		(640	)		(19	)		—			(621	)
Other, net		168			(2	)		—			170
Income (loss) before income taxes		(18,201	)		1,071			(2,172	)		(21,444	)
Income tax benefit (expense)		6,498			(391	)		760	(c)		7,649
Net income (loss)	$	(11,703	)	$	680		$	(1,412	)	$	(13,795	)
Earnings(loss) per common share:
Basic	$	(0.32	)							$	(0.37	)
Diluted	$	(0.32	)							$	(0.37	)
Weighted-average common shares outstanding:
Basic		36,864									36,864
Diluted		36,864									36,864
Cash dividends declared per share	$	0.16								$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2012

	Consolidated As Reported			Disposal Group			Pro Forma Adjustments			Pro Forma
	(In thousands, except per share data)
Net sales	$	828,976		$	362,315		$	11,917	(b)	$	478,578
Cost and expenses:
Cost of sales (exclusive of items shown separately below)		703,844			360,092			11,917	(b)		355,669
Selling, general and administrative		111,577			10,692			1,812	(c)		102,697
Depreciation and amortization		37,596			7,621			—			29,975
Asset impairment charges		912			—			—			912
Operating income (loss)		(24,953	)		(16,090	)		(1,812	)		(10,675	)
Non-operating income (expense):
Interest expense		(454	)		(23	)		—			(431	)
Other, net		222			(3	)		—			225
Income (loss) before income taxes		(25,185	)		(16,116	)		(1,812	)		(10,881	)
Income tax benefit (expense)		8,651			6,143			634	(c)		3,142
Net income (loss)	$	(16,534	)	$	(9,973	)	$	(1,178	)	$	(7,739	)
Earnings(loss) per common share:
Basic	$	(0.45	)							$	(0.21	)
Diluted	$	(0.45	)							$	(0.21	)
Weighted-average common shares outstanding:
Basic		36,622									36,622
Diluted		36,622									36,622
Cash dividends declared per share	$	0.16								$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2011

	Consolidated As Reported			Disposal Group			Pro Forma Adjustments			Pro Forma
	(In thousands, except per share data)
Net sales	$	848,294		$	440,495		$	12,459	(b)	$	420,258
Cost and expenses:
Cost of sales (exclusive of items shown separately below)		712,091			408,785			12,459	(b)		315,765
Selling, general and administrative		83,994			8,075			133	(c)		76,052
Depreciation and amortization		33,932			8,542			—			25,390
Asset impairment charges		1,799			—			—			1,799
Operating income		16,478			15,093			(133	)		1,252
Non-operating income (expense):
Interest expense		(449	)		(19	)		—			(430	)
Other, net		(514	)		(4	)		—			(510	)
Income from continuing operations before income taxes		15,515			15,070			(133	)		312
Income tax benefit (expense)		(6,437	)		(5,580	)		47			(810	)
Income from continuing operations		9,078			9,490			(86	)		(498	)
Loss from discontinued operations, net of taxes		(12	)		—			—			(12	)
Net income	$	9,066		$	9,490		$	(86	)(c)	$	(510	)
Basic earnings per common share:
Basic earnings from continuing operations	$	0.24								$	(0.01	)
Basic earnings (loss) from discontinued operations		—									—
Basic earnings per share	$	0.24								$	(0.01	)
Diluted earnings per common share:
Diluted earnings from continuing operations	$	0.24								$	(0.01	)
Diluted earnings (loss) from discontinued operations		—									—
Diluted earnings per share	$	0.24								$	(0.01	)
Weighted-average common shares outstanding:
Basic		37,007									37,007
Diluted		37,537									37,007	(d)
Cash dividends declared per share	$	0.16								$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

The following adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or statements of income (loss):

(a) The unaudited pro forma condensed consolidated balance sheet at January 31, 2014 presents anticipated proceeds from the sale of $110.0 million, less net assets (presented as an adjustment to stockholders’ equity), less estimated transaction fees of $2.5 million, resulting in a gain on the sale, with tax effect recorded at the statutory rate of 35%. The impact of this net gain on net income, estimated at $18.5 million, is a component of the change in stockholder’s equity at January 31, 2014. However, this net gain is not included in the unaudited pro forma condensed consolidated statements of income (loss) presented as the transaction does not have a continuing impact to the ongoing operations of the Company.

(b) Historically, intercompany sales between Nichols and other subsidiaries of the Company have been eliminated in consolidation. The Nichols historical results include these intercompany sales. Therefore, an adjustment is required to add back the sales and a corresponding amount for cost of sales, in order to properly present the pro forma consolidated results.

(c) Historically, the Company has allocated certain information technology (IT) and other costs to Nichols. This adjustment increases the Company’s pro forma consolidated expense equal to the amount of this allocation, and records the related tax effect calculated at the statutory rate of 35%.

(d) Diluted weighted-average share calculations include the dilutive effect of employee stock options and unvested restricted stock. For the year ended October 31, 2011, after pro forma adjustments, the Company is in a loss position, so these stock-based compensation instruments are deemed anti-dilutive and have been removed from the weighted-average share calculation for that year.