CORNERSTONE BUILDING BRANDS, INC. Management report and analysis of the financial situation and operating results. (Form 10-K)

RECENT DEVELOPMENTS

At February 13, 2022funds affiliated with Clayton Dubilier & Rice, LLC
(“CD&R”) has submitted a non-binding proposal to acquire all of the outstanding common shares of the Company that CD&R does not already own for a purchase price of $24.65 in cash per share (the “CD&R Offer”).

The CD&R Offer stated that any transaction would be subject to (i) approval by a
special committee ("Special Committee") of our independent directors? and (ii) a
vote in favor of the transaction by a majority of the voting power represented
by the shares of our common stock owned by stockholders not affiliated with
CD&R.

The board of directors of the Company (the "Board") previously formed a Special
Committee to evaluate and consider any potential or actual proposal from CD&R
[and any other alternative proposals or other strategic alternatives that may be
available to the Company].

The CD&R Offer provides that CD&R reserves the right to withdraw or modify the
CD&R Offer at any time and no legally binding obligation with respect to any
transaction will exist unless and until mutually acceptable definitive
documentation is executed and delivered by us and CD&R. There can be no
assurance that the transaction proposed by CD&R or any related transaction will
be completed or as to the terms of any such potential transaction, including
with respect to pricing or timing.

COMPANY OVERVIEW

Cornerstone Building Brands, Inc. is the largest manufacturer of exterior
building products in North America. The Company serves residential and
commercial customers across new construction and the repair & remodel markets.
Our mission is to be relentlessly committed to our customers and to create great
building solutions that enable communities to grow and thrive.

We have developed and continue to implement a well-defined business strategy
focused on (i) driving profitable growth in new and existing markets; (ii)
leveraging operational excellence across our businesses; and (iii) implementing
a capital allocation framework balanced between a focus on opportunistic
investment in high return initiatives and continued debt repayment.

We believe that by focusing on operational excellence every day, creating a
platform for future growth and investing in market-leading residential and
commercial building brands, we will deliver unparalleled financial results. We
design, engineer, manufacture, install and market external building products
through our three operating segments: Windows, Siding, and Commercial.

Our manufacturing processes are vertically integrated, which we believe provides
cost and competitive advantages. As the leading manufacturer of vinyl windows,
vinyl siding, metal roofing and wall systems and metal accessories, Cornerstone
Building Brands combines a diverse portfolio of products with an expansive
national footprint that includes over 21,700 employees at manufacturing,
distribution and office locations primarily in North America.

At Cornerstone Building Brands, corporate stewardship is a responsibility that
is deeply embedded in our 75-year history. Our business practices have given us
the staying power to make a real difference in countless cities and
neighborhoods.

Our sales and earnings are subject to both seasonal and cyclical trends and are
influenced by general economic conditions, interest rates, the price of material
costs relative to other building materials, the level of residential and
nonresidential construction activity, repair and remodel demand and the
availability and cost of financing for construction projects. Our sales normally
are lower in the first and fourth fiscal quarters of each year compared to the
second and third fiscal quarters because of unfavorable weather conditions for
construction and typical business planning cycles affecting construction.

Markets we serve

Our products are available across several large and attractive end markets,
including residential new construction, residential repair and remodel and
low-rise non-residential construction. We believe that there are favorable
underlying fundamental factors that will drive long-term growth across the end
markets in which we operate. We also believe the recent COVID-19 pandemic, while
still causing economic uncertainty worldwide, has driven strong demand for
residential repair and remodel activity, residential new construction and select
segments of the low-rise non-residential construction market, such as
distribution, warehouse, healthcare and educational facilities in suburban
regions; however, the COVID-19 pandemic has also caused challenges in other
areas of non-residential construction, most notably in retail and commercial
office facilities in densely populated urban centers, where we have minimal, if
any, participation. We believe our business is well-

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positioned to benefit from broader societal and demographic trends favoring suburban areas, as employment and living preferences shift to these areas.

Cornerstone Building Brands is deeply committed to the communities where our
customers and employees live, work and play. We recognize that our customers are
increasingly environmentally conscious in their purchasing behavior, and we
believe our sustainable solutions favorably address these evolving consumer
preferences. For example, certain products in our portfolio are high in recycled
end content, virtually 100% recyclable at the end of their useful life and often
manufactured to meet or exceed specified sustainability targets, such as ENERGY
STAR and LEED certifications. We recognize that efficient use of recycled
materials helps to conserve natural resources and reduces environmental impact,
and we are committed to driving these sustainable practices throughout our
business.

COVID-19 Update

We experienced a significant decrease in customer demand across all our markets
during the second quarter of 2020 due to the COVID-19 pandemic mostly due to
delays in construction activity driven by temporary closures of non-life
sustaining businesses. The continuing impact of the pandemic on our future
consolidated results of operations is uncertain. During 2020, the Company
quickly implemented a range of actions aimed at reducing costs and preserving
liquidity. These actions included the closure of our Ambridge, Pennsylvania
Commercial facility and Corona, California Windows facility, permanent workforce
reductions, employee furloughs, a hiring freeze, a deferral of annual wage
raises, and reducing discretionary and non-essential expenses, such as
consulting expenses. Additionally, we reduced capital expenditures to focus on
key strategic initiatives, such as automation, product innovation, and critical
maintenance items. We believe our business model, our existing balances of
domestic cash and cash equivalents, currently anticipated operating cash flows,
and overall liquidity will be sufficient to meet our cash needs arising in the
ordinary course of business for the next twelve months and positions us to
manage our business through this crisis as it continues to unfold. We will
continue to evaluate the nature and extent of the COVID-19 pandemic's impact on
our financial condition, results of operations and cash flows.

Significant Business Developments

Our significant business development activities in 2021 include the: (i)
acquisition of Prime Windows LLC (April 2021), (ii) divestitures of our IMP and
DBCI businesses (August 2021), (iii) acquisition of Cascade Windows, Inc.
(August 2021), and (iv) acquisition of Union Corrugating Company Holding, Inc.
(December 2021). In addition, in April 2021, we amended our cash flow credit and
ABL credit agreements. See Note 4 - Acquisitions, Note 5 - Divestitures and Note
13 - Long Term Debt, in the notes to the consolidated financial statements for
more information on our divestitures, acquisitions, and debt.

Residential (windows and siding)

Our residential building products are typically installed on a new construction
home 90 to 120 days after the start of the home, therefore, there is a lag
between the timing of the single-family housing start date and the time in which
our products are installed on a home. From an industry perspective, we evaluate
the new construction environment by reviewing the U.S. Census Bureau single
family housing start statistics to assess the performance of the new
construction market for a normal period. We evaluated U.S. Census Bureau single
family housing starts for the year ended December 31, 2021 as compared to
December 31, 2020 to assess the demand impacts for our products, noting that
single-family housing starts increased over 12% on a seasonally adjusted annual
rate (SAAR) basis due to overall economic conditions specifically for new
construction. For Canada, we evaluate the Canada Mortgage and Housing Corporate
statistics, which showed housing starts increased by 25% for the year ended
December 31, 2021 compared to 2020.

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The graph below shows the seasonally adjusted annual single family residential
new construction starts as of each year end since 1982 as compiled and reported
by U.S. Census Bureau:

[[Image Removed: cnr-20211231_g3.jpg]]
In addition to new construction, we also evaluate the repair and remodel market
to assess residential market conditions by evaluating the Leading Indicator of
Remodeling Activity ("LIRA"). For the year ended December 31, 2021, LIRA
reflected that the trailing 12 months of remodeling activity increased 9% from
2020. While LIRA is a remodeling economic indicator as it tracks all remodeling
activity including kitchen, bathroom and low ticket remodeling, it is not a
specific metric for our residential businesses measuring solely windows and
siding remodeling growth. Therefore, we utilize this index as a trend indicator
for our repair and remodeling business.

Finally, we assess our performance relative to our competitors and the overall
siding industry by evaluating the marketing indicators produced by the Vinyl
Siding Institute ("VSI"), a third party which summarizes vinyl siding unit sales
for the industry. For the year ended December 31, 2021, the VSI reported that
siding units increased 9% for the industry. Overall, our Siding segment,
including stone veneer, is weighted to the repair and remodel market with
approximately 53% of our net sales being attributed to repair and remodeling
with the remaining 47% attributed to the new construction market. Historically,
we evaluate our net sales performance within the Windows segment by evaluating
our net sales for the new construction market and the repair and remodel market.
Overall, our Windows segment is relatively balanced with approximately 51% of
our net sales attributed to new construction with the remaining 49% attributed
to the repair and remodel market.

Commercial

Our sales and earnings are subject to both seasonal and cyclical trends and are
influenced by general economic conditions, interest rates, the price of steel
relative to other building materials, the level of nonresidential construction
activity, roof repair and retrofit demand and the availability and cost of
financing for construction projects. Our sales in the Commercial segment
normally are lower in the first half of each fiscal year compared to the second
half because of unfavorable weather conditions for construction and typical
business planning cycles affecting construction.

The nonresidential construction industry is highly sensitive to national and
regional macroeconomic conditions. Following a significant downturn in 2008 and
2009, the current recovery of low-rise construction has been uneven and slow.
The COVID-19 pandemic interrupted some signs of steady growth in recent years.
We believe that the nonresidential construction industry will return to
mid-cycle levels of activity over the next several years.

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The graph below shows the annual non-residential new construction starts, measured in square feet, since 1982, compiled and reported by Dodge Data & Analytics, Inc. (“Dodge”):

[[Image Removed: cnr-20211231_g4.jpg]]

Current market estimates continue to show recovery across the nonresidential
construction markets from the 2020 dip, returning above 2019 levels. According
to Dodge Data & Analytics, Inc. ("Dodge"), low-rise nonresidential construction
starts as measured in square feet and comprising buildings of up to five
stories, were up in fiscal 2021 by approximately 19% as compared to our fiscal
2020.

The leading indicators that we follow and that typically have the most
meaningful correlation to nonresidential low-rise construction starts are the
American Institute of Architects' ("AIA") Architecture Mixed Use Index, Dodge
Residential single family starts and the Conference Board Leading Economic Index
("LEI"). Historically, there has been a very high correlation to the Dodge
low-rise nonresidential starts when the three leading indicators are combined
and then seasonally adjusted.

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RESULTS OF OPERATIONS

This section of the Form 10-K generally discusses fiscal 2021 and fiscal 2020
items and year-over-year comparisons of these periods. Discussions of fiscal
2019 items and year-over-year comparisons between fiscal 2020 and fiscal 2019
that are not included in this Form 10-K can be found in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Part II, Item
7 of Cornerstone's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020.

The following table represents the main results of operations on a consolidated basis for the periods indicated:

                                                                Year Ended
                                                                       

the 31st of December, the 31st of December,

 (Amounts in thousands)                                                    2021                 2020              $ change         % change
Net sales                                                             $ 5,583,137          $ 4,617,369          $  965,768               20.9  %
Gross profit                                                            1,199,075            1,050,320             148,755               14.2  %
% of net sales                                                               21.5  %              22.7  %
Selling, general and administrative expenses                              649,472              579,200              70,272               12.1  %
% of net sales                                                               11.6  %              12.5  %
Restructuring and impairment charges, net                                  26,247               34,120              (7,873)             (23.1) %
Strategic development and acquisition related
costs                                                                      27,875               19,341               8,534               44.1  %
Interest expense                                                          191,301              213,610             (22,309)             (10.4) %
Net income (loss)                                                         665,859             (482,778)          1,148,637             (237.9) %


Net sales - Consolidated net sales for the year ended December 31, 2021
increased by approximately 20.9%, as compared to the year ended December 31,
2020. The increase was primarily due to favorable price actions taken in all
segments to offset commodity inflation, higher volume mainly from increased
demand in the residential end markets, and an increase from acquisitions ($113.2
million in the Windows segment from Prime and Cascade and $21.9 million in the
Commercial segment from UCC).

Gross profit % of net sales - The Company's gross profit percentage was 21.5%
for the year ended December 31, 2021, which was a 120 basis point decrease from
the year ended December 31, 2020. The manufacturing inefficiencies and higher
costs to serve our customers that were brought on by supply chain disruptions
and labor constraints drove the decrease in gross profit as a percentage of net
sales. This reduction was partially offset by positive price mix net of
inflation.

Selling, general, and administrative expenses increased 12.1% during the year
ended December 31, 2021, compared to the year ended December 31, 2020. The
return of near-term costs, such as variable compensation, professional services,
and sales commissions drove the higher selling, general, and administrative
expenses at December 31, 2021 as compared to December 31, 2020.

Restructuring and impairment charges, net decreased $7.9 million during the year
ended December 31, 2021, compared to the year ended December 31, 2020, primarily
due to asset impairments in 2021 which were lower in total than the
restructuring charges taken in 2020 in response to the COVID-19 pandemic.

Increased costs related to strategic development and acquisitions $8.5 millionduring the year ended December 31, 2021 compared to the year ended December 31, 2020 as our merger-related activities increased following strategic portfolio rationalization actions to accelerate long-term value creation.

Interest charges decreased $22.3 million i.e. 10.4% in 2021, mainly due to the reimbursement of $645 million 8.00% senior notes coupled with the refinancing of the current term loan facility.

Consolidated provision (benefit) for income taxes was an expense of $236.0
million for the year ended December 31, 2021 compared to an expense of $5.6
million for the year ended December 31, 2020. The effective tax rate for the
year ended December 31, 2021 was 26.2% compared to 1.2% for the year ended
December 31, 2020. The change in the effective tax rate was primarily driven by
the divestitures and improved financial results for the year ended December 31,
2021, and the impact associated with the goodwill impairment recorded during the
year ended December 31, 2020.

Net Income (loss) - Net income was $665.9 million or $5.19 per diluted share.
Effective execution of our priorities, which included maintaining cost
discipline, strengthening price leadership, driving operational excellence and
investing in growth opportunities delivered improved profitability in 2021
(excluding the impact of the gain on sales from the divestitures in 2021 and the
impact of the goodwill impairment in 2020).

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Segment operating results

We report our segment information in the same way management internally
organizes the business in assessing performance and making decisions regarding
allocation of resources in accordance with ASC 280, Segment Reporting. We have
determined that we have three reportable segments, organized and managed
principally by the different industry sectors they serve. While the segments
often operate using shared infrastructure, each reportable segment is managed to
address specific customer needs in these diverse market sectors. We report all
other business activities in Corporate and unallocated costs. Corporate assets
consist primarily of cash, investments, prepaid expenses, current and deferred
taxes and property, plant and equipment associated with our headquarters in
Cary, North Carolina and office in Houston, Texas. These items (and income and
expenses related to these items) are not allocated to the operating segments.
Corporate unallocated expenses primarily include share-based compensation
expenses, restructuring charges, acquisition costs, and other expenses related
to executive, legal, finance, tax, treasury, human resources, information
technology and strategic sourcing, and corporate travel expenses. Additional
unallocated amounts primarily include non-operating items such as interest
income, interest expense, loss on extinguishment of debt and other income
(expense).

One of the primary measurements used by management to measure the financial
performance of each segment is Adjusted EBITDA, a non-GAAP financial measure. We
define Adjusted EBITDA as net income (loss), adjusted for the following items:
income tax (benefit) expense; depreciation and amortization; interest expense,
net; restructuring and impairment charges; strategic development and acquisition
related costs; gain on divestitures; goodwill impairment; share-based
compensation expense; non-cash foreign exchange transaction/translation (income)
loss; other non-cash items; and other items.

The presentation of segment results below includes a reconciliation of the
changes for each segment reported in accordance with U.S. GAAP to a pro forma
basis to allow investors and the Company to meaningfully evaluate the percentage
change on a comparable basis from period to period. The pro forma financial
information is based on the historical information of Cornerstone Building
Brands, which includes historical information of Kleary Masonry, Inc.
("Kleary"), which the Company acquired on March 2, 2020; Prime Windows LLC
("Prime Windows"), which the Company acquired on April 30, 2021; Cascade
Windows, Inc. ("Cascade Windows"), which the Company acquired on August 20,
2021; and the insulated metals panels ("IMP") and the roll-up sheet doors
("DBCI") businesses, which the Company divested on August 9, 2021 and August 18,
2021, respectively. The pro forma financial information does not give effect to
the potential impact of current financial conditions, any anticipated synergies,
operating efficiencies or cost savings that may result from the Kleary, Prime
Windows and Cascade Windows acquisitions; or any integration costs; and from the
IMP and DBCI divestitures. Pro forma balances are not necessarily indicative of
operating results had the Kleary, Prime Windows and Cascade Windows acquisitions
and the IMP and DBCI divestitures occurred on January 1, 2020 or of future
results. UCC, which was acquired on December 3, 2021, is only included from the
acquisition date as pro forma results would comprise substantially all of the
comparative periods and would not be meaningful for comparison.

See Note 22 – Segment information in the notes to the consolidated financial statements for more information on our segments.

NON-GAAP FINANCIAL MEASURES

Set forth below are certain "non-GAAP financial measures" as defined under the
Securities Exchange Act of 1934. Management believes the use of such non-GAAP
financial measures assists investors in understanding the ongoing operating
performance of the Company by presenting the financial results between periods
on a more comparable basis. Such non-GAAP financial measures should not be
construed as an alternative to reported results determined in accordance with
U.S. GAAP. We have included reconciliations of these non-GAAP financial measures
to the most directly comparable financial measures calculated and provided in
accordance with U.S. GAAP.

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The following tables present a comparison of net sales as reported to pro forma
net sales for Cornerstone Building Brands as if the Cascade Windows, Prime
Windows and Kleary acquisitions, and IMP and DBCI divestitures had each occurred
on January 1, 2020 rather than the respective date referenced above for each
transaction. UCC's results are only included from the acquisition date as
discussed above.

                                          Year Ended December 31, 2021                                      Year Ended December 31, 2020
                                                Acquisitions and                                                  Acquisitions and
                             Reported             Divestitures            Pro Forma             Reported            Divestitures            Pro Forma
Net Sales
Windows                   $ 2,322,277          $       132,141          $ 2,454,418          $ 1,889,625          $      206,639          $ 2,096,264
Siding                      1,364,080                        -            1,364,080            1,141,946                   8,358            1,150,304
Commercial                  1,896,780                 (231,347)           1,665,433            1,585,798                (375,261)           1,210,537
Total Net Sales           $ 5,583,137          $       (99,206)         $ 5,483,931          $ 4,617,369          $     (160,264)         $ 4,457,105

The following tables reconcile Adjusted EBITDA and Pro Forma Adjusted EBITDA to operating profit (loss) for the periods indicated.

Consolidated

                                                                     Year Ended
                                                           December 31,      December 31,
(Amounts in thousands)                                         2021              2020
Net sales                                                 $ 5,583,137       $ 4,617,369
 Impact of acquisitions and divestitures(1)                   (99,206)         (160,264)
Pro forma net sales                                       $ 5,483,931       $ 4,457,105

Operating income (loss), GAAP                             $ 1,137,245       $  (266,506)
Restructuring and impairment charges, net                      26,247       

34,277

Strategic development and acquisition related costs            27,875            19,341
Gain on divestitures                                         (831,252)                -
Goodwill impairment                                                 -           503,171
Depreciation and amortization                                 292,901           284,602
Other (2)                                                      42,919            31,919
Adjusted EBITDA                                               695,935           606,804

 Impact of acquisitions and divestitures(1)                    (7,953)      

(52,223)

Pro forma Adjusted EBITDA                                 $   687,982       $   554,581
Adjusted EBITDA as a % of net sales                              12.5  %           13.1  %
Pro forma Adjusted EBITDA as a % of pro forma net sales          12.5  %    

12.4%


(1)Reflects the acquisition from January 1, 2020 of the net sales and Adjusted
EBITDA of Kleary through March 1, 2020, Prime Windows through April 29, 2021 and
Cascade Windows through August 19, 2021; and reflects the impact from January 1,
2020 of the divestitures of IMP and DBCI through the divestiture dates of August
9, 2021 and August 18, 2021, respectively.

(2)Composed mainly of $29.0 million and $17.1 million stock-based compensation expense for the years ended December 31, 2021 and 2020, respectively; $11.6 million of costs for the year ended December 31, 2021
associated with debt refinancing operations; and ($0.4) million and $12.5 million costs related to the COVID-19 pandemic for the years ended December 31, 2021 and 2020, respectively.

Pro forma net sales for the year ended December 31, 2021 increased $1,026.8
million, a 23.0% improvement over pro forma net sales in the same period a year
ago. Disciplined price actions in response to rising commodity costs and other
inflationary impacts across all segments drove approximately 75% of the
increase. Rapid recovery of residential demand drove increased volume within the
Windows and Siding segments of approximately $210 million, and non-residential
demand drove increased volume in the Commercial segment of approximately $48
million.
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Operating income (loss) for the year ended December 31, 2021 increased to
$1,137.2 million income as compared to an operating loss of $266.5 million in
the year ended December 31, 2020 primarily as a result of the gain on the sales
of the IMP and DBCI businesses of $831.3 million in 2021 and the goodwill
impairment of $503.2 million in the comparable period.

Pro forma Adjusted EBITDA for 2021 was $688.0 million or 12.5% of pro forma net
sales, an improvement of 24.1% or 10 basis points from the same pro forma period
a year ago. The improvement was primarily driven by positive price mix net of
inflation of $210 million and higher demand of $85 million, mostly from the
rapid recovery in the residential end markets. Partially reducing these
favorable impacts were manufacturing inefficiencies and higher costs to serve
our customers as a result of the challenges brought on by supply chain
disruptions and labor constraints of $93 million. SG&A costs were $69 million
higher than the same pro forma period last year primarily due to the return of
near-term costs, such as variable compensation, professional services, and sales
commissions.

Windows

                                                                             Year Ended
                                                                  December 31,         December 31,
(Amounts in thousands)                                                2021                 2020
Net sales                                                        $ 2,322,277          $ 1,889,625
Impact of acquisitions(1)                                            132,141              206,639
Pro forma net sales                                              $ 

2,454,418 $2,096,264

Operating income (loss), GAAP                                    $   100,725          $  (223,646)
Restructuring and impairment charges, net                              1,252                7,499
Strategic development and acquisition related costs                    2,976                   16
Goodwill impairment                                                        -              320,990
Depreciation and amortization                                        134,626              121,519
Other                                                                    (88)               7,338
Adjusted EBITDA                                                      239,491              233,716

Impact of acquisitions(1)                                             15,314               25,740
Pro forma Adjusted EBITDA                                        $   254,805          $   259,456
Adjusted EBITDA as a % of net sales                                     10.3  %              12.4  %
Pro forma Adjusted EBITDA as a % of pro forma net sales                 10.4  %              12.4  %


(1)Reflects the impact of the net sales and Adjusted EBITDA of Prime Windows LLC
through April 29, 2021 and Cascade Windows Inc. through August 19, 2021 as if
the acquisitions had occurred on January 1, 2020.

Pro forma net sales for the year ended December 31, 2021 were 17.1% higher
compared to the year ended December 31, 2020 due to 9.0% from disciplined price
actions in response to rising commodity costs and other inflationary impacts
coupled with approximately 8.1% increase in sales volume as a result of the
rapid recovery within the residential end markets in the U.S. and Canada.

Operating income (loss) for the year ended December 31, 2021 was $100.7 million
of operating income as compared to an operating loss of $223.6 million in the
year ended December 31, 2020 primarily due to the goodwill impairment of $321.0
million in the comparable year.

Pro forma Adjusted EBITDA was $254.8 million or 10.4% of pro forma net sales, a
200 basis point decline over the year ended December 31, 2020. Positive price
mix net of inflation of $22.8 million and higher demand of $46.6 million, mostly
from the rapid recovery in the residential end markets, were partially offset by
manufacturing inefficiencies and higher costs to serve our customers as a result
of the challenges brought on by supply chain disruptions and labor constraints
of $61.3

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million. General and administrative expenses were $12.8 million higher than the same pro forma period last year, mainly due to the return of short-term costs, such as variable compensation, professional services and sales commissions.

Siding

                                                                     Year Ended
                                                           December 31,      December 31,
(Amounts in thousands)                                         2021              2020
Net sales                                                 $ 1,364,080       $ 1,141,946
Impact of acquisition(1)                                            -             8,358
Pro forma net sales                                       $ 1,364,080       $ 1,150,304

Operating income (loss), GAAP                             $   137,772       $   (61,930)
Restructuring and impairment charges, net                      14,226       

2,966

Strategic development and acquisition related costs            (2,974)      

10,158

Goodwill impairment                                                 -       

176,774

Depreciation and amortization                                 116,660           113,737
Other                                                             (13)             (523)
Adjusted EBITDA                                               265,671           241,182

Impact of acquisition(1)                                            -             1,869
Pro forma Adjusted EBITDA                                 $   265,671       $   243,051
Adjusted EBITDA as a % of net sales                              19.5  %           21.1  %
Pro forma Adjusted EBITDA as a % of pro forma net sales          19.5  %    

21.1%

(1) Reflects the impact of net sales and adjusted EBITDA of Kleary Masonry, Inc. by March 1, 2020 as if the acquisition had taken place on January 1, 2020.

Net sales for the year ended December 31, 2021 were 18.6% higher compared to the
pro forma net sales for the year ended December 31, 2020. The rapid recovery of
residential demand contributed 3.4% of the favorable increase, while disciplined
price actions to offset inflationary raw material costs resulted in favorable
price mix of approximately 15.1% versus the pro forma prior year.

Operating income for the year ended December 31, 2021 increased to
$137.8 million as compared to an operating loss of $(61.9) million for the year
ended December 31, 2020 primarily due to a goodwill impairment of $176.8 million
in the year ended December 31, 2020. Excluding the 2020 goodwill impairment of
$176.8 million and a 2021 asset impairment of $13.9 million related to a
discontinued product line, operating income increased 32.1% in 2021 primarily
due to disciplined price actions net of inflation of $40.0 million, favorable
volume of $12.2 million and lower strategic development costs, offsetting higher
costs in manufacturing and SG&A.

Pro Forma Adjusted EBITDA was $265.7 million or 19.5% of pro forma net sales, a
160 basis point decline over the year ended December 31, 2020. As mentioned
above, positive price mix net of inflation and higher volume partially offset
increased manufacturing costs to serve our customers and inefficiencies from
supply chain disruptions of $16.7 million and an increase in SG&A of $12.8
million from return of near-term costs, such as variable compensation and
professional service expenses.
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Commercial

                                                                     Year Ended
                                                           December 31,      December 31,
(Amounts in thousands)                                         2021              2020
Net Sales                                                 $ 1,896,780       $ 1,585,798
Impact of divestitures(1)                                    (231,347)         (375,261)
Pro forma net sales                                       $ 1,665,433       $ 1,210,537

Operating income, GAAP                                    $ 1,104,335       $   159,586
Restructuring and impairment charges, net                      10,131       

20,270

Strategic development and acquisition related costs             3,103              (262)
Gain on divestitures                                         (831,252)                -
Goodwill impairment                                                 -             5,407
Depreciation and amortization                                  36,282            45,213
Other                                                             934             4,346
Adjusted EBITDA                                               323,533           234,560

Impact of divestitures(1)                                     (23,267)          (79,832)
Pro forma Adjusted EBITDA                                 $   300,266       $   154,728
Adjusted EBITDA as a % of net sales                              17.1  %           14.8  %
Pro forma Adjusted EBITDA as a % of pro forma net sales          18.0  %    

12.8%


(1)Reflects the net adjustments of IMP and DBCI through the divestiture dates of
August 9, 2021 and August 18, 2021, respectively, as if the divestitures had
occurred on January 1, 2020.

Pro forma net sales for the year ended December 31, 2021 were higher by 37.6%
compared to the year ended December 31, 2020 driven approximately by a 33.7%
increase from disciplined price actions to mitigate rising steel costs.
Additionally, higher volumes of 3.9% from recovering demand in the
non-residential end markets also contributed to the increase in net sales.
Included in pro forma net sales at December 31, 2021 are $21.9 million of net
sales from Union Corrugating Company Holdings, Inc. ("UCC") from the acquisition
date on December 3, 2021. The UCC acquisition furthers our presence in the
high-growth residential metal roofing market.

Operating income for the year ended December 31, 2021 increased $944.7 million
compared to year ended December 31, 2020 primarily due to the gain on the sales
of the IMP and DBCI businesses as a result of strategic portfolio
rationalization actions to accelerate long-term value creation. Excluding the
gain on the sales in 2021 and the goodwill impairment in 2020, operating income
of $273.1 million increased 65.5% primarily from the realization of price
actions taken to offset rising steel and other inflationary impacts.
Additionally, higher volume of $26 million from recovering non-residential end
markets offset manufacturing inefficiencies from steel constraints and higher
SG&A costs. Included in operating income at December 31, 2021 is $1.8 million
from UCC from the acquisition date.

Pro forma Adjusted EBITDA was $300.3 million or 18.0% of pro forma net sales, a
520 basis point improvement compared to the year ended December 31, 2020.
Included in pro forma EBITDA at December 31, 2021 is $2.2 million from UCC from
the acquisition date. As mentioned above, positive price mix net of inflation of
approximately $147.6 million and higher volume of $26.3 million offset
manufacturing inefficiencies of $14.7 million and higher SG&A costs of $13.6
million.

Unallocated Operating Loss

                                                                  Year Ended
                                                       December 31,       December 31,
(Amounts in thousands)                                     2021               2020
Statement of operations data:
SG&A expenses                                         $    (180,817)     $    (131,087)

Costs related to strategic development and acquisitions (24,770)

    (9,429)
Operating loss                                        $    (205,587)     $    (140,516)


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Unallocated (Corporate expenses) operating losses include items that are not
directly attributed to or allocated to our reporting segments. Such items
include legal costs, corporate payroll, and unallocated finance and accounting
expenses. The unallocated operating loss for the year ended December 31, 2021
increased by $65.1 million or 46.3% compared to the year ended December 31,
2020. The change is primarily due to the increase in strategic development
expenses as well as debt issuance costs and the return of near-term expenses
such as variable compensation and professional services. Unallocated operating
loss includes $29.0 million and $17.1 million of share-based compensation
expense for the years ended December 31, 2021 and 2020, respectively.

CASH AND CAPITAL RESOURCES

General

Our ongoing principal source of funds is cash generated from operations,
supplemented by borrowings against our asset-based lending and revolving credit
facility, as necessary. We typically invest our excess cash in various overnight
investments that are issued or guaranteed by the U.S. federal government. Our
cash, cash equivalents and restricted cash decreased from $680.5 million as of
December 31, 2020 to $396.7 million as of December 31, 2021. The following table
summarizes our consolidated cash flows for fiscal 2021 and 2020 (in thousands):

                                                                           Year Ended
                                                               December 31,           December 31,
                                                                   2021                   2020

Net cash provided by (used in) operating activities ($215,887)

         $     308,417
Net cash provided by (used in) investing activities                549,466               (120,123)
Net cash provided by (used in) financing activities               (617,249)               389,655

Effect of changes in exchange rates on cash and cash equivalents (150)

                   222

Net increase (decrease) in cash, cash equivalents and restricted cash

                                                   (283,820)               578,171

Cash, cash equivalents and restricted cash at the beginning of the period

                                                             680,478                102,307

Cash, cash equivalents and restricted cash, end of period $396,658

        $     680,478


Operating Activities

The Company used cash in operating activities during the year ended December 31, 2021 invest in working capital items to support strong market demand.

The following table presents the impact of working capital items on cash in fiscal years 2021 and 2020, respectively (in thousands):

                                                      Year Ended
                                           December 31,       December 31,
                                               2021               2020            $ Change
Net cash (used in) provided by:
Accounts receivable                       $    (156,066)     $     (61,976)     $  (94,090)
Inventories                                    (311,242)             7,927        (319,169)
Accounts payable                                 72,260              4,663          67,597

Net cash used in working capital items ($395,048) ($49,386)

($345,662)



The use of cash for working capital between periods was driven by investments in
net working capital to support the strong demand environment and increased
inventory valuations from higher commodity costs and other inflationary aspects.
See the Consolidated Statements of Cash Flows in the consolidated financial
statements for additional information.

Investing activities

Cash provided by investing activities was $549.5 million during fiscal 2021
compared to $120.1 million used during fiscal 2020. During fiscal 2021, we paid
approximately $528.3 million (net of cash acquired) toward acquisitions,
primarily for the acquisitions of UCC, Cascade Windows and Prime Windows;
received proceeds of $1,187.3 million from the divestitures of our insulated
metal panels and roll-up sheet doors businesses; received proceeds of $5.1
million from the sale of PP&E, and used $114.7 million for capital expenditures.
During fiscal 2020, we paid approximately $41.8 million (net of

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cash acquired) for the acquisition of Kleary, used $81.9 million for capital expenditures and received the proceeds of $3.6 million from the sale of property, plant and equipment.

Fundraising activities

Cash used in financing activities was $617.2 million in fiscal 2021 compared to
$389.7 million provided by financing activities in fiscal 2020. During fiscal
2021, we increased our Current Term Loan Facility by $108.4 million, borrowed
and then repaid $190.0 million on our Current ABL Facility, paid $670.8 million
to redeem the 8.00% Senior Notes, and paid quarterly installments totaling $25.9
million on the Current Term Loan Facility.

During fiscal 2020, we issued $500.0 million in aggregate principal amount of
6.125% Senior Notes due January 2029, borrowed $40.0 million on our Existing ABL
Facility to finance the acquisition of Kleary, borrowed an additional $305.0
million on our Existing ABL Facility and repaid all outstanding ABL Facility
balances at December 31, 2020, and borrowed and repaid $115.0 million on our
Existing Cash Flow Revolver balances. Proceeds from the offering of the 6.125%
Senior Notes were used to pay down the Existing ABL Facility and Existing Cash
Flow Revolver balances. Additionally, during fiscal 2020, we paid quarterly
installments totaling $25.6 million on our Term Loan Facility and used $6.4
million to repurchase shares of our outstanding common stock under our stock
repurchase programs.

Equity Investment

On August 25, 2020, the Company filed a shelf registration statement on Form
S-3, declared effective by the SEC on September 2, 2020, registering the resale
of shares of the Company's common stock held by CD&R Pisces. The Company had
previously registered the resale of shares of the Company's common stock held by
the CD&R Fund VIII Investor Group and the Golden Gate Investor Group.

AT December 31, 2021 and 2020, the CD&R Investor Group held approximately 48.8% and 49.4%, respectively, of the outstanding shares of our common stock.

Debt

Below is a reconciliation of the Company's net debt (in thousands). Management
considers net debt to be more representative of the Company's financial position
than total debt due to the amount of cash and cash equivalents held by the
Company and the ability to utilize cash and cash equivalents to reduce debt if
needed.

                                                                    Year Ended
                                                          December 31,      December 31,
                                                              2021              2020

Asset-backed revolving credit facility April 2026 $ – $ – Term loan facility due April 2028

                           2,580,500       

2,497,967

Cash flow revolver due April 2026                                   -       

8.00% senior notes due April 2026                                   -       

645,000

6.125% senior notes due January 2029                          500,000       

500,000

Total Debt                                                  3,080,500       

3,642,967

Less: cash and cash equivalents                               394,447           674,255
Net Debt                                                 $  2,686,053      $  2,968,712


On April 15, 2021, the Company redeemed its $645 million aggregate principal
amount of 8.00% Senior Notes using available cash from the balance sheet and net
proceeds from its extended and upsized senior term loan facility. The Company
successfully upsized and extended the maturity of its $2,492 million senior term
loan facility due 2025 in the form of $2,600 million in Tranche B term loans due
April 12, 2028. Additionally, the Company amended and refinanced its senior cash
flow based and asset-based revolving credit facilities, extending the maturities
to April 12, 2026.

In connection with the new Tranche B term loans, the Company also terminated two
interest rate swaps and entered into two new swaps maturing in April 2026 on an
aggregate notional value of $1.5 billion. The interest rate swaps effectively
convert a portion of the floating rate interest payment into a fixed rate
interest payment.

We may not be successful in refinancing, extending the maturity or otherwise
amending the terms of our outstanding indebtedness in the future because of
market conditions, disruptions in the debt markets, our financial performance or
other reasons. Furthermore, the terms of any refinancing, extension or amendment
may not be as favorable as the current terms of our indebtedness. If we are not
successful in refinancing our indebtedness or extending its maturity, we and our
subsidiaries

                                       42
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could face substantial liquidity problems and may be forced to reduce or delay
capital expenditures, sell assets, seek additional capital or restructure our
indebtedness.

For more information, see Note 13 – Long-term debt and Note 14 – Derivatives in the notes to the consolidated financial statements.

Additional Liquidity Considerations

We periodically evaluate our liquidity requirements, capital needs and
availability of resources in view of inventory levels, expansion plans, debt
service requirements and other operating cash needs. To meet our short-term and
long-term liquidity requirements, including payment of operating expenses and
repayment of debt, we rely primarily on cash from operations. The following
table summarizes key liquidity measures under the Current ABL Credit Agreement
and the Current Cash Flow Credit Agreement in effect as of December 31, 2021 and
2020 (in thousands):

                                                                    Year Ended
                                                          December 31,      December 31,
                                                              2021              2020
Asset-based revolving credit facility due April 2026     $    611,000      $    611,000
Eligible borrowing base                                       611,000           568,000
Less: Borrowings                                                    -                 -
Less: LCs outstanding and priority payables                    45,000       

40,000

Net ABL availability                                          566,000       

528,000

Plus: Cash flow revolver due April 2026                       115,000       

115,000

Plus: cash and cash equivalents                               394,447           674,255
Total Liquidity                                          $  1,075,447      $  1,317,255


On April 15, 2021, the Company redeemed its $645 million aggregate principal
amount of 8.00% Senior Notes, as noted above, which reduced total liquidity. We
expect that cash generated from operations and our availability under the ABL
Credit Facility and Current Cash Flow Revolver will be sufficient to provide us
the ability to fund our operations and to provide the increased working capital
necessary to support our strategy and fund planned capital expenditures for
fiscal 2022 and expansion when needed.

Consistent with our growth strategy, we evaluate potential acquisitions that
would provide additional synergies in our Windows, Siding and Commercial
segments. From time to time, we may enter into letters of intent or agreements
to acquire assets or companies in these segments. The consummation of these
transactions could require substantial cash payments and/or issuance of
additional debt.

On April 30, 2021, the Company acquired Prime Windows. Prime Windows serves
residential new construction and repair and remodel markets with energy
efficient vinyl window and door products from two manufacturing facilities in
the United States, expanding our manufacturing capabilities and creating new
opportunities for us in the Western United States. This acquisition was funded
through borrowings under the Company's existing credit facilities.

On August 20, 2021, the Company acquired Cascade Windows. Cascade Windows serves
the residential new construction and repair and remodel markets with energy
efficient vinyl window and door products from various manufacturing facilities
in the United States, expanding our manufacturing capabilities and creating new
opportunities for us in the Western United States. This acquisition was funded
with cash available on the balance sheet.

On December 3, 2021, the Company acquired Union Corrugating Company Holdings,
Inc. ("UCC"). UCC provides metal roofing, roofing components and accessories
from locations primarily in the Central and Eastern U.S. regions. This
acquisition was funded with cash available on the balance sheet.

We also evaluate possible dispositions of assets or businesses when such assets
or businesses are no longer core to our operations and do not fit into our
long-term strategy. On August 9, 2021, the Company completed the sale of its
insulated metal panels ("IMP") business to Nucor Insulated Panel Group Inc. and
certain of its subsidiaries (collectively, "Nucor") in a cash transaction for $1
billion. The IMP transaction included products sold under the Metl-Span and
CENTRIA brands. On August 18, 2021, the Company completed the sale of its
roll-up sheet doors business to Janus International Group, Inc. ("Janus") in a
cash transaction for $169 million. The roll-up sheet doors transaction included
products sold under the DBCI brand.

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From time to time, we have used available funds to repurchase shares of our
common stock under our stock repurchase program. On March 7, 2018, we announced
that our Board of Directors authorized a new stock repurchase program for the
repurchase of up to an aggregate of $50.0 million of our outstanding Common
Stock. Under this repurchase program, we are authorized to repurchase shares at
times and in amounts that we deem appropriate in accordance with all applicable
securities laws and regulations. Shares repurchased are usually retired. There
is no time limit on the duration of the program. During fiscal 2021, we did not
repurchase shares under the stock repurchase program. As of December 31, 2021,
approximately $49.1 million remained available for stock repurchases under the
program. In addition to repurchases of shares of our common stock under our
stock repurchase program, we also withhold shares of restricted stock to satisfy
minimum tax withholding obligations arising in connection with the vesting of
awards of share-based compensation.

We may from time to time take steps to reduce our debt or otherwise improve our
financial position. These actions could include prepayments, open market debt
repurchases, negotiated repurchases, other redemptions or retirements of
outstanding debt, opportunistic refinancing of debt and raising additional
capital. The amount of prepayments or the amount of debt that may be refinanced,
repurchased or otherwise retired, if any, will depend on market conditions,
trading levels of our debt, our cash position, compliance with debt covenants
and other considerations. Our affiliates may also purchase our debt from time to
time through open market purchases or other transactions. In such cases, our
debt may not be retired, in which case we would continue to pay interest in
accordance with the terms of the debt, and we would continue to reflect the debt
as outstanding on our consolidated balance sheets.

CONTINGENT LIABILITIES AND COMMITMENTS

Our insurance carriers require us to secure standby letters of credit as a
collateral requirement for our projected exposure to future period claims growth
and loss development, including IBNR claims. For all insurance carriers, the
total standby letters of credit are approximately $31.9 million and
$27.2 million at December 31, 2021 and 2020, respectively.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including those estimates that may
have a significant effect on our financial condition and results of operations.
Our significant accounting policies are disclosed in Note 2 to our consolidated
financial statements. The following discussion of critical accounting policies
addresses those policies that are both important to the portrayal of our
financial condition and results of operations and require significant judgment
and estimates. We base our estimates and judgment on historical experience and
on various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions.

Accounting for acquisitions, intangible assets and goodwill. Accounting for the
acquisition of a business requires the allocation of the purchase price to the
various assets and liabilities of the acquired business. For most assets and
liabilities, purchase price allocation is accomplished by recording the asset or
liability at its estimated fair value. The most difficult estimations of
individual fair values are those involving property, plant and equipment and
identifiable intangible assets. We use all available information to make these
fair value determinations and, for major business acquisitions, typically engage
an outside appraisal firm to assist in the fair value determination of the
acquired long-lived assets.

The Company has approximately $1,358.1 million of goodwill as of December 31,
2021, of which approximately $541.2 million pertains to our Windows segment,
$655.1 million pertains to our Siding segment, and $161.8 million pertains to
our Commercial segment. We perform an annual impairment assessment of goodwill.
Additionally, we assess goodwill for impairment whenever events or changes in
circumstances indicate that the fair values may be below the carrying values of
the reporting units. Unforeseen events, changes in circumstances and market
conditions and material differences in the value of intangible assets due to
changes in estimates of future cash flows could negatively affect the fair value
of our assets and result in a non-cash impairment charge. Some factors
considered important that could trigger an impairment review include the
following: significant underperformance relative to expected historical or
projected future operating results, significant changes in the manner of our use
of the acquired assets or the strategy for our overall business and significant
sustained negative industry or economic trends, such as the COVID-19 pandemic.

The fair value of our reporting units is based on a blend of estimated
discounted cash flows and publicly traded company multiples. A significant
reduction in projected sales and earnings which would lead to a reduction in
future cash flows could indicate potential impairment. The results from each of
these models are then weighted and combined into a single estimate of fair value
for our reporting units. Estimated discounted cash flows are based on projected
sales and related cost of sales. Publicly traded company multiples and
acquisition multiples are derived from information on traded shares and analysis
of recent acquisitions in the marketplace, respectively, for companies with
operations similar to ours. The primary assumptions used in these various models
include earnings multiples of acquisitions in a comparable industry, future cash
flow estimates

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of each of the reporting units, weighted average cost of capital, working
capital and capital expenditure requirements. Management does not believe the
estimates used in the analysis are reasonably likely to change materially in the
future, but we will continue to assess the estimates in the future based on the
expectations of the reporting units. Changes in assumptions used in the fair
value calculation could result in an estimated reporting unit fair value that is
below the carrying value, which may result in an impairment of goodwill.

We completed our annual goodwill impairment test as of October 3, 2021 for each
of our reporting units with goodwill. We have the option of performing an
assessment of certain qualitative factors to determine if it is more likely than
not that the fair value of a reporting unit is less than its carrying value or
proceeding directly to a quantitative impairment test. We elected to apply the
quantitative assessment for the goodwill impairment test for our reporting units
within each of our operating segments as of October 3, 2021.

A summary of the key assumptions utilized in the goodwill impairment analysis at
October 3, 2021, as it relates to the fair values and the sensitivities for
these assumptions follows:

                                                                        As of October 3, 2021
                                                                                       Engineered
                                                                                        Building              Metal
                                                 Windows             Siding              Systems            Components
Assumptions:
Income Approach:
Terminal growth rate                                 3.5  %             3.0  %              3.0    %             3.0  %
Discount rate                                       17.5  %            13.5  %             17.5    %            13.5  %

Market approach:
Control premium                                      0.0  %             0.0  %             10.0    %            10.0  %

Sensitivities
(in thousands)
Estimated fair value change in the event of a  $  58,698          $ 118,932          $   26,843            $  28,149
1% decrease in the terminal year growth
Estimated fair value change in the event of a  $ 124,389          $ 226,792          $   50,247            $  44,064
1% decrease in the discount rate
Estimated fair value change in the event of a           n/a                n/a       $    6,627            $   4,402

1% reduction in the control premium

Overall, we use the same key assumptions to prepare the forward-looking financial information used in the discounted cash flow test for reporting units. However, each reporting unit is affected differently by industry trends, how market factors influence the expected performance of reporting units, competition, and other unique business factors as mentioned above. (in thousands)

                                                           As of October 3, 2021
Estimated Windows reporting unit fair value increase in the event of a $                8,920

10% increase in the weighting of the market multiple method Estimated increase in the fair value of the Siding reporting unit in the event of

               34,190

10% increase in the weighting of the market multiples method
Estimated Engineering Building Systems fair value of reporting unit $

                2,480

increase in the event of a 10% increase in the weighting of the market multiples method Increase in the estimated fair value of the metallic components reporting unit in the

                6,530

case of a 10% increase in the weight of the stock market multiples method


The Company's annual goodwill impairment tests performed as of October 3, 2021
indicated no impairment. The Company's estimate of the fair value of its
Windows, Siding, Engineered Building Systems, and Metal Components reporting
units exceeded their carrying values by approximately 19%, 41%, 444%, and 172%,
respectively.

We make no warranty that: (1) valuation multiples will not decrease, (2) discount rates will not increase, or (3) earnings, carrying values, or projected earnings and cash flows of our operating units will not decrease. We will continue to analyze changes to these assumptions in future periods. We will continue to assess goodwill in future periods and

                                       45
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future declines in residential housing and renovation markets and non-residential markets as well as economic conditions could result in future goodwill impairments.

Warranty. The Company sells a number of products and offers a number of
warranties. The specific terms and conditions of these warranties vary depending
on the product sold. The Company's warranty liabilities are undiscounted and
adjusted for inflation based on third party actuarial estimates. Factors that
affect the Company's warranty liabilities include the number of units sold,
historical and anticipated rates of warranty claims, cost per claim and new
product introduction. Warranties are normally limited to replacement or service
of defective components for the original customer. Some warranties are
transferable to subsequent owners and are generally limited to ten years from
the date of manufacture or require pro-rata payments from the customer. A
provision for estimated warranty costs is recorded based on historical
experience and the Company periodically adjusts these provisions to reflect
actual experience. Warranty costs are included within cost of goods sold. The
Company assesses the adequacy of the recorded warranty claims and adjusts the
amounts as necessary. Separately, upon the sale of a weathertightness warranty
in the Commercial segment, the Company records the resulting revenue as deferred
revenue, which is included in other accrued expenses and other long-term
liabilities on the consolidated balance sheets depending on when the revenues
are expected to be recognized.

Income taxes. The determination of our provision for income taxes requires
significant judgment, the use of estimates and the interpretation and
application of complex tax laws. The amount recorded in our consolidated
financial statements reflects estimates of final amounts due to timing of
completion and filing of actual income tax returns. Estimates are required with
respect to, among other things, the potential utilization of operating and
capital loss carry-forwards for federal, state, and foreign income tax purposes
and valuation allowances required, if any, for tax assets that may not be
realized in the future. We establish reserves when, despite our belief that our
tax return positions are fully supportable, certain positions could be
challenged, and the positions may not be fully sustained. Our provision for
income taxes reflects a combination of income earned and taxed in the various
U.S. federal and state, Canadian federal and provincial, Mexican federal, and
other jurisdictions. Jurisdictional tax law changes, increases or decreases in
permanent differences between book and tax items, accruals or adjustments of
accruals for tax contingencies or valuation allowances, and the change in the
mix of earnings from these taxing jurisdictions all affect the overall effective
tax rate.

As of December 31, 2021, the $41.7 million net operating loss carryforward
included $20.8 million for U.S federal losses, $13.3 million for U.S. state
losses and $7.6 million for foreign losses. The state net operating loss
carryforwards began to expire in 2021, if unused, and the federal and foreign
loss carryforwards will begin to expire in fiscal 2029, if unused. There are
limitations on the utilization of certain net operating losses.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 3 – Accounting pronouncements in the notes to the consolidated financial statements for information on recent accounting pronouncements.

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