What changed in this filing

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Item 1. Financial Statements

2022-07-01 compared with 2022-01-06 · 150 added, 243 removed, 406 unchanged (49% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

(In thousands, except stock data) November 27, 2021 February 27, 2021

(In thousands, except stock data) May 28, 2022 February 26, 2022

Current assets

Cash and cash equivalents $ 15,186 $ 37,583

Restricted cash 8,685 —

Receivables, net 193,741 168,592

4 unchanged sentences

Property, plant and equipment, net 237,412 249,995

Assets held for sale 9,256 —

Operating lease right-of-use assets 45,021 47,912

7 unchanged sentences

Accrued payroll and related benefits 38,212 50,977

Billings on contracts in excess of costs and earnings 18,458 22,789

Billings in excess of costs and earnings on uncompleted contracts 6,505 8,659

Operating lease liabilities 12,178 12,744

Current portion of debt 1,000 2,000

Current portion long-term debt — 1,000

Other current liabilities 61,262 67,462

16 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

(In thousands, except per share data) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

(In thousands, except per share data) May 28, 2022 May 29, 2021

Net sales $ 356,635 $ 326,006

4 unchanged sentences

Interest expense, net 1,206 1,238

Other (expense) income, net ( 3,057 ) 472 ( 3,266 ) 684

Other expense, net 1,310 315

Earnings before income taxes 30,700 14,489

7 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Net earnings $ 22,731 $ 10,817

Other comprehensive earnings (loss):

Other comprehensive (loss) earnings:

Unrealized (loss) gain on marketable securities, net of $( 74 ) and $ 0 of tax (benefit) expense, respectively

( 151 ) ( 2 ) ( 147 ) 145

Unrealized (loss) gain on derivative instruments, net of $( 1,317 ) and $ 211 of tax (benefit) expense, respectively

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Operating Activities

Net earnings $ 22,731 $ 10,817

Adjustments to reconcile net earnings to net cash provided by operating activities:

Adjustments to reconcile net earnings to net cash (used) provided by operating activities:

Depreciation and amortization 10,849 12,980

1 unchanged sentence

Deferred income taxes 4,400 941

Asset impairment 16,638 —

Gain on disposal of assets ( 660 ) ( 421 )

Proceeds from New Markets Tax Credit transaction, net of deferred costs 18,390 —

Settlement of New Markets Tax Credit transaction ( 19,523 ) —

Noncash lease expense 3,088 3,098

5 unchanged sentences

Accounts payable and accrued expenses ( 18,331 ) ( 22,449 )

Billings on contracts in excess of costs and earnings ( 4,474 ) ( 6,981 )

Billings in excess of costs and earnings on uncompleted contracts ( 2,152 ) ( 6,434 )

Refundable and accrued income taxes 4,238 1,410

Operating lease liability ( 3,333 ) ( 3,113 )

Other ( 703 ) 5,122

Net cash provided by operating activities 86,291 120,512

Other, net ( 2,968 ) ( 11 )

Net cash (used) provided by operating activities ( 30,462 ) 6,883

Investing Activities

1 unchanged sentence

Proceeds from sales of property, plant and equipment 4,087 438

Other 76 ( 1,090 )

Net cash (used) provided by investing activities ( 11,647 ) 5,518

Other, net 100 119

Net cash used by investing activities ( 938 ) ( 4,148 )

Financing Activities

Borrowings on line of credit 161,000 —

Repayments on debt ( 2,000 ) ( 5,400 )

Repayment on debt ( 1,000 ) —

Payments on line of credit ( 62,000 ) —

2 unchanged sentences

Dividends paid ( 4,793 ) ( 5,035 )

Other ( 1,895 ) ( 2,309 )

Net cash used by financing activities ( 43,994 ) ( 85,698 )

Increase in cash and cash equivalents 30,650 40,332

Other, net ( 1,271 ) ( 712 )

Net cash provided (used) by financing activities 17,624 ( 14,257 )

Decrease in cash, cash equivalents and restricted cash ( 13,776 ) ( 11,522 )

Effect of exchange rates on cash 64 714

5 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands) Common Shares Outstanding Common Stock Additional Paid-In Capital Retained Earnings Common Stock Held in Trust Deferred Compensation Obligation Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

(In thousands) Common Shares Outstanding Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

Balance at February 26, 2022 23,701 $ 7,901 $ 149,713 $ 254,825 $ ( 26,240 ) $ 386,199

Net earnings — — — 22,731 — 22,731

Unrealized gain on marketable securities, net of $ 0 tax expense

— — — — — — — —

Unrealized gain on foreign currency hedge, net of $ 211 tax expense

— — — — — — 692 692

Foreign currency translation adjustments — — — — — — 5,880 5,880

Issuance of stock, net of cancellations 90 30 ( 7 ) — ( 3 ) 3 — 23

Share-based compensation — — 1,674 — — — — 1,674

Exercise of stock options 179 60 4,055 — — — — 4,115

Share repurchases ( 357 ) ( 119 ) ( 2,218 ) ( 10,288 ) — — — ( 12,625 )

Other share retirements ( 20 ) ( 7 ) ( 121 ) ( 607 ) — — — ( 735 )

Cash dividends — — — ( 5,035 ) — — — ( 5,035 )

Balance at May 29, 2021 25,606 $ 8,535 $ 158,341 $ 352,130 $ ( 189 ) $ 189 $ ( 21,455 ) $ 497,551

Net loss — — — ( 2,116 ) — — — ( 2,116 )

Unrealized gain on marketable securities, net of $ 2 tax expense

— — — — — — 4 4

Unrealized loss on foreign currency hedge, net of $ 203 tax benefit

— — — — — — ( 666 ) ( 666 )

Foreign currency translation adjustments — — — — — — ( 4,300 ) ( 4,300 )

Issuance of stock, net of cancellations 67 22 — — ( 3 ) 3 — 22

Share-based compensation — — 1,587 — — — — 1,587

Share repurchases ( 249 ) ( 83 ) ( 1,616 ) ( 8,095 ) — — — ( 9,794 )

Other share retirements ( 30 ) ( 9 ) ( 197 ) ( 496 ) — — — ( 702 )

Cash dividends — — — ( 5,025 ) — — — ( 5,025 )

Balance at August 28, 2021 25,394 $ 8,465 $ 158,115 $ 336,398 $ ( 192 ) $ 192 $ ( 26,417 ) $ 476,561

Net earnings — — — 11,057 — — — 11,057

Unrealized loss on marketable securities, net of $ 74 tax benefit

— — — — ( 276 ) ( 276 )

Unrealized loss on foreign currency hedge, net of $ 265 tax benefit

— — — — — — ( 868 ) ( 868 )

Foreign currency translation adjustments — — — — — — ( 2,515 ) ( 2,515 )

Issuance of stock, net of cancellations 1 — 22 — ( 3 ) 3 — 22

Share-based compensation — — 1,546 — — — — 1,546

Share repurchases ( 166 ) ( 55 ) ( 1,092 ) ( 5,598 ) — — — ( 6,745 )

Other share retirements ( 2 ) ( 1 ) ( 12 ) ( 51 ) — — — ( 64 )

Cash dividends — — — ( 4,990 ) — — — ( 4,990 )

Balance at November 27, 2021 25,227 $ 8,409 $ 158,579 $ 336,816 $ ( 195 ) $ 195 $ ( 29,951 ) $ 473,853

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Balance at February 29, 2020 26,443 $ 8,814 $ 154,016 $ 388,010 $ ( 685 ) $ 685 $ ( 34,062 ) $ 516,778

Net earnings — — — 2,876 — — — 2,876

Unrealized gain on marketable securities, net of $ 26 tax expense

— — — — — — 97 97

Unrealized loss on foreign currency hedge, net of $ 189 tax benefit

Unrealized loss on derivative instruments, net of $ 1,317 tax benefit

— — — — ( 4,316 ) ( 4,316 )

6 unchanged sentences

Balance at May 28, 2022 22,200 $ 7,400 $ 140,785 $ 208,205 $ ( 29,100 ) $ 327,290

(In thousands) Common Shares Outstanding Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

Balance at February 27, 2021 25,714 $ 8,571 $ 154,958 $ 357,243 $ ( 28,027 ) $ 492,745

Net earnings — — — 10,817 — 10,817

Unrealized gain on marketable securities, net of $ 0 tax expense

— — — — — — 50 50

Unrealized gain on foreign currency hedge, net of $ 404 tax expense

— — — — — — 1,319 1,319

Foreign currency translation adjustments — — — — — — 6,139 6,139

Issuance of stock, net of cancellations 121 41 ( 23 ) — ( 11 ) 11 — 18

Share-based compensation — — 2,256 — — — — 2,256

Other share retirements ( 23 ) ( 8 ) ( 139 ) ( 390 ) — — — ( 537 )

Cash dividends — — — ( 4,879 ) — — — ( 4,879 )

Balance at August 29, 2020 26,467 $ 8,823 $ 155,956 $ 394,614 $ ( 707 ) $ 707 $ ( 33,225 ) $ 526,168

Net earnings — — — 37,273 — — — 37,273

Unrealized loss on marketable securities, net of $ 0 tax benefit

— — — — — — ( 2 ) ( 2 )

Unrealized gain on foreign currency hedge, net of $ 90 tax expense

Unrealized gain on derivative instruments, net of $ 211 tax expense

— — — — 692 692

6 unchanged sentences

Cash dividends — — — ( 5,035 ) — ( 5,035 )

Balance at November 28, 2020 25,962 $ 8,654 $ 155,974 $ 414,749 $ ( 183 ) $ 183 $ ( 32,034 ) $ 547,343

Balance at May 29, 2021 25,606 $ 8,535 $ 158,341 $ 352,130 $ ( 21,455 ) $ 497,551

See accompanying notes to consolidated financial statements.

7 unchanged sentences

All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature.

The results of operations for the three- and nine-month periods ended November 27, 2021 are not necessarily indicative of the results to be expected for the full year.

COVID-19 update

During fiscal 2021, as a result of the global COVID-19 pandemic, we experienced some delays in commercial construction projects and orders and other disruptions to our business, including various physical distancing and health-related precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment for a portion of fiscal 2021 due to governmental orders.

We were also impacted by quarantine-related absenteeism among our production workforce, resulting in labor constraints at some of our facilities.

Through the first three quarters of fiscal 2022, the negative impacts on our business directly due to the COVID-19 pandemic have moderated.

The extent to which COVID-19 will continue to impact our businesses in the future will depend on numerous evolving factors including, but not limited to, the emergence of new variants of the coronavirus, such as the Delta and Omicron variants, and the effectiveness of ongoing public health initiatives, which have been boosted by vaccine production and distribution.

Adoption of new accounting standards

At the beginning of fiscal 2022, we adopted the guidance in ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The amendments in this ASU removed exceptions on intra-period tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes.

The adoption of this ASU did not have a significant impact on the consolidated financial statements.

At the beginning of fiscal 2022, we adopted the guidance in ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The adoption of this ASU did not have a significant impact on the consolidated financial statements.

Equity Investment

During the third quarter of fiscal 2022, an impairment of $ 3.0 million was recognized within other (expense) income within the consolidated results of operations related to a minority equity investment held by the Company which represents a write-down of the entire investment in the company.

The results of operations for the three-month period ended May 28, 2022 are not necessarily indicative of the results to be expected for the full year.

At the beginning of the first quarter of fiscal 2023, we began management of the Sotawall and Harmon businesses under the Architectural Services segment in order to create a single, unified offering for larger custom curtainwall projects.

The comparative fiscal 2022 segment results for the Architectural Framing Systems and Architectural Services segments have been recast to reflect the move of the Sotawall business into the Architectural Services segment from the Architectural Framing Systems segment, effective at the start of the first quarter of fiscal 2023.

Revenue, Receivables and Contract Assets and Liabilities

The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):

Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Recognized at shipment $ 161,164 $ 140,283

7 unchanged sentences

An account is written off when it is determined that the asset is no longer collectible.

construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.

(In thousands) November 27, 2021 February 27, 2021

Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released to us from the customer.

(In thousands) May 28, 2022 February 26, 2022

Trade accounts $ 139,846 $ 129,085

3 unchanged sentences

allowance for credit losses 2,092 2,132

Net receivables $ 165,005 $ 175,917

Receivables, net $ 193,741 $ 168,592

The following table summarizes the activity in the allowance for credit losses:

(In thousands) November 27, 2021 February 27, 2021

(In thousands) May 28, 2022 February 26, 2022

Beginning balance $ 2,132 $ 1,947

2 unchanged sentences

Other changes (1)

( 16 ) ( 24 )

Ending balance $ 2,092 $ 2,132

5 unchanged sentences

The time period between when performance obligations are complete and when payment is due is not significant.

In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.

(In thousands) November 27, 2021 February 27, 2021

(In thousands) May 28, 2022 February 26, 2022

Contract assets $ 72,686 $ 59,185

Contract liabilities 9,464 11,373

The change in contract assets and contract liabilities was mainly due to timing of project activity within our businesses that operate under long-term contracts.

Other contract-related disclosures Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

The changes in contract assets and contract liabilities were mainly due to timing of project activity within our businesses that operate under long-term contracts.

Other contract-related disclosures Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Revenue recognized related to contract liabilities from prior year-end $ 35,926 $ 14,100

2 unchanged sentences

Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time.

As of November 27, 2021, the transaction price associated with unsatisfied performance obligations was approximately $ 863.1 million.

As of May 28, 2022, the transaction price associated with unsatisfied performance obligations was approximately $ 810.6 million.

The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) November 27, 2021

(In thousands) May 28, 2022

Within one year

Within two years

Beyond 68,209

Beyond two years

Total $ 810,593

Supplemental Balance Sheet Information

(In thousands) November 27, 2021 February 27, 2021

(In thousands) May 28, 2022 February 26, 2022

Raw materials $ 51,967 $ 42,541

3 unchanged sentences

Other current liabilities

(In thousands) November 27, 2021 February 27, 2021

(In thousands) May 28, 2022 February 26, 2022

Warranties $ 12,521 $ 11,786

Accrued project losses 904 4,572

Income and other taxes 19,074 15,770

4 unchanged sentences

Other non-current liabilities

(In thousands) November 27, 2021 February 27, 2021

Deferred benefit from New Market Tax Credit transactions $ 9,165 $ 15,717

(In thousands) May 28, 2022 February 26, 2022

Deferred benefit from New Markets Tax Credit transactions $ 15,217 $ 9,165

Retirement plan obligations 6,978 7,041

1 unchanged sentence

Deferred tax liabilities 4,430 2,296

Deferred payroll taxes 6,789 6,789

Other 17,847 16,598

5 unchanged sentences

(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated

November 27, 2021 $ 12,337 $ 223 $ 33 $ 12,527

May 28, 2022 $ 11,731 $ 7 $ 435 $ 11,303

February 26, 2022 11,862 45 123 11,784

1 unchanged sentence

The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

The amortized cost and estimated fair values of these bonds at November 27, 2021, by contractual maturity, are shown below.

The amortized cost and estimated fair values of these bonds at May 28, 2022, by contractual maturity, are shown below.

Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.

3 unchanged sentences

Due after five years through 10 years 339 297

Due beyond 15 years 800 814

Total $ 11,731 $ 11,303

3 unchanged sentences

In fiscal 2020, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility and term loan.

As of November 27, 2021, the interest rate swap contract had a notional value of $ 30.0 million.

As of May 28, 2022, the interest rate swap contract had a notional value of $ 30.0 million.

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign exchange rates (primarily related to the Canadian dollar).

These contracts generally have an original maturity date of less than one year.

As of November 27, 2021, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S.

As of May 28, 2022, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S.

dollar notional values of $ 5.2 million and $ 13.2 million, respectively.

10 unchanged sentences

(Level 1) Other Observable Inputs (Level 2) Total Fair Value

November 27, 2021

Money market funds $ 7,409 $ — $ 7,409

1 unchanged sentence

Cash surrender value of life insurance — 16,656 16,656

Aluminum hedge contracts — 68 68

Foreign currency forward/option contract — 13 13

Interest rate swap contract — 1,218 1,218

Deferred compensation — 11,476 11,476

Foreign currency forward/option contracts — 446 446

Aluminum hedging contract — 2,776 2,776

February 26, 2022

2 unchanged sentences

Cash surrender value of life insurance — 17,831 17,831

Foreign currency forward/option contracts — 606 606

Aluminum hedge contracts — 363 363

Deferred compensation — 13,507 13,507

Aluminum hedging contract — 2,133 2,133

Interest rate swap contract — 718 718

Deferred compensation — 12,491 12,491

Foreign currency forward/option contract — 161 161

Money market funds and commercial paper

16 unchanged sentences

We measure certain financial instruments at fair value on a nonrecurring basis including goodwill, intangible assets, property and equipment and right-of-use lease assets.

These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation.

These assets were initially measured and recognized at amounts equal to the fair

value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation.

Periodically, these assets are tested for impairment, by comparing their respective carrying values to the estimated fair value of the reporting unit or asset group in which they reside.

2 unchanged sentences

Fair value measurements of the reporting units associated with our goodwill balances and our indefinite-lived intangible assets are estimated at least annually in the fourth quarter of each fiscal year for purposes of impairment testing if a quantitative analysis is performed.

See Note 13 for additional information on the impairment charges recorded to fixed assets and right-of-use lease assets during the second and third quarters of fiscal 2022.

Goodwill and Other Intangible Assets

1 unchanged sentence

We evaluate goodwill for impairment annually as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

Based on the impairment analysis performed in the fourth quarter of fiscal 2021, estimated fair value was in excess of carrying value at six of our eight reporting units.

However, estimated fair value did not exceed carrying value for two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall.

As a result, as of February 27, 2021, we incurred goodwill impairment expense of $ 46.7 million and $ 17.1 million in our EFCO and Sotawall reporting units, respectively.

The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, represents the total accumulated goodwill impairment expenses recorded.

During the third quarter of fiscal 2022, we combined certain reporting units to form two reporting units, following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment.

segment, as a result of integration efforts that are ongoing, leadership over our Wausau, EFCO and Sotawall reporting units have been combined to form the Window and Wall Systems reporting unit, and our Linetec and Tubelite reporting units have been combined to form the Storefront and Finishing Solutions reporting unit.

With these organizational changes, Architectural Framing Systems segment management regularly reviews and evaluates the results of the Window and Wall Systems and Storefront and Finishing Solutions reporting units.

Additionally, functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the Window and Wall Systems and Storefront and Finishing Solutions reporting units.

The goodwill of the five individual pre-integration reporting units was aggregated to the respective combined reporting units.

We evaluated goodwill on a qualitative basis prior to and subsequent to this change and concluded no adjustment to the carrying value of goodwill was necessary as a result of this change.

In addition, for all reporting units, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

The carrying amount of goodwill attributable to each reporting segment was:

(In thousands) Architectural Framing Systems Architectural Glass Architectural Services Large-Scale

In connection with the transition, leadership of our Sotawall and Harmon businesses have been combined to form the Architectural Services reporting unit.

We evaluated goodwill on a qualitative basis prior to and subsequent to this change for these reporting units and concluded no adjustment to the carrying value of goodwill was necessary as a result of this change.

Concurrent with this change in composition of the operating segments effective at the start of our first quarter of fiscal 2023, goodwill was reallocated to the affected reporting units within each operating segment, using a relative fair value approach as outlined in ASC 350, Intangibles - Goodwill and Other.

In addition, for all reporting units, no qualitative indicators of impairment were identified during the first quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

The following table presents the carrying amount of goodwill attributable to each reporting segment including the amount of goodwill that has been reallocated from the Architectural Framing Systems segment to the Architectural Services segment using the relative fair value approach as of the start of fiscal 2023:

(In thousands) Architectural Framing Systems Architectural Services Architectural Glass Large-Scale

Optical Total

Balance at February 27, 2021 $ 93,099 $ 1,120 $ 25,322 $ 10,557 $ 130,098

Adjustment (1)

6,315 — — — 6,315

Impairment expense ( 63,769 ) — — — ( 63,769 )

Foreign currency translation 82 — ( 78 ) — 4

Balance at February 26, 2022 93,181 1,120 25,244 10,557 130,102

Reallocation among reporting units (1)

( 2,048 ) 2,048 — — —

Foreign currency translation ( 38 ) ( 3 ) 190 — 149

Balance at November 27, 2021 $ 92,987 $ 25,268 $ 1,120 $ 10,557 $ 129,932

(1) During the first quarter of fiscal 2021, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods.

The error was not material to any previously reported annual or interim consolidated financial statements.

Balance at May 28, 2022 $ 91,095 $ 3,165 $ 25,434 $ 10,557 $ 130,251

(1) Represents the reallocation of goodwill as a result of transitioning Sotawall from the Architectural Framing Systems segment to the Architectural Services segment as of the start of the first quarter of fiscal 2023.

Other intangible assets

Indefinite-lived intangible assets

We have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives.

We test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Based on our analysis, the fair value of each of our trade names and trademarks exceeded carrying amount, except for the EFCO tradename, within our Architectural Framing Systems segment.

The fair value determined for the EFCO tradename was less than its carrying value by $ 6.3 million;

this amount was recognized as impairment expense in the fourth quarter ended February 27, 2021, as reflected in the table below.

Based on the impairment analysis performed in the fourth quarter of fiscal 2022, the fair value of each of our trade names and trademarks exceeded the carrying amount.

However, due to triggering events identified in the fourth quarter of fiscal 2022, resulting from the finalization of our plans for integrating the Sotawall business into the Architectural Services segment, beginning in fiscal 2023, we determined that the carrying value of the Sotawall trade name exceeded fair value by $ 12.7 million.

We determined that Sotawall had an immaterial fair value, resulting in the trade name being fully impaired as of fiscal 2022 year-end.

We recognized this amount as impairment expense in the fourth quarter ended February 26, 2022.

Finite-lived intangible assets

Long-lived assets or asset groups, including intangible assets subject to amortization and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of those assets may not be

We use undiscounted cash flows to determine whether impairment exists and measure any impairment loss using discounted cash flows to determine the fair value of long-lived assets.

Due to triggering events identified during the fourth quarter of fiscal 2022, as a result of finalization of our plans for integrating the Sotawall business into the Architectural Services segment, beginning in fiscal 2023, we determined that the finite-lived intangible assets were impaired as of February 26, 2022.

As such, we recognized a long-lived asset impairment charge of $ 36.7 million in finite-lived intangible assets in the fourth quarter of fiscal year 2022, within the Architectural Framing Systems segment.

The gross carrying amount of other intangible assets and related accumulated amortization was:

3 unchanged sentences

Translation Net

November 27, 2021

Definite-lived intangible assets:

1 unchanged sentence

Other intangibles 38,659 ( 35,865 ) — 157 2,951

Total definite-lived intangible assets 164,799 ( 80,500 ) — ( 507 ) 83,792

Total 128,153 ( 84,162 ) — 305 44,296

Indefinite-lived intangible assets:

5 unchanged sentences

Other intangibles 41,838 ( 35,613 ) ( 3,127 ) ( 14 ) 3,084

Total definite-lived intangible assets 160,940 ( 74,677 ) — 3,958 90,221

Total 164,799 ( 82,839 ) ( 36,735 ) 127 45,352

Indefinite-lived intangible assets:

1 unchanged sentence

Total intangible assets $ 204,631 $ ( 82,839 ) $ ( 49,473 ) $ 162 $ 72,481

Amortization expense on definite-lived intangible assets was $ 5.9 million and $ 5.6 million for the nine-month periods ended November 27, 2021 and November 28, 2020, respectively.

Amortization expense on definite-lived intangible assets was $ 1.1 million and $ 2.0 million for the three-month periods ended May 28, 2022 and May 29, 2021, respectively.

Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses.

At November 27, 2021, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of Fiscal 2022 Fiscal 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026

At May 28, 2022, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of 2023 2024 2025 2026 2027

Estimated amortization expense $ 3,464 $ 4,483 $ 4,164 $ 4,051 $ 4,049

As of November 27, 2021, we had a committed revolving credit facility with maximum borrowings of up to $ 235 million with a maturity of June 2024.

There were no outstanding borrowings under the revolving credit facility as of November 27, 2021 and February 27, 2021.

At November 27, 2021 and February 27, 2021, we also had a $ 150 million term loan with a maturity date of June 2024.

As of May 28, 2022, we had a committed revolving credit facility with maximum borrowings of up to $ 235 million with a maturity of June 2024.

As of May 28, 2022, outstanding borrowings under our revolving credit facility were $ 99.0 million, while there were no outstanding borrowings under the revolving credit facility as of February 26, 2022.

At May 28, 2022 and February 26, 2022, we also had a $ 150 million term loan with a maturity date of June 2024.

Our revolving credit facility and term loan contain two financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of EBITDA-to-interest expense.

Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis.

At November 27, 2021, we were in compliance with both financial covenants.

Additionally, at November 27, 2021, we had a total of $ 16.4 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2023 to 2032 and reduce borrowing capacity under the revolving credit facility.

At November 27, 2021, debt included $ 13.0 million of industrial revenue bonds that mature in fiscal years 2023 through 2043.

In July 2021, two $ 1.0 million industrial revenue bonds matured and were repaid.

The fair value of all industrial revenue bonds approximated carrying value at November 27, 2021, due to the variable interest rates on these instruments.

At May 28, 2022, we were in compliance with both financial covenants.

Additionally, at May 28, 2022, we had a total of $ 16.4 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2023 to 2032 and reduce borrowing capacity under the revolving credit facility.

At May 28, 2022, debt included $ 12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043.

In March 2022, a $ 1.0 million industrial revenue bond matured and was repaid.

The fair value of all industrial revenue bonds approximated carrying value at May 28, 2022, due to the variable interest rates on these instruments.

Our credit facility, term loan and industrial revenue bonds would be classified as Level 2 within the fair value hierarchy described in Note 4.

We also maintain two Canadian committed, revolving credit facilities totaling $ 25.0 million (USD).

As of November 27, 2021 and February 27, 2021, there were no borrowings outstanding under the facilities.

Interest payments were $ 2.7 million and $ 3.7 million for the nine months ended November 27, 2021 and November 28, 2020, respectively.

As of May 28, 2022 and February 26, 2022, there were no borrowings outstanding under the facilities.

Interest payments were $ 1.1 million for each of the three-months ended May 28, 2022 and May 29, 2021, respectively.

We lease certain of the buildings and equipment used in our operations.

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The components of lease expense were as follows:

Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Operating lease cost $ 3,051 $ 3,381

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Other supplemental information related to leases was as follows:

Nine Months Ended

(In thousands except weighted-average data) November 27, 2021 November 28, 2020

Three Months Ended

(In thousands except weighted-average data) May 28, 2022 May 29, 2021

Cash paid for amounts included in the measurement of operating lease liabilities $ 3,537 $ 3,602

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Future maturities of lease liabilities are as follows:

(In thousands) November 27, 2021

(In thousands) May 28, 2022

Remainder of Fiscal 2023 $ 10,208

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In the ordinary course of business, predominantly in our Architectural Services and Architectural Framing Systems segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance.

At November 27, 2021, $ 1.2 billion of these types of bonds were outstanding, of which $ 448.0 million is in our backlog.

At May 28, 2022, $ 1.2 billion of these types of bonds were outstanding, of which $ 409.3 million is in our backlog.

These bonds do not have stated expiration dates.

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A warranty rollforward follows:

Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Balance at beginning of period $ 13,923 $ 14,999

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Balance at end of period $ 15,467 $ 14,547

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of our Architectural

Framing Systems businesses.

We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages.

The liability for these types of project-related contingencies was $ 0.9 million and $ 4.6 million as of November 27, 2021 and February 27, 2021, respectively.

Letters of credit

At November 27, 2021, we had $ 16.4 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6.

At May 28, 2022, we had $ 16.4 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6.

We also have a $6.9 million letter of credit which has been issued outside our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.

Purchase obligations

Purchase obligations for raw material commitments and capital expenditures totaled $ 239.5 million as of November 27, 2021.

Purchase obligations for raw material commitments and capital expenditures totaled $ 196.5 million as of May 28, 2022.

New Markets Tax Credit (NMTC) transactions

We have three outstanding NMTC arrangements which help to support operational expansion.

Proceeds received from investors on these transactions are included within other current and other non-current liabilities in our consolidated balance sheets.

Proceeds received from investors on these transactions are included within other non-current liabilities in our consolidated balance sheets.

The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction.

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These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement.

During the construction phase for each project, we are required to hold cash dedicated to fund each capital project which is classified as restricted cash in our consolidated balance sheets.

During the construction phase or for working capital purposes for each project, we are required to hold cash dedicated to fund each capital project which is classified as restricted cash in our consolidated balance sheets.

Variable-interest entities, which have been included within our consolidated financial statements, have been created as a result of the structure of these transactions, as investors in the programs do not have a material interest in their underlying economics.

During the first quarter of fiscal 2023, one NMTC transaction was terminated, and a new NMTC transaction was established as a replacement.

As a result of these transactions, $19.5 million in previous proceeds received were repaid and $19.5 million was contributed back to the Company as part of the newly established NMTC transaction.

This NMTC transaction will be held for the remainder of the original seven-year term.

The table below provides a summary of our outstanding NMTC transactions (in millions):

Inception date Termination date Proceeds received Deferred costs Net benefit

Inception date Termination date Deferred Benefit Deferred costs Net benefit

June 2016 June 2023 $ 6.0 $ 1.2 $ 4.8

August 2018 August 2025 6.6 1.4 5.2

September 2018 September 2025 3.2 1.0 2.2

May 2022 August 2025 6.0 1.6 4.4

Total $ 15.2 $ 3.8 $ 11.4

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Share-Based Compensation

Total share-based compensation expense included in the results of operations was $ 4.8 million for the nine-month period ended November 27, 2021 and $ 6.2 million for the nine-month period ended November 28, 2020.

Total share-based compensation expense included in the results of operations was $ 1.6 million for the three-month period ended May 28, 2022 and $ 1.7 million for the three-month period ended May 29, 2021.

Stock options and SARs

Stock option and SAR activity for the current nine-month period is summarized as follows:

Stock option and SAR activity for the current three-month period is summarized as follows:

Stock Options and SARs Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value

Outstanding at February 27, 2021 633,700 $ 23.04

Awards exercised ( 178,564 ) 23.04

Awards canceled ( 84,336 ) 23.04

Outstanding at November 27, 2021 370,800 $ 23.04 8.6 years $ 4,694,328

Vested or expected to vest at November 27, 2021 370,800 $ 23.04 8.6 years $ 4,694,328

For the nine-months ended November 27, 2021 and November 28, 2020, cash proceeds from the exercise of stock options were $ 4.1 million and $ 1.5 million, respectively.

The aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $ 2.3 million and $ 1.8 million, for the nine-months ended November 27, 2021 and November 28, 2020, respectively.

Outstanding at beginning of period 370,800 $ 23.04

Outstanding at end of period 370,800 $ 23.04 8.1 years $ 4,694,328

Vested or expected to vest at end of period 370,800 $ 23.04 8.1 years $ 4,694,328

No awards were issued or exercised during the three-months ended May 28, 2022.

For the three-months ended May 29, 2021, cash proceeds from the exercise of stock options was $ 4.1 million and the aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $ 2.7 million.

Executive Compensation Program

In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees.

In the first quarter of fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date.

In the each of the first quarters of fiscal 2023 and fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date.

The number of share units issued at grant is equal to the target number of performance shares and allows for the right to receive an additional number of shares dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Nonvested share awards and units

Nonvested share activity, including performance share units, for the current nine-month period is summarized as follows:

Nonvested share activity, including performance share units, for the current three-month period is summarized as follows:

Nonvested shares and units Number of Shares and Units Weighted Average Grant Date Fair Value

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488,944 $ 30.14

147,417 48.01

Vested ( 72,845 ) 27.60

Canceled ( 7,878 ) 29.36

Nonvested at November 27, 2021 (2)

Nonvested at May 28, 2022 (1) (2)

555,638 $ 35.23

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(2) Includes a total of 38,564 nonvested share units granted and outstanding at target level for the fiscal 2023-2025 performance period.

At November 27, 2021, there was $ 11.0 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 28 months.

The total fair value of shares vested during the nine months ended November 27, 2021 was $ 6.9 million.

At May 28, 2022, there was $ 14.8 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 29 months.

The total fair value of shares vested during the three months ended May 28, 2022 was $ 2.0 million.

The Company files income tax returns in the U.S.

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The Company is not currently under U.S.

federal examination for years subsequent to fiscal year 2017, and there is limited audit activity of the Company’s income tax returns in U.S.

federal examination for years subsequent to fiscal year 2018, and there is very limited audit activity of the Company’s income tax returns in U.S.

state jurisdictions or international jurisdictions.

The total liability for unrecognized tax benefits was $ 4.0 million at November 27, 2021, compared to $ 3.8 million at February 27, 2021.

The total liability for unrecognized tax benefits was $ 3.4 million at May 28, 2022, compared to $ 3.3 million at February 26, 2022.

Penalties and interest related to unrecognized tax benefits are recorded in income tax expense.

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The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:

Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Basic earnings per share – weighted average common shares outstanding

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Weighted average effect of nonvested share grants and assumed exercise of stock options

352 342 293 282

Diluted earnings per share – weighted average common shares and potential common shares outstanding

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We have four reporting segments:

• The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings.

• The Architectural Glass segment fabricates coated, high-performance glass used globally in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.

• The Architectural Services segment provides full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.

• The Large-Scale Optical (LSO) segment manufactures value-added glass and acrylic products primarily for framing and display applications.

Three Months Ended Nine Months Ended

(In thousands) November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

• The Architectural Framing Systems segment designs, engineers, fabricates and finishes aluminum window, curtainwall, storefront and entrance systems for the exterior of buildings.

• The Architectural Services segment integrates technical services, project management, and field installation services to design, engineer, fabricate, and install building glass and curtainwall systems.

• The Architectural Glass segment coats and fabricates, high-performance glass used in custom window and wall systems on commercial buildings.

• The Large-Scale Optical (LSO) segment manufactures high-performance glass and acrylic products for custom framing, museum, and technical glass markets.

The fiscal 2022 segment results were recast for comparability.

Three Months Ended

(In thousands) May 28, 2022 May 29, 2021

Architectural Framing Systems $ 163,292 $ 136,768

Architectural Glass 74,289 84,779 236,693 248,274

Architectural Services 103,388 90,732

Architectural Glass 76,265 83,031

Large-Scale Optical 25,162 24,228

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Architectural Framing Systems $ 23,665 $ 8,371

Architectural Glass (1)

( 1,277 ) 10,825 ( 16,143 ) 15,306

Architectural Services 2,927 4,226

Architectural Glass 5,169 2,128

Large-Scale Optical 6,498 5,847

5,996 26,114 17,326 25,131

Corporate and other ( 5,043 ) ( 4,530 )

Operating income $ 33,216 $ 16,042

(1) Architectural Glass operating loss amounts for the three- and nine-month periods ended November 27, 2021 include $3.5 million and $20.9 million of restructuring related costs, respectively.

(2) LSO operating income amounts for the three- and nine-month periods ended November 28, 2020 include a $19.3 million gain on the sale-lease back of a building.

Due to the varying combinations and integration of individual window, storefront and curtainwall systems, it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported.

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On August 11, 2021, we announced plans to realign and simplify our business structure.

For the three- and nine-month periods ended November 27, 2021, we incurred $ 3.4 million and $ 24.2 million, respectively, of pre-tax costs associated with the execution of these plans, of which $ 3.6 million and $ 22.1 million are included within cost of sales and $( 0.2 ) million and $ 2.1 million are included within selling, general and administrative expenses within our consolidated statements of operations.

These costs primarily related to asset impairment charges due to the closure of two facilities within the Architectural Glass segment, in Dallas, Texas and Statesboro, Georgia, which closures were made in order to concentrate this segment on premium, high-performance products.

Additionally, employee termination costs were incurred related to these facility closures, realignment of the Architectural Framing Systems segment, and within the Corporate office.

We expect future pre-tax costs associated with the ongoing execution of these plans to be approximately $ 2 to $ 3 million, which we expect will be incurred during the fourth quarter of our fiscal year 2022.

At the end of the third quarter of fiscal 2022, $9.3 million of assets were classified as held for sale on the consolidated balance sheets related to the building and related equipment of our Statesboro, Georgia facility within the Architectural Glass segment.

Three Months Ended November 27, 2021

(In thousands) Architectural Framing Architectural Glass Corporate and other Total

Asset impairment charges $ ( 32 ) $ 1,353 $ — $ 1,321

Termination benefits ( 14 ) 1,638 ( 179 ) 1,445

Other restructuring charges 2 527 124 653

Total restructuring charges $ ( 44 ) $ 3,518 $ ( 55 ) $ 3,419

Nine Months Ended November 27, 2021

(In thousands) Architectural Framing Architectural Glass Corporate and other Total

Asset impairment charges $ 54 $ 16,584 $ — $ 16,638

Termination benefits 1,809 3,215 760 5,784

Other restructuring charges 141 1,110 560 1,811

Total restructuring charges $ 2,004 $ 20,909 $ 1,320 $ 24,233

During the three-month period ended May 28, 2022, we completed the execution of these plans with the sale of the remaining manufacturing assets at our Architectural Glass location, in Dallas, Texas, for $ 4.1 million.

The remaining assets had a carrying value of $ 3.4 million, and we recognized a gain on the sale of approximately $ 0.6 million, net of associated transaction costs, which is included as a reduction of cost of sales within our consolidated statements of operations.

The following table summarizes our restructuring related accrual balances included within accrued payroll and related costs and other current liabilities in the consolidated balance sheets.

All balances are expected to be paid within the current fiscal year.

(In thousands) Architectural Framing Architectural Glass Corporate and other Total

Balance at March 1, 2020 $ — $ — $ — $ —

Architectural Framing Architectural Glass Corporate & Other Total

Balance at February 27, 2021 $ 2,872 $ 230 $ 161 $ 3,263

Restructuring expense 2,000 1,036 1,039 4,075

Payments ( 3,567 ) ( 529 ) ( 972 ) ( 5,068 )

Other adjustments ( 865 ) — — ( 865 )

Balance at February 26, 2022 440 737 228 1,405

Restructuring expense 1,984 884 1,221 4,089

Payments ( 124 ) ( 378 ) ( 68 ) ( 570 )

Other adjustments ( 14 ) ( 17 ) — ( 31 )

Balance at November 27, 2021 $ 1,735 $ 760 $ 790 $ 3,285

Balance at May 28, 2022 $ 302 $ 342 $ 160 $ 804

Subsequent Events

We have evaluated subsequent events for potential recognition and disclosure through the date of this filing.

Subsequent to the end of the quarter, we purchased 484,646 shares of stock under our authorized share repurchase program, at a total cost of $ 22.3 million.

In December 2021, we sold all of the property and assets at the Architectural Glass segment’s Statesboro, Georgia manufacturing facility for $ 29.1 million.

The carrying value of the building and related equipment was $ 9.3 million.

We will recognize a gain on this sale of approximately $ 19.0 million, net of associated transaction costs, which will be included as a reduction of cost of sales within our consolidated statements of operations for the fourth quarter of fiscal 2022.

Subsequent to the end of the quarter, the Board of Directors increased the share repurchase authorization by an additional 1,000,000 shares.

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