What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-07-01 compared with 2022-01-06 · 99 added, 101 removed, 74 unchanged (73% of the section changed)

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These statements reflect our current views with respect to future events and financial performance.

The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” "will," "continue" and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Reform Act of 1995.

All forecasts and projections in this document are “forward-looking statements,” and are based on management’s current expectations or beliefs.

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We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

We are a leader in the design and development of value-added glass and metal products and services for enclosing commercial buildings and framing and displays.

We are a leader in the design and development of value-added glass and metal products and services.

Our four reporting segments are:

Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).

During fiscal 2022, we conducted a strategic review of our business and the markets we serve in order to establish a new enterprise strategy with three key elements, as discussed below:

Become the economic leader in our target markets.

We will achieve this by developing a deep understanding of our target markets and aligning our businesses with clear go-to-market strategies to drive value for our customers through differentiated product and service offerings.

We will also build a relentless focus on operational execution, driving productivity improvements, and maintaining a competitive cost structure, so that we may bring more value to our customers and improve our own profitability.

Actively manage our portfolio to drive higher margins and returns.

We intend to shift our business mix toward higher operating margin offerings and improve our return on invested capital performance.

We will accomplish this by allocating resources to grow our top performing businesses, actively addressing underperforming businesses, and investing to add new differentiated product and service offerings to accelerate our growth.

Strengthen our core capabilities.

We are shifting from our historical, decentralized operating model, to one with center-led functional expertise that enables us to leverage the scale of the enterprise to better support the needs of the business.

We are establishing a Company-wide operating system with common tools and processes that are based on the foundation of Lean and Continuous Improvement.

This will be supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

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.

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February 26, 2022 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Highlights of Third Quarter of Fiscal 2022 Compared to Third Quarter of Fiscal 2021

Consolidated net sales increased 6.6 percent, or $20.6 million, and increased 6.9 percent, or $63.9 million, for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, primarily driven by volume growth in the Architectural Services and LSO segments, as well as, flow-through from pricing actions taken to offset inflation within the Architectural Framing segment.

LSO was closed for most of the first and second quarters of fiscal 2021, due to COVID-19.

Highlights of First Quarter of Fiscal 2023 Compared to First Quarter of Fiscal 2022

Consolidated net sales increased 9.4 percent, or $30.6 million, for the three-month period ended May 28, 2022, compared to the same period in the prior year, primarily driven by growth in the Architectural Framing Systems and Architectural Services segments.

The relationship between various components of operations, as a percentage of net sales, is presented below:

Three Months Ended Nine Months Ended

November 27, 2021 November 28, 2020 November 27, 2021 November 28, 2020

Three Months Ended

May 28, 2022 May 29, 2021

Net sales 100.0 % 100.0 %

Cost of sales 76.0 79.2

Gross margin 19.4 22.2 18.3 22.3

Gross profit 24.0 20.8

Selling, general and administrative expenses 14.7 15.8

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Interest expense, net 0.3 0.4

Other (expense) income, net (0.9) 0.2 (0.3) 0.1

Other expense, net 0.4 0.1

Earnings before income taxes 8.6 4.4

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Effective tax rate 26.0 % 25.3 %

Gross profit as a percent of sales (gross margin) was 19.4 percent and 18.3 percent for the three- and nine-month periods ended November 27, 2021, compared to 22.2 percent and 22.3 percent for the three- and nine-month periods ended November 28, 2020.

Gross margin decreased in the current year three- and nine-month periods compared to the prior year, primarily due to $3.6 million and $22.1 million of restructuring charges included in cost of goods sold incurred during the three- and nine-month periods of the current fiscal year, as well as inflationary pressure on raw materials and freight within the Architectural Glass and Architectural Framing Systems segments.

These costs were partially offset by positive impacts from continued recovery of the LSO segment (which closed for most of the first and second quarters last year, based on COVID-related government directives).

Gross profit as a percent of sales (gross margin) was 24.0 percent for the three-month period ended May 28, 2022, compared to 20.8 percent for the three-month period ended May 29, 2021.

Gross margin increased in the current year three-month period compared to the prior year period, primarily driven by inflation-related pricing actions in the Architectural Framing Systems segment, partially offset by negative performance impacts of certain projects within the Architectural Services segment.

Selling, general and administrative (SG&A) expenses

SG&A expenses as a percent of sales were 14.1 percent and 15.2 percent for the three- and nine-month periods ended November 27, 2021, compared to 6.3 percent and 13.7 percent for the prior year three- and nine-month periods.

SG&A expenses in the three- and nine-month periods ended November 27, 2021, included increased Corporate and other costs, primarily related to investments in transformation initiatives in the current year periods and higher health care costs in the current year compared to the prior-year periods.

Additionally, SG&A expenses in the prior year third quarter were reduced by a $19.3 million gain on the sale-leaseback of a building and $7.4 million of income related to a New Markets Tax Credit transaction, driving lower SG&A expenses as a percent of sales in the prior year three- and nine-month periods.

In addition, we recognized a benefit of $1.0 million and $5.5 million during the three- and nine-month periods ended November 27, 2021, respectively, compared to $4.2 million and $5.5 million in the prior year three- and nine-month periods, from a Canadian wage subsidy program offered to support Canadian businesses due to the ongoing impacts of the COVID-19 pandemic.

SG&A expenses as a percent of sales were 14.7 percent for the three-month period ended May 28, 2022, compared to 15.8 percent for the prior year three-month period.

SG&A decreased as a percent of sales compared to the same period in the prior year primarily due to the benefits realized from previously completed restructuring actions.

Income tax expense

The effective income tax rate in the third quarter of fiscal 2022 was 21.7 percent, compared to 23.5 percent in the same period last year, and 19.6 percent for the first nine months of fiscal 2022, compared to 23.8 percent in the prior year period.

The rate decrease was primarily related to lower year-to-date net income, as well as, the release of a $1.2 million valuation allowance on certain state net operating losses, which is the result of a realignment and simplification of our business and legal-entity structure during the second quarter of fiscal 2022.

The effective income tax rate in the first quarter of fiscal 2023 was 26.0 percent, compared to 25.3 percent in the same period last year.

Segment Analysis

Architectural Framing Systems

Three Months Ended Nine Months Ended

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

Three Months Ended

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

Net sales $ 163,292 $ 136,768 19.4 %

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Operating margin 14.5 % 6.1 %

Architectural Framing Systems net sales increased $15.0 million, or 11.0 percent, and increased $13.7 million, or 3.1 percent for the three- and nine-month periods ended November 27, 2021, compared to the prior-year periods, primarily driven by flow-through from pricing actions taken to offset inflation.

Operating margin increased 170 basis points for the three-month period of the current year, compared to the same period in the prior year, primarily driven by improved pricing and the benefits from restructuring actions, which offset increased costs for materials, freight and labor.

As previously announced, the segment incurred restructuring-related termination costs in the second and third quarters of the current fiscal year related to realignment of the segment to increase focus on target markets, better serve customers, improve operational execution, and reduce overall costs.

Operating margin was 6.0 percent for the nine-month periods in the current and prior fiscal years.

In addition, this segment benefited from a Canadian wage subsidy of $1.0 million and $5.5 million during the three- and nine-month periods ended November 27, 2021, respectively, compared to $4.2 million and $5.5 million in the prior-year three- and nine-month periods, respectively, as a result of a program to support Canadian businesses due to the ongoing impacts of the COVID-19 pandemic.

As of November 27, 2021, segment backlog was approximately $419 million, compared to approximately $406 million at the end of the prior quarter.

Architectural Framing Systems net sales increased $26.5 million, or 19.4 percent, for the three-month period ended May 28, 2022, compared to the prior year period, primarily driven by inflation-related pricing actions.

Operating margin increased 840 basis points for the three-month period of the current year, compared to the same period in the prior year, reflecting improved pricing and the benefits from previously completed restructuring and cost actions, which further strengthened our competitive position and offset the impact of cost inflation.

Architectural Framing Systems’ operating income also benefited from the timing of inventory flows and the volatility of aluminum prices, as it sold products this quarter using aluminum that was purchased in previous periods at lower costs.

As of May 28, 2022, segment backlog was approximately $310 million, compared to approximately $281 million at the end of the prior quarter.

Backlog represents the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which may be expected to be recognized as revenue in the future.

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We have strong visibility beyond backlog, as projects awarded, verbal commitments and bidding activities are not included in backlog.

Architectural Glass

Three Months Ended Nine Months Ended

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

Architectural Services

Three Months Ended

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

Net sales $ 103,388 $ 90,732 13.9 %

Operating (loss) income (1,277) 10,825 N/M (16,143) 15,306 N/M

Operating income 2,927 4,226 (30.7) %

Operating margin 2.8 % 4.7 %

Net sales decreased $10.5 million, or 12.4 percent, and $11.6 million, or 4.7 percent, for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, primarily reflecting lower volume due to weaker order backlog from fiscal year 2021, partially offset by an improved sales mix.

In the current quarter, the segment had operating loss of $1.3 million and negative operating margin of 1.7 percent, compared to operating income of $10.8 million and operating margin of 12.8 percent in the same period of the prior year.

For the nine-months ended November 27, 2021, the segment had an operating loss of $16.1 million and negative operating margin of 6.8 percent, compared to operating income of $15.3 million and operating margin of 6.2 percent in the prior year period.

The results for the current year periods were primarily driven by $3.5 million and $20.9 million of restructuring costs for the three- and nine-month periods ended November 27, 2021, respectively.

As previously announced, this segment incurred restructuring charges related to the closure of two operating facilities and the associated employee termination costs in the second and third quarters of the current fiscal year.

This restructuring is intended to enable the segment to emphasize more premium, high-performance products in its business.

The three- and nine-month periods of the prior fiscal year also included $7.4 million of operating income related to the settlement of a New Markets Tax Credit transaction during the third quarter of fiscal 2021.

Architectural Services

Three Months Ended Nine Months Ended

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

Architectural Services net sales increased $12.7 million, or 13.9 percent, for the three-month period ended May 28, 2022, compared to the same period in the prior year, driven by increased volume from executing projects in backlog.

Operating margin decreased 190 basis points in the three-month period of the current year, compared to the same period in the prior year, primarily reflecting performance write downs on a discrete number of projects, increased costs for investments to support future growth, and a less favorable project mix, partially offset by the higher volume.

As of May 28, 2022, segment backlog was approximately $681 million, compared to approximately $665 million at the end of the prior quarter.

Segment backlog at the end of the first quarter of fiscal 2022 was approximately $722 million.

Backlog, a non-GAAP financial measure, is described within the Architectural Framing Systems discussion above.

Architectural Glass

Three Months Ended

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

Net sales $ 76,265 $ 83,031 (8.1) %

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Operating margin 6.8 % 2.6 %

Architectural Services net sales increased $15.3 million, or 19.9 percent, and $36.7 million, or 17.2 percent, for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, driven by increased volume from executing projects in backlog.

Operating margin decreased 120 basis points in each of the three- and nine-month periods of the current year, compared to the same periods in the prior year, primarily reflecting a less favorable project mix.

Additionally, the nine-month period was negatively impacted by isolated performance challenges on certain projects experienced during the first quarter of fiscal 2022.

As of November 27, 2021, segment backlog of $572 million was unchanged from the end of the prior quarter.

Segment backlog at the end of the third quarter of fiscal 2021 was approximately $597 million.

Backlog is described within the Architectural Framing Systems discussion above.

Net sales decreased $6.8 million, or 8.1 percent, for the three-month period ended May 28, 2022, compared to the same period in the prior year, primarily reflecting lower volume.

Operating margin increased 420 basis points in the three-month period of the current year, compared to the same period in the prior year, driven by productivity gains, the positive impact of restructuring actions completed last year, and improved pricing, which offset the impact of cost inflation and lower volume driven by the strategic shift from lower margin work, including the closure of the Velocity business and lower project awards in non-residential construction during the downturn.

Large-Scale Optical (LSO)

Three Months Ended Nine Months Ended

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

Three Months Ended

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

Net sales $ 25,162 $ 24,228 3.9 %

Operating income (loss) 5,996 26,114 (77.0) % 17,326 25,131 (31.1) %

Operating income 6,498 5,847 11.1 %

Operating margin 25.8 % 24.1 %

LSO net sales increased $2.1 million or 8.2 percent, and $26.7 million or 55.1 percent for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, reflecting a more favorable sales mix, as demand recovered from the impact of COVID in the prior year nine-month period.

In fiscal 2021, most of the segment's customers and the segment's manufacturing operations were closed for a large part of the first and second quarters to comply with COVID-related government directives.

The segment had operating income of $6.0 million and $17.3 million and operating margin of 21.9 percent and 23.1 percent, for the three- and nine-month periods ended November 27, 2021, respectively, compared to operating income of $26.1 million and $25.1 million, and operating margin of 103.4 percent and 51.9 percent, in the same periods of the prior year.

The decreases for the fiscal 2022 periods are primarily the result of a $19.3 million gain on the sale-leaseback of a segment manufacturing facility recorded during the prior year third quarter.

LSO net sales increased $0.9 million or 3.9 percent, for the three-month period ended May 28, 2022, compared to the same period in the prior year, driven by improved pricing and a more favorable sales mix.

Operating margin increased 170 basis points in the three-month period of the current year, compared to the same period in the prior year, primarily reflecting improved productivity and pricing, partially offset by cost inflation.

Liquidity and Capital Resources

Selected cash flow data Nine Months Ended

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

Selected cash flow data Three Months Ended

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

Operating Activities

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

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

Investing Activities

Capital expenditures (5,125) (4,705)

Proceeds from sale of property, plant and equipment 1,347 23,724

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

Financing Activities

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Operating Activities.

Net cash provided by operating activities was $86.3 million for the first nine months of fiscal 2022, a decrease of $34.2 million compared to the prior-year period, reflecting a decline in net earnings of $38.0 million in the current-year period compared to the prior-year period, as well as, the impact of temporary actions related to COVID in the prior-year period.

Net cash used by operating activities was $30.5 million for the first three months of fiscal 2023, compared to $6.8 million of net cash provided by operating activities in the prior year period, reflecting increased working capital related to revenue growth.

Investing Activities.

Net cash used by investing activities was $11.6 million for the first nine months of fiscal 2022, driven primarily by capital expenditures of $13.1 million.

In the first nine months of the prior year, net cash provided by investing activities was $5.5 million, driven by proceeds of $23.7 million on the sale-leaseback of a building, offset by capital expenditures of $17.1 million.

Capital expenditures in the first nine months of the current year declined $4.0 million from the prior year due to slower investments while we conducted our strategic review.

Net cash used by investing activities was $0.9 million for the first three months of fiscal 2023, driven primarily by capital expenditures of $5.1 million, partially offset by proceeds received from sales of property, plant and equipment of $4.1 million.

In the first three months of the prior year, net cash used by investing activities was $4.1 million, primarily driven by capital expenditures of $4.7 million.

Financing Activities.

Net cash used by financing activities was $44.0 million for the first nine months of fiscal 2022, compared to $85.7 million in the prior-year period, primarily driven by net debt repayments of $47.5 million in the prior year.

Additionally, in the first nine months of the current year, we made share repurchases totaling $29.2 million, compared to $20.7 million in the prior year nine-month period.

At November 27, 2021, we were in compliance with the financial covenants under our revolving credit facility and term loan.

We paid dividends totaling $15.1 million ($0.6000 per share) in the first nine months of fiscal 2022, compared to $14.5 million ($0.5625 per share) in the comparable prior-year period.

During the first nine months of fiscal 2022, we repurchased 755,384 shares under our authorized share repurchase program, for a total cost of $28.8 million.

In the first nine months of fiscal 2021, we repurchased 852,029 shares under the share repurchase program, for a total cost of $20.7 million.

Net cash provided by financing activities was $17.6 million for the first three months of fiscal 2023, compared to net cash used by financing activities of $14.3 million in the prior year period.

The current year period was primarily driven by net debt borrowings of $99.0 million partially offset by share repurchases totaling $74.3 million, compared to $12.6 million in the prior year period.

We paid dividends totaling $4.8 million ($0.2200 per share) in the first three months of fiscal 2023, compared to $5.0 million ($0.2000 per share) in the comparable prior year period.

During the first three months of fiscal 2023, we repurchased 1,571,139 shares under our authorized share repurchase program, for a total cost of $74.3 million.

In the first three months of fiscal 2022, we repurchased 341,000 shares under the share repurchase program, for a total cost of $12.2 million.

Since the inception of the share repurchase program in 2004, we have purchased a total of 10,996,601 shares, at a total cost of $381.6 million.

We currently have remaining authority to repurchase an additional 1,362,000 shares under this program.

As of May 28, 2022, we had remaining authority to repurchase an additional 253,399 shares under this program.

We will continue to evaluate making future share repurchases, considering our cash flow, debt levels and market conditions, in the context of all our capital allocation options, with the goal of maximizing long-term value for our shareholders.

Other Financing Activities.

The following summarizes our significant contractual obligations that impact our liquidity as of November 27, 2021:

Payments Due by Fiscal Period

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

Debt obligations $ — $ 1,000 $ — $ 150,000 $ — $ 12,000 $ 163,000

Operating leases (undiscounted)

3,501 13,563 11,261 9,915 7,903 13,116 59,259

Purchase obligations 61,169 166,446 8,530 1,433 1,433 487 239,498

Total cash obligations

$ 64,670 $ 181,009 $ 19,791 $ 161,348 $ 9,336 $ 25,603 $ 461,757

Additional Liquidity Considerations.

We periodically evaluate our liquidity requirements, capital needs and availability of resources in view of inventory levels, expansion plans, and other working capital needs.

As of May 28, 2022, we had a committed revolving credit facility with maximum borrowings of up to $235 million and a $150 million term loan, both 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.

We are required to make periodic interest payments on our outstanding indebtedness, and future interest payments will be determined based on the amount of outstanding borrowings and prevailing interest rates during that time.

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 interest expense-to-EBITDA.

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

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

We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment.

Purchase obligations in the table above relate to raw material commitments and capital expenditures.

Future payments for such leases, excluding leases with initial terms of one year or less, were $51.9 million at May 28, 2022, with $10.2 million payable during the remainder of fiscal 2023.

As of May 28, 2022, we had $196.5 million of open purchase obligations, of which payments totaling $169.7 million are expected to become due within the next 12 months.

These purchase obligations primarily relate to raw material commitments

and capital expenditures, and are not expected to impact future liquidity as amounts should be recovered through customer billings.

We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal 2023, which will equal or exceed our minimum funding requirements.

As of November 27, 2021, we had reserves of $4.0 million for unrecognized tax benefits.

As of May 28, 2022, we had reserves of $3.4 million for unrecognized tax benefits.

We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits will ultimately be settled.

We are required, in the ordinary course of business, 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.

We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

During calendar 2020, we took advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the CARES Act.

During calendar year 2020, we took advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the Coronavirus Aid, Relief, and Economic Security Act.

This deferral allowed us to retain cash during calendar year 2020 that would have otherwise been remitted to the federal government.

At the end of fiscal 2021, we had deferred tax payments of $13.6 million, which are included within accrued payroll and other benefits and other non-current liabilities on our consolidated balance sheets.

The deferred tax payments will be repaid in two equal portions in calendar years 2021 and 2022.

Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments for at least the next 12 months.

While we believe we have adequate sources of liquidity to continue to fund our business for at least the next 12 months, the extent to which the ongoing COVID-19 pandemic may impact our results of operations or liquidity is uncertain.

The extent to which COVID-19 will continue to impact our business 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.

Off-balance sheet arrangements.

Our first installment of these deferred social security taxes, totaling approximately $6.8 million, was paid in the fourth quarter of fiscal 2022, and our second installment of approximately $6.8 million is expected to be paid in the fourth quarter of fiscal 2023.

Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will be adequate to meet our short-term and long-term liquidity and capital expenditure needs.

In addition, we believe we have the ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future.

We also believe we will be able to operate our business so as to continue to be in compliance with our existing debt covenants over the next fiscal year.

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

The company has narrowed its guidance for full-year adjusted earnings to a range of $2.25 to $2.40 per diluted share, from the previous range of $2.20 to $2.40.

This guidance excludes the impact of restructuring and impairment costs.

The company expects to record a pre-tax gain of approximately $19.0 million in the fourth quarter, related to the previously announced sale of its Architectural Glass facility in Statesboro, Georgia.

The company intends to exclude this gain from its adjusted earnings results.

The company continues to expect a long-term average tax rate of approximately 24.5 percent and continues to expect full-year capital expenditures of approximately $25 million, down from the previous estimate of approximately $35 million, as the company has slowed some investments while it conducted its strategic review.

Based on our first-quarter results and impact of the share repurchase leading to lower share count in our outlook, we have raised our guidance for full-year adjusted earnings to a range of $3.50 to $3.90 per diluted* share, up from the previously announced range of $2.90 to $3.30.

The company continues to expect full-year capital expenditures of $35 million to $40 million.

* A reconciliation of non-GAAP guidance on adjusted earnings per diluted share (“Adjusted EPS”) to GAAP guidance is not available on a forward-looking basis without unreasonable effort due to the uncertainty of the magnitude and timing of future adjustments.

These adjustments may include the impact of such items as impairment charges, restructuring costs, acquired project-related charges, and gains or losses from significant asset sales.

Accordingly, the company is unable to provide a reconciliation of Adjusted EPS to the most directly comparable GAAP financial measure or address the probable significance of the unavailable information, which could be material to the company's future financial results computed in accordance with GAAP.

Related Party Transactions

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There have been no material changes to our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended February 26, 2022, except as noted below.

Goodwill and indefinite-lived intangible asset impairment

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.

Within this 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

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.

Impairment of goodwill, indefinite-lived intangible assets and long-lived assets

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.

Quantitative and Qualitative Disclosures About Market Risk

Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended February 26, 2022 for a discussion of the Company’s market risk.

There have been no material changes in market risk since February 26, 2022.

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 2. Management’s Discussion and Analysis