What changed in this filing

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Item 1. Business

2023-04-21 compared with 2022-04-22 · 78 added, 67 removed, 139 unchanged (51% of the section changed)

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In fiscal 2023, this segment accounted for approximately 45 percent of our net sales.

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

In fiscal 2022, this segment accounted for approximately 20 percent of our net sales.

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

In fiscal 2023, this segment accounted for approximately 29 percent of our net sales.

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

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

In fiscal 2023, this segment accounted for approximately 19 percent of our net sales.

• The Large-Scale Optical Technologies (LSO) segment manufactures high-performance glazing products for the custom framing, fine art, and engineered optics markets.

In fiscal 2023, this segment accounted for approximately 7 percent of our net sales.

In fiscal 2022, we conducted a holistic strategic review of our business and the markets we serve.

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Through this work, we validated the Company’s strengths that we can leverage as we move forward.

We also identified several challenges facing the Company and opportunities for improved performance.

We also identified opportunities for improved performance.

Following this review, we established a new enterprise strategy, with three key elements:

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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.

We will also have 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.

We are establishing a Company-wide operating system with common tools and processes that are based on the foundation of Lean and Continuous Improvement, which we are calling "Apogee Management System".

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

During the fiscal year, we began to implement our new strategy, building significant momentum in the transformation of our business.

We realigned Architectural Framing Systems to better leverage the scale and capabilities of the organization, and to bring more clarity and focus in our go-to-market approach.

We refocused Architectural Glass to emphasize differentiated, high value-added products.

We also announced our intention to move the Sotawall business into Architectural Services, beginning in fiscal 2023, to create a single, unified offering for larger custom curtainwall projects.

During the fiscal year, we began several enterprise transformation initiatives designed to strengthen core processes and systems and provide new capabilities across several functional areas.

Finally, we relaunched our Lean and Continuous Improvement program, adding key talent and developing a set of tools and processes that we will use to drive improved performance across the enterprise.

We plan to continue to execute this strategy over the next several years.

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• Operating margin greater than 10 percent

• and revenue growth greater than 1.2 times the overall non-residential construction market.

• Revenue growth greater than 1.2 times the overall non-residential construction market.

*ROIC is a non-GAAP measure.

See discussion of non-GAAP measures within the Overview section of Management's Discussion and Analysis.

In fiscal 2023, we made significant progress toward these financial targets through the execution of our strategy.

We advanced our Lean and Continuous Improvement initiatives, which resulted in meaningful productivity improvements, particularly in Architectural Glass.

We increased our focus on differentiated products and services, and effectively managed pricing to share in the value we delivered for our customers.

We integrated the Sotawall business into the Architectural Services segment, in order to create a single, unified offering for larger custom curtainwall projects.

We advanced several initiatives to strengthen our core

capabilities, driving the standardization of key business processes and systems.We also relaunched our talent development and leadership training programs and added key talent across the organization.

Products and Services

Architectural Framing Systems, Architectural Glass and Architectural Services segments

Architectural Framing Systems, Architectural Services and Architectural Glass segments

These three segments primarily serve the construction industry and participate in various phases of the value stream to design, engineer, fabricate and install custom glass and aluminum window, curtainwall, storefront and entrance systems for the exterior of buildings, primarily in the commercial, institutional, and multi-family residential construction sectors.

Our Architectural Framing Systems segment designs, engineers and fabricates aluminum window, curtainwall, storefront and entrance systems.

We also extrude aluminum and provide finishing services for metal components used in a variety of building materials applications, as well as plastic components for other markets.

Our Architectural Glass segment provides a wide range of high-performance glass products, offering customized solutions that enable architects and building owners to meet their design, aesthetic, and performance goals.

We fabricate insulating, laminated, and monolithic glass units that are used in windows, curtainwall, storefront, and entrance systems.

We provide premium glass solutions to meet our customers’ design and energy-performance requirements.

These include propriety, high-performance coatings, digital printing, heat soaking of tempered glass, and thermal spacers.

Our Architectural Services segment delivers value by integrating technical capabilities, project management skills and field installation services, to provide design, engineering, fabrication and installation for the exteriors of commercial buildings.

Our ability to efficiently design high-quality window and curtainwall systems and effectively manage the installation of building façades enables our customers to meet schedule and cost requirements of their projects.

Our product and service offerings across these architectural segments allow architects to create distinctive looks for buildings such as health care facilities, government buildings, office towers, hotels, education and athletic facilities, retail centers, transportation centers, mixed use and multi-family residential buildings.

Our solutions also help meet functional requirements such as energy efficiency, hurricane, blast and other impact resistance and/or sound control.

With respect to sustainability, many of our architectural products and services help architects, developers, and building owners achieve their energy-efficiency and sustainability goals by improving energy performance, thereby reducing greenhouse gas emissions, providing daylight and natural ventilation, and increasing comfort and safety for occupants.

Many of our architectural products and services help architects, developers, and building owners achieve their energy-efficiency and sustainability goals by improving energy performance, reducing greenhouse gas emissions, providing daylight and natural ventilation, and increasing comfort and safety for occupants.

These products include high-performance thermal framing systems, energy efficient glass coatings, and sun control products such as sunshades and light shelves.

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In addition, we offer a wide range of renovation solutions to help modernize aging buildings, providing significantly improved energy performance, while preserving historically accurate aesthetics.

Architectural Framing Systems segment

Our Architectural Framing Systems segment designs, engineers and fabricates aluminum window, curtainwall, storefront and entrance systems.

We also extrude aluminum and provide finishing services for metal components used in a variety of building materials applications, as well as plastic components for other markets.

Architectural Services segment

Architectural Glass segment

We fabricate insulating, laminated, and monolithic glass units that are used in windows, curtainwall, storefront, and entrance systems.

We provide premium glass solutions to meet our customers’ design and energy-performance requirements.

These include propriety, high-performance coatings, digital and silkscreen printing, heat soaking of tempered glass, and thermal spacers.

The LSO segment provides coated glass and acrylic primarily for use in custom picture framing, museum framing, wall decor and technical glass for other display applications.

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Product Demand and Distribution Channels

Architectural Framing Systems, Architectural Glass and Architectural Services segments

Architectural Framing Systems, Architectural Services and Architectural Glass segments

Demand for the products and services offered by our architectural segments is affected by changes in the North American commercial construction industry, as well as by changes in general economic conditions.

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• Customers and distribution channels - Our customers are mainly glazing subcontractors and general contractors, with project design being influenced by architects and building owners.

Our high-performance architectural glass is primarily sold using both a direct sales force and independent sales representatives.

Our installation services are sold by a direct sales force in certain metropolitan areas in the U.S.

Our window, curtainwall, storefront and entrance systems are sold using a combination of direct sales forces, independent sales representatives and distributors.

Our installation services are sold by a direct sales force in certain metropolitan areas in the U.S and Canada.

Our high-performance architectural glass is primarily sold using both a direct sales force and independent sales representatives.

• Geographic location - We primarily supply architectural glass products and aluminum framing systems, including window, curtainwall, storefront and entrance systems, to customers in North America.

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Competitive Conditions

Architectural Framing Systems, Architectural Glass and Architectural Services segments

The North American commercial construction market is highly fragmented.

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To protect and improve our competitive position, we maintain strong relationships with building owners, architects, and other stakeholders who influence the selection of products and services on a project, and with general contractors, who initiate projects and develop specifications.

Our Architectural Framing Systems segment competes against several national, regional and local aluminum window and storefront manufacturers, as well as regional paint and anodizing finishing companies.

Architectural Framing Systems segment

Our Architectural Framing Systems segment competes against several national, regional, and local aluminum window and storefront manufacturers, as well as regional finishing companies.

Our businesses compete by providing a broad portfolio of high-quality products, robust engineering capabilities, and dependable, short lead-time service.

Architectural Services segment

Our Architectural Services segment competes against international, national and regional glass installation companies.

We compete by offering a robust set of capabilities at a competitive cost.

Our capabilities include preconstruction services, engineering and design, project management, manufacturing, and field installation.

We deliver these services using an operating model which reduces costs and risks for our customers, and we have established a track record of regularly meeting each project's unique execution requirements.

Architectural Glass segment

In our Architectural Glass segment, we experience competition from regional glass fabricators and international competitors who can provide certain products with attributes similar to ours.

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We maintain strong relationships with architects, developers, and other industry stakeholders, and provide strong customer service and reliable delivery.

Our Architectural Services segment competes against national and regional glass installation companies.

We compete by offering a robust set of capabilities at a competitive cost.

Our capabilities include preconstruction services, engineering and design, project management, manufacturing, and field installation.

We deliver these services using an operating model which reduces costs and risks for our customers, and we’ve established a track record of regularly meeting each project's unique execution requirements.

Our LSO segment competes with European and U.S.

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The nature and extent of these warranties depend upon the product or service, the market and, in some cases, the customer being served.

Our standard warranties are generally from two to 10 years for our architectural glass, curtainwall and window system products, while we generally offer warranties of two years or less on our other products and services.

Our standard warranties are generally from two to 10 years for our curtainwall, window system and architectural glass products, while we generally offer warranties of two years or less on our other products and services.

Sources and Availability of Raw Materials

Materials used in the Architectural Framing Systems segment include aluminum billet and extrusions, fabricated glass, plastic extrusions, hardware, paint and chemicals.

Raw materials used within the Architectural Glass segment include flat glass, vinyl, silicone sealants and lumber.

Within the Architectural Services segment, materials used include fabricated glass, finished aluminum extrusions, fabricated metal panels and hardware.

Raw materials used within the Architectural Glass segment include flat glass, vinyl, silicone sealants and lumber.

Materials used in the LSO segment are primarily glass and acrylic.

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Inventory requirements, mainly related to raw materials, are most significant in our Architectural Framing Systems and Architectural Glass segments.

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.

Backlog is not a term defined under U.S.

generally accepted accounting principles (GAAP) and is not a measure of contract profitability.

In addition to backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period and are not included in backlog.

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

Architectural Framing Systems segment backlog as of fiscal year-end was $428.7 million, compared to $411.3 million at the end of the prior year, reflecting an increase in order volume.

We expect approximately 78 percent of the backlog in this segment to be fulfilled in fiscal 2023, with the remainder expected to be filled in fiscal 2024 and beyond;

however, the timing of backlog may be impacted by project delays.

Backlog is not a significant metric for the Architectural Glass segment, as orders are typically booked and billed within a short time-frame.

Backlog in the Architectural Services segment as of fiscal year-end was $517.7 million, compared to $570.9 million at the end of the prior year, due to execution of projects in backlog, timing of firm orders, and signed contracts.

We expect approximately 61 percent of the backlog in this segment to be filled during fiscal 2023, with the remainder expected to be filled in fiscal 2024 and beyond;

however, the timing of backlog may be impacted by project delays.

Backlog is not a significant metric for the LSO segment, as orders are typically booked and billed within a short time-frame.

Compliance with Government Regulations

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At one manufacturing facility in our Architectural Framing Systems segment, we are continuing to work to remediate historical environmental impacts.

These remediation activities are being conducted without significant disruption to our operations.

These remediation activities are nearing completion and are being conducted without significant disruption to our operations.

Sustainability Focus

As a leading provider of architectural products and services, we are committed to integrating sustainable business practices and environmental stewardship throughout our business.

Our company-wide commitment to sustainable business practices is focused on delivering long-term profitable growth while carefully stewarding the resources entrusted to us, and delivering products and services that address our customers’ increasing focus on energy efficiency and reducing their carbon footprint.

Our architectural products and services are key enablers of green building and sustainable design.

We have long been at the forefront of developing innovative products and services that conserve resources and help architects and building owners achieve their sustainability goals, such as attaining Leadership in Energy and Environmental Design (LEED) certifications.

Our high-performance thermal framing systems, energy-efficient architectural glass, and other products are designed to help improve building energy efficiency, reduce greenhouse gas emissions, and increase security and comfort for building occupants.

Our products are made primarily with glass and aluminum components, which are recyclable at the end of their useful lives.

In addition, many of our framing products can be specified with recycled aluminum content.

Our commitment to sustainable business practices and environmental stewardship also extends to our own operations.

Through our Apogee Management System we are continually focused on incorporating environmentally sustainable manufacturing processes, eliminating waste, and minimizing our resource consumption.

To further our efforts, we are planning to calculate our Scope 1 and Scope 2 greenhouse gas emissions and are committed to disclosing our baseline greenhouse gas emissions data in

In addition to our company-wide environmental policy, we have policies at each facility to ensure compliance with all applicable environmental laws and regulations.

We also strive to make a difference in the communities where we operate.

Apogee has a long legacy of giving back to the communities where we do business through volunteerism, donations, and financial support.

We work to strengthen the communities where we operate by investing in our business and creating good jobs.

Human Capital Resources

The Company had approximately 5,500 employees on February 26, 2022, down from 6,100 employees on February 27, 2021.

As of February 26, 2022, approximately 420 of these employees were represented by U.S.

We had approximately 4,900 employees on February 25, 2023, down from 5,500 employees on February 26, 2022, of which 77 percent are male and 23 percent are female.

As of February 25, 2023, approximately 610, or approximately 12 percent, of these employees were represented by U.S.

labor unions.

Based on the most recent information available from our latest filing with the U.S.

Equal Employment Opportunity Commission, our U.S employees had the following race and ethnicity demographics:

Employee Demographic Percent of Total

Hispanic / Latinx 18%

Black / African American 11%

Multiracial, Native American, Native Hawaiian, and Pacific Islander 2%

Competition for qualified employees in the markets and industries in which we operate is intense, and the success of our Company depends on our ability to attract, select, develop and retain a productive and engaged workforce.

Investing in our employees and their well-being, offering competitive compensation and benefits, promoting diversity and inclusion, and adopting positive human capital management practices are critical components of our corporate strategy.

Additional information related to our human capital management is available on our website at www.apog.com by clicking “Sustainability” and then “People”.

Health, Wellness and Safety

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This commitment requires focus and dedication to fundamental aspects of our business to minimize the risk of accidents, injury, and exposure to health hazards.

We utilize a safety culture assessment process along with a safety compliance audits to monitor safety programs within our businesses.

These assessments and audits provide suggestions for continuous improvement in safety programs and measure employee engagement.

We will continue to develop an enterprise-wide health and safety program to build centralized oversight of workplace safety and to actively share best practices across our business.

Our Apogee Safety Council meets regularly to review facility-level performance, maintain our policies, and provide short and long-term plans to achieve our ambition of achieving an incident rate of zero.

We utilize a safety culture assessment process along with safety compliance audits to monitor safety programs within our businesses and regularly share best practices.

These annual assessments and audits provide suggestions for continuous improvement in safety programs and measure employee engagement.

In addition, the programs encourage the development of a proactive, inter-dependent safety culture in which leadership and employees interact to ensure safety is viewed as everyone’s responsibility.

Our leadership team and Board of Directors are briefed regularly on our health and safety performance metrics.

We offer comprehensive health and wellness programs for our employees.

In addition to standard health programs, including medical insurance and preventive care, we have a variety of resources available to employees relating to physical and mental wellness.

The COVID-19 pandemic has magnified the importance of keeping our employees safe and healthy.

In response to the pandemic, we have taken actions consistent with recommendations of the U.S.

Centers for Disease Control and Prevention and other local, state, and federal government agencies, to protect our employees.

We also conduct employee engagement surveys at the site level annually to hear directly from our employees with respect to what we are doing well, in addition to areas where they may need additional support.

Diversity, Equity and Inclusion

Our diversity, equity and inclusion program promotes a workplace where each employee’s abilities are recognized, respected, and utilized to further the Company’s goals.

Our aim is to create an environment where people feel included as a part of a team because of their diversity of outlooks, perspectives, and characteristics, which ultimately adds value for our Company.

Our aim is to create an environment where people feel included as a part of a team because of their diversity of outlooks, perspectives, and characteristics and have an equal opportunity to add value to our Company.

We strive to create a culture of inclusion, reduce bias in our talent practices, and invest in and engage with our communities.

We conduct diversity and code of conduct trainings with employees and managers to make clear our views on diversity and promote an inclusive and diverse workplace, where all individuals feel respected and part of a team regardless of their race, national origin, ethnicity, gender, age, religion, disability, sexual orientation or gender identity.

We conduct diversity and code of conduct trainings with employees and managers annually to define our expectations on creating an inclusive and diverse workplace, where all individuals feel respected and part of a team regardless of their race, national origin, ethnicity, gender, age, religion, disability, sexual orientation or gender identity.

Talent Management and Development

Our talent management program is focused on developing employees and leaders to meet the Company's evolving needs.

Managers actively engage with their employees to provide coaching and feedback and identify training and development opportunities to improve performance in the employee’s current role and to position the employee for future growth.

Employees are able to track and manage their growth through a performance management system and managers actively engage with their employees to provide coaching and feedback, identify training and development opportunities to improve performance in the employee’s current role, and to position the employee for future growth.

Training and development opportunities include new-hire training, job specific training, stretch assignments, and safety training.

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Available Information

The Company maintains a website at www.apog.com .

Through a link to a third-party content provider, our website provides free access to the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), as soon as reasonably practicable after electronic filing such material with, or furnishing it to, the Securities and Exchange Commission (SEC).

We maintain a website at www.apog.com .

Through a link to a third-party content provider, our website provides free access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), as soon as reasonably practicable after electronic filing such material with, or furnishing it to, the Securities and Exchange Commission (SEC).

These reports are also available on the SEC's website at www.sec.gov .

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Elliott served as Assistant General Counsel for the Company since 2014.

Nisheet Gupta 47 Executive Vice President and Chief Financial Officer of the Company since June 2020.

Prior to joining the Company, Mr.

Gupta served Vice President of Global Finance Operations at Land O’Lakes, a leading agribusiness and food company, since 2017.

Prior to joining Land O’ Lakes, Mr.

Gupta worked at Diebold Nixdorf, a banking solutions and retail technology systems company, holding various finance roles of increasing responsibility in Diebold Nixdorf’s financial organization, from 2011 to 2017.

Augdahl 57 Interim Chief Financial Officer of the Company since August 2022, Vice President of Finance of the Architectural Glass segment since 2017, and an employee of the Company since 2000.

Johnson 61 Senior Vice President of the Company since 2018, Treasurer and Vice President since 2001 and an employee of the Company since 1995.

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Jewell served as Senior Vice President, Business Development and Strategy for the Company from May 2018 to August 2019 and in Senior leadership positions at Valspar, a developer, manufacturer and distributor of paints and coatings, from 2010 to 2017.

Johnson 48 President of Apogee’s Architectural Services segment (Harmon) since March 2020.

Johnson 49 President of Apogee’s Architectural Services segment since March 2020.

Prior to this role, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business