What changed in this filing

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Item 1. Financial Statements

2023-06-28 compared with 2022-12-29 · 140 added, 213 removed, 407 unchanged (46% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

(In thousands, except stock data) November 26, 2022 February 26, 2022

(In thousands, except stock data) May 27, 2023 February 25, 2023

Current assets

3 unchanged sentences

Inventories 80,579 78,441

Costs and earnings on contracts in excess of billings 32,964 30,403

Contract assets 45,086 59,403

Other current assets 32,622 26,517

Total current assets 393,725 383,101

Property, plant and equipment, net 231,173 249,995

Property, plant and equipment, net of accumulated depreciation of $ 439,930 and $ 431,710

246,343 248,867

Operating lease right-of-use assets 40,213 41,354

Goodwill 129,054 129,026

Intangible assets 68,825 72,481

Intangible assets, net 66,308 67,375

Other non-current assets 45,556 45,642

4 unchanged sentences

Accrued payroll and related benefits 34,360 51,651

Billings in excess of costs and earnings on uncompleted contracts 29,121 8,659

Contract liabilities 36,283 28,011

Operating lease liabilities 11,655 11,806

Current portion long-term debt — 1,000

Other current liabilities 73,223 64,532

16 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

(In thousands, except per share data) November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands, except per share data) May 27, 2023 May 28, 2022

Net sales $ 361,713 $ 356,635

14 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

Three Months Ended Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Net earnings $ 23,576 $ 22,731

Other comprehensive (losses) earnings:

Unrealized loss on marketable securities, net of $( 24 ), $( 40 ), $( 127 ) and $( 39 ) of tax benefit, respectively

( 88 ) ( 151 ) ( 470 ) ( 147 )

Unrealized gain (loss) on derivative instruments, net of $ 277 , $( 265 ), $( 1,192 ) and $( 257 ) of tax expense (benefit), respectively

Other comprehensive earnings (loss):

Unrealized gain (loss) on marketable securities, net of $ 33 , $( 74 ), of tax expense (benefit), respectively

Unrealized loss on derivative instruments, net of $( 121 ), $( 1,317 ), of tax benefit, respectively

( 397 ) ( 4,316 )

Foreign currency translation adjustments 435 1,732

Other comprehensive losses ( 478 ) ( 3,534 ) ( 6,721 ) ( 1,924 )

Other comprehensive earnings (loss) 159 ( 2,860 )

Total comprehensive earnings $ 23,735 $ 19,871

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Operating Activities

4 unchanged sentences

Deferred income taxes ( 165 ) 4,400

Asset impairment — 16,638

Gain on disposal of assets ( 27 ) ( 660 )

6 unchanged sentences

Inventories ( 2,068 ) ( 17,744 )

Costs and earnings on contracts in excess of billings ( 2,599 ) 1,168

Contract assets 14,368 ( 13,528 )

Accounts payable and accrued expenses ( 21,702 ) ( 18,576 )

Billings in excess of costs and earnings on uncompleted contracts 20,884 ( 4,474 )

Contract liabilities 8,158 ( 1,907 )

Refundable and accrued income taxes 7,590 4,238

Operating lease liability ( 3,101 ) ( 3,333 )

Other, net ( 2,724 ) ( 703 )

Net cash provided by operating activities 51,112 86,291

Prepaid expenses and other current assets ( 6,608 ) ( 2,968 )

Net cash provided (used) by operating activities 21,287 ( 30,462 )

Investing Activities

1 unchanged sentence

Proceeds from sales of property, plant and equipment 66 4,087

Other, net 923 76

Sales/maturities of marketable securities 400 100

Net cash used by investing activities ( 6,932 ) ( 938 )

3 unchanged sentences

Payments on line of credit ( 105,000 ) ( 62,000 )

Payments on debt issue costs ( 790 ) —

Proceeds from exercise of stock options — 4,115

Repurchase and retirement of common stock ( 5,193 ) ( 74,312 )

1 unchanged sentence

Other, net ( 1,677 ) ( 1,271 )

Net cash used by financing activities ( 51,597 ) ( 43,994 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 12,469 ) 30,650

Net cash (used) provided by financing activities ( 11,263 ) 17,624

Increase (decrease) in cash, cash equivalents and restricted cash 3,092 ( 13,776 )

Effect of exchange rates on cash 77 64

8 unchanged sentences

Net earnings — — — 23,576 — 23,576

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

Unrealized gain on marketable securities, net of $ 33 tax expense

— — — — 121 121

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

Unrealized loss on foreign currency hedge, net of $ 121 tax benefit

— — — — ( 397 ) ( 397 )

6 unchanged sentences

Balance at May 27, 2023 22,219 $ 7,406 $ 147,897 $ 286,300 $ ( 31,397 ) $ 410,206

Net earnings — — — 37,389 — 37,389

Unrealized loss on marketable securities, net of $ 28 tax benefit

— — — — ( 106 ) ( 106 )

Unrealized loss on derivative instruments, net of $ 152 tax benefit

— — — — ( 500 ) ( 500 )

Foreign currency translation adjustments — — — — ( 2,777 ) ( 2,777 )

Issuance of stock, net of cancellations ( 14 ) ( 5 ) 61 — — 56

Share-based compensation — — 1,797 — — 1,797

Exercise of stock options 36 12 ( 954 ) — — ( 942 )

Other share retirements ( 13 ) ( 4 ) ( 114 ) ( 540 ) — ( 658 )

Cash dividends — — — ( 4,809 ) — ( 4,809 )

Balance at August 27, 2022 22,209 $ 7,403 $ 141,575 $ 240,245 $ ( 32,483 ) $ 356,740

Net earnings — — — 23,765 — 23,765

Unrealized loss on marketable securities, net of $ 24 tax benefit

— — — — ( 88 ) ( 88 )

Unrealized gain on derivative instruments, net of $ 277 tax expense

— — — — 905 905

Foreign currency translation adjustments — — — — ( 1,295 ) ( 1,295 )

Issuance of stock, net of cancellations 9 3 250 ( 196 ) — 57

Share-based compensation — — 2,567 — — 2,567

Other share retirements ( 4 ) ( 1 ) ( 34 ) ( 165 ) — ( 200 )

Cash dividends — — — ( 4,813 ) — ( 4,813 )

Balance at November 26, 2022 22,214 $ 7,405 $ 144,358 $ 258,836 $ ( 32,961 ) $ 377,638

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

1 unchanged sentence

Net earnings — — — 22,731 — 22,731

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

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

— — — — 692 692

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

Issuance of stock, net of cancellations 90 30 ( 7 ) — — 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 $ ( 21,455 ) $ 497,551

Net loss — — — ( 2,116 ) — ( 2,116 )

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

Unrealized loss on derivative instruments, net of $ 203 tax benefit

— — — — ( 666 ) ( 666 )

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

Issuance of stock, net of cancellations 67 22 — — — 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 $ ( 26,417 ) $ 476,561

Net earnings — — — 11,057 — 11,057

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

8 unchanged sentences

Cash dividends — — — ( 4,793 ) — ( 4,793 )

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

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

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 26, 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.

The results of operations for the three-month period ended May 27, 2023 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain reclassifications of amounts previously reported have been made to the accompanying consolidated balance sheets, consolidated statements of cash flows and notes to consolidated financial statements to conform to current year presentation of contract assets and liabilities.

These reclassifications had no impact on reported cash flows or total assets and liabilities.

Adoption of new accounting standards

In the current quarter, we adopted the guidance in ASU 2022-04, Liabilities – Supplier Finance Programs, Disclosure of Supplier Finance Program Obligations.

The guidance requires that entities that use supplier finance programs disclose information about the nature and potential magnitude of the programs, activity during the period, and changes from period to period.

Beginning in the current quarter, we implemented a supplier financing arrangement with U.S.

Bank that enables our suppliers, at their sole discretion, to sell their Apogee receivables (i.e., our payment obligations to the suppliers) to U.S.

Bank on a non-recourse basis in order to be paid earlier than our payment terms provide.

Our suppliers’ voluntary inclusion of invoices in the supplier financing arrangement has no bearing on our payment terms, the amounts we pay, or our liquidity.

We have no economic interest in a supplier’s decision to participate in the supplier financing program, and we do not provide any guarantees in connection with it.

As of May 27, 2023, the amount outstanding that remains unpaid to the bank totaled $ 2.1 million, and is reflected in accounts payable in the consolidated balance sheets.

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 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Recognized at shipment $ 152,655 $ 161,164

7 unchanged sentences

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

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) November 26, 2022 February 26, 2022

(In thousands) May 27, 2023 February 25, 2023

Trade accounts $ 139,204 $ 140,732

Construction contracts 74,685 58,331

Contract retainage 31,395 28,782

Total receivables 213,889 199,063

1 unchanged sentence

Receivables, net $ 210,796 $ 197,267

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

(In thousands) November 26, 2022 February 26, 2022

The following table summarizes the activity in the allowance for credit losses for the three-month period ended:

(In thousands) May 27, 2023

Beginning balance $ 1,796

1 unchanged sentence

Deductions from allowance, net of recoveries ( 82 )

Other changes (1)

( 18 ) ( 30 )

Foreign currency effects 3

Ending balance $ 3,093

(1) Result of foreign currency effects

Contract assets and liabilities

Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer.

Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts.

Retainage is classified within receivables and deferred revenue is classified within other current liabilities on our consolidated balance sheets.

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 at which point amounts are released to us from the customer.

(In thousands) November 26, 2022 February 26, 2022

Contract assets $ 64,359 $ 59,185

Contract liabilities 31,657 11,373

In certain parts of our business 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 at which point amounts are released to us from the customer.

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 Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Other contract-related disclosures Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Revenue recognized related to contract liabilities from prior year-end $ 22,745 $ 35,926

2 unchanged sentences

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

The transaction prices associated with unsatisfied performance obligations at November 26, 2022 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) November 26, 2022

The transaction prices associated with unsatisfied performance obligations at May 27, 2023 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) May 27, 2023

Within one year

3 unchanged sentences

Supplemental Balance Sheet Information

(In thousands) November 26, 2022 February 26, 2022

(In thousands) May 27, 2023 February 25, 2023

Raw materials $ 39,167 $ 36,869

3 unchanged sentences

Other current liabilities

(In thousands) November 26, 2022 February 26, 2022

(In thousands) May 27, 2023 February 25, 2023

Warranties $ 17,124 $ 14,872

Income and other taxes 5,832 15,770

Accrued self-insurance reserves 14,823 14,447

Accrued freight 1,917 2,078

Deferred revenue 2,536 2,714

Income and other taxes 13,552 7,129

Other 27,724 28,084

1 unchanged sentence

Other non-current liabilities

(In thousands) November 26, 2022 February 26, 2022

(In thousands) May 27, 2023 February 25, 2023

Deferred benefit from New Markets Tax Credit transactions $ 9,250 $ 9,250

Retirement plan obligations 6,269 7,041

Deferred compensation plan 6,266 5,577

Retirement plan obligations 5,691 5,749

Deferred tax liabilities 1,433 1,417

6 unchanged sentences

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

November 26, 2022 $ 10,835 $ — $ 675 $ 10,160

May 27, 2023 $ 10,225 $ — $ 550 $ 9,675

February 25, 2023 10,647 — 702 9,945

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 26, 2022, by contractual maturity, are shown below.

The amortized cost and estimated fair values of these bonds at May 27, 2023, 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.

6 unchanged sentences

The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.

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 26, 2022, the interest rate swap contract had a notional value of $ 30.0 million.

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.

As of May 27, 2023, the interest rate swap contract had a notional value of $ 30.0 million and has a maturity date of February 5, 2026.

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 26, 2022, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S.

As of May 27, 2023, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S.

dollar notional values of $ 5.1 million and $ 12.8 million, respectively.

10 unchanged sentences

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

November 26, 2022

Money market funds $ 11,901 $ — $ 11,901

9 unchanged sentences

Cash surrender value of life insurance — 8,282 8,282

Aluminum hedging contract — 2,133 2,133

Interest rate swap contract — 1,817 1,817

1 unchanged sentence

Foreign currency forward/option contract — 206 206

Aluminum hedging contract — 1,075 1,075

Money market funds and commercial paper

27 unchanged sentences

Concurrent with the move of Sotawall from the Architectural Framing Systems segment to the Architectural Services segment effective at the start of our first quarter of fiscal 2023, goodwill was reallocated to the affected reporting units within each 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 of fiscal 2023, and therefore, no interim quantitative goodwill impairment evaluation was performed.

During the first quarter of fiscal 2024, we did not identify any qualitative indicators of impairment at any of our reporting units, 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 was reallocated from the Architectural Framing Systems segment to the Architectural Services segment using the relative fair value approach during the first quarter of fiscal 2023:

2 unchanged sentences

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

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)

1 unchanged sentence

Foreign currency translation ( 996 ) ( 137 ) 57 — ( 1,076 )

Balance at November 26, 2022 $ 90,370 $ 3,063 $ 25,278 $ 10,557 $ 129,268

Balance at February 25, 2023 90,137 3,031 25,301 10,557 129,026

Foreign currency translation ( 18 ) ( 2 ) 48 — 28

Balance at May 27, 2023 $ 90,119 $ 3,029 $ 25,349 $ 10,557 $ 129,054

(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.

3 unchanged sentences

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 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

1 unchanged sentence

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 of Sotawall 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:

1 unchanged sentence

Amount Accumulated

Amortization Impairment Expense Foreign

Amortization Foreign

Translation Net

November 26, 2022

Definite-lived intangible assets:

13 unchanged sentences

Total intangible assets $ 156,028 $ ( 84,633 ) $ ( 4,020 ) $ 67,375

Amortization expense on definite-lived intangible assets was $ 3.1 million and $ 5.9 million for the nine-month periods ended November 26, 2022 and November 27, 2021, respectively.

Amortization expense on definite-lived intangible assets was $ 1.0 million and $ 4.2 million for the three-month periods ended May 27, 2023 and May 28, 2022, respectively.

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

At November 26, 2022, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of 2023 2024 2025 2026 2027

At May 27, 2023, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) 2024 2025 2026 2027 2028

Estimated amortization expense $ 3,195 $ 4,239 $ 4,223 $ 4,392 $ 3,892

During the second quarter ended August 27, 2022, we amended and extended our committed revolving credit facility to include maximum borrowings of up to $ 385 million with a maturity of August 2027.

As part of the amendment, we repaid the $ 150 million term loan with borrowings under the revolving credit facility.

As of November 26, 2022, outstanding borrowings under our revolving credit facility were $ 188.0 million, while there were no outstanding borrowings under the revolving credit facility as of February 26, 2022.

Our revolving credit facility contains two maintenance 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 26, 2022, we were in compliance with both financial covenants.

Additionally, at November 26, 2022, we had a total of $ 12.3 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2024 to 2032 and reduce borrowing capacity under the revolving credit facility.

At November 26, 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 November 26, 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).

At November 26, 2022, outstanding borrowings under our Canadian committed, revolving credit facilities were $ 3.7 million, while there were no outstanding borrowings under the Canadian facilities as of February 26, 2022.

Interest payments were $ 5.3 million and $ 2.7 million for the nine months ended November 26, 2022 and November 27, 2021, respectively.

As of May 27, 2023, we had a committed revolving credit facility with Wells Fargo Bank, N.A.

as administrative agent, and other lenders with maximum borrowings of up to $ 385 million and a maturity date of August 5, 2027.

Outstanding borrowings under the revolving credit facility were $ 155.0 million and $ 156.0 million as of May 27, 2023 and February 25, 2023, respectively.

Our revolving credit facility contains two maintenance financial covenants that require us to stay below a maximum debt-to-EBITDA ratio of 3.25 and maintain a minimum ratio of EBITDA-to-interest expense of 3.00.

In the event we make an acquisition for which the purchase price is greater than $75 million, we can elect to increase the maximum debt-to-EBITDA ratio to 3.75 for a period of four consecutive fiscal quarters, commencing with the fiscal quarter in which a qualifying acquisition occurs.

No more than two acquisition "holidays" can occur during the term of the facility, and at least two fiscal

quarters must separate qualifying acquisitions.

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

At May 27, 2023, we were in compliance with both financial covenants.

Borrowings under the credit facility bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Leverage Ratio (as defined in the Credit Agreement).

For Base Rate borrowings, the margin ranges from 0.125% to 0.75%.

For Term SOFR borrowings, the margin ranges from 1.135% to 1.85%.

The facility also contains an "accordion" provision.

Under this provision, we can request that the facility be increased by as much $200.0 million.

Any Lender may elect or decline to participate in the requested increase at the Lender’s sole discretion.

At May 27, 2023, we had a total of $ 12.3 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2024 to 2032 and reduce borrowing capacity under the revolving credit facility.

As of May 27, 2023, the amount available for revolving borrowings under the Wells Fargo credit facility was $ 217.7 million.

At May 27, 2023, debt included $ 12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043.

The fair value of all industrial revenue bonds approximated carrying value at May 27, 2023, due to the variable interest rates on these instruments.

We also maintain two Canadian committed, revolving credit facilities with the Bank of Montreal totaling $ 25.0 million (USD).

The Canadian committed revolving credit facilities expire annually in February, but can be renewed each year solely at our discretion until August 2027, therefore, we have classified all outstanding amounts under these facilities as long-term debt within our consolidated balance sheets.

At May 27, 2023 and February 25, 2023, outstanding borrowings under these Canadian committed, revolving credit facilities were $ 3.7 million and $ 1.8 million, respectively.

At May 27, 2023, the total amount available for revolving borrowings under the Bank of Montreal credit facilities was $ 21.3 million.

The Bank of Montreal credit facilities have two maintenance financial covenants that are identical to those contained in the Wells Fargo credit facility.

At May 27, 2023, we were in compliance with both financial covenants.

Our Wells Fargo credit facility, Bank of Montreal credit facilities and industrial revenue bonds would be classified as Level 2 within the fair value hierarchy described in Note 4.

Interest payments under the Wells Fargo and Bank of Montreal facilities were $ 2.4 million and $ 1.1 million for the three months ended May 27, 2023 and May 28, 2022, respectively.

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

1 unchanged sentence

Currently, all of our lease arrangements are classified as operating leases.

We elected the package of practical expedients permitted under the transition guidance in adopting ASC 842, which among other things, allowed us to carry forward our historical lease classification.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

10 unchanged sentences

The components of lease expense were as follows:

Three Months Ended Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Operating lease cost $ 3,276 $ 3,051

3 unchanged sentences

Other supplemental information related to leases was as follows:

Nine Months Ended

(In thousands except weighted-average data) November 26, 2022 November 27, 2021

Three Months Ended

(In thousands except weighted-average data) May 27, 2023 May 28, 2022

Cash paid for amounts included in the measurement of operating lease liabilities $ 3,742 $ 3,537

3 unchanged sentences

Future maturities of lease liabilities are as follows:

(In thousands) November 26, 2022

(In thousands) May 27, 2023

Remainder of Fiscal 2024 $ 9,477

11 unchanged sentences

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 26, 2022, $ 1.4 billion of these types of bonds were outstanding, of which $ 578.7 million is in our backlog.

At May 27, 2023, $ 1.3 billion of these types of bonds were outstanding, of which $ 503.4 million is in our backlog.

These bonds do not have stated expiration dates.

5 unchanged sentences

changes in manufacturing quality, changes in product mix and any significant changes in sales volume.

Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Balance at beginning of period $ 17,893 $ 13,923

5 unchanged sentences

Letters of credit

At November 26, 2022, we had $ 12.3 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 27, 2023, we had $ 12.3 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 $3.4 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 $ 222.2 million as of November 26, 2022.

Purchase obligations for raw material commitments and capital expenditures totaled $ 31.6 million as of May 27, 2023.

New Markets Tax Credit (NMTC) transactions

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Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits.

The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other non-current assets in our consolidated balance sheets.

The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other current and other non-current assets in our consolidated balance sheets.

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

During the construction phase or for working capital purposes for each

project, we are required to hold cash dedicated to fund each 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 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.

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In December 2022, the claimant in an arbitration of one such claim was awarded $20 million.

The Company intends to appeal the award and believes, after taking into account all currently available information, including the advice of counsel and the likelihood of available insurance coverage, that this award will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

The Company has appealed the award and believes, after taking into account all currently available information, including the advice of counsel and the likelihood of available insurance coverage, that this award will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters.

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Share-Based Compensation

Total share-based compensation expense included in the results of operations was $ 6.0 million for the nine-month period ended November 26, 2022 and $ 4.8 million for the nine-month period ended November 27, 2021.

Stock options

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

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

Outstanding at beginning of year 370,800 $ 23.04

Awards exercised ( 145,060 ) 23.04

Awards canceled/expired ( 67,740 ) 23.04

Outstanding and expected to vest at November 26, 2022 158,000 $ 23.04 0.7 years $ 2,000,280

For the nine-months ended November 26, 2022, there were no cash proceeds from the exercise of stock options as all stock options were exercised on a stock-for-stock basis.

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.

For the nine-months ended November 27, 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 $ 2.3 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 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 end of the respective performance periods.

The number of share units issued at grant is equal to the target number of performance shares and allows for the right to receive a variable 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 restricted stock awards and performance share units, for the current nine-month period is summarized as follows:

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

Nonvested at February 26, 2022 (1)

488,944 $ 30.14

182,493 46.10

Vested ( 148,332 ) 27.56

As part of our compensation structure, we grant stock-based compensation awards to certain employees and non-employee directors during the fiscal year.

These awards may be in the form of incentive stock options (to employees only), nonstatutory options, or nonvested share awards and units, all of which are granted at a price or with an exercise price equal to the fair market value of the Company’s stock at the date of award.

Refer to our Form 10-K for further information on our share-based compensation plans.

The table below sets forth the number of stock-based compensation awards granted during the three-months ended May 27, 2023, along with the weighted average grant date fair value:

Awards Number of Awards Weighted Average Exercise Price

Restricted stock awards and restricted stock units (1)

159,286 $ 42.77

Nonvested at November 26, 2022 (4)

Performance share units ("PSUs") (2)

47,402 $ 43.59

(1) Includes a total of 50,825 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.

(2)Includes a total of 38,654 nonvested share units granted and outstanding at target level for the 2023-2025 performance period.

(3) Includes a total of 9,690 nonvested share units cancelled for the fiscal 2022-2024 and fiscal 2023-2025 performance periods.

(4)Includes a total of 45,207 and 34,492 nonvested share units granted and outstanding at target level for the 2022-2024 and 2023-2025 performance periods, respectively.

At November 26, 2022, there was $ 11.4 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 25 months.

The total fair value of shares vested during the nine months ended November 26, 2022 was $ 6.2 million.

(1) Represent service condition awards which generally vest over a two- or three-year period.

(2) Represent performance condition awards with the grant equal to the target number of performance shares based on the share price at grant date.

These grants allow for the right to receive a variable number of shares, between 0% and 200% of target, dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Total share-based compensation expense included in the results of operations was $ 2.2 million for the three-month period ended May 27, 2023, and $ 1.6 million for the three-month period ended May 28, 2022.

At May 27, 2023, there was $ 10.3 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 20 months.

The total fair value of shares vested during the three months ended May 27, 2023 was $ 5.5 million.

As of May 27, 2023, we had remaining stock options outstanding and expense to vest of 158,000 , with a weighted average exercise price of $ 23.04 and an aggregate intrinsic value of $ 2.0 million.

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

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state jurisdictions or international jurisdictions.

In the second quarter of fiscal 2023, the Company claimed certain tax deductions, including a worthless stock loss deduction, related to its investment in Sotawall Limited, a Canadian subsidiary.

These deductions generated a net tax benefit of $ 13.7 million.

The total liability for unrecognized tax benefits was $ 5.5 million at November 26, 2022, compared to $ 3.3 million at February 26, 2022.

The increase was primarily related to the tax deductions claimed during the second quarter of fiscal 2023 associated with the Company's investment in Sotawall Limited, a Canadian subsidiary.

The total liability for unrecognized tax benefits was $ 5.2 million at May 27, 2023, compared to $ 5.3 million at February 25, 2023.

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 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

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

408 352 413 293

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

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• 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 Nine Months Ended

(In thousands) November 26, 2022 November 27, 2021 November 26, 2022 November 27, 2021

Three Months Ended

(In thousands) May 27, 2023 May 28, 2022

Segment net sales

Architectural Framing Systems $ 164,162 $ 163,292

Architectural Services 102,031 105,404 312,151 292,506

Architectural Glass 97,202 76,265

Architectural Services 89,418 103,388

Large-Scale Optical 22,456 25,162

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Net sales $ 361,713 $ 356,635

Operating income (loss)

Segment operating income (loss)

Architectural Framing Systems $ 19,945 $ 23,665

Architectural Services 6,032 7,807 14,449 19,172

Architectural Glass 16,521 5,169

Architectural Services ( 596 ) 2,927

Large-Scale Optical 5,525 6,498

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Restructuring

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

During the first quarter of fiscal 2023, 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.

During the second quarter of fiscal 2022, we announced plans to realign and simplify our business structure.

The execution of these plans was completed during the first quarter of fiscal 2023, with the sale of the remaining manufacturing assets at our Architectural Glass location, in Dallas, Texas, for $ 4.1 million.

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.

All balances have been paid as of the end of the first quarter of fiscal 2024.

(In thousands) Architectural Framing Architectural Glass Corporate & Other Total

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

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

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

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

Balance at May 28, 2022 302 342 160 804

Balance at February 25, 2023 $ 62 $ 23 $ — $ 85

Restructuring expense — 116 — 116

Payments ( 62 ) ( 23 ) — ( 85 )

Other adjustments ( 152 ) ( 18 ) — ( 170 )

Balance at November 26, 2022 $ 85 $ 145 $ 25 $ 255

Subsequent Events

We have evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined that there were no subsequent events that required recognition or disclosure in the consolidated financial statements.

Balance at May 27, 2023 $ — $ — $ — $ —

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