What changed in this filing

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Item 1. Financial Statements

2023-10-04 compared with 2023-06-28 · 128 added, 208 removed, 339 unchanged (50% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

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

(In thousands, except stock data) August 26, 2023 February 25, 2023

Current assets

2 unchanged sentences

Receivables, net

205,720 197,267

Inventories 72,775 78,441

12 unchanged sentences

Accounts payable $ 78,323 $ 86,549

Accrued payroll and related benefits 34,360 51,651

Accrued compensation and benefits 34,156 51,651

Contract liabilities 32,498 28,011

18 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended

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

Three Months Ended Six Months Ended

(In thousands, except per share data) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022

Net sales $ 353,675 $ 372,109 $ 715,388 $ 728,744

4 unchanged sentences

Interest expense, net 2,230 1,698 4,266 2,904

Other expense, net 288 1,310

Other (income) expense, net ( 4,900 ) 173 ( 4,612 ) 1,483

Earnings before income taxes 43,223 30,201 74,666 60,901

Income tax expense 7,867 7,969

Income tax expense (benefit) 9,896 ( 7,188 ) 17,763 781

Net earnings $ 33,327 $ 37,389 $ 56,903 $ 60,120

Earnings per share - basic $ 1.08 $ 1.01

Earnings per share - diluted $ 1.05 $ 1.00

Basic earnings per share $ 1.54 $ 1.71 $ 2.61 $ 2.72

Diluted earnings per share $ 1.52 $ 1.68 $ 2.57 $ 2.66

Weighted average basic shares outstanding 21,708 21,860 21,813 22,129

2 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

Three Months Ended

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

Three Months Ended Six Months Ended

(In thousands) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022

Net earnings $ 33,327 $ 37,389 $ 56,903 $ 60,120

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

Unrealized (loss) gain on marketable securities, net of $( 8 ), $( 28 ), $ 25 and $( 102 ) of tax (benefit) expense, respectively

( 28 ) ( 106 ) 93 ( 382 )

Unrealized gain (loss) on derivative instruments, net of $ 66 , $( 152 ), $( 55 ) and $( 1,469 ) of tax expense (benefit), respectively

217 ( 500 ) ( 180 ) ( 4,816 )

Foreign currency translation adjustments 508 ( 2,777 ) 943 ( 1,045 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

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

Six Months Ended

(In thousands) August 26, 2023 August 27, 2022

Operating Activities

22 unchanged sentences

Proceeds from sales of property, plant and equipment 143 4,122

Purchases of marketable securities ( 969 ) —

Sales/maturities of marketable securities 775 450

4 unchanged sentences

Payments on line of credit ( 199,000 ) ( 171,000 )

Payments on debt issue costs — ( 687 )

Repurchase and retirement of common stock ( 11,821 ) ( 74,312 )

2 unchanged sentences

Net cash (used) provided by financing activities ( 50,140 ) 464

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

Decrease in cash, cash equivalents and restricted cash ( 2,645 ) ( 6,862 )

Effect of exchange rates on cash ( 405 ) 28

Cash, cash equivalents and restricted cash at beginning of year 21,473 37,583

Cash, cash equivalents and restricted cash at end of period $ 24,642 $ 23,871

Cash and cash equivalents at end of period $ 18,423 $ 30,749

Noncash Activity

2 unchanged sentences

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

(In thousands) Common Shares Outstanding Common Stock at Par Value

Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

Balance at February 25, 2023 22,224 $ 7,408 $ 146,816 $ 273,740 $ ( 31,556 ) $ 396,408

Net earnings — — — 23,576 — 23,576

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

— — — — 121 121

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

— — — — ( 397 ) ( 397 )

Foreign currency translation adjustments — — — — 435 435

Other comprehensive income, net of tax — — — — 159 159

Issuance of stock, net of cancellations 155 52 13 ( 9 ) — 56

4 unchanged sentences

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

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

Net earnings — — $ — 33,327 $ — $ 33,327

Other comprehensive income, net of tax — — — — 697 697

Issuance of stock, net of cancellations ( 3 ) ( 1 ) 7 ( 195 ) — ( 189 )

Share-based compensation — — 2,305 — — 2,305

Exercise of stock options 25 8 ( 1,192 ) — — ( 1,184 )

Share repurchases ( 160 ) ( 53 ) ( 1,160 ) ( 5,415 ) — ( 6,628 )

Other share retirements ( 9 ) ( 3 ) ( 444 ) ( 547 ) — ( 994 )

Cash dividends — — — ( 5,222 ) — ( 5,222 )

Balance at August 26, 2023 22,072 $ 7,357 $ 147,413 $ 308,248 $ ( 30,700 ) $ 432,318

(In thousands) Common Shares Outstanding Common Stock at Par Value

Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

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

Net earnings — — — 22,731 — 22,731

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

— — — — ( 276 ) ( 276 )

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

— — — — ( 4,316 ) ( 4,316 )

Foreign currency translation adjustments — — — — 1,732 1,732

Other comprehensive loss, net of tax — — — — ( 2,860 ) ( 2,860 )

Issuance of stock, net of cancellations 100 33 23 — — 56

4 unchanged sentences

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

Net earnings — — — 37,389 — 37,389

Other comprehensive loss, net of tax — — — — ( 3,383 ) ( 3,383 )

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

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

The results of operations for the three- and six-month periods ended August 26, 2023 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

2 unchanged sentences

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.

In the first 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.

Beginning in the first 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.

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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.

As of August 26, 2023, $ 4.9 million of obligations remained outstanding that we have confirmed as valid to the administrators of our program with U.S.

These balances are reflected in accounts payable in the consolidated balance sheets and are reflected in net cash provided (used by) operating activities in our consolidated statements of cash flows when settled.

Revenue, Receivables and Contract Assets and Liabilities

The following table disaggregates total revenue by timing of recognition (see Note 11 for disclosure of revenue by segment):

Three Months Ended

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

Three Months Ended Six Months Ended

(In thousands) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022

Recognized at shipment $ 152,240 $ 174,693 $ 304,895 $ 335,857

7 unchanged sentences

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

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

(In thousands) August 26, 2023 February 25, 2023

Trade accounts $ 138,283 $ 140,732

3 unchanged sentences

Receivables, net $ 205,720 $ 197,267

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

(In thousands) May 27, 2023

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

(In thousands) August 26, 2023

Beginning balance $ 1,796

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

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

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

In certain parts of our business that recognize revenue over time, progress billings follow an agreed-upon schedule of values.

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

Other contract-related disclosures Three Months Ended

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

Other contract-related disclosures Three Months Ended Six Months Ended

(In thousands) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022

Revenue recognized related to contract liabilities from prior year-end $ 2,249 $ 4,978 $ 24,956 $ 33,157

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 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

The transaction prices associated with unsatisfied performance obligations at August 26, 2023 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) August 26, 2023

Within one year

2 unchanged sentences

Total $ 750,797

Supplemental Balance Sheet Information

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

(In thousands) August 26, 2023 February 25, 2023

Raw materials $ 36,465 $ 36,869

2 unchanged sentences

Total inventories $ 72,775 $ 78,441

Other current liabilities

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

Warranties $ 17,124 $ 14,872

Accrued self-insurance reserves 14,823 14,447

Income and other taxes 13,552 7,129

Other 27,724 28,084

Total other current liabilities $ 73,223 $ 64,532

Other non-current liabilities

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

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

Deferred compensation plan 6,266 5,577

Retirement plan obligations 5,691 5,749

Deferred tax liabilities 1,433 1,417

Other 20,434 22,190

Total other non-current liabilities $ 43,074 $ 44,183

Financial Instruments

1 unchanged sentence

Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd.

(Prism), w e hold the following available-for-sale marketable securities, made up of municipal and corporate bonds:

(Prism), w e hold the following available-for-sale marketable securities, made up of fixed-maturity investments:

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

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

August 26, 2023 $ 10,778 $ 2 $ 588 $ 10,192

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 May 27, 2023, by contractual maturity, are shown below.

The amortized cost and estimated fair values of these investments at August 26, 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.

4 unchanged sentences

Derivative instruments

We use interest rate swaps, foreign exchange forward contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations.

We use interest rate swaps, foreign exchange contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations.

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.

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).

As of August 26, 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.

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

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

As of August 26, 2023, we held aluminum fixed/floating swaps and foreign exchange contracts with U.S.

dollar notional values of $ 12.9 million and $ 1.6 million, respectively.

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

August 26, 2023

Money market funds $ 9,385 $ — $ 9,385

Municipal and corporate bonds — 10,192 10,192

Cash surrender value of life insurance — 8,188 8,188

Foreign currency option contract — 9 9

Interest rate swap contract — 1,748 1,748

Deferred compensation — 10,204 10,204

Foreign currency forward/option contract — 147 147

Aluminum hedging contract — 1,034 1,034

2 unchanged sentences

Municipal and corporate bonds — 9,945 9,945

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

Interest rate swap contract — 1,817 1,817

Deferred compensation — 9,515 9,515

Foreign currency forward/option contract — 206 206

Aluminum hedging contract — 1,075 1,075

Money market funds and commercial paper

Fair value of money market funds was determined based on quoted prices for identical assets in active markets.

Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets.

These assets are included within cash and cash equivalents on our consolidated balance sheets.

Municipal and corporate bonds

Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified within our consolidated balance sheets as other current or other non-current assets based on maturity date.

Cash surrender value of life insurance and deferred compensation

Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust.

Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans.

Changes in cash surrender value are recorded in other expense.

The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.

Derivative instruments

The interest rate swap is measured at fair value using other observable market inputs, based off of benchmark interest rates.

Forward foreign exchange and fixed/floating aluminum contracts are measured at fair value using other observable market inputs, such as quotations on forward foreign exchange points, foreign currency exchange rates, and forward purchase aluminum prices.

Derivative positions are primarily valued using standard calculations and models that use as their basis readily observable market parameters.

Industry standard data providers are our primary source for forward and spot rate information for both interest and currency rates and aluminum prices.

Nonrecurring fair value measurements

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

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

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

In the event any of these assets were to become impaired, we would recognize an impairment expense equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value.

Fair value measurements of reporting units are estimated using an income approach involving discounted cash flow models that contain certain Level 3 inputs requiring significant management judgment, including projections of economic conditions, customer demand and changes in competition, revenue growth rates, gross profit margins, operating margins, capital expenditures, working capital requirements, terminal growth rates and discount rates.

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

Goodwill and Other Intangible Assets

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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 .

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.

During the second 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:

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

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

Optical Total

5 unchanged sentences

Foreign currency translation 6 111 — — 117

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

Balance at August 26, 2023 $ 90,143 $ 25,412 $ 3,031 $ 10,557 $ 129,143

(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.

During the second quarter of fiscal 2024, we did not identify any qualitative indicators of impairment at any of our reporting units, and therefore, no interim quantitative intangible impairment evaluation was performed.

Finite-lived intangible assets

6 unchanged sentences

Translation Net

August 26, 2023

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 $ 1.0 million and $ 4.2 million for the three-month periods ended May 27, 2023 and May 28, 2022, respectively.

Amortization expense on definite-lived intangible assets was $ 2.0 million and $ 2.1 million for the six-month periods ended August 26, 2023 and August 27, 2022, respectively.

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

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

(In thousands) 2024 2025 2026 2027 2028

At August 26, 2023, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of 2024 2025 2026 2027 2028

Estimated amortization expense $ 2,114 $ 4,228 $ 4,211 $ 4,380 $ 3,913

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.

As of August 26, 2023, we had a committed revolving credit facility with Wells Fargo Bank, N.A.

as administrative agent, and other lenders (U.S.

credit facility) with maximum borrowings of up to $ 385 million and a maturity date of August 5, 2027.

Outstanding borrowings under the revolving credit facility were $ 130.0 million and $ 156.0 million as of August 26, 2023 and February 25, 2023, respectively.

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

The Canadian 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 August 26, 2023 and February 25, 2023, outstanding borrowings under these Canadian facilities were $ 3.7 million and $ 1.8 million, respectively.

Our revolving credit facilities contain 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.

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).

At August 26, 2023, we were in compliance with both financial covenants.

credit facility also contains an acquisition holiday.

No more than two acquisition "holidays" can occur during the term of the facility, and at least two fiscal quarters must separate qualifying acquisitions.

Borrowings under the credit facilities 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.

credit 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.

We determine if an arrangement contains a lease at inception.

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

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

Lease expense is recognized on a straight-line basis over the lease term.

Our leases have remaining lease terms of one to ten years, some of which include renewal options that can extend the lease for up to an additional ten years at our sole discretion.

We have made an accounting policy election not to record leases with an original term of 12 months or less on our consolidated balance sheet;

such leases are expensed on a straight-line basis over the lease term.

In determining lease asset value, we consider fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase.

Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

We use a discount rate for each lease based upon an estimated incremental borrowing rate over a similar term.

We have elected the practical expedient to account for lease and non lease components (e.g., common-area maintenance costs) as a single lease component.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We are not a lessor in any transactions.

The components of lease expense were as follows:

Three Months Ended

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

Operating lease cost $ 3,276 $ 3,051

Short-term lease cost 10 314

Variable lease cost 755 906

Total lease cost $ 4,041 $ 4,271

Other supplemental information related to leases was as follows:

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

Lease assets obtained in exchange for new operating lease liabilities $ 1,580 $ 168

Weighted-average remaining lease term - operating leases 4.4 years 5.2 years

Weighted-average discount rate - operating leases 3.27 % 2.86 %

Future maturities of lease liabilities are as follows:

(In thousands) May 27, 2023

Remainder of Fiscal 2024 $ 9,477

Fiscal 2025 11,785

Fiscal 2026 9,379

Fiscal 2027 7,960

Fiscal 2028 4,324

Fiscal 2029 1,547

Thereafter 2,226

Total lease payments 46,698

Amounts representing interest 3,355

Present value of lease liabilities $ 43,343

At August 26, 2023, we had a total of $ 15.2 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal year 2025 and reduce borrowing capacity under the revolving credit facility.

As of August 26, 2023, the amount available for revolving borrowings was $ 239.8 million and $ 21.3 million under the Wells Fargo credit facility and Bank of Montreal credit facilities, respectively.

At August 26, 2023, debt included $ 12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043.

The fair value of our U.S.

credit facility, Canadian credit facilities and industrial revenue bonds approximated carrying value at August 26, 2023, and would be classified as Level 2 within the fair value hierarchy described in Note 4, due to the variable interest rates on these instruments..

Interest payments under the U.S.

and Canadian credit facilities were $ 5.4 million and $ 2.8 million for the six months ended August 26, 2023 and August 27, 2022, respectively.

Commitments and Contingent Liabilities

1 unchanged sentence

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

At August 26, 2023, $ 1.3 billion of these types of bonds were outstanding, of which $ 452.4 million is in our backlog.

These bonds do not have stated expiration dates.

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

Three Months Ended

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

Six Months Ended

(In thousands) August 26, 2023 August 27, 2022

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

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Letters of credit

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.

At August 26, 2023, we had $ 15.2 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 $ 31.6 million as of May 27, 2023.

Purchase obligations for raw material commitments and capital expenditures totaled $ 30.4 million as of August 26, 2023.

New Markets Tax Credit (NMTC) transactions

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

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

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

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

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

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 current and 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 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.

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

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

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

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

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

During the second quarter ended August 26, 2023, one NMTC transaction was settled as expected and as a result, a $4.7 million benefit was recorded in other (income) expense, net.

The table below provides a summary of estimated benefits related to our outstanding NMTC transactions (in thousands):

Inception date Termination date Deferred Benefit Deferred costs Net benefit

June 2016 June 2023 $ 6.0 $ 1.2 $ 4.8

September 2018 September 2025 3.2 1.0 2.2

August 2025 $ 6,052 $ 1,604 $ 4,448

September 2018 September 2025 $ 3,198 $ 1,031 $ 2,167

Total $ 9,250 $ 2,635 $ 6,615

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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:

The table below sets forth the number of stock-based compensation awards granted during the six-months ended August 26, 2023, along with the weighted average grant date fair value:

Awards Number of Awards Weighted Average Exercise Price

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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.

Total share-based compensation expense included in the results of operations was $ 4.5 million for the six-month period ended August 26, 2023, and $ 3.4 million for the six-month period ended August 27, 2022.

At August 26, 2023, there was $ 11.0 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 22 months.

The total fair value of shares vested during the six months ended August 26, 2023 was $ 5.5 million.

We file income tax returns in the U.S.

federal jurisdiction, various U.S.

state and local jurisdictions, Canada, Brazil and other international jurisdictions.

The Company is no longer subject to U.S.

We are no longer subject to U.S.

federal tax examinations for years prior to fiscal 2020, or state and local income tax examinations for years prior to fiscal 2015.

The Company is not currently under U.S.

federal examination for years subsequent to fiscal year 2019, and there is very limited audit activity of the Company’s income tax returns in U.S.

We are not currently under U.S.

federal examination for years subsequent to fiscal year 2019, and there is very limited audit activity of our income tax returns in U.S.

state jurisdictions or international jurisdictions.

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

The total liability for unrecognized tax benefits was $ 5.3 million at August 26, 2023 and at February 25, 2023, respectively.

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

Earnings per Share

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

Three Months Ended

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

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

Three Months Ended Six Months Ended

(In thousands) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 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

254 385 292 434

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

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Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)

51 120 73 120

Business Segment Data

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

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

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

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

Three Months Ended

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

Three Months Ended Six Months Ended

(In thousands) August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022

Segment net sales

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Operating income $ 40,553 $ 32,072 $ 74,320 $ 65,288

*Corporate and other includes certain corporate expenses that are not allocated at a segment level.

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

Restructuring

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 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 for the prior-year period.

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 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

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

Payments ( 62 ) ( 23 ) — ( 85 )

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