What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-01-03 compared with 2023-10-04 · 95 added, 108 removed, 177 unchanged (53% of the section changed)

27 unchanged sentences

Become the economic leader in our target markets.

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

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

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

Actively manage our portfolio to drive higher margins and returns.

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

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

We plan to 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 working to shift 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, which we are calling "Apogee Management System" or "AMS".

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

We plan to support this through a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

We have made significant progress toward executing our enterprise strategy and underlying financial targets.

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(in thousands, except percentages)

August 26, 2023 August 27, 2022 $ Change

August 26, 2023 August 27, 2022

November 25, 2023 November 26, 2022 $ Change

November 25, 2023 November 26, 2022

Net sales $ 339,714 $ 367,847 $ (28,133) (7.6) % 100.0 % 100.0 %

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Interest expense, net 1,454 2,590 (1,136) (43.9) 0.4 0.7

Other (income) expense, net (4,900) 173 (5,073) N/M (1.4) —

Other expense, net

890 552 338 61.2 0.3 0.2

Earnings before income taxes 35,303 31,619 3,684 11.7 10.4 8.6

Income tax expense (benefit) 9,896 (7,188) 17,084 N/M 2.8 (1.9)

Income tax expense 8,329 7,854 475 6.0 2.5 2.1

Net earnings $ 26,974 $ 23,765 $ 3,209 13.5 % 7.9 % 6.5 %

Effective tax rate 23.6 % 24.8 %

Six Months Ended % of Net Sales

Nine Months Ended % of Net Sales

(in thousands, except percentages)

August 26, 2023 August 27, 2022 $ Change

August 26, 2023 August 27, 2022

November 25, 2023 November 26, 2022 $ Change

November 25, 2023 November 26, 2022

Net sales $ 1,055,102 $ 1,096,591 $ (41,489) (3.8) % 100.0 % 100.0 %

4 unchanged sentences

Interest expense, net 5,720 5,494 226 4.1 0.5 0.5

Other (income) expense, net (4,612) 1,483 (6,095) N/M (0.6) 0.2

Other (income) expense, net

(3,722) 2,035 (5,757) N/M (0.4) 0.2

Earnings before income taxes 109,969 92,520 17,449 18.9 10.4 8.4

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Effective tax rate 23.7 % 9.3 %

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Consolidated net sales decreased 5.0%, or $18.4 million, to $353.7 million, primarily reflecting lower volumes in Architectural Framing Systems and Architectural Services, partially offset by strong growth in the Architectural Glass segment.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Consolidated net sales decreased 7.6%, or $28.1 million, to $339.7 million, primarily reflecting lower volumes, partially offset by improved mix and pricing.

• Gross profit increased 4.3%, or $3.7 million, and gross margin increased to 26.6%, compared to 23.5%.

The improvement in gross margin was primarily driven by higher gross margins in both Architectural Glass and Architectural Framing Systems and the increased mix of Architectural Glass in the consolidated results.

This was partially offset by lower margins in the Large-Scale Optical segment.

• Selling, general and administrative expenses increased $2.0 million to 15.5% of net sales compared to 14.2%.

The increase was primarily due to increased compensation-related expenses and higher consulting costs.

• Operating income grew 26.4% to $40.6 million, and operating margin increased 290 basis points to 11.5%, primarily driven by improved operating margin in Architectural Glass as well as the Architectural Glass segment comprising a higher mix of the consolidated results.

• Interest expense, net was $2.2 million compared to $1.7 million, reflecting a higher average interest rate, partially offset by a lower average debt level.

• Other (income) expense, net included a $4.7 million pre-tax gain related to finalization of a New Markets Tax Credit transaction realized during the second quarter of fiscal 2024.

• Income tax expense was $9.9 million, compared to a tax benefit of $7.2 million.

The prior year period included a $13.7 million tax deduction for a worthless stock loss and related discrete tax benefits.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• Consolidated net sales decreased 1.8%, or $13.4 million to $715.4 million, primarily reflecting lower volumes in Architectural Framing Systems and Architectural Services, partially offset by improved pricing, mix and volumes in the Architectural Glass segment.

The improvement in gross margin was primarily driven by higher pricing, improved product mix, lower short-term incentive compensation expense, and lower insurance-related expense, partially offset by the impact of lower volume and a less favorable mix of projects in Architectural Services.

• Selling, general and administrative expenses increased $0.8 million to 15.5% of net sales, compared to 14.1%, primarily due to higher salaries and benefits costs, partially offset by lower short-term incentive compensation expense.

• Operating income grew 8.3% to $37.6 million, and operating margin increased 170 basis points to 11.1%, primarily driven by improved segment operating margin in Architectural Glass as well as the Architectural Glass segment comprising a higher mix of the consolidated results, partially offset by lower segment operating margin in Architectural Framing Systems.

• Interest expense, net was $1.5 million, compared to $2.6 million, reflecting a lower average debt level, partially offset by higher average interest rates.

• Income tax expense was $8.3 million, compared to $7.9 million.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Consolidated net sales decreased 3.8%, or $41.5 million, to $1.1 billion, primarily reflecting lower volumes in Architectural Framing Systems, Architectural Services and Large-Scale Optical, partially offset by improved mix in the Architectural Glass and Architectural Framing Systems segments, as well as improved pricing in the Architectural Glass segment.

• Gross profit increased 8.4%, or $21.5 million, to 26.4% of net sales, compared to 23.5%.

The gross margin improvement was driven primarily by higher margins in the Architectural Glass segment and the increased mix of that segment in consolidated results.

This was partially offset by lower margins in the Architectural Services and Large Scale Optical segments.

The gross margin improvement was primarily driven by higher margins in Architectural Glass, due to increased pricing and mix, as well as lower short-term incentive compensation expense, primarily in Architectural Framing and Architectural Services, and lower insurance-related expense.

This was partially offset by the impact of lower volume and a less favorable mix of projects in Architectural Services.

• Selling, general and administrative expenses increased $9.6 million to 15.8% of net sales, compared to 14.3%.

The increase in expenses was primarily due to increased compensation-related expenses, commissions and higher consulting costs.

The increase in expenses was primarily due to increased salaries and benefits and consulting costs, partially offset by lower short-term incentive compensation expense.

• Operating income grew 11.9% to $112.0 million, and operating margin increased 150 basis points to 10.6%, primarily driven by improved operating margin in Architectural Glass as well as the Architectural Glass segment comprising a higher mix of the consolidated results.

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• Other (income) expense, net included a $4.7 million pre-tax gain related to finalization of a New Markets Tax Credit transaction realized during the second quarter of fiscal 2024.

• Income tax expense was $17.8 million, compared to tax expense of $0.8 million.

• Income tax expense was $26.1 million, compared to $8.6 million.

The prior year period included a $13.7 million tax deduction for a worthless stock loss and related discrete tax benefits.

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The following table presents net sales, operating income (loss) and operating margin by segment and consolidated total.

Three Months Ended Six Months Ended

(In thousands, except percentages) August 26, 2023 August 27, 2022 % Change August 26, 2023 August 27, 2022 % Change

Three Months Ended Nine Months Ended

(In thousands, except percentages) November 25, 2023 November 26, 2022 % Change November 25, 2023 November 26, 2022 % Change

Segment net sales

21 unchanged sentences

Architectural Framing Systems

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Net sales decreased $14.1 million, or 8.1%, primarily reflecting lower volume, partially offset by a more favorable sales mix.

• Operating income increased to $21.1 million, or 13.3% of net sales, compared to $20.5 million, or 11.9% of net sales.

The operating margin improvement was primarily driven by improved sales mix and cost efficiencies, partially offset by the impact of lower volume.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• Net sales decreased $13.2 million, or 3.9%, primarily reflecting lower volume, partially offset by more favorable sales mix and improved pricing.

• Operating income decreased to $41.0 million, or 12.7% of net sales, compared to $44.2 million, or 13.1% of net sales.

The operating margin decline was primarily driven by the impact of lower volume, as well as the unfavorable comparative impact of timing of inventory flows and aluminum prices in the prior year period.

These items were partially offset by improved sales mix, favorable pricing and cost efficiencies.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Net sales were $139.6 million, compared to $165.0 million, primarily reflecting lower volume due to slowing demand in our short-cycle business, partially offset by a more favorable sales mix.

• Operating income was $17.0 million, or 12.2% of net sales, compared to $22.1 million, or 13.4% of net sales, primarily reflecting the impact of lower volume.

This result was partially offset by improved sales mix, improved productivity, and lower short-term incentive compensation-related expenses.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Net sales were $462.5 million, compared to $501.2 million, primarily reflecting lower volume, partially offset by more favorable sales mix and improved pricing.

• Operating income was $58.0 million, or 12.5% of net sales, compared to $66.3 million, or 13.2% of net sales, primarily driven by the impact of lower volume.

This result was partially offset by improved sales mix and lower short-term incentive compensation-related expenses.

Architectural Glass

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Net sales increased $16.7 million, or 21.6%, primarily driven by improved pricing and mix, reflecting the strategic shift to emphasize premium, high performance products, as well as higher volume.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Net sales increased $9.4 million, or 11.6%, primarily driven by improved mix and pricing, reflecting the strategic shift to emphasize premium, high performance products, partially offset by lower volume.

• Operating income increased to $15.2 million, or 16.7% of net sales, compared to $7.5 million, or 9.1% of net sales.

The operating margin improvement was primarily driven by the impact of improved pricing and mix, as well as higher volume, partially offset by cost inflation.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

The higher operating margin improvement was primarily driven by the impact of improved mix and pricing, partially offset by the impact of lower volume and cost inflation.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Net sales increased $47.1 million, or 20.0%, driven by improved pricing, a more favorable sales mix, and higher volume, reflecting the segment's strategic shift to emphasize premium, high-performance products.

• Operating income increased to $49.1 million, or 17.4% of net sales, compared to $19.1 million, or 8.1% of net sales.

The operating margin improvement was primarily driven by the improved pricing and mix and the impact of higher volume, partially offset by cost inflation.

The operating margin improvement was primarily driven by improved pricing and mix, partially offset by cost inflation.

Architectural Services

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Net sales decreased $18.7 million, or 17.5%, primarily reflecting lower project volume due to a higher mix of projects in earlier stages of completion.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Net sales were $94.7 million, compared to $102.0 million, primarily reflecting a less favorable mix of projects in the quarter.

• Operating income was $5.3 million, or 5.6% of net sales, compared to $6.0 million, or 5.9% of net sales.

The decline in operating margin was primarily driven by the impact of lower project volume.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• Net sales decreased $32.6 million, or 15.5%, primarily reflecting lower project volume due to a higher mix of projects in earlier stages of completion.

The change in operating margin was primarily driven by a less favorable mix of projects, partially offset by lower short-term incentive compensation expense.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Net sales were $272.1 million, compared to $312.2 million, primarily reflecting lower project volume due to a higher mix of projects in earlier stages of completion and a less favorable mix of projects.

• Operating income was $8.2 million, or 3.0% of net sales, compared to $14.4 million, or 4.6% of net sales.

The decline in operating margin was primarily due to the impact of lower project volume.

The decline in operating margin was primarily driven by lower project volume due to a higher mix of projects in earlier stages of completion and a less favorable mix of project, partially offset by lower short-term incentive compensation expense .

Large-Scale Optical (LSO)

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• LSO net sales decreased $1.5 million, or 6.0%, primarily reflecting lower volume driven by customer inventory destocking, partially offset by a more favorable mix.

• Operating income was $4.7 million, or 19.7% of net sales, compared to $6.0 million, or 23.8% of net sales.

The decline in operating margin was primarily driven by the impact of lower volume, partially offset by improved price and mix.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• LSO net sales decreased $4.2 million, or 8.4%, primarily reflecting lower volume due to customer inventory destocking, partially offset by a more favorable mix.

• Operating income was $10.2 million, or 22.1% of net sales, compared to $12.5 million, or 24.8% of net sales.

The decline in operating margin was primarily driven by the impact of lower volume, partially offset by improved price and mix.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• LSO net sales were $26.0 million, compared to $26.7 million, primarily reflecting lower volume from slower retail demand, partially offset by a more favorable mix and pricing.

• Operating income was $7.1 million, with operating margin improving to 27.3% of net sales, compared to 26.7% due to favorable mix and pricing.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• LSO net sales were $72.1 million, compared to $77.0 million, primarily reflecting lower volume due to customer destocking and slower demand in the retail markets, partially offset by a more favorable mix and pricing.

• Operating income was $17.3 million, or 24.0% of net sales, compared to $19.6 million, or 25.5% of net sales, primarily driven by the impact of lower volume, partially offset by more favorable mix and pricing.

Corporate and other

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Our corporate and other expense was $6.1 million, compared to $6.4 million.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• Our corporate and other expense increased to $13.8 million, compared to $11.4 million, primarily due to an increase in compensation expense and higher consulting costs.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Corporate and other expense was $6.9 million, compared to $7.9 million, primarily reflecting lower insurance-related costs.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Corporate and other expense was $20.6 million, compared to $19.4 million primarily due to an increase in compensation expense and higher consulting costs, partially offset by lower insurance-related costs.

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.

1 unchanged sentence

GAAP and is not a measure of contract profitability.

We view backlog as one indicator of future revenues, particularly in our longer-lead time businesses.

We view backlog as one indicator of future revenues, particularly in our longer-lead time

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 also have visibility into future business commitments beyond backlog, as projects awarded, verbal commitments and bidding activities are not included in backlog.

Architectural Framing Systems

As of August 26, 2023, segment backlog was approximately $197 million, compared to approximately $221 million at the end of the prior quarter, and to approximately $286 million at the end of the second quarter of fiscal 2023.

The reduction in backlog was primarily driven by a decline in our longer-cycle business, reflecting delays in award activity, and a continued strategic shift toward projects that allow for more attractive margins.

As of November 25, 2023, segment backlog was approximately $183.9 million, compared to approximately $197.5 million at the end of the prior quarter, and to approximately $246.2 million at the end of the third quarter of fiscal 2023.

The reduction in backlog compared to both periods was primarily driven by a decline in our longer-cycle business, reflecting delays in award activity, and a continued strategic shift in this business toward projects that allow for more attractive margins.

Architectural Services

As of August 26, 2023, segment backlog was approximately $674 million, compared to approximately $709 million at the end of the prior quarter, and to approximately $785 million at the end of the second quarter of fiscal 2023.

The decline was primarily driven by delays in award activity.

As of November 25, 2023, segment backlog was approximately $776.5 million, compared to approximately $674.4 million at the end of the prior quarter, and to approximately $740.9 million at the end of the third quarter of fiscal 2023.

The increase in backlog compared to the prior quarter was primarily driven by several large project awards in the current quarter.

Net earnings, diluted EPS, adjusted net earnings (non-GAAP), and adjusted diluted EPS (non-GAAP)

In order to provide a better understanding of the impact of certain items on our net earnings and diluted EPS, the tables that follow report the comparative impact of certain items on net earnings and diluted EPS for the periods presented below.

Adjusted net earnings and adjusted diluted EPS are considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100.

Adjusted net earnings and adjusted diluted EPS are considered non-GAAP financial measures as contemplated by SEC Regulation G.

For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(In thousands) November 25, 2023 November 26, 2022 % change November 25, 2023 November 26, 2022 % change

Net earnings $ 26,974 $ 23,765 13.5 % $ 83,877 $ 83,885 — %

5 unchanged sentences

Adjusted net earnings $ 26,974 $ 23,765 13.5 % $ 80,338 $ 70,183 14.5 %

Three Months Ended Six Months Ended

August 26, 2023 August 27, 2022 % change August 26, 2023 August 27, 2022 % change

Three Months Ended Nine Months Ended

November 25, 2023 November 26, 2022 % change November 25, 2023 November 26, 2022 % change

$ 1.23 $ 1.07 15.0 % $ 3.80 $ 3.74 1.6 %

NMTC settlement gain (1)

(0.21) (0.21) —

Worthless stock deduction and related discrete tax benefits (2)

— (0.62) — (0.61)

Income tax impact on above adjustments — — 0.05 —

4 unchanged sentences

(2) Worthless stock deduction and related discrete income tax benefits from the impairment of the Sotawall business in fiscal 2023, which were recorded in income tax expense (benefit).

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023

• Net earnings were $33.3 million, compared to $37.4 million.

Diluted EPS was $1.52, compared to $1.68.

Comparison of Third Quarter Fiscal 2024 to Third Quarter Fiscal 2023

• Net earnings were $27.0 million, compared to $23.8 million, driven by higher operating income, lower interest expense and a lower effective tax rate.

• Diluted EPS was $1.23, compared to $1.07, due to higher net earnings and lower weighted average diluted shares outstanding.

• Adjusted net earnings increased 13.5% to $27.0 million, compared to $23.8 million.

Adjusted diluted EPS increased 15.0% to $1.23, compared to $1.07.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023

• Net earnings were $56.9 million, compared to $60.1 million.

Diluted EPS was $2.57, compared to $2.66.

Comparison of First Nine Months of Fiscal 2024 to First Nine Months of Fiscal 2023

• Net earnings were essentially flat at $83.9 million for both periods driven by higher earnings before taxes, offset by a higher effective tax rate.

• Diluted EPS was $3.80, compared to $3.74, due to lower weighted average diluted shares outstanding.

• Adjusted net earnings increased 14.5% to $80.3 million, compared to $70.2 million.

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Operating Activities.

Net cash provided by operating activities was $62.6 million for the first six months of fiscal 2024, compared to $2.6 million of net cash used by operating activities in the prior year period, primarily reflecting improved working capital in the current year period.

Net cash provided by operating activities was $129.3 million for the first nine months of fiscal 2024, compared to $51.1 million of net cash used by operating activities in the prior year period, primarily driven by favorable working capital changes compared to the prior year.

Investing Activities.

Net cash used by investing activities was $15.1 million for the first six months of fiscal 2024, compared to $4.7 million in the prior year, driven primarily by higher capital expenditures to fund strategic initiatives.

Net cash used by investing activities was $26.3 million for the first nine months of fiscal 2024, compared to $12.0 million in the prior year, driven primarily by increased capital expenditures primarily to fund strategic investments.

Financing Activities.

Net cash used by financing activities was $50.1 million for the first six months of fiscal 2024, compared to net cash provided by financing activities of $0.5 million in the prior year period.

Net cash used by financing activities was $100.4 million for the first nine months of fiscal 2024, compared to net cash used by financing activities of $51.6 million in the prior year period.

The increase in cash used for financing activities was primarily driven by higher net debt payments in the current year period.

We paid dividends totaling $10.5 million ($0.48 per share) in the first six months of fiscal 2024, compared to $9.6 million ($0.44 per share) in the comparable prior year period.

During the first six months of fiscal 2024, we repurchased 279,916 shares under our authorized share repurchase program, for a total cost of $11.8 million.

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

In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock.

The Board increased the authorization by 750,000 shares, announced on January 24, 2008;

by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016, January 9, 2018, January 14, 2020, October 7, 2021, and June 22, 2022;

and by 2,000,000 shares, on each of the announcement dates of October 3, 2018 and January 14, 2022.

We paid dividends totaling $15.7 million ($0.72 per share) in the first nine months of fiscal 2024, compared to $14.4 million ($0.66 per share) in the comparable prior year period.

During the first nine months of fiscal 2024, we repurchased 279,916 shares under our authorized share repurchase program, for a total cost of $11.8 million.

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

The repurchase program does not have an expiration date.

Since the inception of the share repurchase program in 2004, we have purchased a total of 11,276,517 shares, at a total cost of $393.5 million.

As of August 26, 2023, we had remaining authority to repurchase an additional 973,483 shares under this program.

As of November 25, 2023, we had remaining authority to repurchase 2,973,483 shares under this program.

We may also elect to repurchase additional shares of common stock under our authorization, subject to limitations contained in our debt agreements and based upon our assessment of a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities.

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We periodically evaluate our liquidity requirements, cash needs and availability of debt resources relative to acquisition plans, significant capital plans, and other working capital needs.

As of the end of the second quarter of fiscal 2024, we had a committed revolving credit facility in the U.S.

As of the end of the third quarter of fiscal 2024, we had a committed revolving credit facility in the U.S.

with maximum borrowings of up to $385 million, with a maturity date of August 5, 2027, and two Canadian committed, revolving credit facilities totaling $25 million (USD).

At August 26, 2023, we had outstanding borrowings under our committed, revolving credit facility of $130.0 million, and $3.7 million outstanding under the Canadian committed, revolving credit facilities.

At November 25, 2023, we had outstanding borrowings under our committed, revolving credit facility of $85.0 million, and $3.7 million outstanding under the Canadian committed, revolving credit facilities.

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

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

At August 26, 2023, we were in compliance with both financial covenants (which are identical in both of our revolving credit facilities).

credit facility also contains an acquisition holiday.

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.

At November 25, 2023, we were in compliance with both financial covenants (which are identical in all three of our revolving credit facilities).

The revolving credit facilities also contain an acquisition holiday.

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.

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).

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 Agreements).

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%.

For Term SOFR borrowings, the margin ranges from 1.125% to 1.75% and an incremental Term SOFR adjustment of 0.10%.

facility also contains an "accordion" provision.

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

Additionally, 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 years 2024 to 2032 and reduce borrowing capacity under the U.S.

Additionally, at November 25, 2023, we had a total of $15.0 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 U.S.

revolving credit facility.

As of August 26, 2023, the amount available for revolving borrowings under the Wells Fargo credit facility was $239.8 million.

As of November 25, 2023, the amount available for revolving borrowings under the U.S credit facility was $285.0 million.

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

Future payments for such leases, excluding leases with initial terms of one year or less, were $48.1 million at August 26, 2023, with $6.6 million payable during the remainder of fiscal 2024.

As of August 26, 2023, we had $30.4 million of open purchase obligations, of which payments totaling $20.7 million are expected to become due during the remainder of fiscal 2024.

Future payments for such leases, excluding leases with initial terms of one year or less, were $42.7 million at November 25, 2023, with $3.5 million payable during the remainder of fiscal 2024.

As of November 25, 2023, we had $45.0 million of open purchase obligations, of which payments totaling $12.2 million are expected to become due during the remainder of fiscal 2024.

These purchase obligations primarily relate to raw material commitments and capital expenditures and are not expected to impact future liquidity, as amounts should be recovered through customer billings.

We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal 2024, which will equal or exceed our minimum funding requirements.

As of August 26, 2023, we had reserves of $5.3 million for unrecognized tax benefits.

As of November 25, 2023, we had reserves of $5.3 million for unrecognized tax benefits.

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

We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance.

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

At November 25, 2023, $1.3 billion of these types of bonds were outstanding, of which $398.4 million is in our backlog.

These bonds do not have stated expiration dates.

13 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis