What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-07-09 compared with 2024-01-03 · 174 added, 203 removed, 281 unchanged (57% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

(In thousands, except stock data) November 25, 2023 February 25, 2023

(In thousands, except stock data) June 1, 2024 March 2, 2024

Current assets

Cash and cash equivalents $ 30,363 $ 37,216

Restricted cash — 1,549

Receivables, net

183,270 173,557

Inventories 70,267 78,441

Inventories, net 80,495 69,240

Contract assets 43,957 49,502

22 unchanged sentences

Shareholders’ equity

Junior preferred stock of $ 1.00 par value;

authorized 200,000 shares;

zero issued and outstanding

Common stock of $ 0.33 -1/3 par value;

8 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

(In thousands, except per share data) November 25, 2023 November 26, 2022 November 25, 2023 November 26, 2022

Three Months Ended

(In thousands, except per share data) June 1, 2024 May 27, 2023

Net sales $ 331,516 $ 361,713

4 unchanged sentences

Interest expense, net 450 2,036

Other expense (income), net 890 552 ( 3,722 ) 2,035

Other (income) expense, net ( 143 ) 288

Earnings before income taxes 41,074 31,443

7 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

Three Months Ended Nine Months Ended

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

Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Net earnings $ 31,011 $ 23,576

Other comprehensive (loss) earnings:

Other comprehensive earnings:

Unrealized (loss) gain on marketable securities, net of $( 1 ) and $ 33 of tax (benefit) expense, respectively

( 7 ) ( 88 ) 86 ( 470 )

Unrealized gain (loss) on derivative instruments, net of $ 364 and $( 121 ) of tax expense (benefit), respectively

1 unchanged sentence

Foreign currency translation adjustments ( 669 ) 435

Other comprehensive (loss) earnings ( 425 ) ( 478 ) 432 ( 6,721 )

Other comprehensive earnings 521 159

Total comprehensive earnings $ 31,532 $ 23,735

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

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

Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Operating Activities

4 unchanged sentences

Deferred income taxes 3,466 ( 165 )

Gain on disposal of assets ( 50 ) ( 1,484 )

Proceeds from New Markets Tax Credit transaction, net of deferred costs — 18,390

Settlement of New Markets Tax Credit transaction ( 4,687 ) ( 19,523 )

Noncash lease expense 8,742 8,924

Loss (gain) on disposal of property, plant and equipment 22 ( 27 )

Non-cash lease expense 2,895 2,714

Other, net ( 925 ) ( 432 )

4 unchanged sentences

Accounts payable ( 1,871 ) ( 8,390 )

Accrued expenses ( 7,015 ) 7,281

Accrued compensation and benefits ( 24,850 ) ( 13,312 )

Contract liabilities 1,648 8,158

Refundable and accrued income taxes ( 7,587 ) ( 14,391 )

Operating lease liability ( 3,007 ) ( 3,101 )

Prepaid expenses and other current assets 1,714 ( 2,724 )

Accrued income taxes 6,535 7,590

Other current assets and liabilities ( 6,480 ) ( 6,608 )

Net cash provided by operating activities 5,453 21,287

6 unchanged sentences

Financing Activities

Borrowings on line of credit 195,851 430,879

Repayment on debt — ( 151,000 )

Payments on line of credit ( 265,000 ) ( 239,000 )

Payments on debt issuance costs — ( 790 )

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

Proceeds from revolving credit facilities 30,000 105,852

Repayments on revolving credit facilities ( 15,000 ) ( 105,000 )

Repurchase of common stock ( 15,061 ) ( 5,193 )

Dividends paid — ( 5,245 )

1 unchanged sentence

Net cash used by financing activities ( 4,926 ) ( 11,263 )

Increase (decrease) in cash, cash equivalents and restricted cash 2,503 ( 12,469 )

Effect of exchange rates on cash ( 51 ) 77

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

(Decrease) increase in cash and cash equivalents ( 6,853 ) 3,169

Cash and cash equivalents at beginning of period 37,216 21,473

Cash and cash equivalents at end of period $ 30,363 $ 24,642

Noncash Activity

Non-cash Activity

Capital expenditures in accounts payable $ 472 $ 2,115

Dividends declared but not yet paid $ 5,409 $ —

See accompanying notes to consolidated financial statements.

2 unchanged sentences

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

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

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

Share-based compensation — — 2,178 — — 2,178

Share repurchases ( 120 ) ( 40 ) ( 829 ) ( 4,324 ) — ( 5,193 )

Other share retirements ( 40 ) ( 14 ) ( 281 ) ( 1,438 ) — ( 1,733 )

Cash dividends — — — ( 5,245 ) — ( 5,245 )

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

Balance at March 2, 2024 22,089 $ 7,363 $ 152,818 $ 340,375 $ ( 29,531 ) $ 471,025

Net earnings — — — 31,011 — 31,011

2 unchanged sentences

Share-based compensation — — 2,704 — — 2,704

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

Share repurchases ( 242 ) ( 81 ) ( 1,860 ) ( 13,120 ) — ( 15,061 )

Other share retirements ( 80 ) ( 27 ) ( 603 ) ( 4,206 ) — ( 4,836 )

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

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

Net earnings — — — 26,974 — 26,974

Other comprehensive income, net of tax — — — — ( 424 ) ( 424 )

Issuance of stock, net of cancellations 15 6 ( 5 ) — — 1

Share-based compensation — — 2,161 — — 2,161

Other share retirements ( 2 ) ( 1 ) ( 12 ) ( 64 ) — ( 77 )

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

Balance at November 25, 2023 22,085 $ 7,362 $ 149,557 $ 329,936 $ ( 31,124 ) $ 455,731

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Declared dividends — — — ( 5,409 ) — ( 5,409 )

Balance at June 1, 2024 21,937 $ 7,312 $ 153,002 $ 348,651 $ ( 29,010 ) $ 479,955

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

2 unchanged sentences

Net earnings — — — 23,576 — 23,576

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

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

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

Net earnings — — — 23,765 — 23,765

Other comprehensive loss, net of tax — — — — ( 478 ) ( 478 )

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.

3 unchanged sentences

The consolidated financial statements of Apogee Enterprises, Inc.

(we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States.

The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended February 25, 2023.

(we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (U.S.

The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended March 2, 2024.

We use the same accounting policies in preparing quarterly and annual financial statements.

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 25, 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 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 first quarter, we implemented a supplier financing arrangement with U.S.

Bank that enables our suppliers, at their sole discretion, to sell the Company's 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 November 25, 2023, $ 7.8 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.

The results of operations for the three-month period ended June 1, 2024 are not necessarily indicative of the results to be expected for the full year.

New accounting standards

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which expands the required disclosure for reportable segments.

This guidance requires entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all segment disclosures which are currently required annually.

This ASU additionally requires entities to disclose the title and position of the individual or the name of the group or committee identified as its chief operating decision-maker.

Such guidance, which is required to be applied retrospectively, is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, although early adoption is permitted.

While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact to our segment disclosures for the year ended March 1, 2025 and future interim periods.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, intended to enhance the transparency and decision-usefulness of income tax disclosures.

Such guidance requires entities to provide additional information within their income tax rate reconciliation, including further disclosure of federal, state, and foreign income taxes and to provide more details about these reconciling items if a quantitative threshold is met.

This guidance additionally requires expanded disclosure of income taxes paid, including amounts paid for federal, state, and foreign taxes.

This ASU, which is required to be applied prospectively, is effective for fiscal years beginning after December 15, 2024, although early adoption and retrospective application is permitted.

While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact on our income tax disclosures, including the processes and controls around the collection of this information.

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 25, 2023 November 26, 2022 November 25, 2023 November 26, 2022

Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Recognized at shipment $ 136,722 $ 152,655

Recognized over time 194,804 199,254 605,297 592,141

Recognized over time (input method) 116,681 123,381

Recognized over time (output method) 78,113 85,677

Total $ 331,516 $ 361,713

1 unchanged sentence

An allowance for credit losses is established based on expected losses.

Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecast economic conditions and other relevant factors.

Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecasted economic conditions and other relevant factors.

Upon billing, aging of receivables is monitored until collection.

1 unchanged sentence

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

(In thousands) November 25, 2023 February 25, 2023

(In thousands) June 1, 2024 March 2, 2024

Trade accounts $ 112,266 $ 115,061

3 unchanged sentences

Receivables, net $ 183,270 $ 173,557

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

(In thousands) November 25, 2023

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

(In thousands) June 1, 2024

Beginning balance $ 3,383

Additions charged to costs and expenses 1,256

Deductions from allowance, net of recoveries ( 281 )

Reductions to allowance of credit losses ( 659 )

Foreign currency effects ( 8 )

7 unchanged sentences

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 25, 2023 November 26, 2022 November 25, 2023 November 26, 2022

Other contract-related disclosures Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Revenue recognized related to contract liabilities from prior year-end $ 26,530 $ 22,745

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 25, 2023 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) November 25, 2023

The transaction prices associated with unsatisfied performance obligations at June 1, 2024 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

(In thousands) June 1, 2024

Within one year

2 unchanged sentences

Total $ 1,071,144

(In thousands) November 25, 2023 February 25, 2023

(In thousands) June 1, 2024 March 2, 2024

Raw materials $ 33,970 $ 31,363

1 unchanged sentence

Finished goods 29,920 25,586

Total inventories $ 70,267 $ 78,441

Total inventories, net $ 80,495 $ 69,240

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 fixed-maturity investments:

(Prism), we 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

November 25, 2023 $ 10,168 $ 3 $ 597 $ 9,574

February 25, 2023 10,647 — 702 9,945

June 1, 2024 $ 11,455 $ 19 $ 448 $ 11,026

March 2, 2024 11,327 15 437 10,905

Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements.

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 investments at November 25, 2023, by contractual maturity, are shown below.

The amortized cost and estimated fair values of these investments at June 1, 2024, 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 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, currency put options, 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 November 25, 2023, the interest rate swap contract had a notional value of $ 30.0 million and has a maturity date of February 5, 2026.

As of June 1, 2024, 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 November 25, 2023, we held aluminum fixed/floating swaps and foreign exchange contracts with U.S.

As of June 1, 2024, we held aluminum purchase contracts and foreign exchange option contracts with U.S.

dollar notional values of $ 4.7 million and $ 0.7 million, respectively.

These derivative instruments are recorded within our consolidated balance sheets within other current assets and liabilities.

Gains or losses associated with these instruments are recorded as a component of accumulated other comprehensive income.

The mark to market adjustments on these derivative instruments are recorded within our consolidated balance sheets within other current assets and other current liabilities.

Gains or losses associated with these instruments are recorded as a component of accumulated other comprehensive loss until which time the hedged transaction is settled and gains or losses are reclassified to net earnings.

Fair value measurements

7 unchanged sentences

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

November 25, 2023

Money market funds $ 23,874 $ — $ 23,874

Municipal and corporate bonds — 11,026 11,026

Foreign currency option contract — 3 3

Interest rate swap contract — 1,336 1,336

Aluminum hedging contract — 386 386

February 25, 2023

March 2, 2024

Money market funds $ 26,529 $ — $ 26,529

Municipal and corporate bonds — 10,905 10,905

Foreign currency forward/option contract — 3 3

Interest rate swap contract — 1,292 1,292

Foreign currency option contract — 206 206

Aluminum hedging contract — 529 529

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost over the value of net tangible and identified intangible assets of acquired businesses.

We evaluate goodwill for impairment annually as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

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, which resulted in the combination of the Sotawall and Harmon reporting units into a single reporting unit.

We evaluated goodwill on a qualitative basis prior to and subsequent to this change for these reporting units and concluded that no adjustment to the carrying value of goodwill was necessary.

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 third 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 Glass Architectural Services Large-Scale

Optical Total

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

Reallocation among reporting units (1)

( 2,048 ) — 2,048 — —

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

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

Foreign currency translation ( 28 ) 59 ( 4 ) — 27

Balance at November 25, 2023 $ 90,109 $ 25,360 $ 3,027 $ 10,557 $ 129,053

(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.

Other intangible assets

Indefinite-lived intangible assets

We have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives.

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 third 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.

Definite-lived intangible assets

Long-lived assets or asset groups, including intangible assets subject to amortization and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable.

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.

The gross carrying amount of other intangible assets and related accumulated amortization was:

(In thousands) Gross

Amount Accumulated

Amortization Foreign

Translation Net

November 25, 2023

Definite-lived intangible assets:

Customer relationships $ 86,798 $ ( 52,130 ) $ ( 15 ) $ 34,653

Other intangibles 38,360 ( 35,706 ) 25 2,679

Total 125,158 ( 87,836 ) 10 37,332

Indefinite-lived intangible assets:

Trademarks 26,851 — ( 9 ) 26,842

Total intangible assets $ 152,009 $ ( 87,836 ) $ 1 $ 64,174

February 25, 2023

Definite-lived intangible assets:

Customer relationships $ 89,495 $ ( 49,404 ) $ ( 2,697 ) $ 37,394

Other intangibles 39,404 ( 35,229 ) ( 1,045 ) 3,130

Total 128,899 ( 84,633 ) ( 3,742 ) 40,524

Indefinite-lived intangible assets:

Trademarks 27,129 — ( 278 ) 26,851

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

Amortization expense on definite-lived intangible assets was $ 3.0 million and $ 3.1 million for the nine-month periods ended November 25, 2023 and November 26, 2022, respectively.

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

At November 25, 2023, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of 2024 2025 2026 2027 2028

Estimated amortization expense $ 1,058 $ 4,240 $ 4,223 $ 4,391 $ 3,936

As of November 25, 2023, we had a committed revolving credit facility with Wells Fargo Bank, N.A.

As of June 1, 2024, 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 $ 85.0 million and $ 156.0 million as of November 25, 2023 and February 25, 2023, respectively.

Outstanding borrowings under the revolving credit facility were $ 65.0 million and $ 50.0 million as of June 1, 2024 and March 2, 2024, respectively.

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

1 unchanged sentence

Therefore, we have classified all outstanding amounts under these facilities as long-term debt within our consolidated balance sheets.

At November 25, 2023 and February 25, 2023, outstanding borrowings under these Canadian facilities were $ 3.7 million and $ 1.8 million, respectively.

As of June 1, 2024 and March 2, 2024, we had no outstanding borrowings under these Canadian facilities.

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 November 25, 2023, we were in compliance with both financial covenants.

At June 1, 2024, we were in compliance with both financial covenants.

The revolving credit facilities also contain an acquisition holiday.

1 unchanged sentence

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 Agreements).

Borrowings under the credit facilities bear floating interest at either the Base Rate or Term Secured Overnight Financing Rate (SOFR), or, in the case of the Canadian facilities, Canadian Overnight Repo Rate Average (CORRA) plus, in each 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 1.125% to 1.75% and an incremental Term SOFR adjustment of 0.10%.

For Term SOFR and CORRA borrowings, the margin ranges from 1.125 % to 1.75 %, with an incremental Term SOFR and CORRA adjustment of 0.10 % and 0.29547 %, respectively.

credit facility also contains an "accordion" provision.

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

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

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 revolving credit facility.

As of November 25, 2023, the amount available for revolving borrowings was $ 285.0 million and $ 21.3 million under the U.S.

Any lender may elect or decline to participate in the requested increase at their sole discretion.

At June 1, 2024, 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 years 2026 through 2032 and reduce borrowing capacity under the revolving credit facility.

As of June 1, 2024, the amount available for revolving borrowings was $ 305.0 million and $ 25.0 million under the U.S.

credit facility and Canadian facilities, respectively.

At November 25, 2023, debt included $ 12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043.

At June 1, 2024, 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 November 25, 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..

credit facility, Canadian credit facilities and industrial revenue bonds approximated carrying values at June 1, 2024, 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.

(In thousands) June 1, 2024 May 27, 2023

Interest on debt $ 1,174 $ 2,510

Interest rate swap gain ( 236 ) ( 267 )

Other interest expense 21 28

Interest income $ ( 509 ) $ ( 235 )

Interest expense, net

$ 450 $ 2,036

Interest payments under the U.S.

and Canadian credit facilities were $ 7.5 million and $ 5.3 million for the nine months ended November 25, 2023 and November 26, 2022, respectively.

and Canadian credit facilities were $ 1.1 million and $ 2.4 million for the three months ended June 1, 2024 and May 27, 2023, 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 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.

At June 1, 2024, $ 1.3 billion of these types of bonds were outstanding, of which $ 434.7 million is in our backlog.

These bonds have expiration dates that align with completion of the sales order or contract.

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

4 unchanged sentences

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

Nine Months Ended

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

Three Months Ended

(In thousands) June 1, 2024

Balance at beginning of period $ 21,362

2 unchanged sentences

Balance at end of period $ 20,232

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and in certain parts of our Architectural Framing Systems businesses.

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services Segment and in certain parts of our Architectural Framing Systems Segment.

We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages.

Letters of credit

At November 25, 2023, we had $ 15.0 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6.

At June 1, 2024, we had $ 15.0 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 5.

Purchase obligations

Purchase obligations for raw material commitments and capital expenditures totaled $ 45.0 million as of November 25, 2023.

Purchase obligations for raw material commitments and capital expenditures totaled $ 17.9 million as of June 1, 2024.

New Markets Tax Credit (NMTC) transactions

5 unchanged sentences

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.

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 second quarter of fiscal 2024, one NMTC transaction was settled as expected and as a result, a $4.7 million benefit was recorded in other (income) expense, net.

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.

As a result of the structure of these transactions, variable-interest entities were created.

As the other investors in these programs do not have a material interest in the entities' underlying economics, we include 100% of the results of the variable-interest entities in our consolidated financial statements.

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

11 unchanged sentences

Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

Supplier Finance Program Obligations

In the first quarter of fiscal 2024, we implemented a supplier financing arrangement that enables our suppliers, at their sole discretion, to sell our receivables (i.e., our payment obligations to the suppliers) 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.

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

The following table summarizes the obligation activity and outstanding balances as of June 1, 2024 and March 2, 2024 that we have confirmed as valid to the administrators of our program:

(In thousands) June 1, 2024 March 2, 2024

Balance at beginning of period $ 6,527 $ —

Obligations added to the program 10,342 33,133

Obligations settled ( 10,666 ) ( 26,606 )

Balance at end of period $ 6,203 $ 6,527

Shareholders' Equity

We declared dividends totaling $ 5.4 million ($ 0.25 per share) in the first three months of fiscal 2025, compared to dividends paid of $ 5.2 million ($ 0.24 per share) in the comparable prior year period.

During fiscal 2004, the Board of Directors authorized a share repurchase program allowing us to repurchase shares of our outstanding common stock, with subsequent increases in authorization.

During the three-months ended June 1, 2024, we repurchased 241,573 shares under the program, for a total cost of $ 15.1 million, inclusive of the applicable excise tax.

During the three-months ended May 27, 2023, we repurchased 119,916 shares under the program, for a total cost of $ 5.2 million.

We have repurchased a total of 11,518,090 shares, at a total cost of $ 408.5 million, since the inception of this program in fiscal 2004.

We have remaining authority to repurchase 2,731,910 shares under this program, which has no expiration date.

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.

We may finance share repurchases with available cash, additional debt or other sources of financing.

Share-Based Compensation

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 unless the date of the award is on a day the Nasdaq Global Select market is not open for trading, then the exercise price shall equal the fair market value on the most recent preceding date when such market is open.

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 nine-months ended November 25, 2023, along with the weighted average grant date fair value:

Awards Number of Awards Weighted Average Exercise Price

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, unless the date of the award is on a day the Nasdaq Stock Market is not open for trading, then the exercise price shall equal the fair market value on the most recent preceding date when such market is open.

The table below sets forth the number of stock-based compensation awards granted during the three-months ended June 1, 2024, along with the weighted average grant date fair value:

Awards Number of Awards Weighted Average Grant Date Fair Value

Restricted stock awards and restricted stock units (1)

91,957 $ 62.25

Performance share units ("PSUs") (2)

Performance share units (2)

35,332 $ 62.53

1 unchanged sentence

(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 $ 6.6 million for the nine-month period ended November 25, 2023, and $ 6.0 million for the nine-month period ended November 26, 2022.

At November 25, 2023, there was $ 11.6 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 21 months.

The total fair value of shares vested during the nine months ended November 25, 2023 was $ 5.8 million.

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

Total share-based compensation expense included in the results of operations was $ 2.7 million for the three-month period ended June 1, 2024, and $ 2.2 million for the three-month period ended May 27, 2023.

At June 1, 2024, there was $ 10.6 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 19 months.

The total fair value of shares vested during the three-months ended June 1, 2024 was $ 9.0 million.

We file income tax returns in the U.S.

4 unchanged sentences

We are not currently under U.S.

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

federal examination for years subsequent to fiscal year 2020, 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 $ 5.3 million at November 25, 2023 and February 25, 2023, respectively.

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions and other items.

Income tax expense as a percentage of earnings before income tax was 24.5 %, compared to 25.0 % for the same period last year.

The decrease in the effective tax rate was primarily due to a decrease in tax expense for discrete items, partially offset by an increase in non-deductible executive compensation expense.

The total liability for unrecognized tax benefits was $ 5.6 million at June 1, 2024 compared to $ 5.1 million at March 2, 2024, respectively.

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

1 unchanged sentence

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 Nine Months Ended

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

Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Basic earnings per share – weighted average common shares outstanding

1 unchanged sentence

Weighted average effect of nonvested share grants and assumed exercise of stock options

194 408 204 413

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

1 unchanged sentence

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)

37 109 56 109

Business Segment Data

1 unchanged sentence

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

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

• The Architectural Glass Segment coats and fabricates, high-performance glass used in custom window and wall systems on non-residential 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 Large-Scale Optical (LSO) segment manufactures high-performance glass and acrylic products for custom framing, museum, and technical glass markets.

Three Months Ended Nine Months Ended

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

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

Segment net sales is defined as net sales for a certain segment and includes revenue related to intersegment transactions.

We report net sales intersegment eliminations separately to exclude these sales from our consolidated total.

Segment operating income is equal to net sales, less cost of goods sold, selling, general and administrative expenses, and any asset impairment charges associated with the segment.

Segment operating income includes operating income related to intersegment sales transactions and excludes certain corporate costs that are not allocated at a segment level.

We report these unallocated corporate costs in Corporate and Other.

Operating income does not include other income or expense, interest expense or a provision for income taxes.

Three Months Ended

(In thousands) June 1, 2024 May 27, 2023

Segment net sales

12 unchanged sentences

Operating income $ 41,381 $ 33,767

*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 fourth quarter of fiscal 2024, we announced strategic actions to further streamline our business operations, enable a more efficient cost model, and better position the Company for profitable growth (referred to as “Project Fortify”).

Project Fortify primarily impacts the Architectural Framing Systems Segment and includes:

• Eliminating certain lower-margin product and service offerings, enabling consolidation into a single operating entity.

• Transferring production operations from the Company’s facility in Walker, Michigan, to the Company’s facilities in Monett, Missouri and Wausau, Wisconsin.

• Simplifying the segment’s brand portfolio and commercial model to improve flexibility, better leverage the Company’s capabilities, and enhance customer service.

Additionally, the Company has implemented actions to optimize processes and streamline resources in its Architectural Services Segment and Corporate.

The Company expects these actions to be substantially complete by the third quarter of fiscal 2025.

The Company now expects to incur approximately $ 15.0 million to $ 16.0 million of pre-tax charges in connection with Project Fortify leading to annualized cost savings of $ 12 million to $ 14 million.

Restructuring charges are expected to include:

• $ 6.5 million to $ 7.5 million of severance and employee related costs;

• $ 1.5 million to $ 2.0 million of contract termination costs:

• $ 6.5 million to $ 7.0 million of other expenses.

During the first quarter of fiscal 2025, we incurred $ 1.1 million of pre-tax costs associated with Project Fortify, of which $ 0.6 million was included within cost of sales and $ 0.5 million was included within selling, general and administrative expenses.

During the fourth quarter of fiscal 2024, we incurred $ 12.4 million of pre-tax costs associated with Project Fortify, of which $ 5.5 million was included within cost of sales and $ 6.9 million was included within selling, general and administrative expenses.

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

Termination benefits $ 302 $ — $ 124 $ 426

Other restructuring charges 696 — — 696

Total restructuring charges $ 998 $ — $ 124 $ 1,122

The following table summarizes our restructuring related accrual balances included within accrued payroll and related benefits and other current liabilities in the consolidated balance sheets.

All remaining accrual balances are expected to be paid within fiscal 2025.

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

Balance at March 2, 2024 $ 2,814 $ 2,067 $ 56 $ 4,937

Restructuring expense 771 — 124 895

Payments ( 2,053 ) ( 348 ) ( 50 ) ( 2,451 )

Other adjustments 320 — — 320

Balance at June 1, 2024 $ 1,852 $ 1,719 $ 130 $ 3,701

The charges presented in the rollforward of our restructuring accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued payroll and related benefits and other current liabilities in the consolidated balance sheets.

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