What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-02 compared with 2025-01-07 · 161 added, 292 removed, 133 unchanged (77% of the section changed)

23 unchanged sentences

Our four reporting segments are:

Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical.

Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces.

Our enterprise strategy is based on the following three key elements:

Become the economic leader in our target markets.

We are 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 have developed a deep understanding of our target markets and aligned our businesses with clear go-to-market strategies to drive value for our customers through differentiated product and service offerings.

We are focused 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.

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We are shifting our business mix toward higher operating margin offerings in order to improve our return on invested capital performance.

We expect 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 and increase margins.

We 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 and increase margins.

We continually analyze our current portfolio of products, services, and capabilities to identify the best areas for future profitable growth.

We also evaluate inorganic opportunities where we can deploy capital to acquire businesses that will be accretive to our long-term growth rate and operating margins.

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.

In fiscal 2022, we established a Company-wide operating system with common tools and processes based on the foundation of Lean and Continuous Improvement, which we call the “Apogee Management System.” Our strategy is supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

We set this strategy by developing a deep knowledge of the markets we serve and by gaining extensive input from customers and industry influencers, along with detailed competitive benchmarking.

We continually analyze our portfolio of products, services, and capabilities to identify the best areas for future profitable growth.

We also evaluate our operating model to ensure we have the organizational structure and capabilities needed to deliver consistent profitable growth.

Through this work, we validate strengths that we can leverage and identify opportunities to improve our performance.

In fiscal 2024 and through the third quarter of fiscal 2025, we drove further progress toward our strategic goals and financial targets.

We continued the deployment of the Apogee Management System across our business, supporting sustainable cost and productivity improvements.

We have invested in inorganic and organic growth initiatives, including the acquisition of UW Interco, LLC (UW Solutions), capacity expansion in the Large-Scale Optical Segment and geographic growth in the Architectural Services Segment.

We increased our focus on differentiated products and services, and continued to diversify the mix of architectural projects that we serve while leaning more heavily into higher, value-added products.

We also advanced several initiatives to strengthen our core capabilities, driving the standardization of key business processes and systems, and strengthening talent management and leadership development programs.

We have established a Company-wide operating system with common tools and processes based on the foundation of Lean and Continuous Improvement, which we call the “Apogee Management System.” Our strategy is supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

Recent Developments

In the third quarter of fiscal 2025, we acquired UW Solutions.

UW Solutions is a U.S.

based, vertically integrated manufacturer of high-performance coated substrates, differentiated by its proprietary formulations and coating application processes.

The Company serves a broad range of customers in attractive end markets, including building products for distribution centers and manufacturing facilities, as well as premium products for the graphic arts market.

See Note 13 for additional information on the terms and conditions of this transaction.

On April 23, 2025, we announced an extension of Project Fortify ("Project Fortify Phase 2" or "Phase 2") to drive further cost efficiencies, primarily in the Architectural Metals and Architectural Services Segments.

Phase 2 focuses on further optimizing our operating footprint and aligning resources to enable a more effective operating model.

We expect the actions of Phase 2 to incur approximately $ 24 million to $ 26 million of pre-tax charges.

Phase 2 is expected to deliver annualized pre-tax cost savings of approximately $ 13 million to $ 15 million.

We expect the actions associated with Phase 2 to be substantially completed by the end of the fourth quarter of fiscal 2026.

See Note 14 for additional information.

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended March 1, 2025 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

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(in thousands, except percentages)

November 30, 2024 November 25, 2023 November 30, 2024 November 25, 2023

Net sales $ 341,344 $ 339,714 100.0 % 100.0 %

Cost of sales 252,195 249,409 73.9 73.4

Gross profit 89,149 90,305 26.1 26.6

Selling, general and administrative expenses 60,520 52,658 17.7 15.5

Operating income 28,629 37,647 8.4 11.1

Interest expense, net 1,044 1,454 0.3 0.4

Other (income) expense, net (60) 890 — 0.3

Earnings before income taxes 27,645 35,303 8.1 10.4

Income tax expense 6,656 8,329 1.9 2.5

Net earnings $ 20,989 $ 26,974 6.1 % 7.9 %

Effective tax rate 24.1 % 23.6 %

Nine Months Ended % of Net Sales

(in thousands, except percentages)

November 30, 2024 November 25, 2023 November 30, 2024 November 25, 2023

May 31, 2025 June 1, 2024 May 31, 2025 June 1, 2024

Net sales $ 346,622 $ 331,516 100.0 % 100.0 %

4 unchanged sentences

Interest expense, net 3,846 450 1.1 0.1

Other (income) expense, net (493) (3,722) — (0.4)

Other expense (income), net 682 (143) 0.2 —

Earnings before income taxes 2,403 41,074 0.7 12.4

Income tax expense 5,091 10,063 1.5 3.0

Net earnings $ 82,566 $ 83,877 8.1 % 7.9 %

Net (loss) earnings $ (2,688) $ 31,011 (0.8) % 9.4 %

Effective tax rate 211.9 % 24.5 %

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

• Consolidated net sales increased 0.5%, to $341.3 million, driven by $8.8 million of inorganic sales contribution from the acquisition of UW Solutions and a more favorable mix of projects in Architectural Services, partially offset by less favorable mix in Architectural Framing Systems and lower volume in Architectural Glass.

• Gross margin decreased to 26.1%, compared to 26.6%, primarily driven by the unfavorable sales leverage impact of lower volume, a less favorable product mix in the Architectural Framing Systems Segment, and higher incentive compensation and lease expenses, partially offset by a more favorable mix of projects in Architectural Services Segment, and lower quality and insurance-related costs.

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Consolidated net sales increased 4.6%, to $346.6 million, driven by $22.0 million of inorganic sales contribution from the acquisition of UW Solutions.

Growth from inorganic sales was partially offset by lower volume in Architectural Glass and a less favorable mix in Architectural Metals.

• Gross margin decreased to 21.7%, compared to 29.8%, primarily due to restructuring charges of $6.9 million, a less favorable mix and higher aluminum costs in Architectural Metals, and higher tariff expense in Architectural Services.

• SG&A expenses increased $10.7 million to 19.7% of net sales, compared to 17.3% of net sales.

The increase in SG&A as a percentage of net sales was primarily due to acquisition-related expenses associated with the UW Solutions acquisition, restructuring expense related to Project Fortify, and the unfavorable sales leverage impact of lower volume.

The increase in SG&A as a percentage of net sales was primarily due to restructuring charges of $8.4 million and increased amortization expense associated with the UW Solutions transaction, partially offset by lower long-term incentive expense.

• Operating income declined to $6.9 million from $41.4 million, and operating margin decreased 1,050 basis points to 2.0%.

The lower operating margin was primarily driven by acquisition-related expenses associated with the UW Solutions transaction, unfavorable sales leverage impact on lower volume, less favorable product mix, higher incentive compensation, higher lease expense, and $0.9 million of restructuring costs related to Project Fortify, partially offset by a more favorable mix of projects in Architectural Services and lower insurance-related costs.

Adjusted operating income was lower by 5.9% t o $35.4 million, and adjusted operating margin was reduced to 10.4%.

• Interest expense, net declined to $1.0 million, primarily driven by lower weighted-average interest rates and higher interest income.

The decline in operating margin was primarily driven by restructuring charges of $15.3 million, a less favorable mix and higher aluminum costs in Architectural Metals, higher tariff expense in Architectural Services, and increased amortization expense associated with the UW Solutions transaction, partially offset by lower long-term incentive expense.

• Adjusted EBITDA decreased to $34.4 million compared to $52.6 million and adjusted EBITDA margin decreased to 9.9% compared to 15.9%.

The decrease in adjusted EBITDA margin was primarily driven by a less favorable mix and higher aluminum costs in Architectural Metals, as well as higher tariff expense in Architectural Services, partially offset by lower long-term incentive expense.

• Interest expense, net increased to $3.8 million, primarily due to increased debt resulting from the acquisition of UW Solutions.

• Other income was $0.7 million compared to expense of $0.1 million.

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• Income tax expense as a percentage of earnings before income tax was 211.9%, compared to 24.5% for the same period last year.

The increase in the effective tax rate was primarily due to an increase in tax expense for discrete items.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• Consolidated net sales decreased 3.8%, to $1,015.3 million, primarily driven by lower volume and mix, partially offset by a more favorable mix of projects in Architectural Services, improved pricing, and the $8.8 million inorganic sales contribution from the acquisition of UW Solutions.

• Gross margin increased to 28.1%, compared to 26.4%, primarily driven by improved pricing and a more favorable mix of projects in Architectural Services, favorable material costs, and lower quality and insurance-related costs, partially

offset by the unfavorable sales leverage impact of lower volume, higher incentive compensation expense, higher lease costs, and $1.3 million of restructuring costs associated with Project Fortify.

• SG&A expenses increased $6.7 million to 17.1% of net sales, compared to 15.8% of net sales.

The increase in SG&A as a percentage of net sales was primarily due to the impact of acquisition-related expenses, and the unfavorable sales leverage impact of lower volume, partially offset by lower bad debt expense.

• Operating income was $112.0 million and operating margin increased 40 basis points to 11.0%.

The improvement in operating margin was primarily driven by improved pricing, a more favorable mix of projects in Architectural Services, favorable material costs, lower insurance-related costs, and lower bad debt expense, partially offset by the unfavorable sales leverage impact of lower volume, acquisition-related expenses, and $3.2 million of restructuring costs related to Project Fortify.

Adjusted operating income grew 8.1% to $121.1 million, and adjusted operating margin improved to 11.9%.

• Interest expense, net was $2.6 million, compared to $5.7 million, primarily driven by lower average debt levels and increased interest income from higher invested cash over the periods, partially offset by the impact of the write-off of unamortized financing fees related to our previous credit facility.

• Other income was $0.5 million compared to $3.7 million.

The higher amount of income in the prior year period was primarily due to $4.7 million of New Market Tax Credit income recognized in the prior year period.

• Income tax expense as a percentage of earnings before income tax was 24.8%, compared to 23.7% for the same period last year.

The increase in the effective tax rate was primarily due to an increase in tax expense for discrete items.

The increase in the effective tax rate was primarily due to lower earnings before income taxes.

• Net loss of $2.7 million compared to net earnings of $31.0 million.

Segment Analysis

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

Three Months Ended Nine Months Ended

(In thousands, except percentages) November 30, 2024 November 25, 2023 % Change November 30, 2024 November 25, 2023 % Change

We have four operating segments which are also reportable segments.

Each of our four segments have distinct economic characteristics, including products and services provided, production processes and varying ranges in performance and results.

We evaluate the performance of our segments based on segment net sales and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

Our CEO is our chief operating decision maker (CODM).

The CODM uses these measurements to assess segment performance and make decisions about the allocation of operating and capital resources by analyzing recent results, trends, and variances of each segment in relation to forecasts and historical performance.

The segment measurements provided to, and evaluated by, the CODM are described in Note 12 of our unaudited condensed consolidated financial statements.

The following table presents net sales, adjusted EBITDA and adjusted EBITDA margin by segment and the consolidated total.

Three Months Ended

(In thousands, except percentages) May 31, 2025 June 1, 2024 % Change

Segment net sales

Architectural Framing Systems $ 138,039 $ 139,585 (1.1) % $ 412,561 $ 462,548 (10.8) %

Architectural Glass 70,236 90,964 (22.8) 247,040 282,262 (12.5)

Architectural Metals $ 128,624 $ 133,172 (3.4) %

Architectural Services 106,505 99,027 7.6 %

Large-Scale Optical 33,196 26,009 27.6 74,232 72,110 2.9

Architectural Glass 73,273 86,703 (15.5) %

Performance Surfaces 42,250 21,204 99.3 %

Total segment sales 350,652 340,106 3.1 %

Intersegment eliminations (4,030) (8,590) (53.1) %

Net sales $ 346,622 $ 331,516 4.6 %

Segment operating income (loss)

Architectural Framing Systems $ 12,710 $ 16,981 (25.2) % $ 48,187 $ 57,986 (16.9) %

Architectural Glass 10,118 15,164 (33.3) 48,277 49,119 (1.7)

Segment adjusted EBITDA

Architectural Metals 9,366 23,840 (60.7) %

Architectural Services 6,067 6,573 (7.7) %

Large-Scale Optical 4,842 7,100 (31.8) 13,481 17,288 (22.0)

Corporate and Other (8,771) (6,886) 27.4 (19,453) (20,637) (5.7)

Operating income $ 28,629 $ 37,647 (24.0) % $ 111,975 $ 111,967 — %

Segment operating margin

Architectural Framing Systems 9.2 % 12.2 % 11.7 % 12.5 %

Architectural Glass 13,417 20,231 (33.7) %

Architectural Services 9.3 5.6 7.1 3.0

Large-Scale Optical 14.6 27.3 18.2 24.0

Performance Surfaces 7,959 5,642 41.1 %

Corporate and Other (2,425) (3,664) (33.8) %

N/M N/M N/M N/M

Operating income 8.4 % 11.1 % 11.0 % 10.6 %

Adjusted EBITDA $ 34,384 $ 52,622 (34.7) %

Segment adjusted EBITDA margins

Architectural Metals 7.3 % 17.9 %

Architectural Services 5.7 % 6.6 %

Architectural Glass 18.3 % 23.3 %

Performance Surfaces 18.8 % 26.6 %

Corporate and Other N/M N/M

Adjusted EBITDA margin 9.9 % 15.9 %

N/M Indicates calculation not meaningful.

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, SG&A, 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 income tax expense.

Architectural Framing Systems

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

• Net sales were $138.0 million, compared to $139.6 million, primarily reflecting a less favorable product mix, partially offset by increased volume.

• Operating income was $12.7 million, or 9.2% of net sales, compared to $17.0 million, or 12.2% of net sales.

The decline in operating margin was primarily driven by the less favorable product mix as well as higher freight and compensation expenses and $0.8 million of restructuring charges related to Project Fortify.

Adjusted operating income was $13.6 million, or 9.8% of net sales, compared to $17.0 million, or 12.2% of net sales.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• Net sales were $412.6 million, compared to $462.5 million, primarily reflecting reduced volume due to exiting certain lower-margin product lines as part of Project Fortify and lower end market demand as well as a less favorable product mix.

• Operating income was $48.2 million, or 11.7% of net sales, compared to $58.0 million, or 12.5% of net sales.

The decline in operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, higher compensation costs, and $2.8 million of restructuring charges as part of Project Fortify, partially offset by favorable material costs and lower bad debt expense.

Adjusted operating income was $50.9 million, or 12.3% of net sales, compared to $58.0 million, or 12.5% of net sales.

The following table summarizes the impact that different items had on our net sales for the first quarter fiscal 2026.

All net sales for the first quarter of fiscal 2025 were organic.

(In thousands, except percentages) Architectural Metals

Architectural Services Architectural Glass

Performance Surfaces Intersegment eliminations

Fiscal 2025 net sales

$ 133,172 $ 99,027 $ 86,703 $ 21,204 $ (8,590) $ 331,516

Organic business (1)

(4,548) 7,478 (13,430) (982) 4,560 (6,922)

Acquisition (2)

— — — 22,028 — 22,028

Fiscal 2026 net sales

$ 128,624 $ 106,505 $ 73,273 $ 42,250 $ (4,030) $ 346,622

Total net sales growth (decline)

(3.4) % 7.6 % (15.5) % 99.3 % (53.1) % 4.6 %

Organic business (1)

(3.4) % 7.6 % (15.5) % (4.6) % (53.1) % (2.1) %

Acquisition (2)

— % — % — % 103.9 % — % 6.6 %

Organic business includes net sales associated with acquired product lines or businesses that occur after the first twelve months from the date the product line or business is acquired and net sales from internally developed product lines or businesses.

On November 4, 2024, we completed the acquisition of UW Solutions.

For additional information, see Note 13 to the accompanying consolidated financial statements.

Architectural Metals

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Net sales were $128.6 million, compared to $133.2 million, primarily reflecting a less favorable mix, partially offset by increased volume.

• Adjusted EBITDA was $9.4 million, or 7.3% of net sales, compared to $23.8 million, or 17.9% of net sales.

The decline in adjusted EBITDA margin was primarily driven by a less favorable mix, higher aluminum costs, unfavorable productivity, and unfavorable sales leverage, partially offset by the impact from higher volume.

Architectural Services

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Net sales were $106.5 million, compared to $99.0 million, primarily due to increased volume.

• Adjusted EBITDA decreased to $6.1 million, or 5.7% of net sales, compared to $6.6 million, or 6.6% of net sales.

The decrease in adjusted EBITDA margin was primarily driven by higher tariff expense, partially offset by a more favorable mix of projects and favorable sales leverage.

• For the three months ended May 31, 2025 and June 1, 2024, cumulative catch-up adjustments on our longer-term contracts for changes in estimates were as follows:

(in thousands)

Gross favorable adjustments

$ 5,293 $ 3,554

Gross unfavorable adjustments

(5,226) (550)

Net adjustments

Architectural Glass

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Net sales were $73.3 million, compared to $86.7 million, primarily reflecting reduced volume due to lower end-market demand.

• Operating income decreased to $10.1 million, or 14.4% of net sales, compared to $15.2 million, or 16.7% of net sales.

The lower operating margin was primarily driven by unfavorable sales leverage impact of lower volume partially offset by improved productivity, favorable freight costs, and lower quality-related expense.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• Net sales were $247.0 million, compared to $282.3 million, reflecting lower volume due to lower end-market demand, partially offset by improved pricing.

• Operating income decreased to $48.3 million, or 19.5% of net sales, compared to $49.1 million, or 17.4% of net sales.

The improvement in operating margin was primarily driven by improved pricing, improved productivity, and lower quality-related costs, partially offset by the unfavorable sales leverage impact of lower volume.

Architectural Services

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

• Net sales were $104.9 million, compared to $94.7 million, primarily due to a more favorable mix of projects and increased volume.

• Operating income increased to $9.7 million, or 9.3% of net sales, compared to $5.3 million, or 5.6% of net sales.

The improvement in operating margin was primarily driven by a more favorable mix of projects partially offset by higher incentive compensation expense and higher lease costs.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• Net sales were $302.0 million, compared to $272.1 million, primarily due increased volume and a more favorable mix of projects.

• Operating income increased to $21.5 million, or 7.1% of net sales, compared to $8.2 million, or 3.0% of net sales.

The improvement in operating margin was primarily driven by a more favorable mix of projects, partially offset by higher incentive compensation expense and higher lease costs.

Large-Scale Optical (LSO)

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

• LSO net sales were $33.2 million, compared to $26.0 million, which included $8.8 million of inorganic sales contribution from the acquisition of UW Solutions, partially offset by lower volume in the retail channel.

• Operating income was $4.8 million, or 14.6% of net sales, compared to $7.1 million, or 27.3% of net sales.

The decline in operating margin was primarily driven by acquisition-related costs, the unfavorable sales leverage impact of lower volume, and the dilutive effect of lower operating margin from acquiring UW Solutions.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• LSO net sales were $74.2 million, compared to $72.1 million, which included $8.8 million of sales from UW Solutions, partially offset by lower volume in the retail channel.

• Operating income was $13.5 million, or 18.2% of net sales, compared to $17.3 million, or 24.0% of net sales.

The decline in operating margin was primarily driven by acquisition-related costs and the sales leverage impact of lower volume.

• Adjusted EBITDA decreased to $13.4 million, or 18.3% of net sales, compared to $20.2 million, or 23.3% of net sales.

The decline in adjusted EBITDA margin was primarily driven by unfavorable sales leverage.

Performance Surfaces

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Net sales were $42.3 million, compared to $21.2 million, which included $22.0 million of inorganic sales contribution from the acquisition of UW Solutions.

• Adjusted EBITDA was $8.0 million, or 18.8% of net sales, compared to $5.6 million, or 26.6% of net sales.

The decline in adjusted EBITDA margin was primarily driven by the dilutive effect of lower adjusted EBITDA margin from UW Solutions, unfavorable mix, and increased corporate allocation expense.

Corporate and Other

Comparison of Third Quarter Fiscal 2025 to Third Quarter Fiscal 2024

• Corporate and Other expense was $8.8 million, compared to $6.9 million.

The increase was primarily driven by acquisition-related costs, partially offset by lower incentive compensation and insurance-related costs.

Comparison of First Nine Months of Fiscal 2025 to First Nine Months of Fiscal 2024

• Corporate and Other expense was $19.5 million, compared to $20.6 million.

The decrease was primarily due to lower insurance-related and incentive compensation costs, partially offset by acquisition-related costs.

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

• Corporate and Other adjusted EBITDA expense was $2.4 million, compared to $3.7 million, primarily driven by lower long-term incentive expense.

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.

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Architectural Services

As of November 30, 2024, segment backlog was approximately $742.2 million, compared to approximately $792.1 million at the end of the prior quarter.

The decrease in backlog compared to the prior quarter was primarily driven by executing more project work in the quarter than securing new project awards that were added to backlog.

Our backlog in this segment tends to vary significantly given the variable timing and relatively large size of projects awarded.

As of May 31, 2025, segment backlog was approximately $682.9 million, compared to approximately $720.3 million at the end of the fourth quarter of fiscal 2025.

Reconciliation of Non-GAAP Financial Measures

Adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted diluted earnings per share (adjusted diluted EPS), adjusted net earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), and adjusted EBITDA margin are supplemental non-GAAP financial measures provided by the Company to assess performance on a more comparable basis from period-to-period by excluding amounts that management does not consider part of core operating results.

Adjusted net earnings, adjusted diluted earnings per share (adjusted diluted EPS), adjusted net earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), and adjusted EBITDA margin are supplemental non-GAAP financial measures provided by the Company to assess performance on a more comparable basis from period-to-period by excluding amounts that management does not consider part of core operating results.

Management uses these non-GAAP measures as noted below:

• We use adjusted operating income, adjusted operating margin, adjusted net earnings, and adjusted diluted EPS to provide meaningful supplemental information about our operating performance by excluding amounts that are not considered part of core operating results to enhance comparability of results from period to period.

• We use adjusted net earnings, and adjusted diluted EPS to provide meaningful supplemental information about our operating performance by excluding amounts that are not considered part of core operating results to enhance comparability of results from period to period.

• We believe adjusted EBITDA and adjusted EBITDA margin metrics provide useful information to investors and analysts about our core operating performance.

In addition, adjusted EBITDA is among the primary measures used by management for the planning and forecasting of future period, as well as for measuring performance for compensation of executives and other members of management.

These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported financial results of the Company prepared in accordance with U.S.

Other companies may calculate these measures differently, thereby limiting the usefulness of the measures for comparison with other companies.

Apogee Enterprises, Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income and Adjusted Operating Margin

Three Months Ended November 30, 2024

(In thousands, except percentages)

Architectural Framing Systems Architectural Glass Architectural Services LSO Corporate and Other Consolidated

Operating income $ 12,710 $ 10,118 $ 9,730 $ 4,842 $ (8,771) $ 28,629

Acquisition-related costs (1)

Transaction — — — — 3,748 3,748

Integration — — — 147 794 941

Backlog amortization — — — 805 — 805

Inventory step-up — — — 379 — 379

Total Acquisition-related costs

— — — 1,331 4,542 5,873

Restructuring charges (2)

842 — (717) — 787 912

Adjusted operating income $ 13,552 $ 10,118 $ 9,013 $ 6,173 $ (3,442) $ 35,414

Operating margin

9.2 % 14.4 % 9.3 % 14.6 % N/M 8.4 %

Acquisition-related costs (1)

Transaction — % — % — % — % N/M 1.1 %

Integration — % — % — % 0.4 % N/M 0.3 %

Backlog amortization — % — % — % 2.4 % N/M 0.2 %

Inventory step-up — % — % — % 1.1 % N/M 0.1 %

Total Acquisition-related costs

— % — % — % 4.0 % N/M 1.7 %

Restructuring charges (2)

0.6 % — % (0.7) % — % N/M 0.3 %

Adjusted operating margin

9.8 % 14.4 % 8.6 % 18.6 % N/M 10.4 %

Three Months Ended November 25, 2023

Architectural Framing Systems Architectural Glass Architectural Services LSO Corporate and Other Consolidated

Operating income

$ 16,981 $ 15,164 $ 5,288 $ 7,100 $ (6,886) $ 37,647

Operating margin

12.2 % 16.7 % 5.6 % 27.3 % N/M 11.1 %

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.

• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.

• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition.

These costs will be amortized in SG&A over the period that the contracted backlog is shipped.

• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value.

These costs will be expensed to cost of goods sold over the period the inventory is sold.

Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025.

Nine Months Ended November 30, 2024

(In thousands, except percentages)

Architectural Framing Systems Architectural Glass Architectural Services LSO Corporate and Other Consolidated

Operating income $ 48,187 $ 48,277 $ 21,483 $ 13,481 $ (19,453) $ 111,975

Adjusted EBITDA and Adjusted EBITDA Margin

Three Months Ended May 31, 2025

(In thousands) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Corporate and Other Consolidated

Net (loss) earnings $ 3,669 $ (6,193) $ 10,202 $ 4,132 $ (14,498) $ (2,688)

Interest expense (income), net 457 (52) (145) — 3,586 3,846

Income tax (benefit) expense (44) (8) 90 — 5,053 5,091

Depreciation and amortization 3,813 1,072 3,270 3,550 731 12,436

EBITDA 7,895 (5,181) 13,417 7,682 (5,128) 18,685

Acquisition-related costs (1)

Transaction — — — — 3,748 $ 3,748

Integration — — — 147 794 $ 941

Backlog amortization — — — 805 — $ 805

Inventory step-up — — — 379 — $ 379

Total Acquisition-related costs

— — — 277 72 349

Restructuring charges (2)

Restructuring costs (2)

1,471 11,248 — — 2,631 15,350

Adjusted operating income $ 50,942 $ 48,277 $ 21,024 $ 14,812 $ (13,994) $ 121,061

Operating margin

11.7 % 19.5 % 7.1 % 18.2 % N/M 11.0 %

Acquisition-related costs (1)

Transaction — % — % — % — % N/M 0.4 %

Integration — % — % — % 0.2 % N/M 0.1 %

Backlog amortization — % — % — % 1.1 % N/M 0.1 %

Inventory step-up — % — % — % 0.5 % N/M — %

Total Acquisition-related costs — % — % — % 1.8 % N/M 0.6 %

Restructuring charges (2)

0.7 % — % (0.2) % — % N/M 0.3 %

Adjusted operating margin

12.3 % 19.5 % 7.0 % 20.0 % N/M 11.9 %

Nine Months Ended November 25, 2023

Architectural Framing Systems Architectural Glass Architectural Services LSO Corporate and Other Consolidated

Operating income

Adjusted EBITDA $ 9,366 $ 6,067 $ 13,417 $ 7,959 $ (2,425) $ 34,384

EBITDA margin 6.1 % (4.9) % 18.3 % 18.2 % (1.5) % 5.4 %

Adjusted EBITDA margin 7.3 % 5.7 % 18.3 % 18.8 % (0.7) % 9.9 %

Costs related to the acquisition of UW Solutions.

Restructuring charges related to Project Fortify Phase 2.

Three Months Ended June 1, 2024

(In thousands) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Corporate and Other Consolidated

Net (loss) earnings $ 17,759 $ 5,620 $ 18,050 $ 4,846 $ (15,264) $ 31,011

Interest expense (income), net 570 3 (112) — (11) 450

Income tax expense (benefit) 6 — (717) — 10,774 10,063

Depreciation and amortization 4,507 950 3,010 796 713 9,976

EBITDA 22,842 6,573 20,231 5,642 (3,788) 51,500

Restructuring costs (3)

998 — — — 124 1,122

Operating margin

12.5 % 17.4 % 3.0 % 24.0 % N/M 10.6 %

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.

• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.

• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition.

These costs will be amortized in SG&A over the period that the contracted backlog is shipped.

• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value.

These costs will be expensed to cost of goods sold over the period the inventory is sold.

Restructuring charges related to Project Fortify, including $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.

Adjusted EBITDA $ 23,840 $ 6,573 $ 20,231 $ 5,642 $ (3,664) $ 52,622

EBITDA margin 17.2 % 6.6 % 23.3 % 26.6 % (1.1) % 15.5 %

Adjusted EBITDA margin 17.9 % 6.6 % 23.3 % 26.6 % (1.1) % 15.9 %

Restructuring charges related to Project Fortify Phase 1.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share

Three Months Ended Nine Months Ended

(In thousands, except per share amounts)

November 30, 2024 November 25, 2023 November 30, 2024 November 25, 2023

Net earnings $ 20,989 $ 26,974 $ 82,566 $ 83,877

Three Months Ended

(In thousands) May 31, 2025 June 1, 2024

Net (loss) earnings $ (2,688) $ 31,011

Acquisition-related costs (1)

Transaction 3,748 — 3,748 —

Integration 941 — 941 —

Backlog amortization 805 — 805 —

Inventory step-up 379 — 379 —

Total Acquisition-related costs

5,873 — 5,873 —

Restructuring charges (2)

912 — 3,213 —

NMTC settlement gain (3)

— — — (4,687)

Income tax impact on above adjustments (3)

1 unchanged sentence

Adjusted net earnings $ 11,850 $ 31,858

Three Months Ended Nine Months Ended

November 30, 2024 November 25, 2023 November 30, 2024 November 25, 2023

Diluted EPS $ 0.96 $ 1.23 $ 3.76 $ 3.80

Three Months Ended

May 31, 2025 June 1, 2024

Diluted (loss) earnings per share $ (0.13) $ 1.41

Acquisition-related costs (1)

Transaction 0.17 — 0.17 —

Integration 0.04 — 0.04 —

Backlog amortization 0.04 — 0.04 —

Inventory step-up 0.02 — 0.02 —

Total Acquisition-related costs 0.27 — 0.27 —

Restructuring charges (2)

0.04 — 0.15 —

NMTC settlement gain (3)

Income tax impact on above adjustments (3)

(0.05) (0.01)

Adjusted diluted EPS $ 1.19 $ 1.23 $ 4.08 $ 3.64

Shares outstanding for EPS 21,917 22,013 21,937 22,093

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.

• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.

• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition.

These costs will be amortized in SG&A over the period that the contracted backlog is shipped.

• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value.

These costs will be expensed to cost of goods sold over the period the inventory is sold.

Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025, and $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.

Realization of a New Markets Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.

Income tax impact calculated using an estimated statutory tax rate of 24.5%, which reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

(Earnings before interest, taxes, depreciation and amortization)

Three Months Ended Nine Months Ended

(In thousands) November 30, 2024 November 25, 2023 November 30, 2024 November 25, 2023

Net earnings $ 20,989 $ 26,974 $ 82,566 $ 83,877

Income tax expense 6,656 8,329 27,268 26,092

Interest expense, net 1,044 1,454 2,634 5,720

Depreciation and amortization 11,134 10,524 30,798 31,185

EBITDA $ 39,823 $ 47,281 $ 143,266 $ 146,874

Acquisition-related costs (1)

Transaction 3,748 — 3,748 —

Integration 941 — 941 —

Inventory step-up 379 — 379 —

Total Acquisition-related costs

5,068 — 5,068 —

Restructuring charges (2)

912 — 3,213 —

NMTC settlement gain (3)

— — — (4,687)

Adjusted EBITDA $ 45,803 $ 47,281 $ 151,547 $ 142,187

EBITDA Margin

11.7 % 13.9 % 14.1 % 13.9 %

Adjusted EBITDA Margin 13.4 % 13.9 % 14.9 % 13.5 %

(1) Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.

• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.

• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value.

These costs will be expensed to cost of goods sold over the period the inventory is sold.

Realization of a New Markets Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.

Adjusted diluted earnings per share $ 0.56 $ 1.44

Weighted average diluted shares outstanding 21,338 22,061

Acquisition-related costs include costs related to one-time expenses incurred to integrate the UW Solutions acquisition.

Restructuring charges related to Project Fortify Phase 2.

Income tax impact reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred.

Liquidity and Capital Resources

1 unchanged sentence

Operating Activities.

Net cash provided by operating activities was $95.1 million for the first nine months of fiscal 2025, compared to $129.3 million in the prior year period.

The decrease in net cash provided by operating activities was primarily driven by cash used for working capital.

Net cash used in operating activities was $19.8 million for the first three months of fiscal 2026, compared to cash provided by operating activities of $5.5 million in the prior year period.

The increase of cash used in operating activities was primarily driven by lower net earnings and an increased cash used for working capital, including a payment of $24.7 million for the settlement of an arbitration award.

Investing Activities.

Net cash used by investing activities was $257.1 million for the first nine months of fiscal 2025, compared to $26.3 million in the prior year period.

The increase in net cash used by investing activities was primarily related to $233.1 million of cash used for the acquisition of UW Solutions.

Net cash used in investing activities was $7.0 million for the first three months of fiscal 2026, compared to $7.3 million in the prior year period.

The net cash used in investing activities was primarily related to capital expenditures in both periods.

Financing Activities.

Net cash provided by financing activities was $169.0 million for the first nine months of fiscal 2025, compared to $100.4 million of net cash used by financing activities in the prior year period.

The increase in net cash provided by financing activities was primarily driven by the proceeds of $250.0 million from the delayed draw term loan utilized to finance the UW Solutions acquisition.

Net cash provided by financing activities was $17.6 million for the first three months of fiscal 2026, compared to $4.9 million of net cash used in financing activities in the prior year period.

The increase in net cash provided by financing activities was primarily driven by differences in cash requirements to support the change in operating cash flows between periods.

Additional Liquidity Considerations.

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Borrowings under the revolving credit facility can be in Canadian dollars (CAD) limited to $25.0 million USD.

The term loan facility may be utilized in up to two drawdowns, which are available to be made within one year after the closing date.

The term loan facility may be utilized in up to two drawdowns, which are available to be ma

de within one year after the closing date.

The senior credit facility has a term of five years with a maturity date of July 19, 2029.

The Credit Agreement replaces the previous revolving credit facility with Wells Fargo Bank, N.A., as administrative agent, and other lenders, with maximum borrowings up to $385.0 million, and the two Canadian credit facilities with Bank of Montreal totaling $25.0 million USD.

Outstanding borrowings under the previous revolving credit facility were $50.0 million as of March 2, 2024.

We had no outstanding borrowings under the Canadian facilities as of March 2, 2024.

The Credit Agreement replaced the previous revolving credit facility with Wells Fargo Bank, N.A., as administrative agent, and other lenders, with maximum borrowings up to $385.0 million, and the two Canadian credit facilities with Bank of Montreal totaling $25.0 million USD.

As a result of the execution of the Credit Agreement, in the second quarter of fiscal 2025, we recognized a loss on extinguishment of debt within interest expense of $0.5 million for the write-off of unamortized financing fees related to the previous revolving credit facility.

Additionally, we capitalized $3.0 million of lender fees and $0.8 million of third-party fees incurred in connection with the Credit Agreement, which were recorded as other non-current assets and will be amortized over the term of the credit facility as interest expense.

Additionally, we capitalized $3.0 million of lender fees and $0.8 million of third-party fees incurred in connection with the Credit Agreement, which were recorded as other non-current assets and are being amortized over the term of the credit facility as interest expense.

The Credit Agreement contains two maintenance financial covenants that require our Consolidated Leverage Ratio (as defined in the Credit Agreement) to be less than 3.50 and our Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) to exceed 3.00.

At November 30, 2024, we were in compliance with all covenants as defined under the terms of the Credit Agreement.

At May 31, 2025, we were in compliance with all covenants as defined under the terms of the Credit Agreement.

The Credit Agreement 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 Consolidated Leverage Ratio (as defined in the Credit Agreement) to 4.00 for a period of four consecutive fiscal quarters, commencing with the fiscal quarter in which a qualifying acquisition occurs.

7 unchanged sentences

On November 4, 2024, as part of the acquisition of UW Solutions, and for working capital and general corporate purposes, we executed a drawdown against the delayed draw term loan facility for $250.0 million.

Outstanding borrowings under the term loan facility were $230.0 million as of November 30, 2024.

Outstanding borrowings under the revolving credit facility were $30.0 million as of November 30, 2024.

At November 30, 2024, we had a total of $27.3 million of ongoing letters of credit related to the senior credit facility and 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 November 30, 2024, the amount available for revolving borrowings was $405.0 million.

Outstanding borrowings under the term loan facility were $215.0 million as of May 31, 2025.

Outstanding borrowings under the revolving credit facility were $96.0 million as of May 31, 2025.

At May 31, 2025, we had a total of $2.6 million of ongoing letters of credit related to the senior credit facility, construction contracts and insurance collateral that expire in fiscal year 2026 and reduce borrowing capacity under the revolving credit facility.

As of May 31, 2025, the amount available for revolving borrowings was $351.4 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 $73.9 million at November 30, 2024, with $4.3 million payable during the remainder of fiscal 2025.

As of November 30, 2024, we had $20.0 million of open purchase obligations, of which payments totaling $14.5 million are expected to become due during the remainder of fiscal 2025.

Future payments for such leases, excluding leases with initial terms of one year or less, were $71.8 million at May 31, 2025, with $12.5 million payable during the remainder of fiscal 2026.

As of May 31, 2025, we had $16.0 million of open purchase obligations, of which payments totaling $7.8 million are expected to become due during the remainder of fiscal 2026.

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 $0.4 million to our defined-benefit pension plans in fiscal 2026, which will equal or exceed our minimum funding requirements.

As of November 30, 2024, we had reserves of $5.7 million for unrecognized tax benefits.

As of May 31, 2025, we had reserves of $6.1 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 November 30, 2024, $1.2 billion of these types of bonds were outstanding, of which $307.2 million is in our backlog.

At May 31, 2025, $1.2 billion of these types of bonds were outstanding, of which $339.2 milli

on is in our backlog.

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

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