APOGEE ENTERPRISES, INC. 10-Q

Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except stock data) May 31, 2025 March 1, 2025 Assets Current assets Cash and cash equivalents $ 32,831 $ 41,448 Receivables, net 189,956 185,590 Inventories, net 103,901 92,305 Contract assets 69,457 71,842 Other current assets 51,814 50,919 Total current assets 447,959 442,104 Property, plant and equipment, net of accumulated depreciation of $ 480,155 and $ 469,480 263,279 268,139 Operating lease right-of-use assets 58,961 62,314 Goodwill 236,560 235,775 Intangible assets, net 119,117 128,417 Other non-current assets 30,956 38,520 Total assets $ 1,156,832 $ 1,175,269 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $ 97,763 $ 98,804 Accrued compensation and benefits 32,153 48,510 Contract liabilities 43,342 35,193 Operating lease liabilities 15,671 15,290 Other current liabilities 64,317 87,659 Total current liabilities 253,246 285,456 Long-term debt 311,000 285,000 Non-current operating lease liabilities 48,653 51,632 Non-current self-insurance reserves 29,560 30,382 Other non-current liabilities 32,590 34,901 Commitments and contingent liabilities (Note 6) 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; authorized 50,000,000 shares; issued and outstanding 21,532,572 and 21,417,631 , respectively 7,178 7,139 Additional paid-in capital 157,788 156,075 Retained earnings 349,501 359,976 Accumulated other comprehensive loss ( 32,684 ) ( 35,292 ) Total shareholders’ equity 481,783 487,898 Total liabilities and shareholders’ equity $ 1,156,832 $ 1,175,269 See accompanying notes to consolidated financial statements. 4 Table of Contents CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) Three Months Ended (In thousands, except per share data) May 31, 2025 June 1, 2024 Net sales $ 346,622 $ 331,516 Cost of sales 271,497 232,661 Gross profit 75,125 98,855 Selling, general and administrative expenses 68,194 57,474 Operating income 6,931 41,381 Interest expense, net 3,846 450 Other expense (income), net 682 ( 143 ) Earnings before income taxes 2,403 41,074 Income tax expense 5,091 10,063 Net (loss) earnings $ ( 2,688 ) $ 31,011 Basic (loss) earnings per share $ ( 0.13 ) $ 1.42 Diluted (loss) earnings per share $ ( 0.13 ) $ 1.41 Weighted average basic shares outstanding 21,338 21,823 Weighted average diluted shares outstanding 21,338 22,061 See accompanying notes to consolidated financial statements. 5 Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Unaudited) Three Months Ended (In thousands) May 31, 2025 June 1, 2024 Net (loss) earnings $ ( 2,688 ) $ 31,011 Other comprehensive earnings: Unrealized gain (loss) on marketable securities, net of $ 10 and $( 1 ) of tax expense (benefit), respectively 35 ( 6 ) Unrealized (loss) gain on derivative instruments, net of $( 32 ) and $ 364 of tax (benefit) expense, respectively ( 94 ) 1,196 Foreign currency translation adjustments 2,667 ( 669 ) Other comprehensive earnings 2,608 521 Total comprehensive (loss) earnings $ ( 80 ) $ 31,532 See accompanying notes to consolidated financial statements. 6 Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended (In thousands) May 31, 2025 June 1, 2024 Operating Activities Net (loss) earnings $ ( 2,688 ) $ 31,011 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 12,436 9,976 Share-based compensation 2,300 2,704 Deferred income taxes 2,496 3,466 Loss on disposal of property, plant and equipment 328 22 Impairment on intangible assets 7,418 — Non-cash lease expense 3,738 2,895 Other, net 1,294 ( 925 ) Changes in operating assets and liabilities: Receivables ( 3,938 ) ( 9,845 ) Inventories ( 11,255 ) ( 11,337 ) Contract assets 2,596 5,511 Accounts payable 1,103 ( 1,871 ) Accrued compensation and benefits ( 16,639 ) ( 24,850 ) Contract liabilities 8,104 1,648 Operating lease liability ( 3,643 ) ( 3,007 ) Accrued income taxes 1,698 6,535 Other current assets and liabilities ( 25,130 ) ( 6,480 ) Net cash (used in) provided by operating activities ( 19,782 ) 5,453 Investing Activities Capital expenditures ( 7,167 ) ( 7,229 ) Proceeds from sales of property, plant and equipment 10 40 Purchases of marketable securities — ( 740 ) Sales/maturities of marketable securities 175 600 Net cash used in investing activities ( 6,982 ) ( 7,329 ) Financing Activities Proceeds from revolving credit facilities 59,000 30,000 Repayment on revolving credit facilities ( 33,000 ) ( 15,000 ) Repurchase of common stock — ( 15,061 ) Dividends paid ( 5,520 ) — Other, net ( 2,835 ) ( 4,865 ) Net cash provided by (used in) financing activities 17,645 ( 4,926 ) Effect of exchange rates on cash 502 ( 51 ) Decrease in cash, cash equivalents and restricted cash ( 8,617 ) ( 6,853 ) Cash, cash equivalents and restricted cash at beginning of period 41,448 37,216 Cash and cash equivalents at end of period $ 32,831 $ 30,363 Non-cash Activity Capital expenditures in accounts payable $ 922 $ 472 Dividends declared but not yet paid $ — $ 5,409 See accompanying notes to consolidated financial statements. 7 Table of Contents CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (In thousands) Common Shares Outstanding Common Stock at Par Value Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity Balance at March 1, 2025 21,418 $ 7,139 $ 156,075 $ 359,976 $ ( 35,292 ) $ 487,898 Net loss — — — ( 2,688 ) — ( 2,688 ) Other comprehensive income, net of tax — — — — 2,608 2,608 Issuance of stock, net of cancellations 182 61 ( 61 ) — — — Share-based compensation — — 2,300 — — 2,300 Other share retirements ( 67 ) ( 22 ) ( 526 ) ( 2,267 ) — ( 2,815 ) Cash dividends — — — ( 5,520 ) — ( 5,520 ) Balance at May 31, 2025 21,533 $ 7,178 $ 157,788 $ 349,501 $ ( 32,684 ) $ 481,783 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (In thousands) Common Shares Outstanding Common Stock at Par Value Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity Balance at March 2, 2024 22,089 $ 7,363 $ 152,818 $ 340,375 $ ( 29,531 ) $ 471,025 Net earnings — — — 31,011 — 31,011 Other comprehensive income, net of tax — — — — 521 521 Issuance of stock, net of cancellations 170 57 ( 57 ) — — — Share-based compensation — — 2,704 — — 2,704 Share repurchases ( 242 ) ( 81 ) ( 1,860 ) ( 13,120 ) — ( 15,061 ) Other share retirements ( 80 ) ( 27 ) ( 603 ) ( 4,206 ) — ( 4,836 ) Declared dividends — — — ( 5,409 ) — ( 5,409 ) Balance at June 1, 2024 21,937 $ 7,312 $ 153,002 $ 348,651 $ ( 29,010 ) $ 479,955 See accompanying notes to consolidated financial statements. 8 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Summary of Significant Accounting Policies Basis of presentation 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 (U.S. GAAP). 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 1, 2025. 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 month period ended May 31, 2025 are not necessarily indicative of the results to be expected for the full year. Adoption of new accounting standards On November 27, 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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. We adopted this guidance in the fourth quarter of fiscal 2025 for the annual requirements and in the first quarter of fiscal 2026 for the interim requirements. On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The ASU is effective for our fiscal 2026 annual financial statements and for our interim financial statements beginning fiscal 2027. This guidance expands the existing disclosure requirements for the annual rate reconciliation between the effective tax rate and the statutory federal tax rate by requiring reconciliation items to be disaggregated by defined categories and disclosed as both percentages and amounts. ASU 2023-09 also requires the disaggregation of income taxes paid by jurisdiction for each annual period presented. Accounting standards not yet adopted In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This guidance requires entities to disclose more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion in commonly presented expense captions such as cost of sales and selling, general and administrative (SG&A) expenses. Such guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, although early adoption is permitted. This guidance should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. 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 this ASU may have on our consolidated financial statement disclosures, including the processes and controls around the collection of this information. 2. Revenue, Receivables and Contract Assets and Liabilities Revenue The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment): Three Months Ended (In thousands) May 31, 2025 June 1, 2024 Recognized at shipment $ 158,155 $ 136,722 Recognized over time (input method) 119,224 116,681 Recognized over time (output method) 69,243 78,113 Total $ 346,622 $ 331,516 Revenue is recognized at the time products are shipped from our manufacturing facilities, which is when control is transferred to our customer. Revenue is also recognized over time using an input method and an output method. The contracts for the businesses that recognize revenue following an over-time input method have a single, bundled performance obligation, as these businesses generally provide interrelated products and services and integrate these products and services into a combined output specified by the customer. The customer obtains control of this combined output, generally integrated window systems or 9 Table of Contents installed window and curtainwall systems, over time. We measure progress on these contracts following an input method, by comparing total costs incurred to-date to the total estimated costs for the contract, and record that proport ion of the total contract price as revenue in the period. Contract costs include materials, labor and other direct costs related to contract performance. We believe this method of recognizing revenue is consistent with our progress in satisfying our contract obligations. Revenue is also recognized following an over-time output method based upon units produced. The customer is considered to have control over the products at the time of production, as the products are highly customized with no alternative use, and we have an enforceable right to payment for performance completed over the production p eriod. We believe this over-time output method of recognizing revenue reasonably depicts the fulfillment of our performance obligations under our contracts. Receivables Receivables reflected in the financial statements represent the net amount expected to be collected. 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 forecasted economic conditions and other relevant factors. Upon billing, aging of receivables is monitored until collection. An account is considered current when it is within agreed upon payment terms. An account is written off when it is determined that the asset is no longer collectible. (In thousands) May 31, 2025 March 1, 2025 Trade accounts $ 126,884 $ 117,533 Construction contracts 65,856 70,724 Total receivables 192,740 188,257 Less: allowance for credit losses 2,784 2,667 Receivables, net $ 189,956 $ 185,590 The following table summarizes the activity in the allowance for credit losses for the three-month period ended: (In thousands) May 31, 2025 Beginning balance $ 2,667 Charges against costs and expenses 89 Deductions from allowance, net of recoveries ( 2 ) Other adjustments 30 Ending balance $ 2,784 Contract assets and liabilities Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released to us from the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts. The time period between when performance obligations are complete and payment is due is not significant. In certain parts of our business that recognize revenue over time, progress billings follow an agreed-upon schedule of values. (In thousands) May 31, 2025 March 1, 2025 Contract assets $ 69,457 $ 71,842 Contract liabilities 43,342 35,193 The changes in contract assets and contract liabilities were mainly due to timing of project activity within our businesses that operate under long-term contracts. Other contract-related disclosures Three Months Ended (In thousands) May 31, 2025 June 1, 2024 Revenue recognized related to contract liabilities from prior year-end $ 6,830 $ 26,530 Revenue recognized related to prior satisfaction of performance obligations 473 3,298 10 Table of Contents Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that time frame. Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time. The transaction prices associated with unsatisfied performance obligations at May 31, 2025 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods: (In thousands) May 31, 2025 Within one year $ 535,558 Between one and two years 210,117 Beyond two years 89,831 Total $ 835,506 Long-term contracts are often modified to account for changes in contract specifications and requirements of work to be performed. We consider contract modifications to exist when the modification, generally through a change order, either creates new or changes existing enforceable rights and obligations, and we evaluate these types of modifications to determine whether they may be considered distinct performance obligations. In most cases, these contract modifications are for goods or services that are not distinct from the existing contract, due to the significant integration service provided in the context of the contract. Therefore, these modifications are accounted for as part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress is recognized as an adjustment to revenue, generally on a cumulative catch-up basis. The net cumulative catch-up adjustments on our longer-term contracts for changes in estimates had the following effect on the respective periods shown: (in thousands, except earnings per share data) Three Months Ended May 31, 2025 June 1, 2024 Operating income $ 67 $ 3,004 Earnings per share: Basic 0.00 0.10 Diluted 0.00 0.10 11 Table of Contents 3. Inventories (In thousands) May 31, 2025 March 1, 2025 Raw materials $ 43,323 $ 36,804 Work-in-process 17,789 15,554 Finished goods 42,789 39,947 Total inventories, net $ 103,901 $ 92,305 4. Financial Instruments Marketable securities Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (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 Fair Value May 31, 2025 $ 9,963 $ 42 $ 186 $ 9,819 March 1, 2025 10,148 33 222 9,959 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 May 31, 2025, 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. Investments that are due within one year are included in other current assets while those due after one year are included as other non-current assets. Gross realized gains and losses were insignificant for all periods presented. (In thousands) Amortized Cost Estimated Fair Value Due within one year $ 5,384 $ 5,349 Due after one year through five years 4,579 4,470 Total $ 9,963 $ 9,819 Derivative instruments We periodically use interest rate swaps, currency put options, forward purchase contracts, or other instruments to manage risks generally associated with foreign exchange rate (primarily related to the Canadian dollar and euro), 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 2025, we entered into an interest rate swap with a notional value of $ 75.0 million with an expiration date of January 5, 2027, to hedge a portion of our exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility. In fiscal 2020, we entered into an interest rate swap with a notional value of $ 30.0 million with an expiration date of February 5, 2026, to hedge a portion of our exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility. As of May 31, 2025, we held foreign exchange option contracts with U.S. dollar notional values of $ 0.8 million. Derivative instruments that qualify for hedge accounting 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 earnings. 12 Table of Contents Fair value measurements Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities. Financial assets and liabilities measured at fair value on a recurring basis were: (In thousands) Quoted Prices in Active Markets (Level 1) Other Observable Inputs (Level 2) Total Fair Value May 31, 2025 Assets: Money market funds $ 23,499 $ — $ 23,499 Municipal bonds — 9,819 9,819 Foreign currency option contract — — — Interest rate swap contracts — 437 437 Liabilities: Interest rate swap contracts — 531 531 March 1, 2025 Assets: Money market funds $ 20,758 $ — $ 20,758 Municipal bonds — 9,959 9,959 Foreign currency option contract — 29 29 Interest rate swap contracts — 539 539 Liabilities: Interest rate swap contracts — 540 540 5. Debt On July 19, 2024, we entered into a Credit Agreement (the Credit Agreement) with Bank of America, N.A., as administrative agent, and other lenders. The Credit Agreement provides for an unsecured senior credit facility in an aggregate principal amount of up to $ 700.0 million, in which commitments were made through a $ 450.0 million, five-year revolving credit facility and a committed $ 250.0 million delayed draw term loan facility. 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 draw downs, which are available to be made 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 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 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 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. No more than two acquisition holidays can occur during the term of the Credit Agreement, and at least two fiscal quarters must separate qualifying acquisitions. 13 Table of Contents Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term Secured Overnight Financing Rate (SOFR), or, for CAD borrowings, Canadian Overnight Repo Rate Average (CORRA) plus, in each a margin based on the Consolidated Leverage Ratio (as defined in the Credit Agreement). For Base Rate borrowings, the margin ranges from 0.25 % to 0.75 %. For Term SOFR and CORRA borrowings, the margin ranges from 1.25 % to 1.75 %, with an incremental Term SOFR and CORRA adjustment of 0.10 % and 0.29547 %, respectively. The Credit Agreement also contains an “accordion” provision. Under this provision, we can request that the senior credit facility be increased by unlimited additional amounts. Any lender may elect or decline to participate in the requested increase at their sole discretion. On November 4, 2024, as part of the acquisition of UW Interco, LLC (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 $ 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. The fair value of our senior credit facility approximated carrying value at May 31, 2025, 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) May 31, 2025 June 1, 2024 Interest on debt $ 4,483 $ 1,174 Interest rate swap gain ( 181 ) ( 236 ) Other interest expense 115 21 Interest income ( 571 ) ( 509 ) Interest expense, net $ 3,846 $ 450 Interest payments under the credit facilities were $ 4.4 million and $ 1.1 million for the three months ended May 31, 2025 and June 1, 2024, respectively. The weighted average interest rates on borrowings outstanding, inclusive of the impact of our interest rate swap as of May 31, 2025 and March 1, 2025 were 4.46 % and 4.32 %, respectively. 6. Commitments and Contingent Liabilities Bond commitments In the ordinary course of business, predominantly in our Architectural Services Segment, we are required to provide surety or performance bonds that commit payments to our customers for non-performance against our contracts. At May 31, 2025, $ 1.2 billion of these types of bonds were outstanding, of which $ 339.2 million is in our backlog. These bonds have expiration dates that align with the completion of these contracts. We have never been required to make payments under surety or performance bonds with respect to our existing businesses. Warranty and project-related contingencies We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on these accruals in any given period include changes in manufacturing quality, changes in product mix, and any significant changes in sales volume. Three Months Ended (In thousands) May 31, 2025 Balance at beginning of period $ 18,461 Additional accruals 1,539 Claims paid ( 1,792 ) Balance at end of period $ 18,208 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 14 Table of Contents Architectural Metals Segment. We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages. Letters of credit At May 31, 2025, we had $ 2.6 million of ongoing letters of credit as discussed in Note 5. Purchase obligations Purchase obligations for raw material commitments and capital expenditures totaled $ 16.0 million as of May 31, 2025. New Markets Tax Credit (NMTC) transactions We have two outstanding NMTC arrangements which help to support operational expansion. Proceeds received from investors on these transactions are included within other current liabilities in our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits. The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other current assets in our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase or for working capital purposes for each project, we are required to hold cash dedicated to fund each project, which is classified as restricted cash in our consolidated balance sheets. 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): Inception date Termination date Deferred benefit Deferred costs Net benefit May 2022 (1) August 2025 $ 6,052 $ 1,855 $ 4,197 September 2018 September 2025 $ 3,198 $ 631 $ 2,567 Total $ 9,250 $ 2,486 $ 6,764 (1) Continuation of the August 2018 NMTC financing transaction Litigation The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. In December 2022, the claimant in an arbitration of one such claim was awarded $ 20 million by an arbitration panel. The claimant then sought to confirm this award in Los Angeles Superior Court in March 2023. In response, the Company moved to vacate the award. Later in March 2023, the Superior Court confirmed the award, which the Company appealed in June 2023. The appeal was argued before the California Court of Appeals, Second Appellate District, Division Seven, on March 7, 2025. The California Court of Appeals confirmed the judgment of the Superior Court on March 25, 2025 and the Company paid the final arbitration award, including accrued post-judgment interest, in the amount of $ 24.7 million, on April 7, 2025. As a result of the judgment, in the fourth quarter of fiscal 2025, we recorded expense of $ 9.4 million, which represented the impact of the award amount net of existing reserves and insurance proceeds of $ 11.0 million. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. 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. 15 Table of Contents 7. Supplier Finance Program Obligations We have a supplier financing arrangement that enables select 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. These 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 the supplier’s decision to participate in the supplier financing program, and we do not provide any guarantees in connection with it. The balances owed 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 balance as of May 31, 2025 that we have confirmed as valid to the administrators of our program: (In thousands) May 31, 2025 Balance at beginning of period $ 6,846 Obligations added to the program 13,392 Obligations settled ( 12,794 ) Balance at end of period $ 7,444 8. Shareholders' Equity We paid dividends totaling $ 5.5 million ($ 0.26 per share) in the first three months of fiscal 2026, compared to declared dividends of $ 5.4 million ($ 0.25 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 May 31, 2025, we did not repurchase shares under the program. During the three-months ended June 1, 2024, we repurchased 241,573 shares under the program, for a total cost of $ 15.1 million. We have repurchased a total of 12,063,207 shares, at a total cost of $ 438.5 million, since the inception of this program in fiscal 2004. We have remaining authority to repurchase 2,186,793 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. Additionally, shares withheld from the vesting of restricted awards, or the settlement of performance-based awards, are treated as purchases and retirements, and are included within other, net in the financing activities section in the consolidated statement of cash flows. 9. 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), restricted stock awards and restricted stock units, and performance share unit awards, 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. In that case, the exercise price shall equal the fair market value on the most recent preceding date when such market is open. 16 Table of Contents The table below sets forth the number of stock-based compensation awards granted during the three-months ended May 31, 2025, 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) 134,036 $ 45.62 Performance share units (2) 52,018 $ 45.65 (1) Represent service condition awards which generally vest over a two - or three -year period. (2) Represent performance condition awards with the grant equal to the target number of performance shares based on the share price at grant date. These grants allow for the right to receive a variable number of shares, between 0 % and 200 % of target, dependent on being employed at the end of the performance period and achieving defined performance goals for average adjusted return on invested capital and cumulative adjusted earnings per share. Total share-based compensation expense included in the results of operations was $ 2.3 million for the three-month period ended May 31, 2025 and $ 2.7 million for the three-month period ended June 1, 2024, respectively. At May 31, 2025, there was $ 17.2 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 26 months. The total fair value of shares vested during the three-months ended May 31, 2025 was $ 7.4 million. 10. Income Taxes We file income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, Canada, Brazil, and other international jurisdictions. We are not subject to U.S. federal tax examinations for years prior to fiscal 2021, or state and local income tax examinations for years prior to fiscal 2020. We are not currently under 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. 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 211.9 %, compared to 24.5 % for the same period last year. The increase in the effective tax rate was primarily driven by lower net earnings before income tax. The total liability for unrecognized tax benefits was $ 6.1 million at May 31, 2025 compared to $ 6.0 million at March 1, 2025. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. 17 Table of Contents 11. Earnings per Share 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 (In thousands) May 31, 2025 June 1, 2024 Net (loss) earnings $ ( 2,688 ) $ 31,011 Basic earnings per share – weighted average common shares outstanding 21,338 21,823 Weighted average effect of nonvested share grants and assumed exercise of stock options — 238 Diluted earnings per share – weighted average common shares and potential common shares outstanding (1) 21,338 22,061 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) — 87 Basic (loss) earnings per share $ ( 0.13 ) $ 1.42 Diluted (loss) earnings per share $ ( 0.13 ) $ 1.41 (1) In the first quarter of fiscal 2026, there were 224 shares excluded from the calculation of diluted loss per share, due to their anti-dilutive effect. 18 Table of Contents 12. Business Segment Data 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: • The Architectural Metals Segment designs, engineers, fabricates and finishes aluminum window, curtainwall, storefront and entrance systems used primarily in non-residential construction. • The Architectural Services Segment integrates technical services, project management, and field installation services to design, engineer, fabricate, and install architectural curtainwall and other façade-related systems primarily in non-residential construction. • The Architectural Glass Segment cuts, treats, coats and fabricates high-performance glass used in custom window and wall systems primarily for non-residential buildings. • The Performance Surfaces Segment develops and manufactures high-performance coated materials for a variety of applications, including wall decor, museums, graphic design, digital displays, architectural interiors, and industrial flooring. The Company’s CEO is the chief operating decision maker (CODM) . The CODM utilizes net sales and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) 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. Net sales, adjusted cost of sales, adjusted SG&A, other income (expense), depreciation and amortization and the resulting adjusted EBITDA for each of the Company’s four reportable segments are presented below. 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 adjusted EBITDA includes 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. Three Months Ended May 31, 2025 (In thousands) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Total Net sales $ 128,596 $ 106,505 $ 69,271 $ 42,250 $ 346,622 Intersegment net sales 28 — 4,002 — 4,030 Total segment net sales 128,624 106,505 73,273 42,250 350,652 Adjusted cost of sales (1) ( 97,603 ) ( 90,664 ) ( 51,759 ) ( 28,217 ) ( 268,243 ) Adjusted SG&A (2) ( 25,468 ) ( 10,847 ) ( 11,309 ) ( 9,624 ) ( 57,248 ) Other expense, net — — ( 58 ) — ( 58 ) Depreciation and amortization 3,813 1,073 3,270 3,550 11,706 Adjusted EBITDA $ 9,366 $ 6,067 $ 13,417 $ 7,959 $ 36,809 Three Months Ended June 1, 2024 (In thousands) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Total Net sales $ 133,109 $ 99,027 $ 78,176 $ 21,204 $ 331,516 Intersegment net sales 63 — 8,527 — 8,590 Total segment net sales 133,172 99,027 86,703 21,204 340,106 Adjusted cost of sales (1) ( 88,552 ) ( 81,852 ) ( 58,288 ) ( 12,485 ) ( 241,177 ) Adjusted SG&A (2) ( 25,287 ) ( 11,552 ) ( 11,324 ) ( 3,873 ) ( 52,036 ) Other income (expense), net — — 130 — 130 Depreciation and amortization 4,507 950 3,010 796 9,263 Adjusted EBITDA $ 23,840 $ 6,573 $ 20,231 $ 5,642 $ 56,286 19 Table of Contents (1) Adjusted cost of sales excludes $ 7.0 million of adjustments related to acquisition and restructuring expense and $ 0.6 million of adjustments related to restructuring expense as described in more detail within the reconciliation presented below, for the three months ended May 31, 2025 and June 1, 2024, respectively. (2) Adjusted SG&A expenses excludes $ 6.0 million of adjustments related to acquisition and restructuring expense and $ 0.4 million of adjustments related to restructuring expense as described in more detail within the reconciliation presented below, for the three months ended May 31, 2025 and June 1, 2024, respectively. The following table presents the reconciliation of adjusted EBITDA to net (loss) earnings, the nearest measurement under U.S. GAAP: Three Months Ended (In thousands) May 31, 2025 June 1, 2024 Segment Adjusted EBITDA $ 36,809 $ 56,286 Corporate and Other Expenses ( 5,129 ) ( 3,481 ) Segment acquisition-related costs (1) ( 277 ) — Segment restructuring costs (2) ( 12,718 ) ( 998 ) Depreciation and amortization ( 12,436 ) ( 10,283 ) Interest expense, net ( 3,846 ) ( 450 ) Income tax expense ( 5,091 ) ( 10,063 ) Net (loss) earnings $ ( 2,688 ) $ 31,011 (1) Acquisition-related costs include costs related to one-time expenses incurred to integrate the UW Solutions acquisition. (2) Segment restructuring charges related to Project Fortify. 13. Acquisitions On November 4, 2024, we completed the acquisition of UW Solutions for $ 240.9 million in cash. UW Solutions is a U.S. based, vertically integrated manufacturer of high-performance coated substrates with a portfolio of well-known brands, including ResinDEK®, ChromaLuxe®, RDC Coatings™, and Unisub®, each known as a leader in its specified applications. The UW Solutions business activity is included in our Large-Scale Optical Segment. The total purchase consideration was $ 232.2 million in cash, net of a favorable net working capital adjustment of $ 0.9 million and cash acquired of $ 8.7 million. The acquisition was funded with cash on hand and borrowings under our existing credit agreement. During fiscal 2025, we incurred total pre-tax acquisition-related expenses of $ 10.3 million associated with the acquisition. During the first quarter of fiscal 2026, we incurred $ 0.1 million and $ 0.2 million in integration costs associated with the acquisition, which are included in cost of sales and SG&A within our consolidated results of operations, respectively. We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill of $ 107.8 million. The goodwill recognized is attributable primarily to expected synergies by integrating UW Solutions into our Performance Surfaces Segment and by creating a scalable growth platform in the specialty coatings and materials market. The goodwill is expected to be amortized and deductible for income tax purposes. We have provisionally determined the appropriate fair values of the acquired intangible assets and completed our analysis of the economic lives of the assets acquired. The following table presents the estimated fair values of assets acquired and liabilities assumed at the acquisition date: 20 Table of Contents (In thousands) Assets: Cash and cash equivalents $ 8,703 Receivables, net 12,427 Inventories, net 17,903 Other current assets 1,122 Property, plant and equipment 26,563 Operating lease right-of-use assets 14,189 Goodwill 107,826 Intangible assets, net 79,679 Other non-current assets 166 Total Assets $ 268,578 Liabilities: Accounts payable 5,126 Accrued compensation and benefits 6,900 Operating lease liabilities 1,259 Other non-current liabilities 1,490 Noncurrent operating lease liabilities 12,930 Total Liabilities $ 27,705 Net assets recorded $ 240,873 The impact of the acquisition of UW Solutions on our consolidated results of operations for the three-month period ended on May 31, 2025 was $ 22.0 million of net sales and $ 1.4 million net loss, respectively. The following supplemental unaudited pro forma information presents our financial results as if the acquisition of UW Solutions had occurred on March 3, 2024. This supplemental pro forma information has been prepared for comparative purposes and would not necessarily indicate what may have occurred if the acquisition had been completed on March 3, 2024, and this information is not intended to be indicative of future results. (in thousands, except earnings per share data) (Unaudited) Three Months Ended June 1, 2024 Net sales $ 354,628 Net earnings 29,930 Earnings per share: Basic $ 1.37 Diluted $ 1.36 Nonrecurring charges of $ 0.3 million integration costs incurred in the first quarter of fiscal 2026 are reflected as if those charges were incurred in the first quarter of fiscal 2025 supplemental pro forma earnings. These amounts have been calculated after applying our accounting policies and adjusting the results of UW Solutions to reflect the effect of definite-lived intangible assets recognized as part of the business combination on amortization expense as if the acquisition had occurred on March 3, 2024. 14. Restructuring During the fourth quarter of fiscal 2024, we announced strategic actions to 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 impacted the Architectural Metals Segment and included: • Eliminating certain lower-margin product and service offerings, enabling consolidation into a single operating entity. 21 Table of Contents • 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 implemented actions to optimize processes and streamline resources in its Architectural Services and Corporate and Other. The Company completed Project Fortify during the fourth quarter of fiscal 2025 and incurred a total of $ 16.7 million of restructuring charges, which led to an annualized pre-tax cost savings of approximately $ 14 million. On April 23, 2025, we announced a second phase of Project Fortify (referred to as "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 to incur approximately $ 24 million to $ 26 million of pre-tax charges associated with Phase 2. The total charges are expected to include the following: • $ 9 million to $ 10 million of severance and employee related costs; • $ 2 million to $ 3 million of contract termination costs; and • $ 12 million to $ 13 million of other expenses. We expect the actions associated with Phase 2 to be substantially completed by the end of the fourth quarter of fiscal 2026 and expect them to deliver annualized pre-tax cost savings of approximately $ 13 million to $ 15 million. During the first quarter of fiscal 2026, we incurred $ 15.3 million of pre-tax costs associated with Phase 2, of which $ 6.9 million is included in cost of sales and $ 8.4 million is included within SG&A. The SG&A charges include a $ 5.0 million non-cash intangible asset impairment charge in the Architectural Services segment and $ 2.6 million of a non-cash asset write-off and other charges in Corporate and Other. The table below reflects the pretax impact of Project Fortify for the quarters ended May 31, 2025 and June 1, 2024, respectively. (In thousands) Architectural Metals Architectural Services Corporate and Other Total May 31, 2025 Termination benefits $ 805 $ 5,947 $ — $ 6,752 Other restructuring charges 665 5,300 2,630 8,595 Total restructuring charges $ 1,470 $ 11,247 $ 2,630 $ 15,347 June 1, 2024 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 2026. (In thousands) Architectural Metals Architectural Services Corporate and Other Total Balance at March 1, 2025 $ 1,286 $ 650 $ 511 $ 2,447 Restructuring expense 1,088 5,947 2,630 9,665 Payments ( 259 ) ( 966 ) ( 182 ) ( 1,407 ) Balance at May 31, 2025 $ 2,115 $ 5,631 $ 2,959 $ 10,705 The charges presented in the roll forward 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. 22 Table of Contents