What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-09 compared with 2025-07-02 · 195 added, 80 removed, 214 unchanged (56% of the section changed)

35 unchanged sentences

We are shifting from our historical, decentralized operating model to one with center-led functional expertise that enables us to leverage the scale of the enterprise to better support the needs of the business.

We 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.

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

Recent Developments

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Three Months Ended % of Net Sales

(in thousands, except percentages)

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

(in thousands, except percentages) August 30, 2025 August 31, 2024 August 30, 2025 August 31, 2024

Net sales $ 358,194 $ 342,440 100.0 % 100.0 %

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Interest expense, net 4,075 1,140 1.1 % 0.3 %

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

Other income, net 5,140 290 1.4 % 0.1 %

Earnings before income taxes 27,953 41,115 7.8 % 12.0 %

Income tax expense 4,304 10,549 1.2 % 3.1 %

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

Net earnings $ 23,649 $ 30,566 6.6 % 8.9 %

Effective tax rate 15.4 % 25.7 %

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 restructuring charges of $8.4 million and increased amortization expense associated with the UW Solutions transaction, partially offset by lower long-term incentive expense.

Six Months Ended % of Net Sales

(in thousands, except percentages) August 30, 2025 August 31, 2024 August 30, 2025 August 31, 2024

Net sales $ 704,816 $ 673,956 100.0 % 100.0 %

Cost of sales 547,084 477,780 77.6 % 70.9 %

Gross profit 157,732 196,176 22.4 % 29.1 %

Selling, general and administrative expenses 123,913 112,830 17.6 % 16.7 %

Operating income 33,819 83,346 4.8 % 12.4 %

Interest expense, net 7,921 1,590 1.1 % 0.2 %

Other income, net 4,458 433 0.6 % 0.1 %

Earnings before income taxes 30,356 82,189 4.3 % 12.2 %

Income tax expense 9,394 20,612 1.3 % 3.1 %

Net earnings $ 20,962 $ 61,577 3.0 % 9.1 %

Effective tax rate 30.9 % 25.1 %

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Consolidated net sales increased 4.6%, to $358.2 million, driven by $24.9 million of inorganic sales contribution from the acquisition of UW Solutions and higher volume in Architectural Services.

This was partially offset by lower volume and price in Architectural Glass and unfavorable product mix in Architectural Metals.

• Gross margin decreased to 23.1%, compared to 28.4%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs, partially offset by lower incentive compensation expense.

• SG&A expense as a percent of net sales decreased to 15.6%, compared to 16.2%.

The decrease was primarily due to lower incentive compensation expense, partially offset by higher amortization expense and integration costs related to the UW Solutions acquisition.

• Operating income declined to $26.9 million from $42.0 million, and operating margin decreased 480 basis points to 7.5%.

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 $44.4 million compared to $53.1 million and adjusted EBITDA margin decreased to 12.4% compared to 15.5%.

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.

The decrease in adjusted EBITDA margin was primarily driven by lower price and volume, unfavorable mix and higher material, tariff, and health insurance costs, partially offset by lower incentive compensation expense.

• Interest expense increased to $4.1 million, primarily due to higher debt resulting from the acquisition of UW Solutions.

• Other income was $5.1 million compared to $0.3 million.

The change was due to a $4.6 million gain related to a New Market Tax Credit recognized in the current period.

• Income tax expense as a percentage of earnings before income tax was 15.4%, compared to 25.7%.

The decrease in the effective tax rate was primarily due to a decrease in tax expense for discrete items.

• Net earnings were $23.6 million compared to $30.6 million.

Comparison of First Six Months Fiscal 2026 to First Six Months Fiscal 2025

• Consolidated net sales increased 4.6%, to $704.8 million, primarily driven by $46.6 million of inorganic sales contribution from the acquisition of UW Solutions and higher volume in Architectural Services.

This was partially offset by lower price in Architectural Glass and a less favorable product mix in Architectural Metals.

• Gross margin decreased to 22.4%, compared to 29.1%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, health insurance costs, and restructuring charges, partially offset by lower incentive compensation expenses.

• SG&A expenses as a percent of net sales increased to 17.6%, compared to 16.7%.

The increase was primarily due to increased restructuring charges and increased amortization expense associated with the UW Solutions transaction, partially offset by lower incentive compensation expense.

• Operating income declined to $33.8 million from $83.3 million, and operating margin decreased 760 basis points to 4.8%.

• Adjusted EBITDA decreased to $78.8 million compared to $105.7 million and adjusted EBITDA margin decreased to 11.2% compared to 15.7%.

The decrease in adjusted EBITDA margin was primarily driven by lower price and volume, a less favorable mix and higher material, tariff and health insurance costs, partially offset by lower incentive compensation expense.

• Interest expense, net increased to $7.9 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.

The change was driven by an increase in value of company-owned life insurance assets.

• Other income was $4.5 million compared to $0.4 million.

The change was driven by a $4.6 million gain from a New Market Tax Credit recognized in the current period.

• Income tax expense as a percentage of earnings before income tax was 30.9%, compared to 25.1% for the same period last year.

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.

The increase in the effective tax rate was primarily due to lower earnings before income taxes, partially offset by a decrease in tax expense for discrete items.

• Net earnings was $21.0 million compared to $61.6 million.

Segment Analysis

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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

Three Months Ended Six Months Ended

(In thousands, except percentages) August 30, 2025 August 31, 2024 % Change August 30, 2025 August 31, 2024 % Change

Segment net sales

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Performance Surfaces 23.2 % 23.1 % 21.2 % 24.9 %

Corporate and Other N/M N/M

Corporate and Other N/M N/M N/M N/M

Adjusted EBITDA margin 12.4 % 15.5 % 11.2 % 15.7 %

N/M Indicates calculation not meaningful.

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.

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

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

Three Months Ended August 30, 2025

(In thousands, except percentages) Architectural Metals

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— % — % — % 125.4 % — % 7.3 %

Six Months Ended August 30, 2025

(In thousands, except percentages) Architectural Metals

Architectural Services Architectural Glass

Performance Surfaces Intersegment Eliminations

Fiscal 2025 net sales

$ 274,522 $ 197,045 $ 176,804 $ 41,036 $ (15,451) $ 673,956

Organic business (1)

(4,963) 9,950 (31,350) 2,701 7,619 (16,043)

Acquisition (2)

— — — 46,903 — 46,903

Fiscal 2026 net sales

$ 269,559 $ 206,995 $ 145,454 $ 90,640 $ (7,832) $ 704,816

Total net sales growth (decline)

(1.8) % 5.0 % (17.7) % 120.9 % (49.3) % 4.6 %

Organic business (1)

(1.8) % 5.0 % (17.7) % 6.6 % (49.3) % (2.4) %

Acquisition (2)

— % — % — % 114.3 % — % 7.0 %

(1) 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.

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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.

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Net sales were $140.9 million, compared to $141.4 million, primarily reflecting a less favorable mix, partially offset by higher volume and price.

• Adjusted EBITDA was $20.8 million, or 14.8% of net sales, compared to $22.2 million, or 15.7% 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.

The decline in adjusted EBITDA margin was primarily driven by unfavorable mix, and higher material and tariff costs, partially offset by lower incentive compensation expense.

Comparison of First Six Months of Fiscal 2026 to First Six Months of Fiscal 2025

• Net sales were $269.6 million, compared to $274.5 million, primarily reflecting a less favorable mix and lower price, partially offset by increased volume.

• Adjusted EBITDA was $30.2 million, or 11.2% of net sales, compared to $46.1 million, or 16.8% of net sales.

The decline in adjusted EBITDA margin was primarily driven by higher material and tariff costs as well as lower price and a less favorable mix, partially offset by lower incentive compensation costs.

Architectural Services

Comparison of First Quarter Fiscal 2026 to First Quarter Fiscal 2025

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Net sales were $100.5 million, compared to $98.0 million, primarily due to increased volume.

• Adjusted EBITDA decreased to $5.0 million, or 5.0% of net sales, compared to $7.3 million, or 7.5% 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)

The decrease in adjusted EBITDA margin was primarily driven by project mix, partially offset by lower short-term incentive compensation costs.

Comparison of First Six Months of Fiscal 2026 to First Six Months of Fiscal 2025

• Net sales were $207.0 million, compared to $197.0 million, primarily due to increased volume, partially offset by an unfavorable project mix.

• Adjusted EBITDA decreased to $11.1 million, or 5.4% of net sales, compared to $13.9 million, or 7.1% of net sales.

The decrease in adjusted EBITDA margin was primarily driven by the impact of higher tariff costs and unfavorable project mix, partially offset by lower incentive compensation costs.

Cumulative catch-up adjustments on our longer-term contracts for changes in estimates were as follows:

Three Months Ended

(in thousands) August 30, 2025 August 31, 2024

Gross favorable adjustments

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Net adjustments

$ 731 $ 4,099

Six Months Ended

(in thousands) August 30, 2025 August 31, 2024

Gross favorable adjustments

$ 14,747 $ 10,373

Gross unfavorable adjustments

(13,948) (3,269)

Net adjustments

$ 799 $ 7,104

Architectural Glass

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.

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Net sales were $72.2 million, compared to $90.1 million, primarily reflecting lower volume and price due to lower end-market demand.

• Adjusted EBITDA decreased to $11.6 million, or 16.1% of net sales, compared to $24.1 million, or 26.8% of net sales.

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

The decline in adjusted EBITDA margin was primarily driven by lower price and volume, partially offset by lower short-term incentive compensation expense.

Comparison of First Six Months of Fiscal 2026 to First Six Months of Fiscal 2025

• Net sales were $145.5 million compared to $176.8 million, primarily reflecting lower volume due to lower end-market demand.

• Adjusted EBITDA decreased to $25.1 million, or 17.2% of net sales, compared to $44.4 million, or 25.1% of net sales.

The decline in adjusted EBITDA margin was primarily driven by lower volume and price, partially offset by lower incentive compensation expense.

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.

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Net sales were $48.4 million, compared to $19.8 million, which included $24.9 million of inorganic sales contribution from the acquisition of UW Solutions and organic growth of 18.6%.

• Adjusted EBITDA was $11.2 million, or 23.2% of net sales, compared to $4.6 million, or 23.1% 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.

The increase in adjusted EBITDA margin was primarily driven by favorable price and volume.

Comparison of First Six Months of Fiscal 2026 to First Six Months of Fiscal 2025

• Net sales were $90.6 million, compared to $41.0 million, which included $46.9 million of inorganic sales contribution from the acquisition of UW Solutions and organic growth of 6.6%.

• Adjusted EBITDA was $19.2 million, or 21.2% of net sales, compared to $10.2 million, or 24.9% of net sales.

The decrease in adjusted EBITDA margin was primarily driven by the dilutive effect of lower adjusted EBITDA margin from the UW Solutions acquisition, partially offset by favorable pricing.

Corporate and Other

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.

Comparison of Second Quarter Fiscal 2026 to Second Quarter Fiscal 2025

• Corporate and Other adjusted EBITDA expense was $4.3 million, compared to $5.2 million, primarily driven by lower incentive compensation expense, partially offset by higher health insurance costs.

Comparison of First Six Months of Fiscal 2026 to First Six Months of Fiscal 2025

• Corporate and Other adjusted EBITDA expense was $6.8 million, compared to $8.8 million, primarily driven by lower incentive compensation expense, partially offset by higher health insurance expenses.

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 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.

As of August 30, 2025, segment backlog was approximately $792.3 million, compared to approximately $792.1 million at the end of the second quarter of fiscal 2025.

Reconciliation of Non-GAAP Financial Measures

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Management uses these non-GAAP measures as noted below:

• 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.

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

• Adjusted EBITDA represents adjusted net earnings before interest, taxes, depreciation, and amortization, and adjusted EBITDA margin is adjusted EBITDA as a percentage of net sales.

We use adjusted EBITDA and adjusted EBITDA margin 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.

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.

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Adjusted EBITDA and Adjusted EBITDA Margin

Three Months Ended May 31, 2025

Three Months Ended August 30, 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)

Net earnings (loss) $ 20,874 $ 1,433 $ 8,429 $ 6,245 $ (13,332) $ 23,649

Interest expense (income), net 444 (86) (131) — 3,848 4,075

Income tax expense — — 26 — 4,278 4,304

Depreciation and amortization 3,752 911 3,323 3,789 732 12,507

EBITDA 25,070 2,258 11,647 10,034 (4,474) 44,535

Acquisition-related costs (1)

— — — 1,187 120 1,307

Restructuring costs (2)

355 2,758 — — 10 3,123

NMTC settlement gain (3)

(4,597) — — — — (4,597)

Adjusted EBITDA $ 20,828 $ 5,016 $ 11,647 $ 11,221 $ (4,344) $ 44,368

EBITDA margin 17.8 % 2.2 % 16.1 % 20.7 % N/M 12.4 %

Adjusted EBITDA margin 14.8 % 5.0 % 16.1 % 23.2 % N/M 12.4 %

Three Months Ended August 31, 2024

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

Net earnings (loss) $ 16,603 $ 6,107 $ 21,176 $ 3,794 $ (17,114) $ 30,566

Interest expense (income), net 538 24 (85) — 663 1,140

Income tax (benefit) expense — — (31) — 10,580 10,549

1 unchanged sentence

EBITDA 21,313 7,086 24,140 4,584 (5,180) 51,943

Restructuring costs (2)

916 258 — — 5 1,179

Adjusted EBITDA $ 22,229 $ 7,344 $ 24,140 $ 4,584 $ (5,175) $ 53,122

EBITDA margin 15.1 % 7.2 % 26.8 % 23.1 % N/M 15.2 %

Adjusted EBITDA margin 15.7 % 7.5 % 26.8 % 23.1 % N/M 15.5 %

Six Months Ended August 30, 2025

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

Net earnings (loss) $ 24,543 $ (4,759) $ 18,631 $ 10,377 $ (27,830) $ 20,962

Interest expense (income), net 901 (138) (276) — 7,434 7,921

Income tax (benefit) expense (43) (8) 116 — 9,329 9,394

Depreciation and amortization 7,566 1,983 6,593 7,338 1,463 24,943

EBITDA 32,967 (2,922) 25,064 17,715 (9,604) 63,220

Acquisition-related costs (1)

2 unchanged sentences

1,825 14,006 — — 2,641 18,472

NMTC settlement gain (3)

(4,597) — — — — (4,597)

Adjusted EBITDA $ 30,195 $ 11,084 $ 25,064 $ 19,179 $ (6,770) $ 78,752

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

EBITDA margin 12.2 % (1.4) % 17.2 % 19.5 % N/M 9.0 %

Adjusted EBITDA margin 11.2 % 5.4 % 17.2 % 21.2 % N/M 11.2 %

Six Months Ended August 31, 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

Net earnings (loss) $ 34,362 $ 11,727 $ 39,227 $ 8,639 $ (32,378) $ 61,577

Interest expense (income), net 1,108 27 (196) — 651 1,590

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Adjusted EBITDA $ 46,070 $ 13,917 $ 44,371 $ 10,225 $ (8,839) $ 105,744

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.

EBITDA margin 16.1 % 6.9 % 25.1 % 24.9 % N/M 15.3 %

Adjusted EBITDA margin 16.8 % 7.1 % 25.1 % 24.9 % N/M 15.7 %

Costs related to the acquisition of UW Solutions.

Restructuring costs related to Project Fortify.

Costs incurred in fiscal year 2025 were associated with Phase 1 and costs incurred in fiscal year 2026 are associated with Phase 2.

Gain related to the settlement of a New Market Tax Credit transaction.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share

Three Months Ended

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

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

Three Months Ended Six Months Ended

(In thousands) August 30, 2025 August 31, 2024 August 30, 2025 August 31, 2024

Net earnings $ 23,649 $ 30,566 $ 20,962 $ 61,577

Acquisition-related costs (1)

Restructuring charges (2)

1,307 — 1,657 —

Restructuring costs (2)

3,123 1,179 18,472 2,301

NMTC settlement gain (3)

(4,597) — (4,597) —

Income tax impact on above adjustments (4)

1 unchanged sentence

Adjusted net earnings $ 21,098 $ 31,456 $ 32,948 $ 63,314

Three Months Ended

May 31, 2025 June 1, 2024

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

Three Months Ended Six Months Ended

August 30, 2025 August 31, 2024 August 30, 2025 August 31, 2024

Diluted earnings per share $ 1.10 $ 1.40 $ 0.97 $ 2.80

Acquisition-related costs (1)

Restructuring charges (2)

0.06 — 0.08 —

Restructuring costs (2)

0.14 0.05 0.86 0.10

NMTC settlement gain (3)

(0.21) — (0.21) —

Income tax impact on above adjustments (4)

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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.

Restructuring costs related to Project Fortify.

Costs incurred in fiscal year 2025 were associated with Phase 1 and costs incurred in fiscal year 2026 are associated with Phase 2.

Gain related to the settlement of a New Market Tax Credit transaction

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

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Operating Activities.

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.

Net cash provided by operating activities was $37.3 million for the first six months of fiscal 2026, compared to $64.1 million in the prior year period.

The decrease in net cash provided by operating activities was primarily driven by lower net earnings and an increased cash used for working capital, including a net payment of $13.7 million for the settlement of an arbitration award.

Investing Activities.

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.

Net cash used in investing activities was $10.9 million for the first six months of fiscal 2026, compared to $15.5 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 $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.

Net cash used in financing activities was $29.1 million for the first six months of fiscal 2026, compared to $34.6 million in the prior year period.

The decrease in net cash used in financing activities was primarily driven by a reduction in repurchases of common stock.

Additional Liquidity Considerations.

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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.

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 drawdowns, which are available to be ma

de within one year after the closing date.

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

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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.

At August 30, 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.

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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 $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.

Outstanding borrowings under the term loan facility were $215.0 million as of August 30, 2025.

Outstanding borrowings under the revolving credit facility were $55.0 million as of August 30, 2025.

At August 30, 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 August 30, 2025, the amount available for revolving borrowings was $392.4 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 $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.

Future payments for such leases, excluding leases with initial terms of one year or less, were $69.4 million at August 30, 2025, with $8.5 million payable during the remainder of fiscal 2026.

As of August 30, 2025, we had $15.5 million of open purchase obligations, of which payments totaling $5.2 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 May 31, 2025, we had reserves of $6.1 million for unrecognized tax benefits.

As of August 30, 2025, we had reserves of $6.2 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 May 31, 2025, $1.2 billion of these types of bonds were outstanding, of which $339.2 milli

on is in our backlog.

At August 30, 2025, $1.2 billion of these types of bonds were outstanding, of which $293.7 million is in our backlog.

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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis