APOGEE ENTERPRISES, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-looking statements This Quarterly Report on Form 10-Q, including the section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain statements that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “will,” “continue” or similar words or expressions. All forecasts and projections in this document are “forward-looking statements,” and are based on management’s current expectations or beliefs of the Company's near-term results, based on current information available pertaining to the Company. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results. Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to, the risks and uncertainties set forth under “Risk Factors” section of our Annual Report on Form 10-K for the year ended March 1, 2025, and in subsequent filings with the U.S. Securities and Exchange Commission, including this Quarterly Report on Form 10-Q. We also wish to caution investors that other factors might in the future prove to be important in affecting the Company’s results of operations. New factors emerge from time to time; it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Measures We have included in this report measures of financial performance that are not defined by U.S. GAAP. We believe that these measures provide useful information and include these measures in other communications to investors. For each of these non-GAAP financial measures, we provide a reconciliation of the differences between the non-GAAP measure and the most directly comparable U.S. GAAP measure (see “Reconciliation of Non-GAAP Financial Measures” in this Item 2 below), and an explanation of why we believe the non-GAAP measure provides useful information to management and investors. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measure. Overview We are a leading provider of architectural products and services for enclosing buildings, and high-performance coating products used in applications for preservation, protection and enhanced viewing. Our four reporting segments are: Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces. Our enterprise strategy is based on the following three key elements: 1. Become the economic leader in our target markets. 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. 2. Actively manage our portfolio to drive higher margins and returns. We are shifting our business mix toward higher operating margin offerings in order to improve our return on invested capital performance. 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. 3. Strengthen our core capabilities. We are shifting from our historical, decentralized operating model to one with center-led functional expertise that enables us to leverage the scale of the enterprise to better support the needs of the business. We 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 23 Table of Contents supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance. Recent Developments 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 $24.0 million to $26.0 million of pre-tax charges. Phase 2 is expected to deliver annualized pre-tax cost savings of approximately $13.0 million to $15.0 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. Results of Operations The following tables provide various components of operations as year over year U.S. dollar and percentage change, as well as a percentage of net sales. Three Months Ended % of Net Sales (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 % Cost of sales 275,587 245,119 76.9 % 71.6 % Gross profit 82,607 97,321 23.1 % 28.4 % Selling, general and administrative expenses 55,719 55,356 15.6 % 16.2 % Operating income 26,888 41,965 7.5 % 12.3 % Interest expense, net 4,075 1,140 1.1 % 0.3 % 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 earnings $ 23,649 $ 30,566 6.6 % 8.9 % Effective tax rate 15.4 % 25.7 % 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. 24 Table of Contents • 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%. • 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 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 $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, partially offset by a decrease in tax expense for discrete items. • Net earnings was $21.0 million compared to $61.6 million. Segment Analysis 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. 25 Table of Contents The following table presents net sales, adjusted EBITDA and adjusted EBITDA margin by segment and the consolidated total. 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 Architectural Metals $ 140,935 $ 141,350 (0.3)% $ 269,559 $ 274,522 (1.8)% Architectural Services 100,490 98,018 2.5% 206,995 197,045 5.0% Architectural Glass 72,181 90,101 (19.9)% 145,454 176,804 (17.7)% Performance Surfaces 48,390 19,832 144.0% 90,640 41,036 120.9% Total segment sales 361,996 349,301 3.6% 712,648 689,407 3.4% Intersegment eliminations (3,802) (6,861) (44.6)% (7,832) (15,451) (49.3)% Net sales $ 358,194 $ 342,440 4.6% $ 704,816 $ 673,956 4.6% Segment adjusted EBITDA Architectural Metals $ 20,828 $ 22,229 (6.3)% $ 30,195 $ 46,070 (34.5)% Architectural Services 5,016 7,344 (31.7)% 11,084 13,917 (20.4)% Architectural Glass 11,647 24,140 (51.8)% 25,064 44,371 (43.5)% Performance Surfaces 11,221 4,584 144.8% 19,179 10,225 87.6% Corporate and Other (4,344) (5,175) (16.1)% (6,770) (8,839) (23.4)% Adjusted EBITDA $ 44,368 $ 53,122 (16.5)% $ 78,752 $ 105,744 (25.5)% Segment adjusted EBITDA margins Architectural Metals 14.8 % 15.7 % 11.2 % 16.8 % Architectural Services 5.0 % 7.5 % 5.4 % 7.1 % Architectural Glass 16.1 % 26.8 % 17.2 % 25.1 % Performance Surfaces 23.2 % 23.1 % 21.2 % 24.9 % 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 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 Architectural Services Architectural Glass Performance Surfaces Intersegment Eliminations Consolidated Fiscal 2025 net sales $ 141,350 $ 98,018 $ 90,101 $ 19,832 $ (6,861) $ 342,440 Organic business (1) (415) 2,472 (17,920) 3,682 3,059 (9,122) Acquisition (2) — — — 24,876 — 24,876 Fiscal 2026 net sales $ 140,935 $ 100,490 $ 72,181 $ 48,390 $ (3,802) $ 358,194 Total net sales growth (decline) (0.3) % 2.5 % (19.9) % 144.0 % (44.6) % 4.6 % Organic business (1) (0.3) % 2.5 % (19.9) % 18.6 % (44.6) % (2.7) % Acquisition (2) — % — % — % 125.4 % — % 7.3 % 26 Table of Contents Six Months Ended August 30, 2025 (In thousands, except percentages) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Intersegment Eliminations Consolidated 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. (2) 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 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 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 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 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. 27 Table of Contents 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 $ 9,454 $ 6,818 Gross unfavorable adjustments (8,722) (2,719) 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 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 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 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 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 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. 28 Table of Contents 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 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. Backlog is most meaningful for Architectural Services due to the longer-term nature of their projects. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. We view backlog as one indicator of future revenues, particularly in our longer-lead time businesses. In addition to backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period and are not included in backlog. Architectural Services 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 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 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. GAAP. 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 EBITDA and Adjusted EBITDA Margin (Unaudited) Three Months Ended August 30, 2025 (In thousands) Architectural Metals Architectural Services Architectural Glass Performance Surfaces Corporate and Other Consolidated 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 % 29 Table of Contents 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 Depreciation and amortization 4,172 955 3,080 790 691 9,688 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) — — — 1,464 193 1,657 Restructuring costs (2) 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 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 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 Income tax expense (benefit) 7 — (749) — 21,354 20,612 Depreciation and amortization 8,679 1,905 6,089 1,586 1,405 19,664 EBITDA 44,156 13,659 44,371 10,225 (8,968) 103,443 Restructuring costs (2) 1,914 258 — — 129 2,301 Adjusted EBITDA $ 46,070 $ 13,917 $ 44,371 $ 10,225 $ (8,839) $ 105,744 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 % (1) Costs related to the acquisition of UW Solutions. (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. (3) Gain related to the settlement of a New Market Tax Credit transaction. 30 Table of Contents Reconciliation of Non-GAAP Financial Measures Adjusted Net Earnings and Adjusted Diluted Earnings Per Share (Unaudited) 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) 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) (2,384) (289) (3,546) (564) Adjusted net earnings $ 21,098 $ 31,456 $ 32,948 $ 63,314 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) 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) (0.11) (0.01) (0.16) (0.03) Adjusted diluted earnings per share $ 0.98 $ 1.44 $ 1.53 $ 2.88 Weighted average diluted shares outstanding 21,590 21,875 21,562 21,985 (1) Acquisition-related costs include costs related to one-time expenses incurred to integrate the UW Solutions acquisition. (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. (3) Gain related to the settlement of a New Market Tax Credit transaction (4) Income tax impact reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred. Liquidity and Capital Resources We rely on cash provided by operations for our material cash requirements, including working capital needs, capital expenditures, satisfaction of contractual commitments (including principal and interest payments on our outstanding indebtedness) and shareholder return through dividend payments and share repurchases. Operating Activities. 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 $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 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. We periodically evaluate our liquidity requirements, cash needs and availability of debt resources relative to acquisition plans, significant capital plans, and other working capital needs. 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 31 Table of Contents 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 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 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. 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 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 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 $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 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 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. We have not been required to make any payments under these bonds with respect to our existing businesses. 32 Table of Contents Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will be adequate to meet our short-term and long-term liquidity and capital expenditure needs. In addition, we believe we have the ability to obtain both short-term and long-term debt to meet our financing needs, including additional sources of debt to finance potential acquisitions, for the foreseeable future. We also believe we will be able to operate our business so as to continue to be in compliance with our existing debt covenants over the next fiscal year. We continually review our portfolio of businesses and their assets and how they support our business strategy and performance objectives. As part of this review, we may acquire other businesses, pursue geographic expansion, take actions to manage capacity and further invest in, divest and/or sell parts of our current businesses. Related Party Transactions No material changes have occurred in the disclosure with respect to our related party transactions set forth in our Annual Report on Form 10-K for the fiscal year ended March 1, 2025. Critical Accounting Policies There have been no material changes to our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 1, 2025. Item 3. Quantitative and Qualitative Disclosures About Market Risk Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2025, for a discussion of the Company’s market risk. There have been no material changes in market risk since March 1, 2025.