UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM 10-Q
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 26, 2016June 3, 2017
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o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-6365
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APOGEE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
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Minnesota | | 41-0919654 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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4400 West 78th Street – Suite 520, Minneapolis, MN | | 55435 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (952) 835-1874
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” andfiler,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | x | | Accelerated filer | | o |
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Non-accelerated filer | | o (Do not check if a smaller reporting company) | | Smaller reporting company | | o |
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Emerging growth company | | o | | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of January 4,July 11, 2017, 28,646,30828,848,271 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
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PART I | | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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PART II | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 6. | | |
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PART I. FINANCIAL INFORMATION
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Item 1. | Financial Statements |
CONSOLIDATED BALANCE SHEETS
(unaudited)
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| | | | | | | | |
(In thousands, except stock data) | | November 26, 2016 | | February 27, 2016 |
Assets | | | | |
Current assets | | | | |
Cash and cash equivalents | | $ | 51,599 |
| | $ | 60,470 |
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Short-term available for sale securities | | 30,635 |
| | 30,173 |
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Restricted cash | | 14,884 |
| | — |
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Receivables, net of allowance for doubtful accounts | | 188,442 |
| | 172,832 |
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Inventories | | 73,161 |
| | 63,386 |
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Deferred tax assets | | — |
| | 1,820 |
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Other current assets | | 6,770 |
| | 8,112 |
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Total current assets | | 365,491 |
| | 336,793 |
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Property, plant and equipment, net | | 229,556 |
| | 202,462 |
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Available for sale securities | | 10,962 |
| | 12,519 |
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Deferred tax assets | | 395 |
| | — |
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Goodwill | | 74,308 |
| | 73,996 |
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Intangible assets | | 19,460 |
| | 19,862 |
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Other non-current assets | | 17,073 |
| | 11,808 |
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Total assets | | $ | 717,245 |
| | $ | 657,440 |
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Liabilities and Shareholders’ Equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 65,087 |
| | $ | 64,762 |
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Accrued payroll and related benefits | | 42,132 |
| | 39,946 |
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Accrued self-insurance reserves | | 8,581 |
| | 7,818 |
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Other current liabilities | | 32,369 |
| | 29,339 |
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Billings in excess of costs and earnings on uncompleted contracts | | 36,786 |
| | 31,890 |
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Accrued income taxes | | 3,439 |
| | 3,626 |
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Total current liabilities | | 188,394 |
| | 177,381 |
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Long-term debt | | 20,400 |
| | 20,400 |
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Long-term self-insurance reserves | | 8,008 |
| | 7,137 |
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Deferred tax liabilities | | — |
| | 4,972 |
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Other non-current liabilities | | 48,266 |
| | 41,355 |
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Commitments and contingent liabilities (Note 13) | |
| |
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Shareholders’ equity | | | | |
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 28,646,488 and 28,683,948, respectively | | 9,549 |
| | 9,561 |
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Additional paid-in capital | | 148,379 |
| | 145,528 |
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Retained earnings | | 323,070 |
| | 282,477 |
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Common stock held in trust | | (863 | ) | | (837 | ) |
Deferred compensation obligations | | 863 |
| | 837 |
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Accumulated other comprehensive loss | | (28,821 | ) | | (31,371 | ) |
Total shareholders’ equity | | 452,177 |
| | 406,195 |
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Total liabilities and shareholders’ equity | | $ | 717,245 |
| | $ | 657,440 |
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See accompanying notes to consolidated financial statements.
3
CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)
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| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands, except per share data) | | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 |
Net sales | | $ | 274,072 |
| | $ | 238,324 |
| | $ | 800,407 |
| | $ | 719,040 |
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Cost of sales | | 201,204 |
| | 175,898 |
| | 590,581 |
| | 544,326 |
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Gross profit | | 72,868 |
| | 62,426 |
| | 209,826 |
| | 174,714 |
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Selling, general and administrative expenses | | 39,609 |
| | 34,568 |
| | 117,269 |
| | 106,209 |
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Operating income | | 33,259 |
| | 27,858 |
| | 92,557 |
| | 68,505 |
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Interest income | | 271 |
| | 258 |
| | 799 |
| | 762 |
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Interest expense | | 150 |
| | 159 |
| | 495 |
| | 477 |
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Other (expense) income, net | | (158 | ) | | (75 | ) | | 350 |
| | (120 | ) |
Earnings before income taxes | | 33,222 |
| | 27,882 |
| | 93,211 |
| | 68,670 |
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Income tax expense | | 10,670 |
| | 9,361 |
| | 30,540 |
| | 23,264 |
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Net earnings | | $ | 22,552 |
| | $ | 18,521 |
| | $ | 62,671 |
| | $ | 45,406 |
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| | | | | | | | |
Earnings per share - basic | | $ | 0.78 |
| | $ | 0.64 |
| | $ | 2.18 |
| | $ | 1.56 |
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Earnings per share - diluted | | $ | 0.78 |
| | $ | 0.63 |
| | $ | 2.17 |
| | $ | 1.54 |
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Weighted average basic shares outstanding | | 28,828 |
| | 29,181 |
| | 28,807 |
| | 29,137 |
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Weighted average diluted shares outstanding | | 28,892 |
| | 29,466 |
| | 28,913 |
| | 29,479 |
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(In thousands, except stock data) | | June 3, 2017 | | March 4, 2017 |
Assets | | | | |
Current assets | | | | |
Cash and cash equivalents | | $ | 22,972 |
| | $ | 19,463 |
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Short-term available for sale securities | | 425 |
| | 548 |
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Restricted cash | | 2,683 |
| | 7,834 |
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Receivables, net of allowance for doubtful accounts | | 180,483 |
| | 185,740 |
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Inventories | | 81,083 |
| | 73,409 |
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Refundable income taxes | | — |
| | 1,743 |
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Other current assets | | 9,626 |
| | 8,724 |
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Total current assets | | 297,272 |
| | 297,461 |
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Property, plant and equipment, net | | 250,979 |
| | 246,748 |
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Available for sale securities | | 7,551 |
| | 9,041 |
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Deferred tax assets | | 1,099 |
| | 4,025 |
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Goodwill | | 95,211 |
| | 101,334 |
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Intangible assets | | 105,330 |
| | 106,686 |
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Other non-current assets | | 22,155 |
| | 19,363 |
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Total assets | | $ | 779,597 |
| | $ | 784,658 |
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Liabilities and Shareholders’ Equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 63,666 |
| | $ | 63,182 |
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Accrued payroll and related benefits | | 27,990 |
| | 51,244 |
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Accrued self-insurance reserves | | 5,901 |
| | 8,575 |
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Other current liabilities | | 32,979 |
| | 34,200 |
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Billings in excess of costs and earnings on uncompleted contracts | | 33,931 |
| | 28,857 |
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Accrued income taxes | | 2,801 |
| | — |
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Total current liabilities | | 167,268 |
| | 186,058 |
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Long-term debt | | 71,400 |
| | 65,400 |
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Unrecognized tax benefits | | 4,309 |
| | 3,980 |
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Long-term self-insurance reserves | | 8,254 |
| | 8,831 |
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Deferred tax liabilities | | 3,622 |
| | 4,025 |
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Other non-current liabilities | | 42,915 |
| | 45,787 |
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Commitments and contingent liabilities (Note 14) | |
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Shareholders’ equity | | | | |
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 28,787,701 and 28,680,841, respectively | | 9,596 |
| | 9,560 |
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Additional paid-in capital | | 152,107 |
| | 150,111 |
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Retained earnings | | 351,872 |
| | 341,996 |
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Common stock held in trust | | (886 | ) | | (875 | ) |
Deferred compensation obligations | | 886 |
| | 875 |
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Accumulated other comprehensive loss | | (31,746 | ) | | (31,090 | ) |
Total shareholders’ equity | | 481,829 |
| | 470,577 |
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Total liabilities and shareholders’ equity | | $ | 779,597 |
| | $ | 784,658 |
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See accompanying notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTSRESULTS OF COMPREHENSIVE EARNINGSOPERATIONS
(unaudited)
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| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 |
Net earnings | | $ | 22,552 |
| | $ | 18,521 |
| | $ | 62,671 |
| | $ | 45,406 |
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Other comprehensive (loss) earnings: | | | | | | | | |
Unrealized (loss) gain on marketable securities, net of $(139), $10, $(105) and $(24) of tax (benefit) expense, respectively | | (258 | ) | | 18 |
| | (192 | ) | | (45 | ) |
Foreign currency translation adjustments | | (1,783 | ) | | (4,106 | ) | | 2,742 |
| | (9,257 | ) |
Other comprehensive (loss) earnings | | (2,041 | ) | | (4,088 | ) | | 2,550 |
| | (9,302 | ) |
Total comprehensive earnings | | $ | 20,511 |
| | $ | 14,433 |
| | $ | 65,221 |
| | $ | 36,104 |
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| | Three Months Ended |
(In thousands, except per share data) | | June 3, 2017 | | May 28, 2016 |
Net sales | | $ | 272,307 |
| | $ | 247,880 |
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Cost of sales | | 202,013 |
| | 183,452 |
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Gross profit | | 70,294 |
| | 64,428 |
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Selling, general and administrative expenses | | 46,188 |
| | 38,179 |
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Operating income | | 24,106 |
| | 26,249 |
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Interest income | | 167 |
| | 275 |
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Interest expense | | 444 |
| | 157 |
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Other income, net | | 179 |
| | 256 |
|
Earnings before income taxes | | 24,008 |
| | 26,623 |
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Income tax expense | | 7,904 |
| | 8,901 |
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Net earnings | | $ | 16,104 |
| | $ | 17,722 |
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| | | | |
Earnings per share - basic | | $ | 0.56 |
| | $ | 0.62 |
|
Earnings per share - diluted | | $ | 0.56 |
| | $ | 0.61 |
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Weighted average basic shares outstanding | | 28,851 |
| | 28,702 |
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Weighted average diluted shares outstanding | | 28,861 |
| | 28,895 |
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See accompanying notes to consolidated financial statements.
5
CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE EARNINGS
(unaudited)
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| | Nine Months Ended |
(In thousands) | | November 26, 2016 | | November 28, 2015 |
Operating Activities | | | | |
Net earnings | | $ | 62,671 |
| | $ | 45,406 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 24,270 |
| | 23,336 |
|
Stock-based compensation | | 4,403 |
| | 3,686 |
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Deferred income taxes | | (3,335 | ) | | (5,026 | ) |
Excess tax benefits from share-based compensation | | (2,334 | ) | | (4,990 | ) |
Gain on disposal of assets | | (287 | ) | | (67 | ) |
Proceeds from New Markets Tax Credit transaction, net of deferred costs | | 5,109 |
| | — |
|
Other, net | | (1,281 | ) | | 562 |
|
Changes in operating assets and liabilities: | | | | |
Receivables | | (15,235 | ) | | 6,552 |
|
Inventories | | (9,555 | ) | | (3,419 | ) |
Accounts payable and accrued expenses | | 1,897 |
| | 1,296 |
|
Billings in excess of costs and earnings on uncompleted contracts | | 4,896 |
| | 7,391 |
|
Refundable and accrued income taxes | | (1,073 | ) | | 13,159 |
|
Other, net | | 335 |
| | (1,719 | ) |
Net cash provided by operating activities | | 70,481 |
| | 86,167 |
|
Investing Activities | | | | |
Capital expenditures | | (44,548 | ) | | (26,757 | ) |
Proceeds from sales of property, plant and equipment | | 1,716 |
| | — |
|
Change in restricted cash | | (14,884 | ) | | — |
|
Purchases of marketable securities | | (3,021 | ) | | (64,551 | ) |
Sales/maturities of marketable securities | | 3,703 |
| | 3,765 |
|
Other, net | | (2,168 | ) | | (3,875 | ) |
Net cash used in investing activities | | (59,202 | ) | | (91,418 | ) |
Financing Activities | | | | |
(Repayments) borrowings on line of credit, net | | (408 | ) | | 350 |
|
Shares withheld for taxes, net of stock issued to employees | | (910 | ) | | (3,267 | ) |
Excess tax benefits from share-based compensation | | 2,334 |
| | 4,990 |
|
Repurchase and retirement of common stock | | (10,817 | ) | | (7,257 | ) |
Dividends paid | | (10,687 | ) | | (9,632 | ) |
Net cash used in financing activities | | (20,488 | ) | | (14,816 | ) |
Decrease in cash and cash equivalents | | (9,209 | ) | | (20,067 | ) |
Effect of exchange rates on cash | | 338 |
| | (1,405 | ) |
Cash and cash equivalents at beginning of year | | 60,470 |
| | 52,185 |
|
Cash and cash equivalents at end of period | | $ | 51,599 |
| | $ | 30,713 |
|
Noncash Activity | | | | |
Capital expenditures in accounts payable | | $ | 6,683 |
| | $ | 371 |
|
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| | | | | | | | |
| | Three Months Ended |
(In thousands) | | June 3, 2017 | | May 28, 2016 |
Net earnings | | $ | 16,104 |
| | $ | 17,722 |
|
Other comprehensive (loss) earnings: | | | | |
Unrealized gain (loss) on marketable securities, net of $33 and ($9) of tax expense (benefit), respectively | | 62 |
| | (14 | ) |
Foreign currency translation adjustments | | (718 | ) | | 2,893 |
|
Other comprehensive (loss) earnings | | (656 | ) | | 2,879 |
|
Total comprehensive earnings | | $ | 15,448 |
| | $ | 20,601 |
|
See accompanying notes to consolidated financial statements.
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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| | | | | | | | |
| | Three Months Ended |
(In thousands) | | June 3, 2017 | | May 28, 2016 |
Operating Activities | | | | |
Net earnings | | $ | 16,104 |
| | $ | 17,722 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 11,423 |
| | 7,720 |
|
Share-based compensation | | 1,403 |
| | 1,390 |
|
Deferred income taxes | | 2,540 |
| | 377 |
|
Other, net | | (1,223 | ) | | (375 | ) |
Changes in operating assets and liabilities: | | | | |
Receivables | | 5,125 |
| | (13,225 | ) |
Inventories | | (7,712 | ) | | (5,883 | ) |
Accounts payable and accrued expenses | | (30,736 | ) | | (21,315 | ) |
Billings in excess of costs and earnings on uncompleted contracts | | 5,109 |
| | 10,513 |
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Refundable and accrued income taxes | | 4,867 |
| | 2,532 |
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Other, net | | (988 | ) | | 60 |
|
Net cash provided by (used in) operating activities | | 5,912 |
| | (484 | ) |
Investing Activities | | | | |
Capital expenditures | | (11,430 | ) | | (17,725 | ) |
Change in restricted cash | | 5,151 |
| | — |
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Purchases of marketable securities | | (1,535 | ) | | (2,643 | ) |
Sales/maturities of marketable securities | | 3,220 |
| | 1,892 |
|
Other, net | | 1,742 |
| | (1,842 | ) |
Net cash used in investing activities | | (2,852 | ) | | (20,318 | ) |
Financing Activities | | | | |
Borrowings on line of credit | | 37,000 |
| | 1,893 |
|
Payments on line of credit | | (31,000 | ) | | — |
|
Shares withheld for taxes, net of stock issued to employees | | (1,596 | ) | | (1,198 | ) |
Dividends paid | | (4,002 | ) | | (3,560 | ) |
Net cash provided by (used in) financing activities | | 402 |
| | (2,865 | ) |
Increase (decrease) in cash and cash equivalents | | 3,462 |
| | (23,667 | ) |
Effect of exchange rates on cash | | 47 |
| | 164 |
|
Cash and cash equivalents at beginning of year | | 19,463 |
| | 60,470 |
|
Cash and cash equivalents at end of period | | $ | 22,972 |
| | $ | 36,967 |
|
Noncash Activity | | | | |
Capital expenditures in accounts payable | | $ | 4,201 |
| | $ | 3,455 |
|
See accompanying notes to consolidated financial statements.
7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
| | (In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income |
Balance at February 27, 2016 | | 28,684 |
| | $ | 9,561 |
| | $ | 145,528 |
| | $ | 282,477 |
| | $ | (837 | ) | | $ | 837 |
| | $ | (31,371 | ) | |
Balance at March 4, 2017 | | | 28,680 |
| | $ | 9,560 |
| | $ | 150,111 |
| | $ | 341,996 |
| | $ | (875 | ) | | $ | 875 |
| | $ | (31,090 | ) |
Net earnings | | — |
| | — |
| | — |
| | 62,671 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 16,104 |
| | — |
| | — |
| | — |
|
Unrealized loss on marketable securities, net of $105 tax benefit | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (192 | ) | |
Unrealized gain on marketable securities, net of $33 tax expense | | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 62 |
|
Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,742 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (718 | ) |
Issuance of stock, net of cancellations | | 139 |
| | 46 |
| | 94 |
| | — |
| | (26 | ) | | 26 |
| | — |
| | 52 |
| | 17 |
| | 39 |
| | — |
| | (11 | ) | | 11 |
| | — |
|
Share-based compensation | | — |
| | — |
| | 4,403 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,403 |
| | — |
| | — |
| | — |
| | — |
|
Tax deficit associated with stock plans | | — |
| | — |
| | (1,229 | ) | | — |
| | — |
| | — |
| | — |
| |
Exercise of stock options | | 125 |
| | 42 |
| | 1,211 |
| | — |
| | — |
| | — |
| | — |
| | 100 |
| | 33 |
| | 800 |
| | — |
| | — |
| | — |
| | — |
|
Share repurchases | | (250 | ) | | (83 | ) | | (1,357 | ) | | (9,376 | ) | | — |
| | — |
| | — |
| |
Other share retirements | | (52 | ) | | (17 | ) | | (271 | ) | | (2,015 | ) | | — |
| | — |
| | — |
| | (44 | ) | | (14 | ) | | (246 | ) | | (2,226 | ) | | — |
| | — |
| | — |
|
Cash dividends | | — |
| | — |
| | — |
| | (10,687 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (4,002 | ) | | — |
| | — |
| | — |
|
Balance at November 26, 2016 | | 28,646 |
| | $ | 9,549 |
| | $ | 148,379 |
| | $ | 323,070 |
| | $ | (863 | ) | | $ | 863 |
| | $ | (28,821 | ) | |
Balance at June 3, 2017 | | | 28,788 |
| | $ | 9,596 |
| | $ | 152,107 |
| | $ | 351,872 |
| | $ | (886 | ) | | $ | 886 |
| | $ | (31,746 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at February 28, 2015 | | 29,050 |
| | $ | 9,683 |
| | $ | 138,575 |
| | $ | 256,538 |
| | $ | (801 | ) | | $ | 801 |
| | $ | (22,320 | ) | |
Balance at February 27, 2016 | | | 28,684 |
| | $ | 9,561 |
| | $ | 145,528 |
| | $ | 282,477 |
| | $ | (837 | ) | | $ | 837 |
| | $ | (31,371 | ) |
Net earnings | | — |
| | — |
| | — |
| | 45,406 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 17,722 |
| | — |
| | — |
| | — |
|
Unrealized loss on marketable securities, net of $24 tax benefit | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (45 | ) | |
Unrealized loss on marketable securities, net of $9 tax benefit | | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (14 | ) |
Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (9,257 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,893 |
|
Issuance of stock, net of cancellations | | 101 |
| | 34 |
| | 124 |
| | — |
| | (27 | ) | | 27 |
| | — |
| | 126 |
| | 42 |
| | (3 | ) | | — |
| | (6 | ) | | 6 |
| | — |
|
Share-based compensation | | — |
| | — |
| | 3,686 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,390 |
| | — |
| | — |
| | — |
| | — |
|
Tax benefit associated with stock plans | | — |
| | — |
| | 4,037 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 188 |
| | — |
| | — |
| | — |
| | — |
|
Exercise of stock options | | 200 |
| | 67 |
| | 1,539 |
| | — |
| | — |
| | — |
| | — |
| | 9 |
| | 3 |
| | 62 |
| | — |
| | — |
| | — |
| | — |
|
Share repurchases | | (150 | ) | | (50 | ) | | (784 | ) | | (6,424 | ) | | — |
| | — |
| | — |
| |
Other share retirements | | (93 | ) | | (31 | ) | | (477 | ) | | (4,559 | ) | | — |
| | — |
| | — |
| | (30 | ) | | (10 | ) | | (155 | ) | | (1,137 | ) | | — |
| | — |
| | — |
|
Cash dividends | | — |
| | — |
| | — |
| | (9,632 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (3,560 | ) | | — |
| | — |
| | — |
|
Balance at November 28, 2015 | | 29,108 |
| | $ | 9,703 |
| | $ | 146,700 |
| | $ | 281,329 |
| | $ | (828 | ) | | $ | 828 |
| | $ | (31,622 | ) | |
Balance at May 28, 2016 | | | 28,789 |
| | $ | 9,596 |
| | $ | 147,010 |
| | $ | 295,502 |
| | $ | (843 | ) | | $ | 843 |
| | $ | (28,492 | ) |
See accompanying notes to consolidated financial statements.
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended February 27, 2016March 4, 2017. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. The results of operations for the ninethree-month period ended November 26, 2016June 3, 2017 are not necessarily indicative of the results to be expected for the full year.
In connection with preparing the unaudited consolidated financial statements for the ninethree months ended November 26, 2016,June 3, 2017, we evaluated subsequent events for potential recognition and disclosure through the date of this filing. On December 14, 2016,June 12, 2017, we acquired substantially all100 percent of the assetsstock of Sotawall Inc.,EFCO Corporation, a privately-held U.S. manufacturer of architectural aluminum window, curtainwall, designstorefront and fabrication company basedentrance systems for commercial construction projects for $192 million in Toronto, Canada, for approximately $135 million (USD). The acquisition wascash, funded through a combinationan expansion of approximately $70 million ofour existing cash and short-term investments and approximately $65 million from our committed revolving linecredit facility, also occurring after the close of credit. Purchasethe first fiscal quarter (see Note 9). Preliminary purchase accounting will be performedcompleted in the fourthsecond quarter and the acquired company will be included within our Architectural Framing Systems reporting segment. Results of operations for SotawallEFCO will be included in our consolidated financial statements from the date of acquisition.
| |
2. | New Accounting Standards |
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires all deferred tax assets and liabilities, along with any related valuation allowance, to be classified as noncurrent on the balance sheet. We early adopted this standard in the first quarter of the current fiscal year, and prior periods were not retrospectively adjusted. The adoption of this standard did not have a significant impact to our consolidated financial statements in any period presented.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016. We plan to early adopt this standard in the fourth quarter of the current fiscal year and do not expect it to have a significant impact to our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Under the new standard, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2017, Apogee'sour fiscal 2019. We are currently evaluatingundertaking a process to quantify the impact that this standard will have on our consolidated financial statements. statements and will provide further analysis and discussion as we progress in this quantification process. At this time:
We are in the process of evaluating the significance of the guidance to our operations and as we proceed, we will finalize our determination of adoption method.
We expect to have business units that will continue to recognize revenue at the point in time when goods are shipped, as that represents when control is transferred, and business units that will continue to recognize revenue over time, following a cost-to-cost percentage of completion method of revenue recognition. Additionally, we expect that one of our business units in the Architectural Framing Systems segment will change from recognizing revenue at a point in time to recognizing revenue over time, to better reflect transfer of control to the customer in line with the new guidance. This business unit represents approximately 10 percent of our total net sales and will follow a similar cost-to-cost percentage of completion method of revenue recognition, consistent with our other business units using percentage of completion.
In February 2016, the FASB issued ASU 2016-02, Leases, which provides for comprehensive changes to lease accounting. The new standard requires that a lessee recognize a lease obligation liability and a right to use asset for virtually all leases of property, plant and equipment, subsequently amortized over the lease term. The new standard is effective for fiscal years beginning after December 15, 2018, our fiscal year 2020, with a modified retrospective transition. We are currently evaluating whether we will early adopt this standard in our fiscal year 2019 to align with the impactadoption of the new revenue recognition standard discussed above. The adoption of this standard will haveresult in reflecting assets and liabilities for the value of our leased property and equipment on our consolidated financial statements.balance sheet but we do not expect this guidance to have a significant impact on our consolidated results of operations
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, which addresses eight specificand in November 2016, it issued 2016-18, Restricted Cash. Both standards provide guidance for presentation of certain topics within the statement of cash flow issues with the objective of reducing diversityflows, including presenting restricted cash within cash and cash equivalents, and are intended to improve consistency in practice.presentation. The standardnew classification guidance is effective for fiscal years beginning after December 15, 2017, butour fiscal year 2019, and is to be applied retrospectively for comparability across all periods. These standards may be adopted early. Weearly, and we are currently evaluatingconsidering the impacttiming of adoption, but we do not expect this standard willguidance to have a significant impact on our consolidated financial statements.
In November 2016,January 2017, the FASB issued ASU 2016-18,2017-04, Restricted CashSimplifying the Test for Goodwill Impairment, which clarifies guidance and presentation relatedsimplifies the accounting for goodwill impairment by requiring impairment charges to restricted cashbe based on the first step in the statementcurrent two-step impairment test process. The new guidance eliminates the current requirement to calculate a goodwill impairment charge using step 2. The standard
is effective for fiscal yearsapplicable to impairment tests performed in periods beginning after December 15, 2017,2019, our fiscal 2021, with early adoption permitted, and is to be applied retrospectively.permitted. We are currently evaluating the impactearly adoption of this standard will have onguidance for our consolidated financial statements.future annual goodwill impairment review process.
| |
3. | Share-Based Compensation |
Total share-based compensation expense included in the results of operations was $4.4$1.4 million and $3.7 million for in each of the ninethree-month periods ended November 26, 2016June 3, 2017 and NovemberMay 28, 20152016, respectively..
Stock Options and SARs
There were no stock options or SARs issued in the first ninemonths of either fiscal 2017 or 2016. The following table summarizes activityperiod presented. Activity for the nine months ended November 26, 2016:current period is summarized as follows:
| | Stock Options and SARs | | Number of Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value | | Number of Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Outstanding at February 27, 2016 | | 403,714 |
| | $ | 11.81 |
| | | |
Outstanding at March 4, 2017 | | | 229,901 |
| | $ | 9.90 |
| | |
Awards exercised | | (128,387 | ) | | 10.77 |
| | | | (100,000 | ) | | 8.34 |
| | |
Outstanding and exercisable at November 26, 2016 | | 275,327 |
| | $ | 12.30 |
| | 3.8 Years | | $ | 9,944,785 |
| |
Outstanding and exercisable at June 3, 2017 | | | 129,901 |
| | $ | 11.10 |
| | 3.5 Years | | $ | 5,830,913 |
|
Cash proceeds from the exercise of stock options were $1.30.8 million and $1.60.1 million for the ninethree months ended November 26, 2016June 3, 2017 and NovemberMay 28, 20152016, respectively. The aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $4.54.8 million during the ninethree months ended November 26, 2016June 3, 2017 and $7.50.3 million during the prior-year period.
Nonvested Shares and Share Units
The following table summarizes nonvestedNonvested share activity for the nine months ended November 26, 2016:current period is summarized as follows:
| | Nonvested Shares and Units | | Number of Shares and Units | | Weighted Average Grant Date Fair Value | | Number of Shares and Units | | Weighted Average Grant Date Fair Value |
Nonvested at February 27, 2016 | | 275,457 |
| | $ | 37.48 |
| |
Nonvested at March 4, 2017 | | | 279,204 |
| | $ | 44.80 |
|
Granted | | 148,672 |
| | 42.90 |
| | 50,686 |
| | 54.50 |
|
Vested | | (140,404 | ) | | 28.43 |
| | (110,744 | ) | | 45.45 |
|
Canceled | | (750 | ) | | 45.79 |
| |
Nonvested at November 26, 2016 | | 282,975 |
| | $ | 44.79 |
| |
Nonvested at June 3, 2017 | | | 219,146 |
| | $ | 46.70 |
|
At November 26, 2016June 3, 2017, there was $8.28.0 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 2224 months. The total fair value of shares vested during the ninethree months ended November 26, 2016June 3, 2017 was $6.2$6.0 million.
The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 |
Basic earnings per share – weighted average common shares outstanding | 28,828 |
| | 29,181 |
| | 28,807 |
| | 29,137 |
| 28,851 |
| | 28,702 |
|
Weighted average effect of nonvested share grants and assumed exercise of stock options | 64 |
| | 285 |
| | 106 |
| | 342 |
| 10 |
| | 193 |
|
Diluted earnings per share – weighted average common shares and potential common shares outstanding | 28,892 |
| | 29,466 |
| | 28,913 |
| | 29,479 |
| 28,861 |
| | 28,895 |
|
There were no anti-dilutive stock options excluded from the calculation of earnings per share for any of the periods presented, as the average market price exceeded the exercise price of options outstanding.
| | (In thousands) | November 26, 2016 | | February 27, 2016 | June 3, 2017 | | March 4, 2017 |
Raw materials | $ | 24,950 |
| | $ | 21,404 |
| $ | 25,380 |
| | $ | 22,761 |
|
Work-in-process | 14,153 |
| | 9,958 |
| 19,514 |
| | 16,154 |
|
Finished goods | 30,444 |
| | 25,486 |
| 31,471 |
| | 29,372 |
|
Costs and earnings in excess of billings on uncompleted contracts | 3,614 |
| | 6,538 |
| 4,718 |
| | 5,122 |
|
Total inventories | $ | 73,161 |
| | $ | 63,386 |
| $ | 81,083 |
| | $ | 73,409 |
|
We hold the following marketableMarketable securities allare classified as available for sale:
|
| | | | | | | | | | | | | | | |
(In thousands) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
November 26, 2016 | | | | | | | |
Mutual fund | $ | 30,353 |
| | $ | — |
| | $ | (84 | ) | | $ | 30,269 |
|
Municipal bonds | 11,419 |
| | 50 |
| | (141 | ) | | 11,328 |
|
Total marketable securities | $ | 41,772 |
| | $ | 50 |
| | $ | (225 | ) | | $ | 41,597 |
|
February 27, 2016 | | | | | | | |
Mutual fund | $ | 30,178 |
| | $ | — |
| | $ | (55 | ) | | $ | 30,123 |
|
Municipal bonds | 12,393 |
| | 285 |
| | (109 | ) | | 12,569 |
|
Total marketable securities | $ | 42,571 |
| | $ | 285 |
| | $ | (164 | ) | | $ | 42,692 |
|
We are invested in a mutual fund holding short-term government securities as a means of deploying excess cash generated from operations while preserving liquidity. |
| | | | | | | | | | | |
(In thousands) | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
June 3, 2017 | | | | | | | |
Municipal bonds | 7,888 |
| | 145 |
| | (57 | ) | | 7,976 |
|
March 4, 2017 | | | | | | | |
Municipal bonds | 9,595 |
| | 91 |
| | (97 | ) | | 9,589 |
|
We have a wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), which holds municipal bonds. 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, which are generally high-quality municipal bonds, for the purpose of providing collateral for Prism’s obligations under the reinsurance agreement.
As of November 26, 2016,June 3, 2017, marketable securities with a fair value of $1.2 million have been in a continuous unrealized loss position for more than 12 months with unrealized losses of $0.1 million.
We test for other-than-temporary losses on a quarterly basis and whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable. We consider thethese unrealized losses indicated above to be temporary in nature. We intend to hold our investments until the full principal amount can be recovered, and we have the ability to do so based on other sources of liquidity. Gross realized gains and losses were not significant during the first three months of fiscal 2018 or fiscal 2017.
The amortized cost and estimated fair values of municipal bonds at November 26, 2016June 3, 2017, 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.
| | (In thousands) | Amortized Cost | | Estimated Fair Value | Amortized Cost | | Estimated Fair Value |
Due within one year | $ | 367 |
| | $ | 366 |
| $ | 425 |
| | $ | 425 |
|
Due after one year through five years | 4,166 |
| | 4,164 |
| 2,656 |
| | 2,696 |
|
Due after five years through 10 years | 5,594 |
| | 5,606 |
| 3,316 |
| | 3,419 |
|
Due after 10 years through 15 years | 1,292 |
| | 1,192 |
| 1,291 |
| | 1,236 |
|
Due beyond 15 years | | 200 |
| | 200 |
|
Total | $ | 11,419 |
| | $ | 11,328 |
| $ | 7,888 |
| | $ | 7,976 |
|
Gross realized gains and losses were not significant during the first nine months of fiscal 2017 and fiscal 2016.
| |
7. | 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 assets or liabilities.
| | (In thousands) | Quoted Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Total Fair Value | Quoted Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Total Fair Value |
November 26, 2016 | | | | | | |
June 3, 2017 | | | | | | |
Cash equivalents | | | | | | | | | | |
Money market funds | $ | 10,879 |
| | $ | — |
| | $ | 10,879 |
| $ | 4,138 |
| | $ | — |
| | $ | 4,138 |
|
Commercial paper | — |
| | 25,686 |
| | 25,686 |
| — |
| | 1,400 |
| | 1,400 |
|
Total cash equivalents | 10,879 |
| | 25,686 |
| | 36,565 |
| 4,138 |
| | 1,400 |
| | 5,538 |
|
Short-term securities | | | | | | | | | | |
Mutual funds | 30,269 |
| | — |
| | 30,269 |
| |
Municipal bonds | — |
| | 366 |
| | 366 |
| — |
| | 425 |
| | 425 |
|
Total short-term securities | 30,269 |
| | 366 |
| | 30,635 |
| |
Long-term securities | | | | | | | | | | |
Municipal bonds | — |
| | 10,962 |
| | 10,962 |
| — |
| | 7,551 |
| | 7,551 |
|
Total assets at fair value | $ | 41,148 |
| | $ | 37,014 |
| | $ | 78,162 |
| $ | 4,138 |
| | $ | 9,376 |
| | $ | 13,514 |
|
February 27, 2016 | | | | | | |
March 4, 2017 | | | | | | |
Cash equivalents | | | | | | | | | | |
Money market funds | $ | 23,199 |
| | $ | — |
| | $ | 23,199 |
| $ | 4,423 |
| | $ | — |
| | $ | 4,423 |
|
Commercial paper | — |
| | 29,774 |
| | 29,774 |
| — |
| | 5,500 |
| | 5,500 |
|
Total cash equivalents | 23,199 |
| | 29,774 |
| | 52,973 |
| 4,423 |
| | 5,500 |
| | 9,923 |
|
Short-term securities | | | | | | | | | | |
Mutual funds | 30,123 |
| | — |
| | 30,123 |
| |
Municipal bonds | — |
| | 50 |
| | 50 |
| — |
| | 548 |
| | 548 |
|
Total short-term securities | 30,123 |
| | 50 |
| | 30,173 |
| |
Long-term securities | | | | | | | | | | |
Municipal bonds | — |
| | 12,519 |
| | 12,519 |
| — |
| | 9,041 |
| | 9,041 |
|
Total assets at fair value | $ | 53,322 |
| | $ | 42,343 |
| | $ | 95,665 |
| $ | 4,423 |
| | $ | 15,089 |
| | $ | 19,512 |
|
Cash equivalents
Fair value of money market funds was determined based on quoted prices for identical assets in active markets. Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets.
Short- and long-term securities
Mutual funds were measured at fair value based on quoted prices for identical assets in active markets.
Municipal bonds were measured at fair value based on market prices from recent trades of similar securities and are classified as short-term or long-term based on maturity date.
On December 14, 2016, we acquired substantially all the assets of Sotawall, Inc. (now operating under the name Sotawall Limited or "Sotawall"). Sotawall specializes in the design, engineering, fabrication, assembly and installation of unitized curtainwall systems for industrial, commercial and institutional buildings, primarily serving the Canadian and northeastern U.S. geographic regions and is included within our Architectural Framing Systems segment. Sotawall's results of operations have been included in the consolidated financial statements and within the Architectural Framing Systems segment since the date of acquisition.
The assets and liabilities of Sotawall were recorded in the consolidated balance sheet as of the acquisition date, at their respective fair values. The purchase price allocation was completed in the current quarter reflecting subsequent working capital adjustments and final intangible asset values as follows:
|
| | | |
(In thousands) | |
Net working capital | $ | 10,682 |
|
Property, plant and equipment | 7,993 |
|
Goodwill | 21,380 |
|
Other intangible assets | 94,630 |
|
Net assets acquired | $ | 134,685 |
|
No significant adjustments were made to our consolidated results of operations as a result of the completion of purchase accounting.
The following unaudited pro forma information provides the results of operations for the quarter ended May 28, 2016, as if the acquisition had been completed at the beginning of fiscal year 2017:
|
| | | |
| Pro forma |
In thousands, except per share data | May 28, 2016 |
Net sales | $ | 272,816 |
|
Net earnings | 21,466 |
|
Earnings per share | |
Basic | 0.75 |
|
Diluted | 0.74 |
|
Unaudited pro forma information has been provided for comparative purposes only and the information does not necessarily reflect what the combined company's results of operations would have been had the acquisition occurred at the beginning of fiscal year 2017. The information does not reflect the effect of any synergies or integration costs that may result from the acquisition.
| |
9. | Goodwill and Other Identifiable Intangible Assets |
The carrying amount of goodwill attributable to each reporting segment is as follows:was:
| | (In thousands) | Architectural Glass | | Architectural Framing Systems | | Architectural Services | | Large-Scale Optical | | Total | Architectural Glass | | Architectural Framing Systems | | Architectural Services | | Large-Scale Optical | | Total |
Balance at February 28, 2015 | $ | 26,355 |
| | $ | 37,825 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 75,857 |
| |
Balance at February 27, 2016 | | $ | 25,639 |
| | $ | 36,680 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 73,996 |
|
Goodwill acquired | | — |
| | 27,444 |
| | — |
| | — |
| | 27,444 |
|
Foreign currency translation | (716 | ) | | (1,145 | ) | | — |
| | — |
| | (1,861 | ) | 317 |
| | (423 | ) | | — |
| | — |
| | (106 | ) |
Balance at February 27, 2016 | 25,639 |
| | 36,680 |
| | 1,120 |
| | 10,557 |
| | 73,996 |
| |
Balance at March 4, 2017 | | 25,956 |
| | 63,701 |
| | 1,120 |
| | 10,557 |
| | 101,334 |
|
Goodwill adjustment for purchase accounting | | — |
| | (5,860 | ) | | — |
| | — |
| | (5,860 | ) |
Foreign currency translation | 323 |
| | (11 | ) | | — |
| | — |
| | 312 |
| 50 |
| | (313 | ) | | — |
| | — |
| | (263 | ) |
Balance at November 26, 2016 | $ | 25,962 |
| | $ | 36,669 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 74,308 |
| |
Balance at June 3, 2017 | | $ | 26,006 |
| | $ | 57,528 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 95,211 |
|
Purchase accounting related to the acquisition of Sotawall was finalized during the current quarter (see Note 8).
The following table provides the gross carrying amount of other intangible assets and related accumulated amortization:amortization was:
| | (In thousands) | | Gross Carrying Amount | | Accumulated Amortization | | Foreign Currency Translation | | Net | | Gross Carrying Amount | | Accumulated Amortization | | Foreign Currency Translation | | Net |
November 26, 2016 | | | | | | | | | |
June 3, 2017 | | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | | | | | | | | | |
Debt issue costs on revolving credit facility | | $ | 4,073 |
| | $ | (2,907 | ) | | $ | — |
| | $ | 1,166 |
| |
Debt issue costs | | | $ | 4,066 |
| | $ | (3,013 | ) | | $ | — |
| | $ | 1,053 |
|
Non-compete agreements | | 6,524 |
| | (6,318 | ) | | — |
| | 206 |
| | 6,286 |
| | (6,111 | ) | | 10 |
| | 185 |
|
Customer relationships | | 22,636 |
| | (13,043 | ) | | 213 |
| | 9,806 |
| | 85,296 |
| | (15,263 | ) | | (465 | ) | | 69,568 |
|
Purchased intellectual property | | 7,656 |
| | (3,473 | ) | | 183 |
| | 4,366 |
| |
Trademarks and other intangibles | | | 25,950 |
| | (7,261 | ) | | (103 | ) | | 18,586 |
|
Total definite-lived intangible assets | | $ | 40,889 |
| | $ | (25,741 | ) | | $ | 396 |
| | $ | 15,544 |
| | $ | 121,598 |
| | $ | (31,648 | ) | | $ | (558 | ) | | $ | 89,392 |
|
Indefinite-lived intangible assets: | | | | | | | | | | | | | | | | |
Trademarks | | 3,919 |
| | — |
| | (3 | ) | | 3,916 |
| | 16,061 |
| | — |
| | (123 | ) | | 15,938 |
|
Total intangible assets | | $ | 44,808 |
| | $ | (25,741 | ) | | $ | 393 |
| | $ | 19,460 |
| | $ | 137,659 |
| | $ | (31,648 | ) | | $ | (681 | ) | | $ | 105,330 |
|
February 27, 2016 | | | | | | | | | |
March 4, 2017 | | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | | | | | | | | | |
Debt issue costs on revolving credit facility | | $ | 3,677 |
| | $ | (2,758 | ) | | $ | — |
| | $ | 919 |
| |
Debt issue costs | | | $ | 4,066 |
| | $ | (2,960 | ) | | $ | — |
| | $ | 1,106 |
|
Non-compete agreements | | 6,673 |
| | (6,419 | ) | | (16 | ) | | 238 |
| | 6,286 |
| | (6,025 | ) | | (65 | ) | | 196 |
|
Customer relationships | | 24,174 |
| | (12,737 | ) | | (1,162 | ) | | 10,275 |
| | 82,479 |
| | (14,013 | ) | | (145 | ) | | 68,321 |
|
Purchased intellectual property | | 8,213 |
| | (3,271 | ) | | (431 | ) | | 4,511 |
| |
Trademarks and other intangibles | | | 25,950 |
| | (4,917 | ) | | (31 | ) | | 21,002 |
|
Total definite-lived intangible assets | | $ | 42,737 |
| | $ | (25,185 | ) | | $ | (1,609 | ) | | $ | 15,943 |
| | $ | 118,781 |
| | $ | (27,915 | ) | | $ | (241 | ) | | $ | 90,625 |
|
Indefinite-lived intangible assets: | | | | | | | | | | | | | | | | |
Trademarks | | 4,239 |
| | — |
| | (320 | ) | | 3,919 |
| | 16,022 |
| | — |
| | 39 |
| | 16,061 |
|
Total intangible assets | | $ | 46,976 |
| | $ | (25,185 | ) | | $ | (1,929 | ) | | $ | 19,862 |
| | $ | 134,803 |
| | $ | (27,915 | ) | | $ | (202 | ) | | $ | 106,686 |
|
Amortization expense on definite-lived intangible assets was $1.2$3.4 million and $1.1$0.4 million for the ninethree-month periods ended November 26, 2016June 3, 2017 and NovemberMay 28, 20152016, respectively. The amortization expense associated with debt issue costs is included in interest expense while the remainder is in selling, general and administrative expenses in the consolidated results of operations. At November 26, 2016June 3, 2017, the estimated future amortization expense for definite-lived intangible assets was:
| | (In thousands) | Remainder of Fiscal 2017 | | Fiscal 2018 | | Fiscal 2019 | | Fiscal 2020 | | Fiscal 2021 | Remainder of Fiscal 2018 | | Fiscal 2019 | | Fiscal 2020 | | Fiscal 2021 | | Fiscal 2022 |
Estimated amortization expense | $ | 397 |
| | $ | 1,520 |
| | $ | 1,460 |
| | $ | 1,349 |
| | $ | 1,162 |
| $ | 10,380 |
| | $ | 8,093 |
| | $ | 5,592 |
| | $ | 5,579 |
| | $ | 5,307 |
|
Debt, at November 26, 2016 consisted ofJune 3, 2017, included $20.4 million of industrial revenue bonds that mature in fiscal years 2021 through 2043. The fair value of the industrial revenue bonds approximatesapproximated carrying value at November 26, 2016,June 3, 2017, due to the variable interest rates on these instruments. The bonds would be classified as Level 2 within the fair value hierarchy described in Note 7.
In November 2016,As of June 3, 2017, we amended ourmaintained a $175.0 million committed revolving credit facility increasing the amount to $175.0 million and extending the expiration date tothat matures in November 2021. Outstanding borrowing was No$51.0 million borrowings were outstanding under the facility as of November 26, 2016June 3, 2017 orand $45.0 million as of February 27, 2016March 4, 2017. As defined within our amended committed revolving credit facility, we are required to comply withWe have two financial covenants. These financial covenants that require us to stay below a maximum leveragedebt-to-EBITDA ratio and to maintain a minimum ratio of interest coverage ratio.expense-to-EBITDA. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At November 26, 2016,June 3, 2017, we were in compliance with both financial covenants. Additionally, at June 3, 2017, we had a total of $23.5 million of ongoing letters of credit related to industrial revenue bonds and construction contracts that expire in fiscal 2018 and reduce availability of funds under our committed credit facility. Subsequent to the end of the quarter, and in connection with our subsequent acquisition of EFCO, on June 9, 2017, we expanded this committed revolving credit facility to $335.0 million. There were no significant changes to terms associated with this expansion.
We also maintain atwo Canadian revolving demand facilities totaling $4.012.0 million Canadian dollar revolving demand facility available to our Canadian operation.dollars. No borrowings were outstanding under this facilitythese facilities as of November 26, 2016June 3, 2017 or February 27, 2016.March 4, 2017. Borrowings under the facilitythese facilities are made available at the sole discretion of the lenderlenders and are payable on demand, with interest at rates specified in the credit agreement.demand.
Interest payments were $0.5 million and $0.4$0.1 million for the ninethree months ended November 26, 2016June 3, 2017 and NovemberMay 28, 20152016, respectively.
| |
10.11. | Employee Benefit Plans |
Pension Plans
The Company sponsors two frozen defined-benefit pension plans: an unfunded Officers’ Supplemental Executive Retirement Plan and the Tubelite Inc. Hourly Employees’ Pension Plan. Components of net periodic benefit cost are:were:
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 |
Interest cost | $ | 139 |
| | $ | 142 |
| | $ | 417 |
| | $ | 426 |
| $ | 133 |
| | $ | 139 |
|
Expected return on assets | (10 | ) | | (34 | ) | | (30 | ) | | (102 | ) | (10 | ) | | (10 | ) |
Amortization of unrecognized net loss | 56 |
| | 62 |
| | 168 |
| | 186 |
| 57 |
| | 56 |
|
Net periodic benefit cost | $ | 185 |
| | $ | 170 |
| | $ | 555 |
| | $ | 510 |
| $ | 180 |
| | $ | 185 |
|
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2014, or U.S. state and local income tax examinations for years prior to fiscal 2010.2011. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2013, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.
The total liability for unrecognized tax benefits at November 26, 2016June 3, 2017 and February 27, 2016March 4, 2017 was approximately $5.3$4.8 million and $5.0$4.5 million, respectively. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.5 million during the next 12 months due to lapsing of statutes.
| |
12.13. | Other Non-Current Liabilities |
| | (In thousands) | November 26, 2016 | | February 27, 2016 | June 3, 2017 | | March 4, 2017 |
Deferred benefit from New Market Tax Credit transactions | $ | 16,708 |
| | $ | 10,741 |
| $ | 16,708 |
| | $ | 16,708 |
|
Retirement plan obligations | 9,992 |
| | 9,992 |
| 9,635 |
| | 9,635 |
|
Deferred compensation plan | 7,176 |
| | 4,814 |
| 9,526 |
| | 7,463 |
|
Other | 14,390 |
| | 15,808 |
| 7,046 |
| | 11,981 |
|
Total other non-current liabilities | $ | 48,266 |
| | $ | 41,355 |
| $ | 42,915 |
| | $ | 45,787 |
|
13.14.Commitments and Contingent Liabilities
Operating lease commitments. As of November 26, 2016June 3, 2017, the Company was obligated under non-cancelable operating leases for buildings and equipment. Certain leases provide for increased rental payments based upon increases in real estate taxes or operating costs. Future minimum rental payments under non-cancelable operating leases are:
| | (In thousands) | Remainder of Fiscal 2017 | | Fiscal 2018 | | Fiscal 2019 | | Fiscal 2020 | | Fiscal 2021 | | Thereafter | | Total | Remainder of Fiscal 2018 | | Fiscal 2019 | | Fiscal 2020 | | Fiscal 2021 | | Fiscal 2022 | | Thereafter | | Total |
Total minimum payments | $ | 2,987 |
| | $ | 8,683 |
| | $ | 7,891 |
| | $ | 6,507 |
| | $ | 4,006 |
| | $ | 4,981 |
| | $ | 35,055 |
| $ | 9,047 |
| | $ | 10,821 |
| | $ | 9,259 |
| | $ | 6,297 |
| | $ | 5,604 |
| | $ | 8,823 |
| | $ | 49,851 |
|
Bond commitments. In the ordinary course of business, predominantly in our Architectural Services segment,and Architectural Framing Systems segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance. At November 26, 2016, $113.2June 3, 2017, $66.0 million of our backlog was bonded by performance bonds with a face value of $327.5$329.7 million. Performance bonds do not have stated expiration dates, as we are released from the bonds upon completion of the contract. We have never been required to make any payments related to these performance bonds with respect to any of our current portfolio of businesses.
Warranties. We accruereserve estimated exposures on known claims, as well as on a portion of anticipated claims for product warranty and claimrework costs as a percentage of sales based on historical trends and for specific sales creditsproduct liability claims as they become known and estimable. Actual warranty and claima ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, shifts in product mix and any significant changes in sales volume. A warranty rollforward is provided as follows:
| | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 |
Balance at beginning of period | $ | 16,340 |
| | $ | 11,275 |
| $ | 21,933 |
| | $ | 16,340 |
|
Additional accruals | 6,082 |
| | 5,789 |
| 1,240 |
| | 1,463 |
|
Claims paid | (4,878 | ) | | (2,460 | ) | (973 | ) | | (1,129 | ) |
Balance at end of period | $ | 17,544 |
| | $ | 14,604 |
| $ | 22,200 |
| | $ | 16,674 |
|
Letters of credit. At November 26, 2016June 3, 2017, we had ongoing letters of credit related to construction contracts and certain industrial revenue bonds. The total value of letters of credit under which we were obligated as of November 26, 2016June 3, 2017 was approximately $23.5 million, all of which have been issued under our committed revolving credit facility. Availability under this $175.0 million credit facility is reduced by borrowings under the facility and also by letters of credit issued under the facility.
Purchase obligations. Purchase obligations for raw material commitments and capital expenditures totaled $141.7115.5 million as of November 26, 2016.June 3, 2017.
New Markets Tax Credit transaction. In June 2016, we entered into a transaction with a subsidiary of Wells Fargo (WF) under a qualified New Markets Tax Credit (NMTC) program related to an investment in plant and equipment within our Architectural Glass segment (the Project). The NMTC transaction is subject to 100 percent tax credit recapture for a period of seven years. Therefore, proceeds received in exchange for the transfer of the tax credits will be recognized as earnings in fiscal 2024, if the expected tax benefits are delivered without risk of recapture to WF and our performance obligation is relieved.
In exchange for substantially all of the benefits derived from the tax credits, WF contributed $6.0 million to the Project, which is included in other non-current liabilities on our consolidated balance sheets. Direct and incremental costs incurred in structuring the arrangement have been deferred and will be recognized in proportion to the recognition of the related profits. These costs amounted to $0.9 million and are included in other non-current assets on our consolidated balance sheets. Variable-interest entities have been created as a result of the transaction structure, which have been included within our consolidated financial statements as WF does not have a material interest in the underlying economics of the Project.
Litigation. We are a party to various legal proceedings incidental to our normal operating activities. In particular, like others in the construction supply and services industry, our businesses are routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We are also subject to litigation arising out of general liability, employment practices, workers' compensation and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on our results of operations, cash flows or financial condition.
| |
14.15. | Segment Information |
The Company has four reporting segments: Architectural Glass, Architectural Framing Systems, Architectural Services and Large-Scale Optical (LSO).
The Architectural Glass segment fabricates coated, high-performance glass used in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.
The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings. The Company has aggregated fourfive operating segments into this reporting segment based on their similar products, customers, distribution methods, production processes and economic characteristics.
The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.
The LSO segment fabricatesmanufactures value-added glass and acrylic products primarily for the picture framing fine art, wall decor and display markets.applications.
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 |
Net sales from operations | | | | | | | | | | |
Architectural Glass | $ | 107,002 |
| | $ | 85,461 |
| | $ | 299,567 |
| | $ | 279,069 |
| $ | 97,735 |
| | $ | 93,360 |
|
Architectural Framing Systems | 90,850 |
| | 76,419 |
| | 264,212 |
| | 228,990 |
| 110,492 |
| | 81,132 |
|
Architectural Services | 64,380 |
| | 61,244 |
| | 204,934 |
| | 169,093 |
| 50,150 |
| | 62,820 |
|
Large-Scale Optical | 22,084 |
| | 24,211 |
| | 63,382 |
| | 66,874 |
| 18,603 |
| | 20,028 |
|
Intersegment eliminations | (10,244 | ) | | (9,011 | ) | | (31,688 | ) | | (24,986 | ) | (4,673 | ) | | (9,460 | ) |
Net sales | $ | 274,072 |
| | $ | 238,324 |
| | $ | 800,407 |
| | $ | 719,040 |
| $ | 272,307 |
| | $ | 247,880 |
|
Operating income (loss) from operations | | | | | | | | | | |
Architectural Glass | $ | 11,708 |
| | $ | 8,383 |
| | $ | 30,855 |
| | $ | 23,405 |
| $ | 9,322 |
| | $ | 9,531 |
|
Architectural Framing Systems | 11,838 |
| | 9,244 |
| | 35,070 |
| | 24,197 |
| 11,964 |
| | 10,232 |
|
Architectural Services | 4,918 |
| | 3,702 |
| | 14,336 |
| | 6,063 |
| 782 |
| | 3,181 |
|
Large-Scale Optical | 5,910 |
| | 7,621 |
| | 15,613 |
| | 18,132 |
| 4,050 |
| | 4,652 |
|
Corporate and other | (1,115 | ) | | (1,092 | ) | | (3,317 | ) | | (3,292 | ) | (2,012 | ) | | (1,347 | ) |
Operating income | $ | 33,259 |
| | $ | 27,858 |
| | $ | 92,557 |
| | $ | 68,505 |
| $ | 24,106 |
| | $ | 26,249 |
|
Due to the varying combinations and integration of individual window, storefront and curtainwall systems, it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported.
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
This discussion contains “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. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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, including the risk factors noted under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2016March 4, 2017. 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 Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2016March 4, 2017.
We 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.
Overview
We are a world leader in certain technologies involving the design and development of value-added glass solutions for enclosing commercial buildingsproducts and framing art.services. Our four reporting segments are: Architectural Glass, Architectural Framing Systems, Architectural Services and Large-Scale Optical (LSO).
The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February 27, 2016March 4, 2017 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.
Highlights of ThirdFirst Quarter andof Fiscal 2018 Compared to First Nine MonthsQuarter of Fiscal 2017 Compared to Third Quarter and First Nine Months of Fiscal 2016
Net sales
Consolidated net sales increased 15.09.9 percent, or $35.7$24.4 million, for the thirdfirst quarter ended November 26, 2016, and 11.3 percent, or $81.4 million, for the nine months ended November 26, 2016,June 3, 2017, compared to the same periodsperiod in the prior year. Sales growth in the third-quarter and year-to-date periods of fiscal 2017 compared to the same periods of fiscal 2016 was largely due to gainsthe additional sales from Sotawall within the Architectural Framing Systems segment. Sales also grew as a result of volume growth within two other businesses in the Architectural Framing Systems segment and volume across all three architectural segments, driven by continued strengthgrowth with U.S. mid-size projects in non-residential construction end-markets and success in our strategies to expand geographically and introduce new products. Additionally, the nine-month period benefited by timing of project activity driving growth in our Architectural ServicesGlass segment. Foreign currency did not have a meaningful impact on sales results in either of the current year periods as compared tocurrent-year period or the prior-year periods.period.
The relationship between various components of operations, as a percentage of net sales, is illustrated below:
| | | Three Months Ended | | Nine Months Ended | Three Months Ended | |
(Percent of net sales) | November 26, 2016 | | November 28, 2015 | | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 | |
Net sales | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % | 100.0 | % | | 100.0 | % | |
Cost of sales | 73.4 |
| | 73.8 |
| | 73.8 |
| | 75.7 |
| 74.2 |
| | 74.0 |
| |
Gross profit | 26.6 |
| | 26.2 |
| | 26.2 |
| | 24.3 |
| 25.8 |
| | 26.0 |
| |
Selling, general and administrative expenses | 14.5 |
| | 14.5 |
| | 14.7 |
| | 14.8 |
| 17.0 |
| | 15.4 |
| |
Operating income | 12.1 |
| | 11.7 |
| | 11.5 |
| | 9.5 |
| 8.9 |
| | 10.6 |
| |
Interest and other (expense) income, net | — |
| | — |
| | — |
| | — |
| (0.1 | ) | | 0.1 |
| |
Earnings before income taxes | 12.1 |
| | 11.7 |
| | 11.5 |
| | 9.5 |
| 8.8 |
| | 10.7 |
| |
Income tax expense | 3.9 |
| | 3.9 |
| | 3.8 |
| | 3.2 |
| 2.9 |
| | 3.6 |
| |
Net earnings | 8.2 | % | | 7.8 | % | | 7.7 | % | | 6.3 | % | 5.9 | % | | 7.1 | % | |
Effective tax rate | 32.1 | % | | 33.6 | % | | 32.8 | % | | 33.9 | % | 32.9 | % | | 33.4 | % | |
Gross profit
Gross profit as a percent of sales increased to 26.6 percent and 26.2was 25.8 percent for the respective three- and nine-month periodsthree-months ended November 26, 2016June 3, 2017, from 26.2compared to 26.0 percent for the three-months ended May 28, 2016. Gross profit as a percent of sales declined by 20 basis points primarily due to a decline in sales and 24.3 percentreduced volume leverage in the respective three- and nine-month periods ofArchitectural Services segment in the prior year. Gross profit improvements in both periods of fiscal 2017 compared to fiscal 2016 were driven by operating leverage on increased volume and improved productivity in our three Architectural-based segments.quarter.
Selling, general and administrative (SG&A) expenses
SG&A expenses for the thirdfirst quarter of fiscal 20172018 increased $5.0$8.0 million over the thirdprior period, and were 17.0 percent of sales in the current three-month period, compared to 15.4 percent of sales in first quarter of last year. The increase in the current year but were flatwas made up of approximately $4.6 million of additional expense as a percentageresult of net sales at 14.5 percent in both quarterly periods. For the nine-month period ended November 26, 2016 compared to the prior year nine-month period, SG&A expenses increased $11.1inclusion of Sotawall, $1.1 million but declined asof a percentage of net sales to 14.7 percent compared to 14.8 percent in the prior-year period. The increased expense in both periods of fiscal 2017 compared to the prior-year periods wasreceivable write off due to overall incentive compensation due to improved results,a customer bankruptcy, $0.7 million of aquisition-related costs and to increased sales-related wages.$1.6 million of other items.
Income tax expense
Our effective tax rate in the thirdfirst quarter of fiscal 2017 was 32.132.9 percent, compared to 33.633.4 percent in the same period last year, and was 32.8 percent foras we have increased the nine-month period ended November 26, 2016, compared to 33.9 percentportion of our earnings in international jurisdictions which have lower statutory tax rates than in the same period last year, mainly as a result of differences in the timing of the federal research and development tax credit.U.S.
Segment Analysis
Architectural Glass
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | % Change | | November 26, 2016 | | November 28, 2015 | | % Change | June 3, 2017 | | May 28, 2016 | | % Change |
Net sales | $ | 107,002 |
| | $ | 85,461 |
| | 25.2 | % | | $ | 299,567 |
| | $ | 279,069 |
| | 7.3 | % | $ | 97,735 |
| | $ | 93,360 |
| | 4.7 | % |
Operating income | 11,708 |
| | 8,383 |
| | 39.7 | % | | 30,855 |
| | 23,405 |
| | 31.8 | % | 9,322 |
| | 9,531 |
| | (2.2 | )% |
Operating margin | 10.9 | % | | 9.8 | % | | | | 10.3 | % | | 8.4 | % | | | 9.5 | % | | 10.2 | % | | |
Architectural Glass netNet sales increased $21.5$4.4 million, or 25.2 percent, and $20.5 million, or 7.34.7 percent, for the three- and nine-month periods ended November 26, 2016, respectively,quarter-ended June 3, 2017 over the same periodsperiod in the prior year, due to strong growthsuccess in our U.S.-based business, as a resultgaining share of our focus on growthdemand with mid-size projects in the mid-size building sector.United States. Foreign currency impact on sales was nominal in both periods of fiscal 2017 asthe current-year period compared to fiscal 2016.the prior-year period.
Operating margin improved 110 basis points and 190declined 70 basis points for the three- and nine-month periods of the currentthree-month period this year respectively, compared to the same periods in the prior year, driven by volume growthprimarily due to planned costs related to the startup of the oversize glass production line, which began operating during the period.
Given the short lead times in the U.S., improved pricing and mix and improved productivity.this segment, backlog is not considered a significant metric.
Architectural Framing Systems
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | % Change | | November 26, 2016 | | November 28, 2015 | | % Change | June 3, 2017 | | May 28, 2016 | | % Change |
Net sales | $ | 90,850 |
| | $ | 76,419 |
| | 18.9 | % | | $ | 264,212 |
| | $ | 228,990 |
| | 15.4 | % | $ | 110,492 |
| | $ | 81,132 |
| | 36.2 | % |
Operating income | 11,838 |
| | 9,244 |
| | 28.1 | % | | 35,070 |
| | 24,197 |
| | 44.9 | % | 11,964 |
| | 10,232 |
| | 16.9 | % |
Operating margin | 13.0 | % | | 12.1 | % | | | | 13.3 | % | | 10.6 | % | | | 10.8 | % | | 12.6 | % | | |
Architectural Framing Systems net sales increased $14.4$29.4 million, or 18.9 percent, and $35.2 million, or 15.436.2 percent, for the three- and nine-month periodsthree-month period ended November 26, 2016, respectively,June 3, 2017 over the same periodsperiod in the prior year, primarily due to volumewith the net sales of Sotawall, acquired in the fourth quarter of fiscal 2017, providing approximately 80 percent of the growth across all fourand two of the other framing systems businesses in this segment.contributing the remaining growth.
Operating margin improved 90declined 180 basis points and 270from the prior-year period. This reflected an impact of 190 basis points fordue to amortization of short-lived acquired intangible assets. Beyond these amortization costs, leverage on increased volume was largely offset by higher raw material and manufacturing costs in the three- and nine-month periodsquarter, as well as a receivable write off due to a customer bankruptcy.
Backlog in this segment as of the current year, respectively,June 3, 2017 is approximately $255 million compared to the same periods of the prior year, as a result of volume growth and improved productivity.approximately $245 million at year-end.
Architectural Services
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | % Change | | November 26, 2016 | | November 28, 2015 | | % Change | June 3, 2017 | | May 28, 2016 | | % Change |
Net sales | $ | 64,380 |
| | $ | 61,244 |
| | 5.1 | % | | $ | 204,934 |
| | $ | 169,093 |
| | 21.2 | % | $ | 50,150 |
| | $ | 62,820 |
| | (20.2 | )% |
Operating income | 4,918 |
| | 3,702 |
| | 32.8 | % | | 14,336 |
| | 6,063 |
| | 136.5 | % | 782 |
| | 3,181 |
| | (75.4 | )% |
Operating margin | 7.6 | % | | 6.0 | % | | | | 7.0 | % | | 3.6 | % | | | 1.6 | % | | 5.1 | % | | |
Architectural Services net sales increased $3.1decreased $12.7 million, or 5.1 percent, and $35.8 million, or 21.220.2 percent, for the three- and nine-month periodsthree-month period ended November 26, 2016, respectively,June 3, 2017, over the same periodsperiod in the prior year primarily due to year-on-year timing of project activity.
Operating margin improved 160declined 350 basis points due to lower volume leverage on fixed project management, engineering and 340 basis points for the three- and nine-month periodsmanufacturing costs.
As of the current year, respectively,June 3, 2017, backlog in this segment is approximately $293 million compared to the same periods of the prior year, due to good execution on projects with better margins and leveraging volume growth.
$255 million at year-end.
Large-Scale Optical (LSO)
| | | Three Months Ended | | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | | % Change | | November 26, 2016 | | November 28, 2015 | | % Change | June 3, 2017 | | May 28, 2016 | | % Change |
Net sales | $ | 22,084 |
| | $ | 24,211 |
| | (8.8 | )% | | $ | 63,382 |
| | $ | 66,874 |
| | (5.2 | )% | $ | 18,603 |
| | $ | 20,028 |
| | (7.1 | )% |
Operating income | 5,910 |
| | 7,621 |
| | (22.5 | )% | | 15,613 |
| | 18,132 |
| | (13.9 | )% | 4,050 |
| | 4,652 |
| | (12.9 | )% |
Operating margin | 26.8 | % | | 31.5 | % | | | | 24.6 | % | | 27.1 | % | | | 21.8 | % | | 23.2 | % | | |
LSO net sales declined $2.1$1.4 million, or 8.8 percent, and $3.5 million, or 5.27.1 percent, for the three- and nine-month periodsthree-month period ended November 26, 2016, respectively, over the comparative prior-year periods,June 3, 2017, due to timing of customer orders and softer than expected custom picture framing end markets.end-markets.
Operating margin declined 470140 basis points and 250 basis points fordue to lower volume leverage on operating costs. Given the three- and nine-month periods of the current year, respectively, compared to the same periods of the prior year, as a result of the lower volume.
Backlog
Backlog represents the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which is expected to be recognized as revenue in the near-term. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. Backlog should not be used as the sole indicator of our future revenue and earnings. In addition to projects considered to be backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period, which arein this segment, backlog is not included in thisconsidered a significant metric.
Architectural Glass segment backlog as of November 26, 2016, was $84.6 million, compared to $90.7 million at the end of the prior quarter. This segment has strategically shortened lead-times with capability and productivity improvements in order to reach new markets. As a result, there is a higher level of book-and-bill activity within quarters. In each period, backlog includes approximately $10 million of intersegment orders.
Architectural Framing Systems segment backlog has grown from $130.5 million at the end of the prior quarter to $164.1 million at November 26, 2016, due to recent increased order activity, particularly of longer lead-time contracts. Approximately half the revenue in this segment is derived from smaller projects and book-and-bill activity within the quarter.
Backlog in the Architectural Services segment has declined from $236.1 million at the end of the prior quarter to $195.5 million at November 26, 2016, due to timing of signed contracts. As a project does not enter backlog until a contract is signed, this timing can have a significant impact on this segment's backlog. In the Architectural Services segment, we have additional visibility beyond backlog because projects awarded, verbal commitments and bidding activities are monitored separately and are not included in backlog until a contract is signed.
Backlog is not a significant metric for the LSO segment, as orders are typically booked and billed within a few days.
Liquidity and Capital Resources
| | Selected cash flow data | Nine Months Ended | Three Months Ended |
(In thousands) | November 26, 2016 | | November 28, 2015 | June 3, 2017 | | May 28, 2016 |
Operating Activities | | | | | | |
Net cash provided by operating activities | $ | 70,481 |
| | $ | 86,167 |
| $ | 5,912 |
| | $ | (484 | ) |
Investing Activities | | | | | | |
Capital expenditures | (44,548 | ) | | (26,757 | ) | (11,430 | ) | | (17,725 | ) |
Change in restricted cash | (14,884 | ) | | — |
| |
Net sales (purchases) of marketable securities | 682 |
| | (60,786 | ) | |
Financing Activities | | | | | | |
Repurchase and retirement of common stock | (10,817 | ) | | (7,257 | ) | |
Dividends paid | (10,687 | ) | | (9,632 | ) | (4,002 | ) | | (3,560 | ) |
Operating Activities. Cash provided by operating activities was $70.5$5.9 million for the first ninethree months of fiscal 2017, decreasing $15.72018, increasing $6.4 million over the prior yearprior-year period due to timing of working capital and tax payments, partially offset by increased profitability.payments.
Investing Activities. In the first ninethree months of fiscal 2018 and 2017, net cash used by investing activities was $59.2 million, compared to $91.4 million in the same period last year. Current year usage was mainly in the form of capital expenditures, while the prior year was driven by net purchases of short-term marketable securities. In relation to our New Markets Tax Credit transaction, we also hold $14.9 million of cash in the current year, restricted for investment in our oversized glass fabrication project in our Architectural Glass segment expected to take place over the next six to nine months (see Note 13 for additional discussion).
capital expenditures. We expect totalestimate fiscal 20172018 capital expenditures to be approximately $70$60 million, primarily usedas we continue to increase our product capabilities. In particular, we are investinginvest in the oversized glass fabrication project,capabilities and to increase our manufacturing productivity across our reporting segments.productivity.
We continue to review our portfolio of businesses and their assets in comparison to our internal strategic and performance objectives. As part of this review, we may acquire other businesses, pursue geographic expansion, take actions to manage capacity and/or further invest in, fully divest and/or sell parts of our current businesses.
Financing Activities. In November 2016,As of June 3, 2017, we amended ourmaintained a $175.0 million committed revolving credit facility as describedthat expires in Note 9, and now have a limit of $175 million, with the ability to expand to $275 million.November 2021. As defined within our amended committed revolving credit facility, we are required to comply with two financial covenants. These financial covenants require us to stay below a maximum leverage ratio and to maintain a minimum interest coverage ratio. At November 26, 2016,June 3, 2017, we were in compliance with both financial covenants.
Our BoardWe paid dividends totaling $4.0 million ($0.14 per share) in the first three months of Directors hasfiscal 2018. We did not repurchase shares under our authorized a share repurchase program. We repurchased 250,001 shares under the program for a total cost of $10.8 million during the current third-quarterfirst three months of fiscal 2018 or fiscal 2017. Subsequent to the end of the quarter, in June and nine-month periods. In the prior year third-quarter and nine-month periods,July 2017, we repurchasedpurchased 150,000 shares under the program for a total cost of $7.3$8.2 million. We have repurchased a total of 3,307,6333,457,633 shares, at a total cost of $72.3$80.5 million, since the inception of this program. We have remaining authority to repurchase 942,367792,367 shares under this program, which has no expiration date. We also paid dividends totaling $10.7 million ($0.375 per share) in the first nine months of fiscal 2017.
Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of November 26, 2016June 3, 2017:
| | | Payments Due by Fiscal Period | Payments Due by Fiscal Period |
(In thousands) | 2017 Remaining | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter | | Total | Remainder of Fiscal 2018 | | Fiscal 2019 | | Fiscal 2020 | | Fiscal 2021 | | Fiscal 2022 | | Thereafter | | Total |
Long-term debt obligations | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 5,400 |
| | $ | 15,000 |
| | $ | 20,400 |
| $ | — |
| | $ | — |
| | $ | — |
| | $ | 5,400 |
| | $ | 53,000 |
| | $ | 13,000 |
| | $ | 71,400 |
|
Operating leases (undiscounted) | 2,987 |
| | 8,683 |
| | 7,891 |
| | 6,507 |
| | 4,006 |
| | 4,981 |
| | 35,055 |
| 9,047 |
| | 10,821 |
| | 9,259 |
| | 6,297 |
| | 5,604 |
| | 8,823 |
| | 49,851 |
|
Purchase obligations | 73,080 |
| | 67,693 |
| | 759 |
| | 197 |
| | — |
| | — |
| | 141,729 |
| 91,083 |
| | 19,697 |
| | 2,273 |
| | 1,230 |
| | 1,230 |
| | — |
| | 115,513 |
|
Total cash obligations | $ | 76,067 |
| | $ | 76,376 |
| | $ | 8,650 |
| | $ | 6,704 |
| | $ | 9,406 |
| | $ | 19,981 |
| | $ | 197,184 |
| $ | 100,130 |
| | $ | 30,518 |
| | $ | 11,532 |
| | $ | 12,927 |
| | $ | 59,834 |
| | $ | 21,823 |
| | $ | 236,764 |
|
From time to time, we acquire the use of certain assets through operating leases, such as warehouses, vehicles, forklifts, office equipment, hardware, software and some manufacturing equipment. Many of these operating leases have termination penalties. However, because the assets are used in the conduct of our business operations, it is unlikely that any significant portion of these operating leases would be terminated prior to the normal expiration of their lease terms. Therefore, we consider the risk related to termination penalties to be minimal.
Purchase obligations in the table above relate to raw material commitments and capital expenditures.
We expect to make contributions of $1.0 million to our defined-benefit pension plans in fiscal 2017,2018, which will equal or exceed our minimum funding requirements.
As of November 26, 2016June 3, 2017, we had reserves of $5.3$4.8 million and $1.5$1.4 million for unrecognized tax benefits and environmental liabilities, respectively. We expect approximately $0.5$0.5 million of the unrecognized tax benefits to lapse during the next 12 months. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits and environmental liabilities will ultimately be settled.
At November 26, 2016June 3, 2017, we had a total of $23.5 million of ongoing letters of credit related to industrial revenue bonds and construction contracts that expire in fiscal 2018 and reduce availability of funds under our committed credit facility. The letters of credit by expiration period are:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amount of Commitment Expiration Per Fiscal Period |
(In thousands) | 2017 Remaining | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter | | Total |
Standby letters of credit | $ | — |
| | $ | 20,982 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 2,500 |
| | $ | 23,482 |
|
In addition to the above standby letters of credit, 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 by us. At November 26, 2016, $113.2June 3, 2017, $66.0 million of our backlog was bonded by performance bonds with a face value of $327.5$329.7 million. Performance bonds do not have stated expiration dates, as we are released from the bonds upon completion of the contract. We have never been required to make any payments related to these performance bonds with respect to any of our current portfolio of businesses.
Due to our ability to generate strong cash from operations and borrowing capability under our committed revolving credit facility, we have significant financial flexibility. We believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments for at least the next 12 months.
Subsequent EventEvents
On December 14, 2016,June 9, 2017, we acquired substantially all the assets of Sotawall Inc., a privately-held curtainwall design and fabrication company based in Toronto, Canada, for approximately $135 million (USD). The acquisition was funded through a combination of approximately $70 million of existing cash and short-term investments and approximately $65 million fromexpanded our committed revolving linecredit facility (see Note 9) to $335.0 million. There were no significant changes to terms associated with this expansion.
On June 12, 2017, we acquired 100 percent of credit. Purchasethe stock of EFCO Corporation, a privately-held U.S. manufacturer of architectural aluminum window, curtainwall, storefront and entrance systems for commercial construction projects for $192.0 million, funded by our committed revolving credit facility. Preliminary purchase accounting will be performedcompleted in the fourthsecond quarter and the acquired company will be included within our Architectural Framing Systems reporting segment. Results of operations for SotawallEFCO will be included in our consolidated financial statements from the date of acquisition.
Non-GAAP Measures
We analyze non-GAAP measures for adjusted net earnings, adjusted diluted earnings per common share and adjusted operating income. These measures are used by management to evaluate the Company's financial performance on a more consistent basis and improve comparability of results from period to period, because they exclude certain amounts that are not considered part of core operating results. 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 GAAP. The non-GAAP measures presented below may differ from similar measures used by other companies.
The following table reconciles net earnings to adjusted net earnings and earnings per diluted common share to adjusted earnings per diluted common share.
|
| | | | | | | | | | | |
| | Three Months Ended |
(In thousands, except per share data) | | June 3, 2017 | | May 28, 2016 | | % Change |
Net earnings | | $ | 16,104 |
| | $ | 17,722 |
| | (9 | )% |
Amortization of short-lived acquired intangibles | | 2,054 |
| | — |
| | N/M |
|
Acquisition-related costs | | 680 |
| | — |
| | N/M |
|
Income tax impact on above adjustments (1) | | (899 | ) | | — |
| | N/M |
|
Adjusted net earnings | | $ | 17,939 |
| | $ | 17,722 |
| | 1 | % |
| | | | | | |
Earnings per diluted common share | | $ | 0.56 |
| | $ | 0.61 |
| | (8 | )% |
Amortization of short-lived acquired intangibles | | 0.07 |
| | — |
| | N/M |
|
Acquisition-related costs | | 0.02 |
| | — |
| | N/M |
|
Income tax impact on above adjustments (1) | | (0.03 | ) | | — |
| | N/M |
|
Adjusted earnings per diluted common share | | $ | 0.62 |
| | $ | 0.61 |
| | 2 | % |
(1) Income tax impact on adjustments was calculated using the quarterly effective income tax rate of 32.9%. |
The following table reconciles operating income (loss) to adjusted operating income (loss).
|
| | | | | | | | | | | | | | | | | | |
| | Framing Systems Segment | | Corporate | | Consolidated |
(In thousands) | | Operating income | | Operating margin | | Operating income (loss) | | Operating income | | Operating margin |
Three Months Ended June 3, 2017 | | | | | | | | | | |
Operating income (loss) | | $ | 11,964 |
| | 10.8 | % | | $ | (2,012 | ) | | $ | 24,106 |
| | 8.9 | % |
Amortization of short-lived acquired intangibles | | 2,054 |
| | 1.9 | % | | — |
| | 2,054 |
| | 0.8 | % |
Acquisition-related costs | | — |
| | — | % | | 680 |
| | 680 |
| | 0.2 | % |
Adjusted operating income (loss) | | $ | 14,018 |
| | 12.7 | % | | $ | (1,332 | ) | | $ | 26,840 |
| | 9.9 | % |
Three Months Ended May 28, 2016 | | | | | | | | | | |
Operating income (loss) (1) | | $ | 10,232 |
| | 12.6 | % | | $ | (1,347 | ) | | $ | 26,249 |
| | 10.6 | % |
(1) Expenses related to amortization of short-lived acquired intangibles and acquisition-related costs are not applicable to the period ended May 28, 2016, and therefore no adjustments have been made. |
Outlook
The following statements are based on our current expectations for full-year fiscal 20172018 results, and do not include the impactinclusive of the recent EFCO acquisition. These statements are forward-looking, and actual results may differ materially.
Revenue growth of approximately 1026 to 28 percent over fiscal 2016.2017.
GrossOperating margin of approximately 26.710.5 percent and operating margin of approximately 11.5to 11.0 percent.
EarningsDiluted earnings per share of $2.85$3.31 to $2.95.$3.51.
| |
• | Adjusted operating margin of 11.5 to 12.0 percentand adjusted diluted earnings per share of $3.65 to $3.85(1). |
Capital expenditures of approximately $70$60 million.
(1)Adjusted operating margin and adjusted diluted earnings per share exclude the after-tax impact of amortization of short-lived acquired intangible assets associated with the acquired backlog of Sotawall and EFCO of $7 million ($0.24 per diluted share) and acquisition-related costs for Sotawall and EFCO of approximately $2.9 million ($0.10 per diluted share). These two adjustments have a combined approximate 100 basis point impact on operating margin. These non-GAAP measures are used by management to evaluate prospective financial performance on a more consistent basis across periods. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the financial results of the company prepared in accordance with GAAP.
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 February 27, 2016.March 4, 2017.
Critical Accounting Policies
No material changes have occurred in the disclosure of our critical accounting policies set forth in our Annual Report on Form 10-K for the fiscal year ended February 27, 2016.March 4, 2017.
| |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
No material changes have occurred to the disclosures of quantitative and qualitative market risk set forth in our Annual Report on Form 10-K for the fiscal year ended February 27, 2016.March 4, 2017.
| |
Item 4. | Controls and Procedures |
| |
a) | Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. |
| |
b) | Changes in internal controls: There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended November 26, 2016June 3, 2017, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. |
PART II. OTHER INFORMATION
The Company has been 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’s construction supply and services businesses are routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. The Company is also subject to litigation arising out of employment practices, workers compensation, general liability and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.
There have been no material changes or additions to our risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended February 27, 2016March 4, 2017.
| |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
The following table provides information with respect to purchases made by the Company of its own stock during the thirdfirst quarter of fiscal 2017:2018:
|
| | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b) |
August 28, 2016 through September 24, 2016 | | — |
| | $ | — |
| | — |
| | 1,192,368 |
|
September 25, 2016 through October 22, 2016 | | — |
| | 44.23 |
| | 150,001 |
| | 1,042,367 |
|
October 23, 2016 through November 26, 2016 | | — |
| | 42.07 |
| | 100,000 |
| | 942,367 |
|
Total | | — |
| | $ | 43.64 |
| | 250,001 |
| | 942,367 |
|
|
| | | | | | | | | | | | | |
Period | | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b) |
March 5, 2017 to April 1, 2017 | | 802 |
| | $ | 59.61 |
| | — |
| | 942,367 |
|
April 2, 2017 to April 29, 2017 | | 31,364 |
| | 54.50 |
| | — |
| | 942,367 |
|
April 30, 2017 to June 3, 2017 | | 13,660 |
| | 53.40 |
| | — |
| | 942,367 |
|
Total | | 45,826 |
| | $ | 55.50 |
| | — |
| | 942,367 |
|
| |
(a) | The shares in this column represent shares that were surrendered to us by plan participants to satisfy stock-for-stock option exercises or withholding tax obligations related to share-based compensation. |
| |
(b) | In fiscal 2004, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock, which was announced on April 10, 2003. Subsequently, the Board of Directors increased the authorization by 750,000 shares, which was announced on January 24, 2008; by 1,000,000 shares, which was announced on October 8, 2008; and by 1,000,000 shares, which was announced on January 13, 2016. The repurchase program does not have an expiration date. |
|
| |
10.12.1 | Second Amended and Restated CreditStock Purchase Agreement, dated November 2, 2016,as of April 28, 2017, by and among Apogee Enterprises, Inc., asEFCO Corporation, and Pella Corporation. Incorporated herein by reference to Exhibit 2.1 to the Borrower,Company's Current Report on Form 8-K filed May 2, 2017. |
| |
10.1 | Form of Bonus Pool Award Agreement under the Lenders referred to therein, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and U.S. Bank National Association, as Syndication Agent and Issuing Lender.Apogee Enterprises, Inc. 2012 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 4, 2016.May 3, 2017. |
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10.2 | Asset PurchaseForm of CEO Evaluation-Based Retention Incentive Agreement between Sotawall,under the Apogee Enterprises, Inc. 2016 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed May 3, 2017. |
| |
10.3 | Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of June 9, 2017, by and among the Company, the Lenders (as defined therein), Juan A. Speck and WPP Acquisition Corporation, dated December 14, 2016.Wells Fargo Bank, National Association, as administrative agent for the Lenders, swingline lender and (with Comerica Bank) issuer of letters of credit. Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 20, 2016.June 14, 2017. |
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31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
| |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
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32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101 | The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 26, 2016June 3, 2017 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of November 26, 2016June 3, 2017 and February 27, 2016,March 4, 2017, (ii) the Consolidated Results of Operations for the three and nine months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (iii) the Consolidated Statements of Comprehensive Earnings for the three and nine months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (iv) the Consolidated Statements of Cash Flows for the ninethree months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (v) the Consolidated Statements of Shareholders' Equity for the ninethree months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, and (vi) Notes to Consolidated Financial Statements. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | |
| | APOGEE ENTERPRISES, INC. |
| | | |
Date: January 5,July 12, 2017 | | By: /s/ Joseph F. Puishys |
| | | Joseph F. Puishys President and Chief Executive Officer (Principal Executive Officer) |
|
| | | |
Date: January 5,July 12, 2017 | | By: /s/ James S. Porter |
| | | James S. Porter Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit Index to Form 10-Q for the Period Ended November 26, 2016June 3, 2017
|
| |
10.12.1 | Second Amended and Restated CreditStock Purchase Agreement, dated November 2, 2016,as of April 28, 2017, by and among Apogee Enterprises, Inc., asEFCO Corporation, and Pella Corporation. Incorporated herein by reference to Exhibit 2.1 to the Borrower,Company's Current Report on Form 8-K filed May 2, 2017. |
| |
10.1 | Form of Bonus Pool Award Agreement under the Lenders referred to therein, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and U.S. Bank National Association, as Syndication Agent and Issuing Lender.Apogee Enterprises, Inc. 2012 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 4, 2016.May 3, 2017. |
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10.2 | Asset PurchaseForm of CEO Evaluation-Based Retention Incentive Agreement between Sotawallunder the Apogee Enterprises, Inc. 2016 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed May 3, 2017. |
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10.3 | Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of June 9, 2017, by and among the Company, the Lenders (as defined therein), Juan A. Speck and WPP Acquisition Corporation, dated December 14, 2016.Wells Fargo Bank, National Association, as administrative agent for the Lenders, swingline lender and (with Comerica Bank) issuer of letters of credit. Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 20, 2016.June 14, 2017. |
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31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
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31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. |
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32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101 | The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 26, 2016June 3, 2017 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of November 26, 2016June 3, 2017 and February 27, 2016,March 4, 2017, (ii) the Consolidated Results of Operations for the three and nine months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (iii) the Consolidated Statements of Comprehensive Earnings for the three and nine months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (iv) the Consolidated Statements of Cash Flows for the ninethree months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, (v) the Consolidated Statements of Shareholders' Equity for the ninethree months ended November 26,June 3, 2017 and May 28, 2016, and November 28, 2015, and (vi) Notes to Consolidated Financial Statements. |