UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November ~~28, 2020~~27, 2021


☐			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

_________________________________

APOGEE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

_________________________________

Minnesota

41-0919654

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

4400 West 78th Street, Suite 520

Minneapolis

Minnesota

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)

_________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.33 1/3 per share

APOG

~~NASDAQ Global Select~~The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

As of January ~~5, 2021, 26,007,703~~3, 2022, 24,865,480 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.

Table of Contents

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS

~~(unaudited)~~(Unaudited)


(In thousands, except stock data)	(In thousands, except stock data)	November 28, 2020		February 29, 2020		(In thousands, except stock data)	November 27, 2021		February 27, 2021
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	55,413	$	14,952	Cash and cash equivalents	$	78,272	$	47,277

Receivables, net	Receivables, net	172,877		196,806		Receivables, net	165,005		175,917
Inventories	Inventories	73,815		71,089		Inventories	75,437		72,823
Costs and earnings on contracts in excess of billings	Costs and earnings on contracts in excess of billings	29,141		73,582		Costs and earnings on contracts in excess of billings	28,323		29,497
Other current assets	Other current assets	14,389		25,481		Other current assets	19,837		25,160
Total current assets	Total current assets	345,635		381,910		Total current assets	366,874		350,674
Property, plant and equipment, net	Property, plant and equipment, net	302,082		324,386		Property, plant and equipment, net	254,838		298,443
Assets held for sale						Assets held for sale	9,256		—
Operating lease right-of-use assets	Operating lease right-of-use assets	62,950		52,892		Operating lease right-of-use assets	50,845		58,864
Goodwill	Goodwill	192,883		185,516		Goodwill	129,932		130,098
Intangible assets	Intangible assets	136,843		140,191		Intangible assets	123,553		130,053
Other non-current assets	Other non-current assets	45,589		44,096		Other non-current assets	46,793		46,967
Total assets	Total assets	$	1,085,982	$	1,128,991	Total assets	$	982,091	$	1,015,099
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	69,719	$	69,056	Accounts payable	$	80,995	$	76,204
Accrued payroll and related benefits	Accrued payroll and related benefits	40,170		40,119		Accrued payroll and related benefits	48,017		50,125

Billings on contracts in excess of costs and earnings	Billings on contracts in excess of costs and earnings	25,945		32,696		Billings on contracts in excess of costs and earnings	18,458		22,789
Operating lease liabilities	Operating lease liabilities	12,098		11,272		Operating lease liabilities	11,834		13,251
Current portion of debt	Current portion of debt	2,000		5,400		Current portion of debt	1,000		2,000
Other current liabilities	Other current liabilities	61,768		118,314		Other current liabilities	57,586		53,183
Total current liabilities	Total current liabilities	211,700		276,857		Total current liabilities	217,890		217,552
Long-term debt	Long-term debt	166,463		212,500		Long-term debt	162,000		163,000
Non-current operating lease liabilities	Non-current operating lease liabilities	53,122		43,163		Non-current operating lease liabilities	43,608		48,439
Non-current self-insurance reserves	Non-current self-insurance reserves	26,085		22,831		Non-current self-insurance reserves	26,628		24,880
Other non-current liabilities	Other non-current liabilities	81,269		56,862		Other non-current liabilities	58,112		68,483
Commitments and contingent liabilities (Note 8)	Commitments and contingent liabilities (Note 8)					Commitments and contingent liabilities (Note 8)
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 25,962,041 and 26,443,166 respectively		8,654		8,814
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 25,227,367 and 25,713,688 respectively						Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 25,227,367 and 25,713,688 respectively	8,409		8,571
Additional paid-in capital	Additional paid-in capital	155,974		154,016		Additional paid-in capital	158,579		154,958
Retained earnings	Retained earnings	414,749		388,010		Retained earnings	336,816		357,243
Common stock held in trust		(183)		(685)
Deferred compensation obligations		183		685

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(32,034)		(34,062)		Accumulated other comprehensive loss	(29,951)		(28,027)
Total shareholders’ equity	Total shareholders’ equity	547,343		516,778		Total shareholders’ equity	473,853		492,745
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,085,982	$	1,128,991	Total liabilities and shareholders’ equity	$	982,091	$	1,015,099

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

~~(unaudited)~~(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(In thousands, except per share data)	(In thousands, except per share data)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019		(In thousands, except per share data)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Net sales	Net sales	$	313,583	$	337,916	$	922,162	$	1,050,340	Net sales	$	334,217	$	313,583	$	986,020	$	922,162
Cost of sales	Cost of sales	243,998		263,606		716,139		808,856		Cost of sales	269,537		243,998		805,627		716,139
Gross profit	Gross profit	69,585		74,310		206,023		241,484		Gross profit	64,680		69,585		180,393		206,023
Selling, general and administrative expenses	Selling, general and administrative expenses	19,835		52,716		126,590		169,274		Selling, general and administrative expenses	46,970		19,835		149,709		126,590
Operating income	Operating income	49,750		21,594		79,433		72,210		Operating income	17,710		49,750		30,684		79,433

Interest expense, net	Interest expense, net	1,502		1,995		4,240		7,176		Interest expense, net	528		1,502		2,838		4,240
Other income, net		472		231		684		599
Other (expense) income, net										Other (expense) income, net	(3,057)		472		(3,266)		684
Earnings before income taxes	Earnings before income taxes	48,720		19,830		75,877		65,633		Earnings before income taxes	14,125		48,720		24,580		75,877
Income tax expense	Income tax expense	11,447		4,596		18,070		15,677		Income tax expense	3,068		11,447		4,821		18,070
Net earnings	Net earnings	$	37,273	$	15,234	$	57,807	$	49,956	Net earnings	$	11,057	$	37,273	$	19,759	$	57,807
Earnings per share - basic	Earnings per share - basic	$	1.44	$	0.58	$	2.22	$	1.89	Earnings per share - basic	$	0.44	$	1.44	$	0.79	$	2.22
Earnings per share - diluted	Earnings per share - diluted	$	1.42	$	0.57	$	2.19	$	1.87	Earnings per share - diluted	$	0.44	$	1.42	$	0.78	$	2.19
Weighted average basic shares outstanding	Weighted average basic shares outstanding	25,883		26,432		26,068		26,481		Weighted average basic shares outstanding	24,957		25,883		25,166		26,068
Weighted average diluted shares outstanding	Weighted average diluted shares outstanding	26,225		26,750		26,350		26,776		Weighted average diluted shares outstanding	25,309		26,225		25,459		26,350

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

~~(unaudited)~~(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Net earnings	Net earnings	$	37,273	$	15,234	$	57,807	$	49,956	Net earnings	$	11,057	$	37,273	$	19,759	$	57,807
Other comprehensive earnings (loss):	Other comprehensive earnings (loss):									Other comprehensive earnings (loss):
Unrealized (loss) gain on marketable securities, net of $0, $(11), $39 and $38 of tax (benefit) expense, respectively		(2)		(44)		145		145
Unrealized gain on derivative instruments, net of $90, $119, $305 and $146 of tax expense, respectively		294		387		997		476
Unrealized (loss) gain on marketable securities, net of $(40), $0, $(39) and $39 of tax (benefit) expense, respectively										Unrealized (loss) gain on marketable securities, net of $(40), $0, $(39) and $39 of tax (benefit) expense, respectively	(151)		(2)		(147)		145
Unrealized (loss) gain on derivative instruments, net of $(265), $90, $(257) and $305 of tax (benefit) expense, respectively										Unrealized (loss) gain on derivative instruments, net of $(265), $90, $(257) and $305 of tax (benefit) expense, respectively	(868)		294		(842)		997
Foreign currency translation adjustments	Foreign currency translation adjustments	899		(491)		887		(586)		Foreign currency translation adjustments	(2,515)		899		(935)		887
Other comprehensive earnings (loss)		1,191		(148)		2,029		35
Other comprehensive (loss) earnings										Other comprehensive (loss) earnings	(3,534)		1,191		(1,924)		2,029
Total comprehensive earnings	Total comprehensive earnings	$	38,464	$	15,086	$	59,836	$	49,991	Total comprehensive earnings	$	7,523	$	38,464	$	17,835	$	59,836

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(unaudited)~~(Unaudited)


		Nine Months Ended					Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020
Operating Activities	Operating Activities					Operating Activities
Net earnings	Net earnings	$	57,807	$	49,956	Net earnings	$	19,759	$	57,807
Adjustments to reconcile net earnings to net cash provided by operating activities:	Adjustments to reconcile net earnings to net cash provided by operating activities:					Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	38,000		34,681		Depreciation and amortization	38,353		38,000
Share-based compensation	Share-based compensation	6,163		4,617		Share-based compensation	4,807		6,163
Deferred income taxes	Deferred income taxes	5,012		10,088		Deferred income taxes	(5,412)		5,012
Asset impairment						Asset impairment	16,638		—
Gain on disposal of assets	Gain on disposal of assets	(19,346)		(623)		Gain on disposal of assets	(1,250)		(19,346)

Noncash lease expense	Noncash lease expense	9,531		8,993		Noncash lease expense	9,302		9,531
Other, net	Other, net	(69)		(2,007)		Other, net	3,009		(69)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	24,153		(5,288)		Receivables	6,443		24,153
Inventories	Inventories	(2,722)		2,474		Inventories	(2,657)		(2,722)
Costs and earnings on contracts in excess of billings	Costs and earnings on contracts in excess of billings	44,501		(17,156)		Costs and earnings on contracts in excess of billings	1,168		44,501
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(43,915)		(22,457)		Accounts payable and accrued expenses	5,440		(43,915)
Billings on contracts in excess of costs and earnings	Billings on contracts in excess of costs and earnings	(6,981)		4,901		Billings on contracts in excess of costs and earnings	(4,474)		(6,981)
Refundable and accrued income taxes	Refundable and accrued income taxes	12,424		(6,159)		Refundable and accrued income taxes	5,255		12,424
Operating lease liability	Operating lease liability	(9,168)		(7,468)		Operating lease liability	(9,387)		(9,168)
Other	Other	5,122		(951)		Other	(703)		5,122
Net cash provided by operating activities	Net cash provided by operating activities	120,512		53,601		Net cash provided by operating activities	86,291		120,512
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(17,116)		(41,176)		Capital expenditures	(13,070)		(17,116)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	23,724		591		Proceeds from sales of property, plant and equipment	1,347		23,724

Other	Other	(1,090)		(857)		Other	76		(1,090)
Net cash provided (used) by investing activities		5,518		(41,442)
Net cash (used) provided by investing activities						Net cash (used) provided by investing activities	(11,647)		5,518
Financing Activities	Financing Activities					Financing Activities
Borrowings on line of credit	Borrowings on line of credit	193,332		108,000		Borrowings on line of credit	—		193,332
(Repayment) borrowings on debt		(5,400)		150,000
Repayments on debt						Repayments on debt	(2,000)		(5,400)
Payments on line of credit	Payments on line of credit	(237,500)		(252,500)		Payments on line of credit	—		(237,500)
Proceeds from exercise of stock options						Proceeds from exercise of stock options	4,115		1,456
Repurchase and retirement of common stock	Repurchase and retirement of common stock	(20,731)		(20,010)		Repurchase and retirement of common stock	(29,164)		(20,731)
Dividends paid	Dividends paid	(14,546)		(13,808)		Dividends paid	(15,050)		(14,546)
Other	Other	(853)		(2,584)		Other	(1,895)		(2,309)
Net cash used by financing activities	Net cash used by financing activities	(85,698)		(30,902)		Net cash used by financing activities	(43,994)		(85,698)
Increase (decrease) in cash and cash equivalents		40,332		(18,743)
Increase in cash and cash equivalents						Increase in cash and cash equivalents	30,650		40,332
Effect of exchange rates on cash	Effect of exchange rates on cash	129		32		Effect of exchange rates on cash	345		129
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	14,952		29,241		Cash, cash equivalents and restricted cash at beginning of year	47,277		14,952
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	55,413	$	10,530	Cash, cash equivalents and restricted cash at end of period	$	78,272	$	55,413
Noncash Activity	Noncash Activity					Noncash Activity
Capital expenditures in accounts payable	Capital expenditures in accounts payable	$	684	$	1,205	Capital expenditures in accounts payable	$	1,095	$	684

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

~~(unaudited)~~(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 Total Shareholders' Equity
Balance at February 29, 2020 26,443 $ 8,814 $ 154,016 $ 388,010 $ (685) $ 685 $ (34,062) $ 516,778
Net earnings — — — 2,876 — — — 2,876
Unrealized gain on marketable securities, net of $26 tax expense — — — — — — 97 97
Unrealized loss on foreign currency hedge, net of $189 tax benefit — — — — — — (617) (617)
Foreign currency translation adjustments — — — — — — (6,151) (6,151)
Issuance of stock, net of cancellations 183 62 (39) — (11) 11 — 23
Share-based compensation — — 1,406 — — — — 1,406
Share repurchases (231) (77) (1,370) (3,284) — — — (4,731)
Other share retirements (26) (9) (151) (505) — — — (665)
Cash dividends — — — (4,872) — — — (4,872)
Balance at May 30, 2020 26,369 $ 8,790 $ 153,862 $ 382,225 $ (696) $ 696 $ (40,733) $ 504,144
Net earnings — — — 17,658 — — — 17,658
Unrealized gain on marketable securities, net of $13 tax expense — — — — — — 50 50
Unrealized gain on foreign currency hedge, net of $404 tax expense — — — — — — 1,319 1,319
Foreign currency translation adjustments — — — — — — 6,139 6,139
Issuance of stock, net of cancellations 121 41 (23) — (11) 11 — 18
Share-based compensation — — 2,256 — — — — 2,256
Other share retirements (23) (8) (139) (390) — — — (537)
Cash dividends — — — (4,879) — — — (4,879)
Balance at August 29, 2020 26,467 $ 8,823 $ 155,956 $ 394,614 $ (707) $ 707 $ (33,225) $ 526,168
Net earnings — — — 37,273 — — — 37,273
Unrealized loss on marketable securities, net of $0 tax benefit — — — — — — (2) (2)
Unrealized gain on foreign currency hedge, net of $90 tax expense — — — — — — 294 294
Foreign currency translation adjustments — — — — — — 899 899
Issuance of stock, net of cancellations 10 3 15 — 524 (524) — 18
Share-based compensation — — 2,501 — — — — 2,501
Exercise of stock options 127 42 1,414 — — — — 1,456
Share repurchases (620) (207) (3,781) (12,012) — — — (16,000)
Other share retirements (22) (7) (131) (331) — — — (469)
Cash dividends — — — (4,795) — — — (4,795)
Balance at November 28, 2020 25,962 $ 8,654 $ 155,974 $ 414,749 $ (183) $ 183 $ (32,034) $ 547,343


(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		Total Shareholders' Equity
Balance at February 27, 2021	25,714	$	8,571	$	154,958	$	357,243	$	(186)	$	186	$	(28,027)	$	492,745
Net earnings	—	—		—		10,817		—		—		—		10,817
Unrealized gain on marketable securities, net of $0 tax expense	—	—		—		—		—		—		—		—
Unrealized gain on foreign currency hedge, net of $211 tax expense	—	—		—		—		—		—		692		692
Foreign currency translation adjustments	—	—		—		—		—		—		5,880		5,880
Issuance of stock, net of cancellations	90	30		(7)		—		(3)		3		—		23
Share-based compensation	—	—		1,674		—		—		—		—		1,674
Exercise of stock options	179	60		4,055		—		—		—		—		4,115
Share repurchases	(357)	(119)		(2,218)		(10,288)		—		—		—		(12,625)
Other share retirements	(20)	(7)		(121)		(607)		—		—		—		(735)
Cash dividends	—	—		—		(5,035)		—		—		—		(5,035)
Balance at May 29, 2021	25,606	$	8,535	$	158,341	$	352,130	$	(189)	$	189	$	(21,455)	$	497,551
Net loss	—	—		—		(2,116)		—		—		—		(2,116)
Unrealized gain on marketable securities, net of $2 tax expense	—	—		—		—		—		—		4		4
Unrealized loss on foreign currency hedge, net of $203 tax benefit	—	—		—		—		—		—		(666)		(666)
Foreign currency translation adjustments	—	—		—		—		—		—		(4,300)		(4,300)
Issuance of stock, net of cancellations	67	22		—		—		(3)		3		—		22
Share-based compensation	—	—		1,587		—		—		—		—		1,587

Share repurchases	(249)	(83)		(1,616)		(8,095)		—		—		—		(9,794)
Other share retirements	(30)	(9)		(197)		(496)		—		—		—		(702)
Cash dividends	—	—		—		(5,025)		—		—		—		(5,025)
Balance at August 28, 2021	25,394	$	8,465	$	158,115	$	336,398	$	(192)	$	192	$	(26,417)	$	476,561
Net earnings	—	—		—		11,057		—		—		—		11,057
Unrealized loss on marketable securities, net of $40 tax benefit	—	—		—		—		—		—		(151)		(151)
Unrealized loss on foreign currency hedge, net of $265 tax benefit	—	—		—		—		—		—		(868)		(868)
Foreign currency translation adjustments	—	—		—		—		—		—		(2,515)		(2,515)
Issuance of stock, net of cancellations	1	—		22		—		(3)		3		—		22
Share-based compensation	—	—		1,546		—		—		—		—		1,546

Share repurchases	(166)	(55)		(1,092)		(5,598)		—		—		—		(6,745)
Other share retirements	(2)	(1)		(12)		(51)		—		—		—		(64)
Cash dividends	—	—		—		(4,990)		—		—		—		(4,990)
Balance at November 27, 2021	25,227	$	8,409	$	158,579	$	336,816	$	(195)	$	195	$	(29,951)	$	473,853

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

~~(unaudited)~~(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 Total Shareholders' Equity
Balance at March 2, 2019 27,015 $ 9,005 $ 151,842 $ 367,597 $ (755) $ 755 $ (32,127) $ 496,317
Net earnings — — — 15,443 — — — 15,443
Unrealized gain on marketable securities, net of $47 tax expense — — — — — — 181 181
Unrealized gain on foreign currency hedge, net of $2 tax expense — — — — — — 5 5
Foreign currency translation adjustments — — — — — — (2,560) (2,560)
Issuance of stock, net of cancellations 79 26 14 — (12) 12 — 40
Share-based compensation — — 1,618 — — — — 1,618
Share repurchases (532) (177) (3,051) (16,782) — — — (20,010)
Other share retirements (32) (11) (183) (1,266) — — — (1,460)
Cash dividends — — — (4,598) — — — (4,598)
Balance at June 1, 2019 26,530 $ 8,843 $ 150,240 $ 360,394 $ (767) $ 767 $ (34,501) $ 484,976
Net earnings — — — 19,279 — — — 19,279
Unrealized gain on marketable securities, net of $2 tax expense — — — — — — 8 8
Unrealized gain on foreign currency hedge, net of $25 tax expense — — — — — — 84 84
Foreign currency translation adjustments — — — — — — 2,465 2,465
Issuance of stock, net of cancellations 44 15 27 — (11) 11 — 42
Share-based compensation — — 1,582 — — — — 1,582
Other share retirements (20) (7) (114) (629) — — — (750)
Cash dividends — — — (4,605) — — — (4,605)
Balance at August 31, 2019 26,554 $ 8,851 $ 151,735 $ 374,439 $ (778) $ 778 $ (31,944) $ 503,081
Net earnings — — — 15,234 — — — 15,234
Unrealized loss on marketable securities, net of $11 tax benefit — — — — — — (44) (44)
Unrealized gain on foreign currency hedge, net of $119 tax expense — — — — — — 387 387
Foreign currency translation adjustments — — — — — — (491) (491)
Issuance of stock, net of cancellations (1) 1 43 — 103 (103) — 44
Share-based compensation — — 1,417 — — — — 1,417
Other share retirements 0 (1) (7) (36) — — — (44)
Cash dividends — — — (4,605) — — — (4,605)
Balance at November 30, 2019 26,553 $ 8,851 $ 153,188 $ 385,032 $ (675) $ 675 $ (32,092) $ 514,979


(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		Total Shareholders' Equity
Balance at February 29, 2020	26,443	$	8,814	$	154,016	$	388,010	$	(685)	$	685	$	(34,062)	$	516,778
Net earnings	—	—		—		2,876		—		—		—		2,876
Unrealized gain on marketable securities, net of $26 tax expense	—	—		—		—		—		—		97		97
Unrealized loss on foreign currency hedge, net of $189 tax benefit	—	—		—		—		—		—		(617)		(617)
Foreign currency translation adjustments	—	—		—		—		—		—		(6,151)		(6,151)
Issuance of stock, net of cancellations	183	62		(39)		—		(11)		11		—		23
Share-based compensation	—	—		1,406		—		—		—		—		1,406

Share repurchases	(231)	(77)		(1,370)		(3,284)		—		—		—		(4,731)
Other share retirements	(26)	(9)		(151)		(505)		—		—		—		(665)
Cash dividends	—	—		—		(4,872)		—		—		—		(4,872)
Balance at May 30, 2020	26,369	$	8,790	$	153,862	$	382,225	$	(696)	$	696	$	(40,733)	$	504,144
Net earnings	—	—		—		17,658		—		—		—		17,658
Unrealized gain on marketable securities, net of $13 tax expense	—	—		—		—		—		—		50		50
Unrealized gain on foreign currency hedge, net of $404 tax expense	—	—		—		—		—		—		1,319		1,319
Foreign currency translation adjustments	—	—		—		—		—		—		6,139		6,139
Issuance of stock, net of cancellations	121	41		(23)		—		(11)		11		—		18
Share-based compensation	—	—		2,256		—		—		—		—		2,256


Other share retirements	(23)	(8)		(139)		(390)		—		—		—		(537)
Cash dividends	—	—		—		(4,879)		—		—		—		(4,879)
Balance at August 29, 2020	26,467	$	8,823	$	155,956	$	394,614	$	(707)	$	707	$	(33,225)	$	526,168
Net earnings	—	—		—		37,273		—		—		—		37,273
Unrealized loss on marketable securities, net of $0 tax benefit	—	—		—		—		—		—		(2)		(2)
Unrealized gain on foreign currency hedge, net of $90 tax expense	—	—		—		—		—		—		294		294
Foreign currency translation adjustments	—	—		—		—		—		—		899		899
Issuance of stock, net of cancellations	10	3		15		—		524		(524)		—		18
Share-based compensation	—	—		2,501		—		—		—		—		2,501
Exercise of stock options	127	42		1,414		—		—		—		—		1,456
Share repurchases	(620)	(207)		(3,781)		(12,012)		—		—		—		(16,000)
Other share retirements	(22)	(7)		(131)		(331)		—		—		—		(469)
Cash dividends	—	—		—		(4,795)		—		—		—		(4,795)
Balance at November 28, 2020	25,962	$	8,654	$	155,974	$	414,749	$	(183)	$	183	$	(32,034)	$	547,343

See accompanying notes to consolidated financial statements.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(unaudited)~~(Unaudited)

1.Summary of Significant Accounting Policies

Basis of presentation

The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. 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 ~~29, 2020.~~27, 2021. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three- and nine-month periods ended November ~~28, 2020~~27, 2021 are not necessarily indicative of the results to be expected for the full year.

COVID-19 ~~considerations~~update

~~The ongoing~~During fiscal 2021, as a result of the global COVID-19 pandemic, ~~continues to cause volatility and uncertainty in global markets impacting worldwide economic activity. We have~~we experienced some delays in commercial construction projects and orders ~~as a result of COVID-19. In~~and other disruptions to our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increasedbusiness, including various physical distancing and health-related ~~precautions. Within~~precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment ~~most customers reopened and the segment's two manufacturing locations resumed normal operations during the latter part~~for a portion of ~~the second quarter, after being shutdown for most of the first and second quarters~~fiscal 2021 due to governmental orders. We ~~have~~were also ~~been~~ impacted by quarantine-related absenteeism among our production workforce, resulting in labor ~~and capacity~~ constraints at some of our facilities. Through the first three quarters of fiscal 2022, the negative impacts on our business directly due to the COVID-19 pandemic have moderated. The extent to which COVID-19 will continue to impact our ~~business~~businesses in the future will depend on ~~future developments~~numerous evolving factors including, but not limited to, the emergence of new variants of the coronavirus, such as the Delta and Omicron variants, and the effectiveness of ongoing public health ~~advancements,~~initiatives, which have been ~~buoyed recently~~boosted by ~~the commencement of~~ vaccine production and distribution.

In response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, business travel restrictions, and remote work capabilities, in addition to quarantine-related paid leave and other employee assistance programs.

Adoption of new accounting standards

At the beginning of fiscal ~~2021,~~2022, we adopted the guidance in ASU ~~2016-13,~~2019-12, ~~Measurement of Credit Losses~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU removed exceptions on ~~Financial Instruments.~~ ~~The guidance provides~~intra-period tax allocations and reporting and provided simplification on accounting for a new impairment model on financial instruments which is based on expected credit losses, which was applied following a modified retrospective approach. Additionally, the new guidance makes targeted improvements to the impairment model for certain available-for-sale debt securities, including eliminating the concept of "other than temporary" from that model. The portion of the guidance related to available-for-sale debt securities was adopted following a prospective approach.franchise taxes, tax basis goodwill and tax law changes. The adoption of this ASU did not have a significant impact on ~~earnings or~~the consolidated financial ~~condition. Refer to additional disclosures in Notes 2 and 4.~~statements.

~~Subsequent events~~

~~We have evaluated subsequent events for potential recognition~~At the beginning of fiscal 2022, we adopted the guidance in ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU apply only to contracts, hedging relationships, and ~~disclosure through the date~~other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The adoption of this ~~filing. Subsequent~~ASU did not have a significant impact on the consolidated financial statements.

Equity Investment

During the third quarter of fiscal 2022, an impairment of $3.0 million was recognized within other (expense) income within the consolidated results of operations related to a minority equity investment held by the ~~end~~Company which represents a write-down of the ~~quarter, we announced~~entire investment in the election of our new Chief Executive Officer, Ty R. Silberhorn, and entered into an employment agreement with him, effective January 4, 2021. Mr. Silberhorn replaces, Joseph F. Puishys, who announced his retirement, as an employee of the Company, in September 2020, effective January 4, 2021.company.

2.Revenue, Receivables and Contract Assets and Liabilities

Revenue

The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Recognized at shipment	Recognized at shipment	$	129,132	$	153,093	$	379,292	$	472,695	Recognized at shipment	$	141,826	$	129,132	$	419,893	$	379,292
Recognized over time	Recognized over time	184,451		184,823		542,870		577,645		Recognized over time	192,391		184,451		566,127		542,870
Total	Total	$	313,583	$	337,916	$	922,162	$	1,050,340	Total	$	334,217	$	313,583	$	986,020	$	922,162

~~Table of Contents~~

Receivables

Receivables reflected in the financial statements represent the net amount expected to be collected. An allowance for credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the debtor, recent payment history, current and forecast economic conditions and other relevant factors. Upon billing, aging of receivables is monitored until collection. An account is considered current when it is within agreed upon payment terms. An account is written off when it is determined that the asset is no longer collectible. Retainage on

Table of Contents

construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.


(In thousands)	(In thousands)	November 28, 2020		February 29, 2020		(In thousands)	November 27, 2021		February 27, 2021
Trade accounts	Trade accounts	$	122,959	$	141,126	Trade accounts	$	124,890	$	120,534
Construction contracts	Construction contracts	9,727		20,808		Construction contracts	16,266		12,163
Contract retainage	Contract retainage	42,053		37,341		Contract retainage	26,164		45,167
Total receivables	Total receivables	174,739		199,275		Total receivables	167,320		177,864
Less: allowance for credit losses	Less: allowance for credit losses	(1,862)		(2,469)		Less: allowance for credit losses	2,315		1,947
Net receivables	Net receivables	$	172,877	$	196,806	Net receivables	$	165,005	$	175,917

The following table summarizes the activity in the allowance for credit losses:


~~(In thousands)~~	~~November 28, 2020~~
~~Beginning balance~~	$	~~2,469~~
~~Additions charged to costs and expenses~~	~~325~~
~~Deductions from allowance, net of recoveries~~	~~(884)~~
~~Other changes~~ ~~(1)~~	~~(48)~~
~~Ending balance~~	$	~~1,862~~
~~(1)~~ ~~Result of foreign currency effects~~


(In thousands)	November 27, 2021		February 27, 2021
Beginning balance	$	1,947	$	2,469
Additions charged to costs and expenses	635		389
Deductions from allowance, net of recoveries	(251)		(887)
Other changes (1)	(16)		(24)
Ending balance	$	2,315	$	1,947
(1) Result of foreign currency effects

Contract assets and liabilities

Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts. Retainage is classified within receivables and deferred revenue is classified within other current liabilities on our consolidated balance sheets.

The time period between when performance obligations are complete and when payment is due is not significant. In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.


(In thousands)	(In thousands)	November 28, 2020		February 29, 2020		(In thousands)	November 27, 2021		February 27, 2021
Contract assets	Contract assets	$	71,194	$	110,923	Contract assets	$	54,487	$	74,664
Contract liabilities	Contract liabilities	27,965		35,954		Contract liabilities	20,689		25,000

The ~~decrease~~change in contract assets ~~was mainly due to a reduction in costs~~ and ~~earnings in excess of billings, which is driven by the settlement of matters related to a legacy EFCO project, as well as the timing of projects. The change in~~ contract liabilities was mainly due to timing of project activity within our businesses that operate under long-term contracts.


Other contract-related disclosures	Other contract-related disclosures	Three Months Ended				Nine Months Ended				Other contract-related disclosures	Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Revenue recognized related to contract liabilities from prior year-end	Revenue recognized related to contract liabilities from prior year-end	$	2,044	$	4,589	$	16,239	$	22,044	Revenue recognized related to contract liabilities from prior year-end	$	1,687	$	2,044	$	18,266	$	16,239
Revenue recognized related to prior satisfaction of performance obligations	Revenue recognized related to prior satisfaction of performance obligations	4,016		1,776		10,545		5,298		Revenue recognized related to prior satisfaction of performance obligations	5,051		4,016		12,568		10,545

Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that ~~timeframe.~~time frame. Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time. As of November ~~28, 2020,~~27, 2021, the transaction price associated with unsatisfied performance obligations was approximately ~~$901.6~~

~~Table of Contents~~

$863.1 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:


(In thousands)	November ~~28, 2020~~27, 2021
Within one year	$	~~498,623~~547,110
Within two years	~~331,219~~247,753
Beyond	~~71,786~~68,209
Total	$	~~901,628~~863,072

Table of Contents

3.Supplemental Balance Sheet Information

Inventories


(In thousands)	(In thousands)	November 28, 2020		February 29, 2020		(In thousands)	November 27, 2021		February 27, 2021
Raw materials	Raw materials	$	43,292	$	36,611	Raw materials	$	43,436	$	36,681
Work-in-process	Work-in-process	16,337		17,520		Work-in-process	17,532		18,932
Finished goods	Finished goods	14,186		16,958		Finished goods	14,469		17,210
Total inventories	Total inventories	$	73,815	$	71,089	Total inventories	$	75,437	$	72,823

Other current liabilities


(In thousands)	(In thousands)	November 28, 2020		February 29, 2020		(In thousands)	November 27, 2021		February 27, 2021
Warranties	Warranties	$	13,281	$	12,822	Warranties	$	10,889	$	12,298
Accrued project losses	Accrued project losses	3,297		48,962		Accrued project losses	904		4,572
Property and other taxes		13,078		5,952
Income and other taxes						Income and other taxes	8,727		7,459
Accrued self-insurance reserves	Accrued self-insurance reserves	9,912		8,307		Accrued self-insurance reserves	9,431		6,482
Accrued freight						Accrued freight	1,931		1,477
Other	Other	22,200		42,271		Other	25,704		20,895
Total other current liabilities	Total other current liabilities	$	61,768	$	118,314	Total other current liabilities	$	57,586	$	53,183

Other non-current liabilities


(In thousands)	(In thousands)	November 28, 2020		February 29, 2020		(In thousands)	November 27, 2021		February 27, 2021
Deferred benefit from New Market Tax Credit transactions	Deferred benefit from New Market Tax Credit transactions	$	15,717	$	15,717	Deferred benefit from New Market Tax Credit transactions	$	9,165	$	15,717
Retirement plan obligations	Retirement plan obligations	8,138		8,294		Retirement plan obligations	7,575		7,730
Deferred compensation plan	Deferred compensation plan	8,437		8,452		Deferred compensation plan	12,682		13,507
Deferred tax liabilities	Deferred tax liabilities	20,014		7,940		Deferred tax liabilities	4,773		8,310
Deferred payroll taxes						Deferred payroll taxes	6,789		6,789
Other	Other	28,963		16,459		Other	17,128		16,430
Total other non-current liabilities	Total other non-current liabilities	$	81,269	$	56,862	Total other non-current liabilities	$	58,112	$	68,483

4.Financial Instruments

Marketable securities

Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), we hold the following available-for-sale marketable securities, made up of municipal and corporate bonds:

(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated
Fair Value
November 28, 2020 $ 12,556 $ 459 $ 0 $ 13,015
February 29, 2020 11,692 275 0 11,967


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
November 27, 2021	$	12,337	$	223	$	33	$	12,527
February 27, 2021	12,517		386		10		12,893

Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements. The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

~~Table of Contents~~

The amortized cost and estimated fair values of these bonds at November ~~28, 2020,~~27, 2021, 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
Due within one year $ 771 $ 779
Due after one year through five years 7,682 7,978
Due after five years through 10 years 3,303 3,428
Due beyond 15 years 800 830
Total $ 12,556 $ 13,015

Table of Contents


(In thousands)	Amortized Cost		Estimated Fair Value
Due within one year	$	1,011	$	1,024
Due after one year through five years	9,536		9,716
Due after five years through 10 years	990		973

Due beyond 15 years	800		814
Total	$	12,337	$	12,527

Derivative instruments

We use interest rate swaps, foreign exchange forward contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.

In ~~August 2019,~~fiscal 2020, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit ~~facility.~~facility and term loan. As of November ~~28, 2020,~~27, 2021, the interest rate swap contract had a notional value of ~~$55~~$30.0 million.

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign ~~currency cash flow hedge contracts and forward purchase aluminum hedge~~exchange rates (primarily related to the Canadian dollar). These contracts generally ~~with~~have an original maturity date of less than one ~~year, to hedge foreign currency exchange rate risk and future purchases of aluminum in certain of our architectural businesses.~~year. As of November ~~28, 2020,~~27, 2021, we held foreign exchange forward contracts and aluminum ~~forward contracts~~fixed/floating swaps with U.S. dollar notional values of ~~$18.7~~$16.5 million and ~~$1.9~~$8.0 million, ~~respectively, with the objective of reducing the exposure to fluctuations in the Canadian dollar, the Euro and the price of aluminum.~~respectively.

These derivative instruments are recorded within our consolidated balance sheets within other current assets and liabilities. Gains or losses associated with these instruments are recorded as a component of accumulated other comprehensive income.

Fair value measurements

Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities.

(In thousands) Quoted Prices in
Active Markets
(Level 1) Other Observable Inputs (Level 2) Total Fair Value
November 28, 2020
Assets:
Money market funds $ 27,000 $ 0 $ 27,000
Commercial paper — 4,300 4,300
Municipal and corporate bonds — 13,015 13,015
Cash surrender value of life insurance — 17,704 17,704
Foreign currency and aluminum forward/option contracts — 896 896
Liabilities:
Deferred compensation — 14,027 14,027
Interest rate swap contract — 676 676
February 29, 2020
Assets:
Money market funds $ 2,689 $ 0 $ 2,689
Commercial paper 0 1,500 1,500
Municipal and corporate bonds 0 11,967 11,967
Cash surrender value of life insurance — 16,560 16,560
Liabilities:
Deferred compensation — 14,042 14,042
Foreign currency forward/option contract — 340 340
Interest rate swap contract — 561 561


(In thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value
November 27, 2021
Assets:
Money market funds	$	58,482	$	—	$	58,482

Municipal and corporate bonds	—		12,527		12,527
Cash surrender value of life insurance	—		18,839		18,839

Aluminum hedge contracts	—		68		68
Interest rate swap contract	—		69		69
Liabilities:
Deferred compensation	—		14,140		14,140
Foreign currency forward/option contracts	—		446		446


February 27, 2021
Assets:
Money market funds	$	26,034	$	—	$	26,034
Municipal and corporate bonds	—		12,893		12,893
Cash surrender value of life insurance	—		18,632		18,632
Foreign currency forward/option contracts	—		606		606
Aluminum hedge contracts	—		363		363

Liabilities:
Deferred compensation	—		13,507		13,507

Interest rate swap contract	—		504		504

Table of Contents

Money market funds and commercial paper

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. These assets are included within cash and cash equivalents on our consolidated balance sheets.

Municipal and corporate bonds

Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified within our consolidated balance sheets as other current or other non-current assets based on maturity date.

Cash surrender value of life insurance and deferred compensation

Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. Changes in cash surrender value are recorded in other expense. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.

Derivative instruments

The interest rate swap is measured at fair value using other observable market inputs, based off of benchmark interest rates. Forward foreign exchange and ~~forward purchase~~fixed/floating aluminum contracts are measured at fair value using other observable market inputs, such as quotations on forward foreign exchange points, foreign currency exchange rates, and forward purchase aluminum prices. Derivative positions are primarily valued using standard calculations and models that use as their basis readily observable market parameters. Industry standard data providers are our primary source for forward and spot rate information for both interest and currency rates and aluminum prices.

Nonrecurring fair value measurements

We measure certain financial instruments at fair value on a nonrecurring basis including goodwill, intangible assets, property and equipment and right-of-use lease assets. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation. Periodically, these assets are tested for impairment, by comparing their respective carrying values to the estimated fair value of the reporting unit or asset group in which they reside. In the event any of these assets were to become impaired, we would recognize an impairment expense equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. Fair value measurements of reporting units are estimated using an income approach involving discounted cash flow models that contain certain Level 3 inputs requiring significant management judgment, including projections of economic conditions, customer demand and changes in competition, revenue growth rates, gross profit margins, operating margins, capital expenditures, working capital requirements, terminal growth rates and discount rates. Fair value measurements of the reporting units associated with our goodwill balances and our indefinite-lived intangible assets are estimated at least annually in the fourth quarter of each fiscal year for purposes of impairment testing if a quantitative analysis is performed.

See Note 13 for additional information on the impairment charges recorded to fixed assets and right-of-use lease assets during the second and third quarters of fiscal 2022.

5.Goodwill and Other ~~Identifiable~~ Intangible Assets

Goodwill

Goodwill represents the excess of the cost over the value of net tangible and identified intangible assets of acquired businesses. We evaluate goodwill for impairment annually atas of the first day of our ~~year-end,~~fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of ~~a reporting unit~~goodwill may not be recoverable. Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis.

InBased on the ~~third~~impairment analysis performed in the fourth quarter of fiscal 2021, we changed the date of our annual goodwill impairment testing from our year-end to the first day in our fiscal fourth quarter. This change results in better alignment of the annual impairment testing with our strategic and annual planning processes. This change was determined to not be material and had no impact on our current or historical consolidated financial statements.

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units. Therefore, we performed an interim goodwill impairment evaluation as of May 30, 2020. Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value was in excess of ~~each reporting unit exceeded its~~ carrying value ~~and, therefore, goodwill impairment was not indicated as~~at six of ~~May 30, 2020.~~our eight reporting units. However, ~~the~~ estimated fair value did not exceed carrying value ~~by a significant margin at~~for two reporting units within the Architectural Framing Systems segment, EFCO and ~~Sotawall, which had~~Sotawall. As a result, as of February 27, 2021, we incurred goodwill ~~balances~~impairment expense of ~~$90.4~~$46.7 million and ~~$26.7~~$17.1 million ~~respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent~~ in ~~determining the discounted cash flows for~~our EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall ~~and EFCO, the fair value of these~~ reporting units, ~~would fall~~respectively. The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, ~~carrying value, which would indicate~~represents the total accumulated goodwill impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units.expenses recorded.

During the third quarter of fiscal 2022, we combined certain reporting units to form two reporting units, ~~into one reporting unit,~~ following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment. Within this

Table of Contents

segment, as a result of integration efforts that are ongoing, leadership over our ~~Tubelite~~Wausau, EFCO and ~~Alumicor~~Sotawall reporting units have been combined to form the Window and Wall Systems reporting unit, and our Linetec and Tubelite reporting units have been combined to form the Storefront and Finishing Solutions reporting unit. With these organizational changes, Architectural Framing Systems segment management regularly reviews and evaluates the results of the Window and Wall Systems and Storefront and Finishing Solutions reporting units.Additionally, functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the ~~combined business.~~Window and Wall Systems and Storefront and Finishing Solutions reporting units. The goodwill of ~~these~~the five individual pre-integration reporting units was aggregated to the respective combined reporting ~~unit.~~units. We evaluated goodwill on a qualitative basis prior to and subsequent to this change

~~Table of Contents~~

and ~~have~~ concluded no adjustment to the carrying value of goodwill was necessary as a result of this change. In addition, for all reporting units, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

The carrying amount of goodwill attributable to each reporting segment was:


(In thousands)	(In thousands)	Architectural Framing Systems		Architectural Glass		Architectural Services		Large-Scale Optical		Total		(In thousands)	Architectural Framing Systems		Architectural Glass		Architectural Services		Large-Scale Optical		Total
Balance at March 2, 2019		$	148,446	$	25,709	$	1,120	$	10,557	$	185,832
Balance at February 29, 2020												Balance at February 29, 2020	$	148,183	$	25,656	$	1,120	$	10,557	$	185,516
Adjustment (1)												Adjustment (1)	6,315		—		—		—		6,315
Impairment expense												Impairment expense	(63,769)		—		—		—		(63,769)
Foreign currency translation												Foreign currency translation	2,370		(334)		—		—		2,036
Balance at February 27, 2021												Balance at February 27, 2021	93,099		25,322		1,120		10,557		130,098

Foreign currency translation	Foreign currency translation	(263)		(53)		0		0		(316)		Foreign currency translation	(112)		(54)		—		—		(166)
Balance at February 29, 2020		148,183		25,656		1,120		10,557		185,516
Balance at November 27, 2021												Balance at November 27, 2021	$	92,987	$	25,268	$	1,120	$	10,557	$	129,932

Adjustment (1)		6,315		0		0		0		6,315
Foreign currency translation		1,475		(423)		0		0		1,052
Balance at November 28, 2020		$	155,973	$	25,233	$	1,120	$	10,557	$	192,883

(1) During the quarter ended May 30, 2020, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements.
(1) During the first quarter of fiscal 2021, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements.												(1) During the first quarter of fiscal 2021, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements.

~~Indefinite-lived~~Other intangible assets

We ~~hold~~have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. ~~Similar to the change in goodwill measurement date discussed above, we historically evaluated the reasonableness of the useful life and tested~~We test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our ~~year-end,~~fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. ~~In the third quarter of fiscal 2021, we changed the date of our annual impairment testing from our year-end to the first day in our fiscal fourth quarter.~~

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic. Therefore, the Company performed a quantitative indefinite-lived intangible asset impairment evaluation as of May 30, 2020. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If an impairment loss is recognized, the adjusted carrying amount becomes the asset's new accounting basis.

Fair value is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires us to estimate the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. The assessment of fair value involves significant judgment and projections about future performance. In determining the discounted future revenue in our fair value analysis, we used discount rates that are appropriate with the risks and uncertainties inherent in the respective businesses in the range of 10.9 percent to 11.5 percent, royalty rates of 1.5 to 2.0 percent, and a long-term growth rate of 3.0 percent. Based on our analysis, the fair value of each of our trade names and trademarks exceeded carrying amount, except for the EFCO tradename, within our Architectural Framing Systems segment. The fair value determined for the EFCO tradename was less than its carrying value by $6.3 million; this amount ~~and~~was recognized as impairment ~~was not indicated~~expense in the fourth quarter ended February 27, 2021, as ~~of May 30, 2020. During~~reflected in the third quarter of fiscal 2021, no additional qualitative indicators of impairment were identified and therefore, no interim quantitative indefinite-lived intangible asset impairment evaluation was completed. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.table below.

~~Table of Contents~~

The gross carrying amount of other intangible assets and related accumulated amortization was:


(In thousands)	(In thousands)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation		Net		(In thousands)	Gross Carrying Amount		Accumulated Amortization		Impairment Expense		Foreign Currency Translation		Net
November 28, 2020
November 27, 2021										November 27, 2021
Definite-lived intangible assets:	Definite-lived intangible assets:									Definite-lived intangible assets:
Customer relationships	Customer relationships	$	119,647	$	(38,333)	$	1,749	$	83,063	Customer relationships	$	122,961	$	(45,351)	$	—	$	(373)	$	77,237
Other intangibles	Other intangibles	41,293		(33,488)		174		7,979		Other intangibles	41,838		(35,149)		—		(134)		6,555
Total definite-lived intangible assets	Total definite-lived intangible assets	160,940		(71,821)		1,923		91,042		Total definite-lived intangible assets	164,799		(80,500)		—		(507)		83,792
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:									Indefinite-lived intangible assets:
Trademarks	Trademarks	45,300		—		501		45,801		Trademarks	39,832		—		—		(71)		39,761
Total intangible assets	Total intangible assets	$	206,240	$	(71,821)	$	2,424	$	136,843	Total intangible assets	$	204,631	$	(80,500)	$	—	$	(578)	$	123,553
February 29, 2020
February 27, 2021										February 27, 2021
Definite-lived intangible assets:	Definite-lived intangible assets:									Definite-lived intangible assets:
Customer relationships	Customer relationships	$	120,239	$	(33,121)	$	(592)	$	86,526	Customer relationships	$	119,647	$	(40,443)	$	—	$	3,315	$	82,519
Other intangibles	Other intangibles	41,069		(32,516)		(189)		8,364		Other intangibles	41,293		(34,234)		—		643		7,702
Total definite-lived intangible assets	Total definite-lived intangible assets	161,308		(65,637)		(781)		94,890		Total definite-lived intangible assets	160,940		(74,677)		—		3,958		90,221
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:									Indefinite-lived intangible assets:
Trademarks	Trademarks	45,421		—		(120)		45,301		Trademarks	45,300		—		(6,300)		832		39,832
Total intangible assets	Total intangible assets	$	206,729	$	(65,637)	$	(901)	$	140,191	Total intangible assets	$	206,240	$	(74,677)	$	(6,300)	$	4,790	$	130,053

Table of Contents

Amortization expense on definite-lived intangible assets was ~~$5.6~~$5.9 million and ~~$5.7~~$5.6 million for the nine-month periods ended November ~~28, 2020~~27, 2021 and November ~~30, 2019,~~28, 2020, respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At November ~~28, 2020,~~27, 2021, the estimated future amortization expense for definite-lived intangible assets was:


(In thousands)	(In thousands)	Remainder of Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		(In thousands)	Remainder of Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026
Estimated amortization expense	Estimated amortization expense	$	1,999	$	7,993	$	7,902	$	7,571	$	7,247	Estimated amortization expense	$	2,075	$	8,262	$	8,082	$	7,638	$	7,621

6.Debt

As of November ~~28, 2020,~~27, 2021, we had a committed revolving credit facility with maximum borrowings of up to $235 million with a maturity of June ~~2024 and a $150 million term loan. The term loan was amended during the third quarter of fiscal 2021 to extend the maturity date to June~~ 2024. ~~Total debt outstanding was $168.5 million, compared to $217.9 million as of February 29, 2020.~~ There were 0no outstanding borrowings under the revolving credit facility as of November ~~28, 2020, while there were $47.5~~27, 2021 and February 27, 2021. At November 27, 2021 and February 27, 2021, we also had a $150 million ~~in outstanding borrowings under the revolving credit facility as~~term loan with a maturity date of ~~February 29, 2020.~~June 2024.

Our revolving credit facility and term loan contain two financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of ~~interest expense-to-EBITDA.~~EBITDA-to-interest expense. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At November ~~28, 2020,~~27, 2021, we were in compliance with both financial covenants. Additionally, at November ~~28, 2020,~~27, 2021, we had a total of ~~$18.7~~$16.4 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal ~~year 2022~~years 2023 to 2032 and reduce borrowing capacity under the revolving credit facility.

At November ~~28, 2020,~~27, 2021, debt included ~~$15.0~~$13.0 million of industrial revenue bonds that mature in fiscal years ~~2022~~2023 through 2043. In ~~June 2020, a $5.4~~July 2021, two $1.0 million industrial revenue ~~bond~~bonds matured and ~~was~~were repaid. The fair value of ~~the~~all industrial revenue bonds approximated carrying value at November ~~28, 2020,~~27, 2021, due to the variable interest rates on these instruments. ~~All debt~~Our credit facility, term loan and industrial revenue bonds would be classified as Level 2 within the fair value hierarchy described in Note 4.

We also maintain two Canadian committed, revolving credit facilities totaling $25.0 million (USD). As of November ~~28, 2020, $3.5 million was outstanding under the facilities, while at~~27, 2021 and February ~~29, 2020,~~27, 2021, there were 0no borrowings outstanding under the facilities.

Interest payments were ~~$3.7~~$2.7 million and ~~$7.3~~$3.7 million for the nine months ended November 27, 2021 and November 28, 2020, ~~and November 30, 2019,~~ respectively.

~~Table of Contents~~

7. Leases

We lease certain of the buildings and equipment used in our operations. We determine if an arrangement contains a lease at inception. Currently, all of our lease arrangements are classified as operating leases. We elected the package of practical expedients permitted under the transition guidance in adopting ASC 842, which among other things, allowed us to carry forward our historical lease classification. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease ~~term and lease~~term. Lease expense is recognized on a straight-line basis over the lease term. Our leases have remaining lease terms of one to ten years, some of which include renewal options that can extend the lease for up to an additional ten years at our sole discretion. We have made an accounting policy election not to record leases with an original term of 12 months or less on our consolidated balance ~~sheet and~~sheet; such leases are expensed on a straight-line basis over the lease term.

In determining lease asset value, we consider fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. We use a discount rate for each lease based upon an estimated incremental borrowing rate over a similar term. We have elected the practical expedient to account for lease and non lease components (e.g., common-area maintenance costs) as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We are not a lessor in any transactions.

Table of Contents

The components of lease expense were as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Operating lease cost	Operating lease cost	$	3,477	$	3,445	$	10,329	$	10,308	Operating lease cost	$	3,422	$	3,477	$	10,321	$	10,329
Short-term lease cost	Short-term lease cost	472		427		1,384		1,606		Short-term lease cost	357		472		821		1,384
Variable lease cost	Variable lease cost	678		843		2,071		2,223		Variable lease cost	725		678		2,182		2,071

Total lease cost	Total lease cost	$	4,627	$	4,715	$	13,784	$	14,137	Total lease cost	$	4,504	$	4,627	$	13,324	$	13,784

Other supplemental information related to leases was as follows:


		Nine Months Ended							Nine Months Ended
(In thousands except weighted-average data)	(In thousands except weighted-average data)	November 28, 2020			November 30, 2019			(In thousands except weighted-average data)	November 27, 2021			November 28, 2020

Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	10,233		$	10,335		Cash paid for amounts included in the measurement of operating lease liabilities	$	10,744		$	10,233
Lease assets obtained in exchange for new operating lease liabilities	Lease assets obtained in exchange for new operating lease liabilities	$	19,623		$	15,948		Lease assets obtained in exchange for new operating lease liabilities	$	3,107		$	19,623
Weighted-average remaining lease term - operating leases	Weighted-average remaining lease term - operating leases	5.8 years			5.9 years			Weighted-average remaining lease term - operating leases	5.4 years			5.8 years
Weighted-average discount rate - operating leases	Weighted-average discount rate - operating leases	3.18		%	3.57		%	Weighted-average discount rate - operating leases	2.88		%	3.18		%

Future maturities of lease liabilities are as follows:


(In thousands)	November ~~28, 2020~~27, 2021
Remainder of Fiscal ~~2021~~2022	$	~~3,381~~
~~Fiscal 2022~~	~~13,866~~3,501
Fiscal 2023	~~12,662~~13,563
Fiscal 2024	~~10,740~~11,261
Fiscal 2025	~~8,994~~9,915
Fiscal 2026	~~7,136~~7,903
Fiscal 2027	6,395
Thereafter	~~10,078~~6,721
Total lease payments	~~66,857~~59,259
Less: Amounts representing interest	~~(1,637)~~3,817
Present value of lease liabilities	$	~~65,220~~55,442

In September 2020, we sold a building in McCook, IL used within our LSO segment for $25.1 million. The carrying value of the building was $4.3 million, and we recognized a gain on this sale of approximately $19.3 million, net of associated transaction costs, which is included as a reduction of selling, general and administrative expenses within our consolidated

~~Table of Contents~~

statements of operations. We also entered into a separate lease agreement for this facility, which was determined to be an operating lease, and we have approximately $8.2 million of future lease payments upon commencement of this lease in September 2020.

8.Commitments and Contingent Liabilities

Bond commitments

In the ordinary course of business, predominantly in our Architectural Services 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 ~~28, 2020, $1.1~~27, 2021, $1.2 billion of these types of bonds were outstanding, of which ~~$527.8~~$448.0 million is in our backlog. These bonds do not have stated expiration dates. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

Warranty and project-related contingencies

We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume. A warranty rollforward follows:


		Nine Months Ended					Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020
Balance at beginning of period	Balance at beginning of period	$	15,629	$	16,737	Balance at beginning of period	$	14,999	$	15,629
Additional accruals	Additional accruals	4,175		5,996		Additional accruals	6,678		4,175
Claims paid	Claims paid	(4,071)		(7,807)		Claims paid	(8,686)		(4,071)

Balance at end of period	Balance at end of period	$	15,733	$	14,926	Balance at end of period	$	12,991	$	15,733

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of our Architectural

Table of Contents

Framing Systems businesses. We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages. The liability for these types of project-related contingencies was ~~$3.3~~$0.9 million and ~~$49.0~~$4.6 million as of November ~~28, 2020~~27, 2021 and February ~~29, 2020,~~27, 2021, respectively. ~~In June 2020, we settled contract claims related to a majority of these project-related contingencies on a legacy EFCO project for an amount equal to the recorded contingency at May 30, 2020.~~

Letters of credit

At November ~~28, 2020,~~27, 2021, we had ~~$18.7~~$16.4 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6. ~~In connection with the settlement of contract claims related to~~We also have a ~~legacy EFCO project referenced above, the original project performance and payment bond related to the project was replaced, which required a $25.0~~$6.9 million letter of ~~credit. The letter of~~ credit ~~for the replacement bond was~~which has been issued outside of our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.

Purchase obligations

Purchase obligations for raw material commitments and capital expenditures totaled ~~$207.5~~$239.5 million as of November ~~28, 2020.~~27, 2021.

New Markets Tax Credit (NMTC) transactions

We have ~~four separate~~three outstanding NMTC ~~transactions~~arrangements which help to support ~~our~~ operational expansion. Proceeds received from investors on these transactions are included within other current and other non-current liabilities onin our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. ~~Therefore, upon~~Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits. The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other non-current assets onin our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase for each project, we are required to hold cash dedicated to fund each capital project which is ~~then~~ classified as restricted cash onin our consolidated balance sheets. Variable-interest entities, which have been included within our consolidated financial statements, have been created as a result of the structure of these transactions, as investors in the programs do not have a material interest in their underlying economics. During the third quarter ended November 28, 2020, an NMTC transaction was settled as expected and as a result, $7.4 million of operating income was recognized as a reduction to selling, general and administrative expenses within the Architectural Glass segment.

~~Table of Contents~~

The table below provides a summary of our ~~remaining~~ outstanding NMTC transactions (in millions):


Inception date	Inception date	Termination date	Proceeds received		Deferred costs		Net benefit		Inception date	Termination date	Proceeds received		Deferred costs		Net benefit

June 2016	June 2016	June 2023	$	6.0	$	1.2	$	4.8	June 2016	June 2023	$	6.0	$	1.2	$	4.8
August 2018	August 2018	August 2025	6.6		1.3		5.3		August 2018	August 2025	6.6		1.4		5.2
September 2018	September 2018	September 2025	3.2		1.0		2.2		September 2018	September 2025	3.2		1.0		2.2
Total	Total		$	15.8	$	3.5	$	12.3	Total		$	15.8	$	3.6	$	12.2

Litigation

The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

9.Share-Based Compensation

Total share-based compensation expense included in the results of operations was $4.8 million for the nine-month period ended November 27, 2021 and $6.2 million for the nine-month period ended November 28, ~~2020 and $4.6 million for the nine-month period ended November 30, 2019.~~2020.

Stock options and SARs

Stock option and SAR activity for the current nine-month period is summarized as follows:

Stock options and SARs Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value
Outstanding at February 29, 2020 100,341 $ 8.34
Awards granted 660,600 23.04
Awards exercised (127,241) 11.45
Outstanding at November 28, 2020 633,700 $ 23.04 9.6 years $ 2,889,672
Vested or expected to vest at November 28, 2020 633,700 $ 23.04 9.6 years $ 2,889,672


Stock options and SARs	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at February 27, 2021	633,700	$	23.04

Awards exercised	(178,564)	23.04
Awards canceled	(84,336)	23.04
Outstanding at November 27, 2021	370,800	$	23.04	8.6 years	$	4,694,328
Vested or expected to vest at November 27, 2021	370,800	$	23.04	8.6 years	$	4,694,328

Table of Contents

For the nine-months ended November 27, 2021 and November 28, 2020, cash proceeds from the exercise of stock options were $4.1 million and $1.5 million, ~~and the~~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 $2.3 million and $1.8 ~~million. NaN awards were issued or exercised during~~million, for the nine-months ended November ~~30, 2019.~~27, 2021 and November 28, 2020, respectively.

Executive Compensation Program

In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees. In the first quarter of fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date. The number of share units issued at grant is equal to the target number of performance shares and allows for the right to receive an additional number of shares dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Nonvested ~~shares~~share awards and ~~share~~ units

Nonvested share activity, including performance share units, for the current nine-month period is summarized as follows:


Nonvested shares and units	Nonvested shares and units	Number of Shares and Units	Weighted Average Grant Date Fair Value		Nonvested shares and units	Number of Shares and Units	Weighted Average Grant Date Fair Value
Nonvested at February 29, 2020		309,259	$	40.58
Nonvested at February 27, 2021					Nonvested at February 27, 2021	475,227	$	27.52
Granted(1)	Granted(1)	342,196	20.46		Granted(1)	235,028	35.48
Vested	Vested	(140,953)	39.76		Vested	(185,329)	30.36
Canceled	Canceled	(2,059)	34.38		Canceled	(23,306)	29.68
Nonvested at November 28, 2020		508,443	$	27.29
Nonvested at November 27, 2021(2)					Nonvested at November 27, 2021(2)	501,620	$	30.10

(1)Includes a total of 54,395 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.

(2) Includes a total of 50,825 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.

At November ~~28, 2020,~~27, 2021, there was ~~$8.6~~$11.0 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 2528 months. The total fair value of shares vested during the nine months ended November ~~28, 2020~~27, 2021 was ~~$3.2~~$6.9 million.

~~Table of Contents~~

10.Income Taxes

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 ~~2017,~~2018, or state and local income tax examinations for years prior to fiscal 2013. The Company is not currently under U.S. federal examination for years subsequent to fiscal year ~~2016,~~2017, and there is 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 was ~~$4.3 million and $4.1~~$4.0 million at November ~~28, 2020 and~~27, 2021, compared to $3.8 million at February ~~29, 2020, respectively.~~27, 2021. 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 $0.4 million during the next 12 months due to lapsing of statutes.~~

11.Earnings per Share

The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:


		Three Months Ended		Nine Months Ended			Three Months Ended		Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020	November 30, 2019	November 28, 2020	November 30, 2019	(In thousands)	November 27, 2021	November 28, 2020	November 27, 2021	November 28, 2020
Basic earnings per share – weighted average common shares outstanding	Basic earnings per share – weighted average common shares outstanding	25,883	26,432	26,068	26,481	Basic earnings per share – weighted average common shares outstanding	24,957	25,883	25,166	26,068
Weighted average effect of nonvested share grants and assumed exercise of stock options	Weighted average effect of nonvested share grants and assumed exercise of stock options	342	318	282	295	Weighted average effect of nonvested share grants and assumed exercise of stock options	352	342	293	282
Diluted earnings per share – weighted average common shares and potential common shares outstanding	Diluted earnings per share – weighted average common shares and potential common shares outstanding	26,225	26,750	26,350	26,776	Diluted earnings per share – weighted average common shares and potential common shares outstanding	25,309	26,225	25,459	26,350
Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	159	152	238	152	Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	—	159	—	238

Table of Contents

12.Business Segment ~~Information~~Data

~~The Company has~~We have 4 reporting segments: ~~Architectural Framing Systems, Architectural Glass, Architectural Services and LSO.~~

•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 Architectural Glass segment fabricates coated, high-performance glass used globally in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.

•The Architectural Services segment ~~designs, engineers, fabricates and installs~~provides full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.

•The ~~LSO~~Large-Scale Optical (LSO) segment manufactures value-added glass and acrylic products primarily for framing and display applications.

~~Table of Contents~~

Three Months Ended Nine Months Ended
(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019
Net sales
Architectural Framing Systems $ 136,688 $ 165,517 $ 439,779 $ 533,432
Architectural Glass 84,779 89,433 248,274 288,862
Architectural Services 76,690 69,043 213,911 195,787
Large-Scale Optical 25,267 24,405 48,438 66,449
Intersegment eliminations (9,841) (10,482) (28,240) (34,190)
Net sales $ 313,583 $ 337,916 $ 922,162 $ 1,050,340
Operating income (loss)
Architectural Framing Systems $ 7,218 $ 6,345 $ 26,211 $ 34,141
Architectural Glass 10,825 4,092 15,306 16,951
Architectural Services 8,558 6,533 20,470 15,082
Large-Scale Optical(1)
26,114 6,754 25,131 15,561
Corporate and other (2,965) (2,130) (7,685) (9,525)
Operating income $ 49,750 $ 21,594 $ 79,433 $ 72,210

~~(1)~~ ~~LSO operating income amounts for the three- and nine-month periods ended November 28, 2020 include a $19.3 million gain on the sale-lease back of a building.~~


	Three Months Ended				Nine Months Ended
(In thousands)	November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Net sales
Architectural Framing Systems	$	151,665	$	136,688	$	453,476	$	439,779
Architectural Glass	74,289		84,779		236,693		248,274
Architectural Services	91,971		76,690		250,657		213,911
Large-Scale Optical	27,351		25,267		75,122		48,438
Intersegment eliminations	(11,059)		(9,841)		(29,928)		(28,240)
Net sales	$	334,217	$	313,583	$	986,020	$	922,162
Operating income (loss)
Architectural Framing Systems	$	10,689	$	7,218	$	27,027	$	26,211
Architectural Glass(1)	(1,277)		10,825		(16,143)		15,306
Architectural Services	9,203		8,558		20,982		20,470
Large-Scale Optical(2)	5,996		26,114		17,326		25,131
Corporate and other	(6,901)		(2,965)		(18,508)		(7,685)
Operating income	$	17,710	$	49,750	$	30,684	$	79,433

(1) Architectural Glass operating loss amounts for the three- and nine-month periods ended November 27, 2021 include $3.5 million and $20.9 million of restructuring related costs, respectively.
(2) LSO operating income amounts for the three- and nine-month periods ended November 28, 2020 include a $19.3 million gain on the sale-lease back of a building.

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.

13. Restructuring

On August 11, 2021, we announced plans to realign and simplify our business structure. For the three- and nine-month periods ended November 27, 2021, we incurred $3.4 million and $24.2 million, respectively, of pre-tax costs associated with the execution of these plans, of which $3.6 million and $22.1 million are included within cost of sales and $(0.2) million and $2.1 million are included within selling, general and administrative expenses within our consolidated statements of operations. These costs primarily related to asset impairment charges due to the closure of two facilities within the Architectural Glass segment, in Dallas, Texas and Statesboro, Georgia, which closures were made in order to concentrate this segment on premium, high-performance products. Additionally, employee termination costs were incurred related to these facility closures, realignment of the Architectural Framing Systems segment, and within the Corporate office. We expect future pre-tax costs associated with the ongoing execution of these plans to be approximately $2 to $3 million, which we expect will be incurred during the fourth quarter of our fiscal year 2022. At the end of the third quarter of fiscal 2022, $9.3 million of assets were classified as held for sale on the consolidated balance sheets related to the building and related equipment of our Statesboro, Georgia facility within the Architectural Glass segment.

Table of Contents


	Three Months Ended November 27, 2021
(In thousands)	Architectural Framing		Architectural Glass		Corporate and other		Total
Asset impairment charges	$	(32)	$	1,353	$	—	$	1,321
Termination benefits	(14)		1,638		(179)		1,445
Other restructuring charges	2		527		124		653
Total restructuring charges	$	(44)	$	3,518	$	(55)	$	3,419


	Nine Months Ended November 27, 2021
(In thousands)	Architectural Framing		Architectural Glass		Corporate and other		Total
Asset impairment charges	$	54	$	16,584	$	—	$	16,638
Termination benefits	1,809		3,215		760		5,784
Other restructuring charges	141		1,110		560		1,811
Total restructuring charges	$	2,004	$	20,909	$	1,320	$	24,233

The following table summarizes our restructuring related accrual balances included within accrued payroll and related costs and other current liabilities in the consolidated balance sheets. All balances are expected to be paid within the current fiscal year.


(In thousands)	Architectural Framing		Architectural Glass		Corporate and other		Total
Balance at March 1, 2020	$	—	$	—	$	—	$	—
Restructuring expense	4,020		325		229		4,574
Payments	(1,148)		(95)		(68)		(1,311)

Balance at February 27, 2021	2,872		230		161		3,263
Restructuring expense	1,984		884		1,221		4,089
Payments	(2,852)		(354)		(592)		(3,798)
Other adjustments	(269)		—		—		(269)
Balance at November 27, 2021	$	1,735	$	760	$	790	$	3,285

14. Subsequent Events

We have evaluated subsequent events for potential recognition and disclosure through the date of this filing. Subsequent to the end of the quarter, we purchased 484,646 shares of stock under our authorized share repurchase program, at a total cost of $22.3 million.

In December 2021, we sold all of the property and assets at the Architectural Glass segment’s Statesboro, Georgia manufacturing facility for $29.1 million. The carrying value of the building and related equipment was $9.3 million. We will recognize a gain on this sale of approximately $19.0 million, net of associated transaction costs, which will be included as a reduction of cost of sales within our consolidated statements of operations for the fourth quarter of fiscal 2022.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements

This ~~discussion~~Quarterly Report on Form 10-Q, including the section Management’s Discussion and Analysis of Financial Condition and Results of Operations, 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,” "will," "continue" 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. 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.

Table of Contents

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. Information about factors that could materially affect our results can be found in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended February ~~29, 2020~~27, 2021 and in subsequent filings with the U.S. Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.

We also wish to caution investors that other factors might in the future prove to be important in affecting the Company’s results of operations. New factors emerge from time to time; it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a leader in ~~certain technologies involving~~ the design and development of value-added glass and metal products and services for enclosing commercial buildings and framing and displays. Our four reporting segments are: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).

The ongoing COVID-19 pandemic continues to cause volatility and uncertainty in global and domestic markets impacting worldwide economic activity. We have experienced some delays in commercial construction projects and orders as a result of COVID-19. In our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as

~~Table of Contents~~

customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions. Within our Large-Scale Optical (LSO) segment, most customers reopened and the segment's two manufacturing locations resumed normal operations during our second fiscal quarter, after being shutdown for most of our first and second quarters due to governmental orders. We have also been impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at some of our facilities. The extent to which COVID-19 will continue to impact our business will depend on future developments and public health advancements, which have been buoyed recently by the commencement of vaccine production and distribution.

~~The~~ following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February ~~29, 2020~~27, 2021 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Highlights of Third Quarter of Fiscal ~~2021~~2022 Compared to Third Quarter of Fiscal ~~2020~~2021

Net sales

Consolidated net sales ~~decreased 7.2~~increased 6.6 percent, or ~~$24.3~~$20.6 million, and ~~decreased 12.2~~increased 6.9 percent, or ~~$128.2~~$63.9 million, for the three- and nine-month periods ended November ~~28, 2020, respectively,~~27, 2021, compared to the same periods in the prior year, primarily ~~reflecting end market and COVID-19-related~~driven by volume ~~declines~~growth in the Architectural Services and LSO segments, as well as, flow-through from pricing actions taken to offset inflation within the Architectural Framing ~~Systems~~segment. LSO was closed for most of the first and ~~Architectural Glass segments.~~second quarters of fiscal 2021, due to COVID-19.

The relationship between various components of operations, as a percentage of net sales, is presented below:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
		November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019			November 27, 2021		November 28, 2020		November 27, 2021		November 28, 2020
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	Cost of sales	77.8		78.0		77.7		77.0		Cost of sales	80.6		77.8		81.7		77.7
Gross profit		22.2		22.0		22.3		23.0
Gross margin										Gross margin	19.4		22.2		18.3		22.3
Selling, general and administrative expenses	Selling, general and administrative expenses	6.3		15.6		13.7		16.1		Selling, general and administrative expenses	14.1		6.3		15.2		13.7
Operating income	Operating income	15.9		6.4		8.6		6.9		Operating income	5.3		15.9		3.1		8.6
Interest expense, net	Interest expense, net	0.5		0.6		0.5		0.7		Interest expense, net	0.2		0.5		0.3		0.5
Other income, net		0.2		0.1		0.1		0.1
Other (expense) income, net										Other (expense) income, net	(0.9)		0.2		(0.3)		0.1
Earnings before income taxes	Earnings before income taxes	15.5		5.9		8.2		6.3		Earnings before income taxes	4.2		15.5		2.5		8.2
Income tax expense	Income tax expense	3.7		1.4		2.0		1.5		Income tax expense	0.9		3.7		0.5		2.0
Net earnings	Net earnings	11.9	%	4.5	%	6.2	%	4.8	%	Net earnings	3.3	%	11.9	%	2.0	%	6.2	%
Effective tax rate	Effective tax rate	23.5	%	23.2	%	23.8	%	23.9	%	Effective tax rate	21.7	%	23.5	%	19.6	%	23.8	%

Gross profit

Gross profit as a percent of sales (gross margin) was 19.4 percent and 18.3 percent for the three- and nine-month periods ended November 27, 2021, compared to 22.2 percent and 22.3 percent for the three- and nine-month periods ended November 28, ~~2020,~~2020. Gross margin decreased in the current year three- and nine-month periods compared to ~~22.0 percent~~the prior year, primarily due to $3.6 million and ~~23.0 percent for~~$22.1 million of restructuring charges included in cost of goods sold incurred during the three- and nine-month periods ~~ended November 30, 2019. The increase in~~of the ~~third quarter of~~current fiscal ~~2021 compared to the same period in fiscal 2020 was driven by strong project execution in~~year, as well as inflationary pressure on raw materials and freight within the Architectural ~~Services segment. The decrease in~~Glass and Architectural Framing Systems segments. These costs were partially offset by positive impacts from continued recovery of the ~~nine-month period~~LSO segment (which closed for most of ~~fiscal 2021 compared to fiscal 2020 was largely driven by lower volumes due to market-related~~the first and ~~COVID-19 project delays.~~second quarters last year, based on COVID-related government directives).

Table of Contents

Selling, general and administrative (SG&A) expenses

SG&A expenses as a percent of sales were ~~6.3~~14.1 percent and ~~13.7~~15.2 percent for the three- and nine-month periods ended November ~~28, 2020,~~27, 2021, compared to ~~15.6~~6.3 percent and ~~16.1~~13.7 percent for the prior year three- and nine-month periods. SG&A ~~decreased as a percent of sales~~expenses in the three- and nine-month periods ended November 27, 2021, included increased Corporate and other costs, primarily related to investments in transformation initiatives in the current year periods and higher health care costs in the current year compared to the ~~same periods~~prior-year periods. Additionally, SG&A expenses in the prior year ~~primarily due to~~third quarter were reduced by a $19.3 million gain on the sale-leaseback of a building and $7.4 million of income related to a New Markets Tax Credit transaction, ~~both~~driving lower SG&A expenses as a percent of ~~which were recognized~~sales in the ~~third quarter of fiscal 2021.~~prior year three- and nine-month periods. In addition, we ~~received~~recognized a benefit of ~~$4.2~~$1.0 million and $5.5 million during the ~~third quarter of fiscal~~three- and nine-month periods ended November 27, 2021, respectively, compared to $4.2 million and $5.5 million ~~year-to-date~~ in ~~fiscal 2021,~~the prior year three- and nine-month periods, from a Canadian wage subsidy program offered to support Canadian businesses due to the ~~widespread~~ongoing impacts of the COVID-19 pandemic. ~~In total, these items had a favorable impact on SG&A as a percentage of sales~~

~~Table of Contents~~

~~of 9.9 percentage points and 3.5 percentage points for the three- and nine-month periods ended November 28, 2020, respectively.~~

Income tax expense

The effective income tax rate in the third quarter of fiscal ~~2021~~2022 was ~~23.5~~21.7 percent, compared to ~~23.2~~23.5 percent in the same period last year, and ~~23.8~~19.6 percent for the first nine months of fiscal ~~2021,~~2022, compared to ~~23.9~~23.8 percent in the prior year period. The rate decrease was primarily related to lower year-to-date net income, as well as, the release of a $1.2 million valuation allowance on certain state net operating losses, which is the result of a realignment and simplification of our business and legal-entity structure during the second quarter of fiscal 2022.

Segment Analysis

Architectural Framing Systems


		Three Months Ended								Nine Months Ended									Three Months Ended								Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change		(In thousands)	November 27, 2021			November 28, 2020			% Change		November 27, 2021			November 28, 2020			% Change
Net sales	Net sales	$	136,688		$	165,517		(17.4)	%	$	439,779		$	533,432		(17.6)	%	Net sales	$	151,665		$	136,688		11.0	%	$	453,476		$	439,779		3.1	%
Operating income	Operating income	7,218			6,345			13.8	%	26,211			34,141			(23.2)	%	Operating income	10,689			7,218			48.1	%	27,027			26,211			3.1	%
Operating margin	Operating margin	5.3		%	3.8		%			6.0		%	6.4		%			Operating margin	7.0		%	5.3		%			6.0		%	6.0		%

Architectural Framing Systems net sales ~~declined $28.8~~increased $15.0 million, or ~~17.4~~11.0 percent, and ~~$93.7~~increased $13.7 million, or ~~17.6~~3.1 percent for the three- and nine-month periods ended November ~~28, 2020,~~27, 2021, compared to the prior-year periods, primarily ~~reflecting market-related and COVID-19 project delays and lower order volume for short lead-time products.~~driven by flow-through from pricing actions taken to offset inflation.

Operating margin increased ~~150~~170 basis points for the three-month period of the current year and decreased 40 basis points for the nine-month period of the current year, compared to the same periods in the prior year. The increase in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020 was due to cost actions and improved productivity that served to offset the impact of volume declines from end market softness and COVID-19. The decrease in the nine-month period in the current year, compared to the same period in the prior year, ~~reflects leverage~~primarily driven by improved pricing and the benefits from restructuring actions, which offset increased costs for materials, freight and labor. As previously announced, the segment incurred restructuring-related termination costs in the second and third quarters of the current fiscal year related to realignment of the segment to increase focus on target markets, better serve customers, improve operational execution, and reduce overall costs. Operating margin was 6.0 percent for the ~~lower revenue, partially offset by cost reduction actions~~nine-month periods in the current and ~~improved productivity.~~prior fiscal years. In addition, this segment benefited from a Canadian wage subsidy of $1.0 million and $5.5 million during the three- and nine-month periods ended November 27, 2021, respectively, compared to $4.2 million and $5.5 million in the ~~third quarter of fiscal 2021~~prior-year three- and ~~$5.5 million for the~~ nine-month ~~period of fiscal 2021,~~periods, respectively, as a result of a ~~Canadian~~ program ~~offered~~ to support Canadian businesses due to the ~~widespread~~ongoing impacts of the COVID-19 pandemic.

As of November ~~28, 2020,~~27, 2021, segment backlog was approximately ~~$408~~$419 million, compared to approximately ~~$404~~$406 million at the end of the prior ~~quarter, and $375 million at the end of the third quarter of the prior year.~~quarter. Backlog represents the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which may be expected to be recognized as revenue in the future. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. We view backlog as one indicator of future revenues, particularly in our longer-lead time businesses. In addition to backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period and are not included in backlog. We have strong visibility beyond backlog, as projects awarded, verbal commitments and bidding activities are not included in backlog.

Architectural Glass

Three Months Ended Nine Months Ended
(In thousands) November 28, 2020 November 30, 2019 % Change November 28, 2020 November 30, 2019 % Change
Net sales $ 84,779 $ 89,433 (5.2) % $ 248,274 $ 288,862 (14.1) %
Operating income 10,825 4,092 164.5 % 15,306 16,951 (9.7) %
Operating margin 12.8 % 4.6 % 6.2 % 5.9 %

Net sales decreased $4.7 million, or 5.2 percent, and $40.6 million, or 14.1 percent, for the three- and nine-month periods ended November 28, 2020, compared to the same periods in the prior year. The decreases reflect lower volumes primarily due to market-related and COVID-19 project delays.

Operating margin increased 820 and 30 basis points for the three- and nine-month periods of the current year, compared to the same periods in the prior year. Fiscal 2021 third quarter results included $7.4 million of operating income related to a New Markets Tax Credit transaction. In addition, operating margins in both periods of the current year were impacted by volume declines due to end market softness and COVID-19.


	Three Months Ended								Nine Months Ended
(In thousands)	November 27, 2021			November 28, 2020			% Change		November 27, 2021			November 28, 2020			% Change
Net sales	$	74,289		$	84,779		(12.4)	%	$	236,693		$	248,274		(4.7)	%
Operating (loss) income	(1,277)			10,825			N/M		(16,143)			15,306			N/M
Operating margin	(1.7)		%	12.8		%			(6.8)		%	6.2		%

Table of Contents

~~Architectural Services~~

Three Months Ended Nine Months Ended
(In thousands) November 28, 2020 November 30, 2019 % Change November 28, 2020 November 30, 2019 % Change
Net sales $ 76,690 $ 69,043 11.1 % $ 213,911 $ 195,787 9.3 %
Operating income 8,558 6,533 31.0 % 20,470 15,082 35.7 %
Operating margin 11.2 % 9.5 % 9.6 % 7.7 %

~~Architectural Services net~~Net sales ~~increased $7.6~~decreased $10.5 million, or ~~11.1~~12.4 percent, and ~~$18.1~~$11.6 million, or ~~9.3~~4.7 percent, for the three- and nine-month periods ended November ~~28, 2020,~~27, 2021, compared to the same periods in the prior year, primarily reflecting lower volume due to weaker order backlog from fiscal year 2021, partially offset by an improved sales mix.

In the current quarter, the segment had operating loss of $1.3 million and negative operating margin of 1.7 percent, compared to operating income of $10.8 million and operating margin of 12.8 percent in the same period of the prior year. For the nine-months ended November 27, 2021, the segment had an operating loss of $16.1 million and negative operating margin of 6.8 percent, compared to operating income of $15.3 million and operating margin of 6.2 percent in the prior year period. The results for the current year periods were primarily driven by $3.5 million and $20.9 million of restructuring costs for the three- and nine-month periods ended November 27, 2021, respectively. As previously announced, this segment incurred restructuring charges related to the closure of two operating facilities and the associated employee termination costs in the second and third quarters of the current fiscal year. This restructuring is intended to enable the segment to emphasize more premium, high-performance products in its business. The three- and nine-month periods of the prior fiscal year also included $7.4 million of operating income related to the settlement of a New Markets Tax Credit transaction during the third quarter of fiscal 2021.

Architectural Services


	Three Months Ended								Nine Months Ended
(In thousands)	November 27, 2021			November 28, 2020			% Change		November 27, 2021			November 28, 2020			% Change
Net sales	$	91,971		$	76,690		19.9	%	$	250,657		$	213,911		17.2	%
Operating income	9,203			8,558			7.5	%	20,982			20,470			2.5	%
Operating margin	10.0		%	11.2		%			8.4		%	9.6		%

Architectural Services net sales increased $15.3 million, or 19.9 percent, and $36.7 million, or 17.2 percent, for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, driven by increased volume from executing projects in backlog.

Operating margin ~~increased 170 and 190~~decreased 120 basis points ~~for~~in each of the three- and nine-month periods of the current year, compared to the same periods in the prior year, primarily ~~driven~~reflecting a less favorable project mix. Additionally, the nine-month period was negatively impacted by ~~strong project execution.~~isolated performance challenges on certain projects experienced during the first quarter of fiscal 2022.

As of November ~~28, 2020,~~27, 2021, segment backlog of $572 million was ~~approximately $597 million, compared to approximately $665 million as of~~unchanged from the end of the prior ~~quarter, and $607 million~~quarter. Segment backlog at the end of the third quarter of ~~the prior year.~~fiscal 2021 was approximately $597 million. Backlog is described within the Architectural Framing Systems discussion above.

Large-Scale Optical (LSO)


		Three Months Ended								Nine Months Ended									Three Months Ended								Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change		(In thousands)	November 27, 2021			November 28, 2020			% Change		November 27, 2021			November 28, 2020			% Change
Net sales	Net sales	$	25,267		$	24,405		3.5	%	$	48,438		$	66,449		(27.1)	%	Net sales	$	27,351		$	25,267		8.2	%	$	75,122		$	48,438		55.1	%
Operating income		26,114			6,754			286.6	%	25,131			15,561			61.5	%
Operating income (loss)																		Operating income (loss)	5,996			26,114			(77.0)	%	17,326			25,131			(31.1)	%
Operating margin	Operating margin	103.4		%	27.7		%			51.9		%	23.4		%			Operating margin	21.9		%	103.4		%			23.1		%	51.9		%

LSO net sales increased ~~$0.9~~$2.1 million or ~~3.5~~8.2 percent, and ~~decreased $18.0~~$26.7 million or ~~27.1~~55.1 percent for the three- and nine-month periods ended November ~~28, 2020,~~27, 2021, compared to the same periods in the prior ~~year. In~~year, reflecting a more favorable sales mix, as demand recovered from the third quarter, customer demand increased significantly following the segment's COVID-related shutdown earlier in the year. The decrease in sales for the current year nine-month period compared to the same periodimpact of COVID in the prior year ~~reflects the required COVID-related closure of~~nine-month period. In fiscal 2021, most of the ~~segment’s~~segment's customers and the ~~segment’s~~segment's manufacturing ~~locations~~operations were closed for ~~most~~a large part of the first and second quarters ~~of fiscal 2021.~~to comply with COVID-related government directives.

The segment had operating income of $6.0 million and $17.3 million and operating margin of 21.9 percent and 23.1 percent, for the three- and nine-month periods ended November 27, 2021, respectively, compared to operating income of $26.1 million and $25.1 million, and operating margin of 103.4 percent and 51.9 percent, ~~for the three- and nine-month periods ended November 28, 2020, respectively, compared to operating income of $6.8 million and $15.6 million and operating margin of 27.7 percent and 23.4 percent~~ in the same periods inof the prior year. The ~~increases~~decreases for the fiscal ~~2021~~2022 periods are primarily ~~related to~~the result of a $19.3 million gain on the sale-leaseback of a segment ~~building~~manufacturing facility recorded during the ~~current~~prior year third quarter. ~~Additionally, operating margin in the nine-month period reflects the impact of the segment's temporary shutdown and the related impact from lower volume.~~

Table of Contents

Liquidity and Capital Resources


Selected cash flow data	Selected cash flow data	Nine Months Ended				Selected cash flow data	Nine Months Ended
(In thousands)	(In thousands)	November 28, 2020		November 30, 2019		(In thousands)	November 27, 2021		November 28, 2020
Operating Activities	Operating Activities					Operating Activities
Net cash provided by operating activities	Net cash provided by operating activities	$	120,512	$	53,601	Net cash provided by operating activities	$	86,291	$	120,512
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(17,116)		(41,176)		Capital expenditures	(13,070)		(17,116)

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	23,724		591		Proceeds from sale of property, plant and equipment	1,347		23,724

Financing Activities	Financing Activities					Financing Activities
Borrowings on line of credit	Borrowings on line of credit	193,332		108,000		Borrowings on line of credit	—		193,332
(Repayment) borrowings on debt		(5,400)		150,000

Payments on line of credit	Payments on line of credit	(237,500)		(252,500)		Payments on line of credit	—		(237,500)
Repurchase and retirement of common stock	Repurchase and retirement of common stock	(20,731)		(20,010)		Repurchase and retirement of common stock	(29,164)		(20,731)
Dividends paid	Dividends paid	(14,546)		(13,808)		Dividends paid	(15,050)		(14,546)

Operating Activities. ~~Cash~~Net cash provided by operating activities was ~~$120.5~~$86.3 million for the first nine months of fiscal ~~2021, an increase~~2022, a decrease of ~~$66.9~~$34.2 million compared to the prior-year period, reflecting ~~strong working capital management.~~

~~Table~~a decline in net earnings of ~~Contents~~$38.0 million in the current-year period compared to the prior-year period, as well as, the impact of temporary actions related to COVID in the prior-year period.

Investing Activities. Net cash ~~provided~~used by investing activities was ~~$5.5~~$11.6 million for the first nine months of fiscal ~~2021,~~2022, driven primarily by capital expenditures of $13.1 million. In the first nine months of the prior year, net cash provided by investing activities was $5.5 million, driven by proceeds of $23.7 million on the sale-leaseback of a building, offset by capital expenditures of $17.1 million. InCapital expenditures in the first nine months of the current year declined $4.0 million from the prior year ~~net cash used by investing activities was $41.4 million, driven by capital expenditures of $41.2 million. Given the uncertain economic environment in fiscal 2021,~~due to slower investments while we ~~will continue to limit~~conducted our ~~capital spending to all health and safety related investments as well as the most critical high return projects that support our long-term~~ strategic ~~plan and profitable growth targets.~~review.

Financing Activities. Net cash used by financing activities was ~~$85.7~~$44.0 million for the first nine months of fiscal ~~2021,~~2022, compared to ~~$30.9~~$85.7 million in the prior-year period, primarily ~~due to~~driven by net debt repayments of $47.5 million in the prior year. Additionally, in the first nine months of ~~net payments in~~ the current year, we made share repurchases totaling $29.2 million, compared to ~~net borrowings of $5.5~~$20.7 million in the ~~prior-year~~prior year nine-month period. At November ~~28, 2020,~~27, 2021, we were in compliance with the financial covenants under our revolving credit facility and term loan.

We paid dividends totaling ~~$14.5~~$15.1 million ($~~0.5625~~0.6000 per share) in the first nine months of fiscal ~~2021,~~2022, compared to ~~$13.8~~$14.5 million ($~~0.5250~~0.5625 per share) in the comparable prior-year period. During the first nine months of fiscal ~~2021,~~2022, we repurchased ~~852,029~~755,384 shares under our authorized share repurchase program, for a total cost of ~~$20.7~~$28.8 million. In the first nine months of fiscal ~~2020,~~2021, we repurchased ~~531,997~~852,029 shares under the share repurchase program, for a total cost of ~~$20.0~~$20.7 million. Since the inception of the share repurchase program in 2004, we have purchased a total of ~~6,806,941~~7,888,000 shares, at a total cost of ~~$195.1~~$236.1 million. We currently have remaining authority to repurchase an additional ~~1,443,059~~1,362,000 shares under this program. We will continue to evaluate making future share repurchases, considering our cash flow, debt levels and market conditions, ~~including the continuing effects of the COVID-19 pandemic,~~ in the context of all our capital allocation options, ~~ensuring that we maximize~~with the goal of maximizing long-term value for our shareholders.

Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of November ~~28, 2020:~~27, 2021:


		Payments Due by Fiscal Period															Payments Due by Fiscal Period
(In thousands)	(In thousands)	Remainder of Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Thereafter		Total		(In thousands)	Remainder of Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026		Thereafter		Total
Debt obligations	Debt obligations	$	—	$	2,000	$	1,000	$	—	$	153,463	$	12,000	$	168,463	Debt obligations	$	—	$	1,000	$	—	$	150,000	$	—	$	12,000	$	163,000
Operating leases (undiscounted)	Operating leases (undiscounted)	3,381		13,866		12,662		10,740		8,994		17,214		66,857		Operating leases (undiscounted)	3,501		13,563		11,261		9,915		7,903		13,116		59,259
Purchase obligations	Purchase obligations	47,263		142,186		14,073		939		770		2,310		207,541		Purchase obligations	61,169		166,446		8,530		1,433		1,433		487		239,498
Total cash obligations	Total cash obligations	$	50,644	$	158,052	$	27,735	$	11,679	$	163,227	$	31,524	$	442,861	Total cash obligations	$	64,670	$	181,009	$	19,791	$	161,348	$	9,336	$	25,603	$	461,757

We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. Purchase obligations in the table above relate to raw material commitments and capital expenditures.

Table of Contents

We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal ~~2021,~~2022, which will equal or exceed our minimum funding requirements.

As of November ~~28, 2020,~~27, 2021, we had reserves of ~~$4.3~~$4.0 million for unrecognized tax benefits. ~~We expect approximately $0.4 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 will ultimately be settled.

We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance. At November ~~28, 2020, $1.1~~27, 2021, $1.2 billion of these types of bonds were outstanding, of which ~~$527.8~~$448.0 million is in our backlog. These bonds do not have stated expiration dates. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

~~We are taking~~During calendar 2020, we took advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the ~~Coronavirus, Aid, Relief and Economic Security Act ("~~CARES ~~Act"), and estimate that this~~Act. This deferral ~~will allow~~allowed us to retain ~~approximately $13 million in~~ cash during calendar year 2020 that would have otherwise been remitted to the federal government. At the end of ~~the third quarter of~~ fiscal 2021, we had deferred tax payments of ~~$11.8~~$13.6 million, which are included within accrued payroll and other benefits and other non-current liabilities on our consolidated balance sheets. The deferred tax payments will be repaid ~~equally~~in two equal portions in calendar years 2021 and 2022. The CARES Act, along with other foreign government initiatives, also provides for job retention programs, which have allowed some of our businesses to receive payroll tax credits or subsidies during calendar year 2020.

~~Table of Contents~~

Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments for at least the next 12 months.

~~COVID-19 Consideration.~~ While we believe we have adequate sources of liquidity to continue to fund our business for at least the next 12 months, the extent to which the ongoing COVID-19 pandemic may impact our results of operations or liquidity is uncertain. ~~To date, we have experienced some delays in commercial construction projects and orders due~~The extent to ~~COVID-19. While the construction and construction-related industries are considered an "essential business or service" in most jurisdictions in~~ which ~~we operate, the uncertain economic environment has resulted in order delays and there have been instances of site closures and project delays.Increased social distancing and health-related precautions are required on many work sites, which have caused and may~~COVID-19 will continue to cause additional project delays and additional costs to be incurred. Within the LSO segment, after being closed for most of the first and second quarters, we resumed normal operations at the segment's two manufacturing locations and most ofimpact our ~~customer's retail locations continue to operate after being required to close earlier this year. We expect this global pandemic to continue to have an impact~~business will depend on our revenue and our results of operations, the size and duration of which we are currently unable to predict. At this time, we do not expect that the impact from the coronavirus pandemic will have a significant effect on our liquidity. As demonstrated so far this fiscal year, we have taken steps to increase available cash on handnumerous evolving factors including, but not limited to, ~~active working capital management and targeted reductions in discretionary operating expenses and capital expenditures. Given~~ the ~~continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude~~emergence of new variants of the ~~impact to our results~~coronavirus, such as the Delta and Omicron variants, and the effectiveness of ~~operations, liquidity or financial position. To the extent that our customers~~ongoing public health initiatives, which have been boosted by vaccine production and suppliers are adversely impacted by the COVID-19 pandemic, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations, thereby negatively affecting our results of operations, and/or impact our liquidity.distribution.

Off-balance sheet arrangements. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Outlook

The company has narrowed its guidance for full-year adjusted earnings to a range of $2.25 to $2.40 per diluted share, from the previous range of $2.20 to $2.40. This guidance excludes the impact of restructuring and impairment costs. The company expects to record a pre-tax gain of approximately $19.0 million in the fourth quarter, related to the previously announced sale of its Architectural Glass facility in Statesboro, Georgia. The company intends to exclude this gain from its adjusted earnings results. The company continues to expect a long-term average tax rate of approximately 24.5 percent and continues to expect full-year capital expenditures of approximately $25 million, down from the previous estimate of approximately $35 million, as the company has slowed some investments while it conducted its strategic review.

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 ~~29, 2020.~~27, 2021.

Critical Accounting Policies

NoThere have been no material changes ~~have occurred in the disclosure of~~to our critical accounting policies ~~set forth~~from those disclosed in our Annual Report on Form 10-K for the fiscal year ended February ~~29, 2020, other than as described in our Current Report on Form 10-Q for the fiscal quarter ended May 30, 2020 and~~27, 2021, except as noted below.

Goodwill and indefinite-lived intangible asset impairment

Goodwill

We have historically evaluated goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. InDuring the third quarter of fiscal ~~2021,~~2022, we ~~changed the date of our annual goodwill impairment testing from our year-end~~combined certain reporting units to the first day in our fiscal fourth quarter. This change results in better alignment of the annual impairment testing with our strategic and annual planning processes. This change was determined to not be material and had no impact on our current or historical consolidated financial statements.

Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. However, the estimated fair value did not exceed carrying value by a significant margin atform two reporting units, within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units.

~~Table of Contents~~

~~During the third quarter, we combined two reporting units into one reporting unit,~~ following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment. Within this segment, as a result of integration efforts that are ongoing, leadership over our ~~Tubelite~~Wausau, EFCO and ~~Alumicor~~Sotawall reporting units ~~has~~have been combined to form the Window and Wall Systems reporting unit, and our Linetec and Tubelite reporting units have been combined to form the Storefront and Finishing Solutions reporting unit. With these organizational changes, Architectural Framing Systems segment management regularly reviews and evaluates the results of the Window and Wall Systems and Storefront and Finishing Solutions reporting units.Additionally, functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the ~~combined business.~~Window and Wall Systems and Storefront and Finishing Solutions reporting units. The goodwill of ~~these~~the five individual pre-integration reporting units was aggregated to the respective combined reporting ~~unit.~~units. We evaluated goodwill on a qualitative basis prior to and subsequent to this change and ~~have~~ concluded ~~that~~ no adjustment to the carrying value of goodwill was necessary as a result of this

Table of Contents

change. In addition, for all reporting units, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

~~Indefinite-lived intangible assets~~

We hold intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. Similar to the change in goodwill measurement date discussed above, we historically evaluated the reasonableness of the useful life and tested indefinite-lived intangible assets for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In the third quarter of fiscal 2021, we changed the date of our annual impairment testing from our year-end to the first day in our fiscal fourth quarter.

During the third quarter of fiscal 2021, no additional qualitative indicators of impairment were identified and therefore, no interim quantitative indefinite-lived intangible asset impairment evaluation was completed. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

NoRefer to the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2021 for a complete discussion on the Company’s market risk. There have been no material changes ~~have occurred to the disclosures of quantitative and qualitative~~in market risk ~~set forth~~from those disclosed in our Annual Report on Form 10-K for the fiscal year ended February ~~29, 2020.~~27, 2021, except as noted below.

Raw Material Pricing Risk

We are subject to market risk exposure related to volatility in the prices of aluminum and lumber, among other raw materials and supplies used in our end products. A significant amount of our cost of sales relates to materials costs. The commodities markets, which include the aluminum industry, are highly cyclical in nature. As a result, commodity costs can be volatile, as we have experienced from time to time during recent fiscal quarters, and may become more volatile in the future. Commodity costs are influenced by numerous factors beyond our control, including general economic conditions, the availability of raw materials, competition, labor costs, freight and transportation costs, production costs, import duties and other trade restrictions.

We principally manage our exposures to the market fluctuations in the aluminum industry through fixed/floating rate swaps and forward purchase agreements. Although we have the ability to purchase aluminum from a number of suppliers, a production cutback by one or more of our current suppliers could create challenges in meeting delivery schedules to our customers. The prices we offer to our customers are also impacted by changes in commodity costs. We manage the alignment of the cost of our raw materials and the prices offered to customers, and attempt to pass changes to raw material costs through to our customers. To improve our management of commodity costs, we attempt to maintain inventory levels not in excess of our production requirements.

We cannot accurately calculate the pre-tax impact a one percent change in the commodity costs of aluminum and/or lumber would have on our fiscal 2022 operating results, as the change in commodity costs would both impact the cost to purchase materials and the selling prices we offer our customers. The impact to our operating results would significantly depend on the competitive environment and the costs of other alternative products, which could impact our ability to pass commodities costs to our customers.

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 ~~28, 2020,~~27, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

~~From time to time, the~~The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

Table of Contents

Item 1A.Risk Factors

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 ~~29, 2020, except as noted below.~~27, 2021.

The novel coronavirus (COVID-19) pandemic, efforts to mitigate the pandemic, and the related weakening economic conditions, have impacted our business and could have a significant negative impact on our operations, liquidity, financial condition and financial results

In the last quarter of our fiscal 2020, a novel strain of coronavirus, COVID-19, started to impact the global economic environment causing extreme volatility and uncertainty in global markets. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic and we started to see certain impacts to our business. This contagious disease outbreak, which continues to spread, and the related adverse public health developments, and government orders to "stay in place" have adversely affected work forces, economies and financial markets globally. Quarantines and "stay in place" orders, the timing and length of containment and eradication solutions, travel restrictions, absenteeism by infected workers, labor shortages or other disruptions to our supply chain or our customers, have adversely impacted our sales and operating results and have resulted in some project delays. In addition, the pandemic has contributed to an economic downturn that could affect the ability of our customers to obtain financing for projects and therefore impact demand for our products and services. Order lead times have been and could continue to be extended or delayed and our pricing or pricing of suppliers for needed materials could increase. Some materials, products or services critical to our operations may become unavailable if the regional or global spread were significant enough to prevent alternative sourcing.

To date, we have experienced some delays in commercial construction projects and orders due to COVID-19. While the construction and construction-related industries are considered an "essential business or service" in most jurisdictions in which we operate, site closures or project delays have occurred and increased social distancing and health-related precautions are required on many work sites, which may cause additional project delays and additional costs to be incurred. Within the LSO segment, we also experienced the temporary closure of many of our customer's retail locations and we temporarily shut down our factories in this segment to comply with government "stay in place" orders. We may see additional temporary closures, which may lead to a future temporary shutdown of our LSO segment factories. We reopened our factories in the LSO segment during the second half of our second quarter.

This global pandemic has had, and we expect it to continue to have, an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict. The global outbreak of COVID-19 continues to evolve. The extent to which COVID-19 will impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate severity and spread of the disease, the duration or future outbreak surges, travel restrictions and social distancing requirements in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Given the continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, liquidity or financial position. To the extent that our customers and suppliers are adversely impacted by the coronavirus outbreak, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations, thereby negatively affecting our results of operations, and/or impact our liquidity.

~~Table of Contents~~

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 third quarter of fiscal ~~2021:~~2022:

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 30, 2020 to September 26, 2020 14,113 $ 20.93 — 2,063,596
September 27, 2020 to October 24, 2020 419,388 25.62 412,214 1,651,382
October 25, 2020 to November 28, 2020 208,649 25.74 208,323 1,443,059
Total 642,150 $ 25.16 620,537 1,443,059


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 29, 2021 to September 25, 2021	7,400	$	42.71	7,400	520,451
September 26, 2021 to October 23, 2021	1,707	37.76		—	1,520,451
October 24, 2021 to November 27, 2021	158,451	40.61		158,451	1,362,000
Total	167,558	$	40.78	165,851	1,362,000

(a)The shares in this column represent the total number of shares that were repurchased by us pursuant to our publicly announced repurchase program, plus the shares surrendered to us by plan participants to satisfy withholding tax obligations related to share-based compensation.

(b)In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock. The Board increased the authorization by 750,000 shares, announced on January 24, 2008; by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016, January 9, 2018, ~~and~~ January 14, ~~2020;~~2020, and October 7, 2021; and by 2,000,000 shares, announced on October 3, 2018. The repurchase program does not have an expiration date.

Item 6.Exhibits


3.1			Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year-ended February 28, 2004.)
3.2			Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on January 16, 2020.)
3.3			Amended and Restated Bylaws of Apogee Enterprises, Inc. (Incorporated by reference to Exhibit ~~3.1~~3.3 to ~~Registrant's Current~~the Registrant’s Quarterly Report on Form ~~8-K filed on July 3, 2018.)~~10-Q for the quarter-ended May 29, 2021).
10.1			~~Transition~~ ~~Agreement~~ ~~between~~Apogee Enterprises, Inc. ~~and Joseph F. Puishys, datedSeptember15,2020.~~2021 Deferred Compensation Plan for Non-Employee Directors (Incorporated by reference to Exhibit ~~10.1~~4.5 to ~~the Registrant’s~~ ~~Current Report~~Apogee’s Registration Statement on Form ~~8-K~~S-8 filed on ~~September17,2020)~~October 13, 2021).
~~10.2~~			Amendment No. 2 to Third Amended and Restated Credit Agreement dated as of November 6, 2020, by and among Apogee Enterprises, Inc., as the Borrower, the Lenders referred to therein, Wells Fargo Bank, National Association, as Administrative Age ~~nt, Swingline Lender and Issuing Lender, and U.S. Bank National Association, as Syndication Agent and Issuing Lender.(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 10, 2020)~~
~~31.1~~31.1#			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
~~31.2~~31.2#			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
~~32.1~~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.
~~32.2~~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.
101			The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November ~~28, 2020,~~27, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of November ~~28, 2020~~27, 2021 and February ~~29, 2020,~~27, 2021, (ii) the Consolidated Results of Operations for the three- and nine-months ended November ~~28, 2020~~27, 2021 and November ~~30, 2019,~~28, 2020, (iii) the Consolidated Statements of Comprehensive Earnings for the three- and nine-months ended November ~~28, 2020~~27, 2021 and November ~~30, 2019,~~28, 2020, (iv) the Consolidated Statements of Cash Flows for the nine-months ended November ~~28, 2020~~27, 2021 and November ~~30, 2019,~~28, 2020, (v) the Consolidated Statements of Shareholders' Equity for the three- and nine-months ended November ~~28, 2020~~27, 2021 and November ~~30, 2019,~~28, 2020, and (vi) Notes to Consolidated Financial Statements.
104			Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
			Exhibits marked with a (#) sign are filed herewith.

Table of Contents

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.


	APOGEE ENTERPRISES, INC.

Date: January ~~7, 2021~~6, 2022	By: /s/ Ty R. Silberhorn
		Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer)


Date: January ~~7, 2021~~6, 2022	By: /s/ Nisheet Gupta
		Nisheet Gupta Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)


		Page
PART I	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets	4

	Consolidated Results of Operations	5

	Consolidated Statements of Comprehensive Earnings	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Shareholders' Equity	8

	Notes to Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	27

PART II	Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	2728

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	28

Signatures		29