UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 27, 202126, 2022
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-6365
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APOGEE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
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Minnesota | | | | 41-0919654 |
(State or other jurisdiction of incorporation or organization) | | | | (I.R.S. Employer Identification No.) |
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4400 West 78th Street, Suite 520 | Minneapolis | 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)
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Securities registered pursuant to Section 12(b) of the Act:
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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 | | 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.
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Large accelerated filer | | ox | | Accelerated filer | | x☐ |
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Non-accelerated filer | | o | | Smaller reporting company | | ☐ |
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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 3,December 26, 2022, 24,865,48022,213,890 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
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PART I | | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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PART II | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 6. | | |
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PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (In thousands, except stock data) | (In thousands, except stock data) | | November 27, 2021 | | February 27, 2021 | (In thousands, except stock data) | | November 26, 2022 | | February 26, 2022 |
Assets | Assets | | | | | Assets | | | | |
Current assets | Current assets | | Current assets | |
Cash and cash equivalents | Cash and cash equivalents | | $ | 78,272 | | | $ | 47,277 | | Cash and cash equivalents | | $ | 21,746 | | | $ | 37,583 | |
| Restricted cash | | Restricted cash | | 3,718 | | | — | |
Receivables, net | Receivables, net | | 165,005 | | | 175,917 | | Receivables, net | | 222,554 | | | 168,592 | |
Inventories | Inventories | | 75,437 | | | 72,823 | | Inventories | | 86,032 | | | 80,494 | |
Costs and earnings on contracts in excess of billings | Costs and earnings on contracts in excess of billings | | 28,323 | | | 29,497 | | Costs and earnings on contracts in excess of billings | | 32,964 | | | 30,403 | |
Other current assets | Other current assets | | 19,837 | | | 25,160 | | Other current assets | | 29,676 | | | 20,820 | |
Total current assets | Total current assets | | 366,874 | | | 350,674 | | Total current assets | | 396,690 | | | 337,892 | |
Property, plant and equipment, net | Property, plant and equipment, net | | 254,838 | | | 298,443 | | Property, plant and equipment, net | | 231,173 | | | 249,995 | |
Assets held for sale | | 9,256 | | | — | | |
Operating lease right-of-use assets | Operating lease right-of-use assets | | 50,845 | | | 58,864 | | Operating lease right-of-use assets | | 44,198 | | | 47,912 | |
Goodwill | Goodwill | | 129,932 | | | 130,098 | | Goodwill | | 129,268 | | | 130,102 | |
Intangible assets | Intangible assets | | 123,553 | | | 130,053 | | Intangible assets | | 68,825 | | | 72,481 | |
Other non-current assets | Other non-current assets | | 46,793 | | | 46,967 | | Other non-current assets | | 48,292 | | | 49,481 | |
Total assets | Total assets | | $ | 982,091 | | | $ | 1,015,099 | | Total assets | | $ | 918,446 | | | $ | 887,863 | |
Liabilities and Shareholders’ Equity | Liabilities and Shareholders’ Equity | | | | | Liabilities and Shareholders’ Equity | | | | |
Current liabilities | Current liabilities | | Current liabilities | |
Accounts payable | Accounts payable | | $ | 80,995 | | | $ | 76,204 | | Accounts payable | | $ | 70,137 | | | $ | 92,104 | |
Accrued payroll and related benefits | Accrued payroll and related benefits | | 48,017 | | | 50,125 | | Accrued payroll and related benefits | | 55,528 | | | 50,977 | |
| Billings on contracts in excess of costs and earnings | | 18,458 | | | 22,789 | | |
Billings in excess of costs and earnings on uncompleted contracts | | Billings in excess of costs and earnings on uncompleted contracts | | 29,121 | | | 8,659 | |
Operating lease liabilities | Operating lease liabilities | | 11,834 | | | 13,251 | | Operating lease liabilities | | 11,077 | | | 12,744 | |
Current portion of debt | | 1,000 | | | 2,000 | | |
Current portion long-term debt | | Current portion long-term debt | | — | | | 1,000 | |
Other current liabilities | Other current liabilities | | 57,586 | | | 53,183 | | Other current liabilities | | 66,174 | | | 67,462 | |
Total current liabilities | Total current liabilities | | 217,890 | | | 217,552 | | Total current liabilities | | 232,037 | | | 232,946 | |
Long-term debt | Long-term debt | | 162,000 | | | 163,000 | | Long-term debt | | 203,735 | | | 162,000 | |
Non-current operating lease liabilities | Non-current operating lease liabilities | | 43,608 | | | 48,439 | | Non-current operating lease liabilities | | 36,778 | | | 39,591 | |
Non-current self-insurance reserves | Non-current self-insurance reserves | | 26,628 | | | 24,880 | | Non-current self-insurance reserves | | 21,062 | | | 22,544 | |
Other non-current liabilities | Other non-current liabilities | | 58,112 | | | 68,483 | | Other non-current liabilities | | 47,196 | | | 44,583 | |
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 25,227,367 and 25,713,688 respectively | | 8,409 | | | 8,571 | | |
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 22,213,635 and 23,701,491 respectively | | Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 22,213,635 and 23,701,491 respectively | | 7,405 | | | 7,901 | |
Additional paid-in capital | Additional paid-in capital | | 158,579 | | | 154,958 | | Additional paid-in capital | | 144,358 | | | 149,713 | |
Retained earnings | Retained earnings | | 336,816 | | | 357,243 | | Retained earnings | | 258,836 | | | 254,825 | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | | (29,951) | | | (28,027) | | Accumulated other comprehensive loss | | (32,961) | | | (26,240) | |
Total shareholders’ equity | Total shareholders’ equity | | 473,853 | | | 492,745 | | Total shareholders’ equity | | 377,638 | | | 386,199 | |
Total liabilities and shareholders’ equity | Total liabilities and shareholders’ equity | | $ | 982,091 | | | $ | 1,015,099 | | Total liabilities and shareholders’ equity | | $ | 918,446 | | | $ | 887,863 | |
See accompanying notes to consolidated financial statements.
4
CONSOLIDATED RESULTS OF OPERATIONS
(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 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 | (In thousands, except per share data) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Net sales | Net sales | | $ | 334,217 | | | $ | 313,583 | | | $ | 986,020 | | | $ | 922,162 | | Net sales | | $ | 367,847 | | | $ | 334,217 | | | $ | 1,096,591 | | | $ | 986,020 | |
Cost of sales | Cost of sales | | 269,537 | | | 243,998 | | | 805,627 | | | 716,139 | | Cost of sales | | 281,239 | | | 269,537 | | | 839,430 | | | 805,627 | |
Gross profit | Gross profit | | 64,680 | | | 69,585 | | | 180,393 | | | 206,023 | | Gross profit | | 86,608 | | | 64,680 | | | 257,161 | | | 180,393 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | | 46,970 | | | 19,835 | | | 149,709 | | | 126,590 | | Selling, general and administrative expenses | | 51,847 | | | 46,970 | | | 157,112 | | | 149,709 | |
Operating income | Operating income | | 17,710 | | | 49,750 | | | 30,684 | | | 79,433 | | Operating income | | 34,761 | | | 17,710 | | | 100,049 | | | 30,684 | |
| Interest expense, net | Interest expense, net | | 528 | | | 1,502 | | | 2,838 | | | 4,240 | | Interest expense, net | | 2,590 | | | 528 | | | 5,494 | | | 2,838 | |
Other (expense) income, net | | (3,057) | | | 472 | | | (3,266) | | | 684 | | |
Other expense, net | | Other expense, net | | 552 | | | 3,057 | | | 2,035 | | | 3,266 | |
Earnings before income taxes | Earnings before income taxes | | 14,125 | | | 48,720 | | | 24,580 | | | 75,877 | | Earnings before income taxes | | 31,619 | | | 14,125 | | | 92,520 | | | 24,580 | |
Income tax expense | Income tax expense | | 3,068 | | | 11,447 | | | 4,821 | | | 18,070 | | Income tax expense | | 7,854 | | | 3,068 | | | 8,635 | | | 4,821 | |
Net earnings | Net earnings | | $ | 11,057 | | | $ | 37,273 | | | $ | 19,759 | | | $ | 57,807 | | Net earnings | | $ | 23,765 | | | $ | 11,057 | | | $ | 83,885 | | | $ | 19,759 | |
Earnings per share - basic | Earnings per share - basic | | $ | 0.44 | | | $ | 1.44 | | | $ | 0.79 | | | $ | 2.22 | | Earnings per share - basic | | $ | 1.09 | | | $ | 0.44 | | | $ | 3.81 | | | $ | 0.79 | |
Earnings per share - diluted | Earnings per share - diluted | | $ | 0.44 | | | $ | 1.42 | | | $ | 0.78 | | | $ | 2.19 | | Earnings per share - diluted | | $ | 1.07 | | | $ | 0.44 | | | $ | 3.74 | | | $ | 0.78 | |
Weighted average basic shares outstanding | Weighted average basic shares outstanding | | 24,957 | | | 25,883 | | | 25,166 | | | 26,068 | | Weighted average basic shares outstanding | | 21,870 | | | 24,957 | | | 22,043 | | | 25,166 | |
Weighted average diluted shares outstanding | Weighted average diluted shares outstanding | | 25,309 | | | 26,225 | | | 25,459 | | | 26,350 | | Weighted average diluted shares outstanding | | 22,278 | | | 25,309 | | | 22,456 | | | 25,459 | |
See accompanying notes to consolidated financial statements.
5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Unaudited)
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended |
(In thousands) | (In thousands) | | November 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 | (In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Net earnings | Net earnings | | $ | 11,057 | | | $ | 37,273 | | | $ | 19,759 | | | $ | 57,807 | | Net earnings | | $ | 23,765 | | | $ | 11,057 | | | $ | 83,885 | | | $ | 19,759 | |
Other comprehensive earnings (loss): | | |
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 | | (868) | | | 294 | | | (842) | | | 997 | | |
Other comprehensive (losses) earnings: | | Other comprehensive (losses) earnings: | |
Unrealized loss on marketable securities, net of $(24), $(40), $(127) and $(39) of tax benefit, respectively | | Unrealized loss on marketable securities, net of $(24), $(40), $(127) and $(39) of tax benefit, respectively | | (88) | | | (151) | | | (470) | | | (147) | |
Unrealized gain (loss) on derivative instruments, net of $277, $(265), $(1,192) and $(257) of tax expense (benefit), respectively | | Unrealized gain (loss) on derivative instruments, net of $277, $(265), $(1,192) and $(257) of tax expense (benefit), respectively | | 905 | | | (868) | | | (3,911) | | | (842) | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | (2,515) | | | 899 | | | (935) | | | 887 | | Foreign currency translation adjustments | | (1,295) | | | (2,515) | | | (2,340) | | | (935) | |
Other comprehensive (loss) earnings | | (3,534) | | | 1,191 | | | (1,924) | | | 2,029 | | |
Other comprehensive losses | | Other comprehensive losses | | (478) | | | (3,534) | | | (6,721) | | | (1,924) | |
Total comprehensive earnings | Total comprehensive earnings | | $ | 7,523 | | | $ | 38,464 | | | $ | 17,835 | | | $ | 59,836 | | Total comprehensive earnings | | $ | 23,287 | | | $ | 7,523 | | | $ | 77,164 | | | $ | 17,835 | |
See accompanying notes to consolidated financial statements.
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | Nine Months Ended | | Nine Months Ended |
(In thousands) | (In thousands) | | November 27, 2021 | | November 28, 2020 | (In thousands) | | November 26, 2022 | | November 27, 2021 |
Operating Activities | Operating Activities | | | | | Operating Activities | | | | |
Net earnings | Net earnings | | $ | 19,759 | | | $ | 57,807 | | Net earnings | | $ | 83,885 | | | $ | 19,759 | |
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 | | 38,353 | | | 38,000 | | Depreciation and amortization | | 31,925 | | | 38,353 | |
Share-based compensation | Share-based compensation | | 4,807 | | | 6,163 | | Share-based compensation | | 5,961 | | | 4,807 | |
Deferred income taxes | Deferred income taxes | | (5,412) | | | 5,012 | | Deferred income taxes | | 2,341 | | | (5,412) | |
Asset impairment | Asset impairment | | 16,638 | | | — | | Asset impairment | | — | | | 16,638 | |
Gain on disposal of assets | Gain on disposal of assets | | (1,250) | | | (19,346) | | Gain on disposal of assets | | (1,484) | | | (1,250) | |
| Proceeds from New Markets Tax Credit transaction, net of deferred costs | | Proceeds from New Markets Tax Credit transaction, net of deferred costs | | 18,390 | | | — | |
Settlement of New Markets Tax Credit transaction | | Settlement of New Markets Tax Credit transaction | | (19,523) | | | — | |
Noncash lease expense | Noncash lease expense | | 9,302 | | | 9,531 | | Noncash lease expense | | 8,924 | | | 9,302 | |
Other, net | Other, net | | 3,009 | | | (69) | | Other, net | | 4,700 | | | 3,009 | |
Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | | Changes in operating assets and liabilities: | |
Receivables | Receivables | | 6,443 | | | 24,153 | | Receivables | | (58,202) | | | 6,443 | |
Inventories | Inventories | | (2,657) | | | (2,722) | | Inventories | | (5,822) | | | (2,657) | |
Costs and earnings on contracts in excess of billings | Costs and earnings on contracts in excess of billings | | 1,168 | | | 44,501 | | Costs and earnings on contracts in excess of billings | | (2,599) | | | 1,168 | |
Accounts payable and accrued expenses | Accounts payable and accrued expenses | | 5,440 | | | (43,915) | | Accounts payable and accrued expenses | | (11,985) | | | 5,440 | |
Billings on contracts in excess of costs and earnings | | (4,474) | | | (6,981) | | |
Billings in excess of costs and earnings on uncompleted contracts | | Billings in excess of costs and earnings on uncompleted contracts | | 20,884 | | | (4,474) | |
Refundable and accrued income taxes | Refundable and accrued income taxes | | 5,255 | | | 12,424 | | Refundable and accrued income taxes | | (14,391) | | | 5,255 | |
Operating lease liability | Operating lease liability | | (9,387) | | | (9,168) | | Operating lease liability | | (9,168) | | | (9,387) | |
Other | | (703) | | | 5,122 | | |
Other, net | | Other, net | | (2,724) | | | (703) | |
Net cash provided by operating activities | Net cash provided by operating activities | | 86,291 | | | 120,512 | | Net cash provided by operating activities | | 51,112 | | | 86,291 | |
Investing Activities | Investing Activities | | | | | Investing Activities | | | | |
Capital expenditures | Capital expenditures | | (13,070) | | | (17,116) | | Capital expenditures | | (18,119) | | | (13,070) | |
Proceeds from sales of property, plant and equipment | Proceeds from sales of property, plant and equipment | | 1,347 | | | 23,724 | | Proceeds from sales of property, plant and equipment | | 5,212 | | | 1,347 | |
| Other | | 76 | | | (1,090) | | |
Net cash (used) provided by investing activities | | (11,647) | | | 5,518 | | |
Other, net | | Other, net | | 923 | | | 76 | |
Net cash used by investing activities | | Net cash used by investing activities | | (11,984) | | | (11,647) | |
Financing Activities | Financing Activities | | | | | Financing Activities | | | | |
Borrowings on line of credit | Borrowings on line of credit | | — | | | 193,332 | | Borrowings on line of credit | | 430,879 | | | — | |
Repayments on debt | | (2,000) | | | (5,400) | | |
Repayment on debt | | Repayment on debt | | (151,000) | | | (2,000) | |
Payments on line of credit | Payments on line of credit | | — | | | (237,500) | | Payments on line of credit | | (239,000) | | | — | |
Payments on debt issue costs | | Payments on debt issue costs | | (790) | | | — | |
Proceeds from exercise of stock options | Proceeds from exercise of stock options | | 4,115 | | | 1,456 | | Proceeds from exercise of stock options | | — | | | 4,115 | |
Repurchase and retirement of common stock | Repurchase and retirement of common stock | | (29,164) | | | (20,731) | | Repurchase and retirement of common stock | | (74,312) | | | (29,164) | |
Dividends paid | Dividends paid | | (15,050) | | | (14,546) | | Dividends paid | | (14,415) | | | (15,050) | |
Other | | (1,895) | | | (2,309) | | |
Other, net | | Other, net | | (2,959) | | | (1,895) | |
Net cash used by financing activities | Net cash used by financing activities | | (43,994) | | | (85,698) | | Net cash used by financing activities | | (51,597) | | | (43,994) | |
Increase in cash and cash equivalents | | 30,650 | | | 40,332 | | |
(Decrease) increase in cash, cash equivalents and restricted cash | | (Decrease) increase in cash, cash equivalents and restricted cash | | (12,469) | | | 30,650 | |
Effect of exchange rates on cash | Effect of exchange rates on cash | | 345 | | | 129 | | Effect of exchange rates on cash | | 350 | | | 345 | |
Cash, cash equivalents and restricted cash at beginning of year | Cash, cash equivalents and restricted cash at beginning of year | | 47,277 | | | 14,952 | | Cash, cash equivalents and restricted cash at beginning of year | | 37,583 | | | 47,277 | |
Cash, cash equivalents and restricted cash at end of period | Cash, cash equivalents and restricted cash at end of period | | $ | 78,272 | | | $ | 55,413 | | Cash, cash equivalents and restricted cash at end of period | | $ | 25,464 | | | $ | 78,272 | |
Noncash Activity | Noncash Activity | | | | | Noncash Activity | | | | |
Capital expenditures in accounts payable | Capital expenditures in accounts payable | | $ | 1,095 | | | $ | 684 | | Capital expenditures in accounts payable | | $ | 1,557 | | | $ | 1,095 | |
See accompanying notes to consolidated financial statements.
7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
| (In thousands) | (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 | (In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | | 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 | | |
Balance at February 26, 2022 | | Balance at February 26, 2022 | | 23,701 | | | $ | 7,901 | | | $ | 149,713 | | | $ | 254,825 | | | | $ | (26,240) | | | $ | 386,199 | |
Net earnings | Net earnings | | — | | | — | | | — | | | 10,817 | | | — | | | — | | | — | | | 10,817 | | Net earnings | | — | | | — | | | — | | | 22,731 | | | | — | | | 22,731 | |
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) | | |
Unrealized loss on marketable securities, net of $74 tax benefit | | Unrealized loss on marketable securities, net of $74 tax benefit | | — | | | — | | | — | | | — | | | | (276) | | | (276) | |
Unrealized loss on derivative instruments, net of $1,317 tax benefit | | Unrealized loss on derivative instruments, net of $1,317 tax benefit | | — | | | — | | | — | | | — | | | | (4,316) | | | (4,316) | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | (4,300) | | | (4,300) | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | 1,732 | | | 1,732 | |
Issuance of stock, net of cancellations | Issuance of stock, net of cancellations | | 67 | | | 22 | | | — | | | — | | | (3) | | | 3 | | | — | | | 22 | | Issuance of stock, net of cancellations | | 100 | | | 33 | | | 23 | | | — | | | | — | | | 56 | |
Share-based compensation | Share-based compensation | | — | | | — | | | 1,587 | | | — | | | — | | | — | | | — | | | 1,587 | | Share-based compensation | | — | | | — | | | 1,597 | | | — | | | | — | | | 1,597 | |
| Share repurchases | Share repurchases | | (249) | | | (83) | | | (1,616) | | | (8,095) | | | — | | | — | | | — | | | (9,794) | | Share repurchases | | (1,571) | | | (524) | | | (10,350) | | | (63,438) | | | | — | | | (74,312) | |
Other share retirements | Other share retirements | | (30) | | | (9) | | | (197) | | | (496) | | | — | | | — | | | — | | | (702) | | Other share retirements | | (30) | | | (10) | | | (198) | | | (1,120) | | | | — | | | (1,328) | |
Cash dividends | Cash dividends | | — | | | — | | | — | | | (5,025) | | | — | | | — | | | — | | | (5,025) | | Cash dividends | | — | | | — | | | — | | | (4,793) | | | | — | | | (4,793) | |
Balance at August 28, 2021 | | 25,394 | | | $ | 8,465 | | | $ | 158,115 | | | $ | 336,398 | | | $ | (192) | | | $ | 192 | | | $ | (26,417) | | | $ | 476,561 | | |
Balance at May 28, 2022 | | Balance at May 28, 2022 | | 22,200 | | | $ | 7,400 | | | $ | 140,785 | | | $ | 208,205 | | | | $ | (29,100) | | | $ | 327,290 | |
Net earnings | Net earnings | | — | | | — | | | — | | | 11,057 | | | — | | | — | | | — | | | 11,057 | | Net earnings | | — | | | — | | | — | | | 37,389 | | | | — | | | 37,389 | |
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) | | |
Unrealized loss on marketable securities, net of $28 tax benefit | | Unrealized loss on marketable securities, net of $28 tax benefit | | — | | | — | | | — | | | — | | | | (106) | | | (106) | |
Unrealized loss on derivative instruments, net of $152 tax benefit | | Unrealized loss on derivative instruments, net of $152 tax benefit | | — | | | — | | | — | | | — | | | | (500) | | | (500) | |
Foreign currency translation adjustments | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | (2,777) | | | (2,777) | |
Issuance of stock, net of cancellations | | Issuance of stock, net of cancellations | | (14) | | | (5) | | | 61 | | | — | | | | — | | | 56 | |
Share-based compensation | | Share-based compensation | | — | | | — | | | 1,797 | | | — | | | | — | | | 1,797 | |
Exercise of stock options | | Exercise of stock options | | 36 | | | 12 | | | (954) | | | — | | | | — | | | (942) | |
| Other share retirements | | Other share retirements | | (13) | | | (4) | | | (114) | | | (540) | | | | — | | | (658) | |
Cash dividends | | Cash dividends | | — | | | — | | | — | | | (4,809) | | | | — | | | (4,809) | |
Balance at August 27, 2022 | | Balance at August 27, 2022 | | 22,209 | | | $ | 7,403 | | | $ | 141,575 | | | $ | 240,245 | | | | $ | (32,483) | | | $ | 356,740 | |
Net earnings | | Net earnings | | — | | | — | | | — | | | 23,765 | | | | — | | | 23,765 | |
Unrealized loss on marketable securities, net of $24 tax benefit | | Unrealized loss on marketable securities, net of $24 tax benefit | | — | | | — | | | — | | | — | | | | (88) | | | (88) | |
Unrealized gain on derivative instruments, net of $277 tax expense | | Unrealized gain on derivative instruments, net of $277 tax expense | | — | | | — | | | — | | | — | | | | 905 | | | 905 | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | (2,515) | | | (2,515) | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | (1,295) | | | (1,295) | |
Issuance of stock, net of cancellations | Issuance of stock, net of cancellations | | 1 | | | — | | | 22 | | | — | | | (3) | | | 3 | | | — | | | 22 | | Issuance of stock, net of cancellations | | 9 | | | 3 | | | 250 | | | (196) | | | | — | | | 57 | |
Share-based compensation | Share-based compensation | | — | | | — | | | 1,546 | | | — | | | — | | | — | | | — | | | 1,546 | | Share-based compensation | | — | | | — | | | 2,567 | | | — | | | | — | | | 2,567 | |
| Share repurchases | | (166) | | | (55) | | | (1,092) | | | (5,598) | | | — | | | — | | | — | | | (6,745) | | |
| Other share retirements | Other share retirements | | (2) | | | (1) | | | (12) | | | (51) | | | — | | | — | | | — | | | (64) | | Other share retirements | | (4) | | | (1) | | | (34) | | | (165) | | | | — | | | (200) | |
Cash dividends | Cash dividends | | — | | | — | | | — | | | (4,990) | | | — | | | — | | | — | | | (4,990) | | Cash dividends | | — | | | — | | | — | | | (4,813) | | | | — | | | (4,813) | |
Balance at November 27, 2021 | | 25,227 | | | $ | 8,409 | | | $ | 158,579 | | | $ | 336,816 | | | $ | (195) | | | $ | 195 | | | $ | (29,951) | | | $ | 473,853 | | |
Balance at November 26, 2022 | | Balance at November 26, 2022 | | 22,214 | | | $ | 7,405 | | | $ | 144,358 | | | $ | 258,836 | | | | $ | (32,961) | | | $ | 377,638 | |
See accompanying notes to consolidated financial statements.
8
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
| (In thousands) | (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 | (In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | | 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 | | |
Balance at February 27, 2021 | | Balance at February 27, 2021 | | 25,714 | | | $ | 8,571 | | | $ | 154,958 | | | $ | 357,243 | | | | $ | (28,027) | | | $ | 492,745 | |
Net earnings | Net earnings | | — | | | — | | | — | | | 2,876 | | | — | | | — | | | — | | | 2,876 | | Net earnings | | — | | | — | | | — | | | 10,817 | | | | — | | | 10,817 | |
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) | | |
Unrealized gain on marketable securities, net of $0 tax expense | | Unrealized gain on marketable securities, net of $0 tax expense | | — | | | — | | | — | | | — | | | | — | | | — | |
Unrealized gain on derivative instruments, net of $211 tax expense | | Unrealized gain on derivative instruments, net of $211 tax expense | | — | | | — | | | — | | | — | | | | 692 | | | 692 | |
Foreign currency translation adjustments | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | 5,880 | | | 5,880 | |
Issuance of stock, net of cancellations | | Issuance of stock, net of cancellations | | 90 | | | 30 | | | (7) | | | — | | | | — | | | 23 | |
Share-based compensation | | Share-based compensation | | — | | | — | | | 1,674 | | | — | | | | — | | | 1,674 | |
Exercise of stock options | | Exercise of stock options | | 179 | | | 60 | | | 4,055 | | | — | | | | — | | | 4,115 | |
Share repurchases | | Share repurchases | | (357) | | | (119) | | | (2,218) | | | (10,288) | | | | — | | | (12,625) | |
Other share retirements | | Other share retirements | | (20) | | | (7) | | | (121) | | | (607) | | | | — | | | (735) | |
Cash dividends | | Cash dividends | | — | | | — | | | — | | | (5,035) | | | | — | | | (5,035) | |
Balance at May 29, 2021 | | Balance at May 29, 2021 | | 25,606 | | | $ | 8,535 | | | $ | 158,341 | | | $ | 352,130 | | | | $ | (21,455) | | | $ | 497,551 | |
Net loss | | Net loss | | — | | | — | | | — | | | (2,116) | | | | — | | | (2,116) | |
Unrealized gain on marketable securities, net of $2 tax expense | | Unrealized gain on marketable securities, net of $2 tax expense | | — | | | — | | | — | | | — | | | | 4 | | | 4 | |
Unrealized loss on derivative instruments, net of $203 tax benefit | | Unrealized loss on derivative instruments, net of $203 tax benefit | | — | | | — | | | — | | | — | | | | (666) | | | (666) | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | (6,151) | | | (6,151) | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | (4,300) | | | (4,300) | |
Issuance of stock, net of cancellations | Issuance of stock, net of cancellations | | 183 | | | 62 | | | (39) | | | — | | | (11) | | | 11 | | | — | | | 23 | | Issuance of stock, net of cancellations | | 67 | | | 22 | | | — | | | — | | | | — | | | 22 | |
Share-based compensation | Share-based compensation | | — | | | — | | | 1,406 | | | — | | | — | | | — | | | — | | | 1,406 | | Share-based compensation | | — | | | — | | | 1,587 | | | — | | | | — | | | 1,587 | |
| Share repurchases | Share repurchases | | (231) | | | (77) | | | (1,370) | | | (3,284) | | | — | | | — | | | — | | | (4,731) | | Share repurchases | | (249) | | | (83) | | | (1,616) | | | (8,095) | | | | — | | | (9,794) | |
Other share retirements | Other share retirements | | (26) | | | (9) | | | (151) | | | (505) | | | — | | | — | | | — | | | (665) | | Other share retirements | | (30) | | | (9) | | | (197) | | | (496) | | | | — | | | (702) | |
Cash dividends | Cash dividends | | — | | | — | | | — | | | (4,872) | | | — | | | — | | | — | | | (4,872) | | Cash dividends | | — | | | — | | | — | | | (5,025) | | | | — | | | (5,025) | |
Balance at May 30, 2020 | | 26,369 | | | $ | 8,790 | | | $ | 153,862 | | | $ | 382,225 | | | $ | (696) | | | $ | 696 | | | $ | (40,733) | | | $ | 504,144 | | |
Balance at August 28, 2021 | | Balance at August 28, 2021 | | 25,394 | | | $ | 8,465 | | | $ | 158,115 | | | $ | 336,398 | | | | $ | (26,417) | | | $ | 476,561 | |
Net earnings | Net earnings | | — | | | — | | | — | | | 17,658 | | | — | | | — | | | — | | | 17,658 | | Net earnings | | — | | | — | | | — | | | 11,057 | | | | — | | | 11,057 | |
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 | | |
Unrealized loss on marketable securities, net of $40 tax benefit | | Unrealized loss on marketable securities, net of $40 tax benefit | | — | | | — | | | — | | | — | | | | (151) | | | (151) | |
Unrealized loss on derivative instruments, net of $265 tax benefit | | Unrealized loss on derivative instruments, net of $265 tax benefit | | — | | | — | | | — | | | — | | | | (868) | | | (868) | |
Foreign currency translation adjustments | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | 6,139 | | | 6,139 | | Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | | (2,515) | | | (2,515) | |
Issuance of stock, net of cancellations | Issuance of stock, net of cancellations | | 121 | | | 41 | | | (23) | | | — | | | (11) | | | 11 | | | — | | | 18 | | Issuance of stock, net of cancellations | | 1 | | | — | | | 22 | | | — | | | | — | | | 22 | |
Share-based compensation | Share-based compensation | | — | | | — | | | 2,256 | | | — | | | — | | | — | | | — | | | 2,256 | | Share-based compensation | | — | | | — | | | 1,546 | | | — | | | | — | | | 1,546 | |
| 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 | Share repurchases | | (620) | | | (207) | | | (3,781) | | | (12,012) | | | — | | | — | | | — | | | (16,000) | | Share repurchases | | (166) | | | (55) | | | (1,092) | | | (5,598) | | | | — | | | (6,745) | |
Other share retirements | Other share retirements | | (22) | | | (7) | | | (131) | | | (331) | | | — | | | — | | | — | | | (469) | | Other share retirements | | (2) | | | (1) | | | (12) | | | (51) | | | | — | | | (64) | |
Cash dividends | Cash dividends | | — | | | — | | | — | | | (4,795) | | | — | | | — | | | — | | | (4,795) | | Cash dividends | | — | | | — | | | — | | | (4,990) | | | | — | | | (4,990) | |
Balance at November 28, 2020 | | 25,962 | | | $ | 8,654 | | | $ | 155,974 | | | $ | 414,749 | | | $ | (183) | | | $ | 183 | | | $ | (32,034) | | | $ | 547,343 | | |
Balance at November 27, 2021 | | Balance at November 27, 2021 | | 25,227 | | | $ | 8,409 | | | $ | 158,579 | | | $ | 336,816 | | | | $ | (29,951) | | | $ | 473,853 | |
See accompanying notes to consolidated financial statements.
9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Summary of Significant Accounting Policies
Basis of presentation
The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended February 27, 2021.26, 2022. 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 27, 202126, 2022 are not necessarily indicative of the results to be expected for the full year.
COVID-19 update
During fiscal 2021, as a result of the global COVID-19 pandemic, we experienced some delays in commercial construction projects and orders and other disruptions to our business, including various physical distancing and health-related precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment for a portion of fiscal 2021 due to governmental orders. We were also impacted by quarantine-related absenteeism among our production workforce, resulting in labor 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 businesses in the future will depend on 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 initiatives, which have been boosted by vaccine production and distribution.
Adoption of new accounting standards
At the beginning of fiscal 2022, we adopted the guidance in ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU removed exceptions on intra-period tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes. The adoption of this ASU did not have a significant impact on the consolidated financial statements.
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 other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The adoption of this ASU did not have a significant impact on the consolidated financial statements.
Equity Investment
During the thirdfirst 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 Company which represents a write-down2023, we began management of the entire investmentSotawall and Harmon businesses under the Architectural Services segment in order to create a single, unified offering for larger custom curtainwall projects. The comparative fiscal 2022 segment results for the company.Architectural Framing Systems and Architectural Services segments have been recast to reflect the move of the Sotawall business into the Architectural Services segment from the Architectural Framing Systems segment, effective at the start of the first quarter of fiscal 2023.
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 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 | (In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Recognized at shipment | Recognized at shipment | | $ | 141,826 | | | $ | 129,132 | | | $ | 419,893 | | | $ | 379,292 | | Recognized at shipment | | $ | 168,593 | | | $ | 141,826 | | | $ | 504,450 | | | $ | 419,893 | |
Recognized over time | Recognized over time | | 192,391 | | | 184,451 | | | 566,127 | | | 542,870 | | Recognized over time | | 199,254 | | | 192,391 | | | 592,141 | | | 566,127 | |
Total | Total | | $ | 334,217 | | | $ | 313,583 | | | $ | 986,020 | | | $ | 922,162 | | Total | | $ | 367,847 | | | $ | 334,217 | | | $ | 1,096,591 | | | $ | 986,020 | |
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
construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.released to us from the customer.
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Trade accounts | Trade accounts | | $ | 124,890 | | | $ | 120,534 | | Trade accounts | | $ | 142,591 | | | $ | 129,085 | |
Construction contracts | Construction contracts | | 16,266 | | | 12,163 | | Construction contracts | | 50,423 | | | 12,857 | |
Contract retainage | Contract retainage | | 26,164 | | | 45,167 | | Contract retainage | | 31,395 | | | 28,782 | |
Total receivables | Total receivables | | 167,320 | | | 177,864 | | Total receivables | | 224,409 | | | 170,724 | |
Less: allowance for credit losses | Less: allowance for credit losses | | 2,315 | | | 1,947 | | Less: allowance for credit losses | | 1,855 | | | 2,132 | |
Net receivables | | $ | 165,005 | | | $ | 175,917 | | |
Receivables, net | | Receivables, net | | $ | 222,554 | | | $ | 168,592 | |
The following table summarizes the activity in the allowance for credit losses:
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Beginning balance | Beginning balance | | $ | 1,947 | | | $ | 2,469 | | Beginning balance | | $ | 2,132 | | | $ | 1,947 | |
Additions charged to costs and expenses | Additions charged to costs and expenses | | 635 | | | 389 | | Additions charged to costs and expenses | | 20 | | | 729 | |
Deductions from allowance, net of recoveries | Deductions from allowance, net of recoveries | | (251) | | | (887) | | Deductions from allowance, net of recoveries | | (279) | | | (514) | |
Other changes (1) | Other changes (1) | | (16) | | | (24) | | Other changes (1) | | (18) | | | (30) | |
Ending balance | Ending balance | | $ | 2,315 | | | $ | 1,947 | | Ending balance | | $ | 1,855 | | | $ | 2,132 | |
(1) Result of foreign currency effects | (1) Result of foreign currency effects | | | | | (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 whereat which point amounts are released.released to us from the customer.
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Contract assets | Contract assets | | $ | 54,487 | | | $ | 74,664 | | Contract assets | | $ | 64,359 | | | $ | 59,185 | |
Contract liabilities | Contract liabilities | | 20,689 | | | 25,000 | | Contract liabilities | | 31,657 | | | 11,373 | |
|
The changechanges in contract assets and contract liabilities waswere 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 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 | (In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Revenue recognized related to contract liabilities from prior year-end | Revenue recognized related to contract liabilities from prior year-end | | $ | 1,687 | | | $ | 2,044 | | | $ | 18,266 | | | $ | 16,239 | | Revenue recognized related to contract liabilities from prior year-end | | $ | 3,473 | | | $ | 1,687 | | | $ | 36,630 | | | $ | 18,266 | |
Revenue recognized related to prior satisfaction of performance obligations | Revenue recognized related to prior satisfaction of performance obligations | | 5,051 | | | 4,016 | | | 12,568 | | | 10,545 | | Revenue recognized related to prior satisfaction of performance obligations | | 4,640 | | | 5,051 | | | 9,586 | | | 12,568 | |
Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that time frame. Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time. As of November 27, 2021, theThe transaction priceprices associated with unsatisfied performance obligations was approximately $863.1 million. The performance obligationsat November 26, 2022 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
| | | | | | | | |
(In thousands) | | November 27, 202126, 2022 |
Within one year | | $ | 547,110493,289 | |
Within two years | | 247,753280,427 | |
Beyond two years | | 68,20987,660 | |
Total | | $ | 863,072861,376 | |
3.Supplemental Balance Sheet Information
Inventories
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Raw materials | Raw materials | | $ | 43,436 | | | $ | 36,681 | | Raw materials | | $ | 43,722 | | | $ | 42,541 | |
Work-in-process | Work-in-process | | 17,532 | | | 18,932 | | Work-in-process | | 17,081 | | | 18,144 | |
Finished goods | Finished goods | | 14,469 | | | 17,210 | | Finished goods | | 25,229 | | | 19,809 | |
Total inventories | Total inventories | | $ | 75,437 | | | $ | 72,823 | | Total inventories | | $ | 86,032 | | | $ | 80,494 | |
Other current liabilities
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Warranties | Warranties | | $ | 10,889 | | | $ | 12,298 | | Warranties | | $ | 14,137 | | | $ | 11,786 | |
Accrued project losses | | 904 | | | 4,572 | | |
| Income and other taxes | Income and other taxes | | 8,727 | | | 7,459 | | Income and other taxes | | 5,832 | | | 15,770 | |
Accrued self-insurance reserves | Accrued self-insurance reserves | | 9,431 | | | 6,482 | | Accrued self-insurance reserves | | 15,888 | | | 8,796 | |
Accrued freight | Accrued freight | | 1,931 | | | 1,477 | | Accrued freight | | 1,917 | | | 2,078 | |
Deferred revenue | | Deferred revenue | | 2,536 | | | 2,714 | |
Other | Other | | 25,704 | | | 20,895 | | Other | | 25,864 | | | 26,318 | |
Total other current liabilities | Total other current liabilities | | $ | 57,586 | | | $ | 53,183 | | Total other current liabilities | | $ | 66,174 | | | $ | 67,462 | |
Other non-current liabilities
| (In thousands) | (In thousands) | | November 27, 2021 | | February 27, 2021 | (In thousands) | | November 26, 2022 | | February 26, 2022 |
Deferred benefit from New Market Tax Credit transactions | | $ | 9,165 | | | $ | 15,717 | | |
Deferred benefit from New Markets Tax Credit transactions | | Deferred benefit from New Markets Tax Credit transactions | | $ | 9,250 | | | $ | 9,165 | |
Retirement plan obligations | Retirement plan obligations | | 7,575 | | | 7,730 | | Retirement plan obligations | | 6,269 | | | 7,041 | |
Deferred compensation plan | Deferred compensation plan | | 12,682 | | | 13,507 | | Deferred compensation plan | | 6,851 | | | 9,483 | |
Deferred tax liabilities | Deferred tax liabilities | | 4,773 | | | 8,310 | | Deferred tax liabilities | | 3,793 | | | 2,296 | |
Deferred payroll taxes | | 6,789 | | | 6,789 | | |
| Other | Other | | 17,128 | | | 16,430 | | Other | | 21,033 | | | 16,598 | |
Total other non-current liabilities | Total other non-current liabilities | | $ | 58,112 | | | $ | 68,483 | | Total other non-current liabilities | | $ | 47,196 | | | $ | 44,583 | |
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 27, 2021 | | $ | 12,337 | | | $ | 223 | | | $ | 33 | | | $ | 12,527 | |
February 27, 2021 | | 12,517 | | | 386 | | | 10 | | | 12,893 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
November 26, 2022 | | $ | 10,835 | | | $ | — | | | $ | 675 | | | $ | 10,160 | |
February 26, 2022 | | 11,862 | | | 45 | | | 123 | | | 11,784 | |
Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements. The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.
The amortized cost and estimated fair values of these bonds at November 27, 2021,26, 2022, 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) | (In thousands) | | Amortized Cost | | Estimated Fair Value | (In thousands) | | Amortized Cost | | Estimated Fair Value |
Due within one year | Due within one year | | $ | 1,011 | | | $ | 1,024 | | Due within one year | | $ | 1,739 | | | $ | 1,720 | |
Due after one year through five years | Due after one year through five years | | 9,536 | | | 9,716 | | Due after one year through five years | | 9,096 | | | 8,440 | |
Due after five years through 10 years | | 990 | | | 973 | | |
| Due beyond 15 years | | 800 | | | 814 | | |
| Total | Total | | $ | 12,337 | | | $ | 12,527 | | Total | | $ | 10,835 | | | $ | 10,160 | |
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 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 and term loan. As of November 27, 2021,26, 2022, the interest rate swap contract had a notional value of $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 exchange rates (primarily related to the Canadian dollar). These contracts generally have an original maturity date of less than one year. As of November 27, 2021,26, 2022, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S. dollar notional values of $16.5$3.0 million and $8.0$8.1 million, 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 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 | |
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Quoted Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Total Fair Value |
November 26, 2022 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 6,629 | | | $ | — | | | $ | 6,629 | |
| | | | | | |
Municipal and corporate bonds | | — | | | 10,160 | | | 10,160 | |
Cash surrender value of life insurance | | — | | | 16,247 | | | 16,247 | |
| | | | | | |
| | | | | | |
Interest rate swap contract | | — | | | 1,917 | | | 1,917 | |
Liabilities: | | | | | | |
Deferred compensation | | — | | | 9,277 | | | 9,277 | |
Foreign currency forward/option contract | | — | | | 192 | | | 192 | |
Aluminum hedging contract | | — | | | 2,382 | | | 2,382 | |
| | | | | | |
| | | | | | |
February 26, 2022 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 19,288 | | | $ | — | | | $ | 19,288 | |
| | | | | | |
Municipal and corporate bonds | | — | | | 11,784 | | | 11,784 | |
Cash surrender value of life insurance | | — | | | 17,831 | | | 17,831 | |
| | | | | | |
Aluminum hedging contract | | — | | | 2,133 | | | 2,133 | |
Interest rate swap contract | | — | | | 718 | | | 718 | |
Liabilities: | | | | | | |
Deferred compensation | | — | | | 12,491 | | | 12,491 | |
Foreign currency forward/option contract | | — | | | 161 | | | 161 | |
| | | | | | |
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 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 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 as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.
Based onAt the impairment analysis performed inbeginning of the fourthfirst quarter of fiscal 2021, estimated fair value was2023, we began management of the Sotawall and Harmon businesses under the Architectural Services segment in excessorder to create a single, unified offering for larger custom curtainwall projects, which resulted in the combination of carrying value at six of our eight reporting units. However, estimated fair value did not exceed carrying value for twothe Sotawall and Harmon reporting units within the Architectural Framing Systems segment, EFCO and Sotawall. Asinto a result, as of February 27, 2021, we incurred goodwill impairment expense of $46.7 million and $17.1 million in our EFCO and Sotawallsingle reporting units, respectively. The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, represents the total accumulated goodwill impairment expenses recorded.
During the third quarter of fiscal 2022, we combined certain reporting units to form two reporting units, 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 Wausau, EFCO and 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 Window and Wall Systems and Storefront and Finishing Solutions reporting units. The goodwill of the five individual pre-integration reporting units was aggregated to the respective combined reporting units. We evaluated goodwill on a qualitative basis prior to and subsequent to this change for these reporting units and concluded that no adjustment to the carrying value of goodwill was necessarynecessary. Concurrent with the move of Sotawall from the Architectural Framing Systems segment to the Architectural Services segment effective at the start of our first quarter of fiscal 2023, goodwill was reallocated to the affected reporting units within each segment, using a relative fair value approach as a result of this change.outlined in ASC 350, Intangibles - Goodwill and Other. In addition, for all reporting units, no qualitative indicators of impairment were identified during the thirdfirst quarter of fiscal 2023, and therefore, no interim quantitative goodwill impairment evaluation was performed.
The following table presents the carrying amount of goodwill attributable to each reporting segment was: including the amount of goodwill that was reallocated from the Architectural Framing Systems segment to the Architectural Services segment using the relative fair value approach during the first quarter of fiscal 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Architectural Framing Systems | | Architectural Glass | | Architectural Services | | Large-Scale Optical | | Total |
Balance at February 29, 2020 | | $ | 148,183 | | | $ | 25,656 | | | $ | 1,120 | | | $ | 10,557 | | | $ | 185,516 | |
Adjustment (1) | | 6,315 | | | — | | | — | | | — | | | 6,315 | |
Impairment expense | | (63,769) | | | — | | | — | | | — | | | (63,769) | |
Foreign currency translation | | 2,370 | | | (334) | | | — | | | — | | | 2,036 | |
Balance at February 27, 2021 | | 93,099 | | | 25,322 | | | 1,120 | | | 10,557 | | | 130,098 | |
| | | | | | | | | | |
| | | | | | | | | | |
Foreign currency translation | | (112) | | | (54) | | | — | | | — | | | (166) | |
Balance at November 27, 2021 | | $ | 92,987 | | | $ | 25,268 | | | $ | 1,120 | | | $ | 10,557 | | | $ | 129,932 | |
| | | | | | | | | | |
(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. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Architectural Framing Systems | | Architectural Services | | Architectural Glass | | Large-Scale Optical | | Total |
Balance at February 27, 2021 | | $ | 93,099 | | | $ | 1,120 | | | $ | 25,322 | | | $ | 10,557 | | | $ | 130,098 | |
| | | | | | | | | | |
| | | | | | | | | | |
Foreign currency translation | | 82 | | | — | | | (78) | | | — | | | 4 | |
Balance at February 26, 2022 | | 93,181 | | | 1,120 | | | 25,244 | | | 10,557 | | | 130,102 | |
| | | | | | | | | | |
Reallocation among reporting units (1) | | (2,048) | | | 2,048 | | | — | | | — | | | — | |
| | | | | | | | | | |
Foreign currency translation | | (763) | | | (105) | | | 34 | | | — | | | (834) | |
Balance at November 26, 2022 | | $ | 90,370 | | | $ | 3,063 | | | $ | 25,278 | | | $ | 10,557 | | | $ | 129,268 | |
| | | | | | | | | | |
(1) Represents the reallocation of goodwill as a result of transitioning Sotawall from the Architectural Framing Systems segment to the Architectural Services segment as of the start of the first quarter of fiscal 2023. |
Other intangible assets
Indefinite-lived intangible assets
We have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. We test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our 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. Based on ourthe impairment analysis performed in the fourth quarter of fiscal 2022, the fair value of each of our
trade names and trademarks exceeded the carrying amount, exceptamount. However, due to triggering events identified in the fourth quarter of fiscal 2022, resulting from the finalization of our plans for integrating the EFCO tradename, within ourSotawall business into the Architectural Framing Systems segment. TheServices segment, beginning in fiscal 2023, we determined that the carrying value of the Sotawall trade name exceeded fair value by $12.7 million. We determined forthat Sotawall had an immaterial fair value, resulting in the EFCO tradename was less than its carrying value by $6.3 million;trade name being fully impaired as of fiscal 2022 year-end. We recognized this amount was recognized as impairment expense in the fourth quarter ended February 27, 2021,26, 2022.
Finite-lived intangible assets
Long-lived assets or asset groups, including intangible assets subject to amortization and property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of those assets may not be recoverable. We use undiscounted cash flows to determine whether impairment exists and measure any impairment loss using discounted cash flows to determine the fair value of long-lived assets. Due to triggering events identified during the fourth quarter of fiscal 2022, as reflecteda result of finalization of our plans for integrating the Sotawall business into the Architectural Services segment, beginning in fiscal 2023, we determined that the finite-lived intangible assets of Sotawall were impaired as of February 26, 2022. As such, we recognized a long-lived asset impairment charge of $36.7 million in finite-lived intangible assets in the table below.fourth quarter of fiscal year 2022, within the Architectural Framing Systems segment.
The gross carrying amount of other intangible assets and related accumulated amortization was:
| (In thousands) | (In thousands) | | Gross Carrying Amount | | Accumulated Amortization | | Impairment Expense | | Foreign Currency Translation | | Net | (In thousands) | | Gross Carrying Amount | | Accumulated Amortization | | Impairment Expense | | Foreign Currency Translation | | Net |
November 27, 2021 | | | | | | | | | | | |
November 26, 2022 | | November 26, 2022 | | | | | | | | | | |
Definite-lived intangible assets: | Definite-lived intangible assets: | | Definite-lived intangible assets: | |
Customer relationships | Customer relationships | | $ | 122,961 | | | $ | (45,351) | | | $ | — | | | $ | (373) | | | $ | 77,237 | | Customer relationships | | $ | 89,495 | | | $ | (48,843) | | | $ | — | | | $ | (2,077) | | | $ | 38,575 | |
Other intangibles | Other intangibles | | 41,838 | | | (35,149) | | | — | | | (134) | | | 6,555 | | Other intangibles | | 39,449 | | | (35,300) | | | — | | | (815) | | | 3,334 | |
Total definite-lived intangible assets | | 164,799 | | | (80,500) | | | — | | | (507) | | | 83,792 | | |
Total | | Total | | 128,944 | | | (84,143) | | | — | | | (2,892) | | | 41,909 | |
Indefinite-lived intangible assets: | Indefinite-lived intangible assets: | | Indefinite-lived intangible assets: | |
Trademarks | Trademarks | | 39,832 | | | — | | | — | | | (71) | | | 39,761 | | Trademarks | | 27,129 | | | — | | | — | | | (213) | | | 26,916 | |
Total intangible assets | Total intangible assets | | $ | 204,631 | | | $ | (80,500) | | | $ | — | | | $ | (578) | | | $ | 123,553 | | Total intangible assets | | $ | 156,073 | | | $ | (84,143) | | | $ | — | | | $ | (3,105) | | | $ | 68,825 | |
February 27, 2021 | | | | | | | | | | | |
February 26, 2022 | | February 26, 2022 | | | | | | | | | | |
Definite-lived intangible assets: | Definite-lived intangible assets: | | Definite-lived intangible assets: | |
Customer relationships | Customer relationships | | $ | 119,647 | | | $ | (40,443) | | | $ | — | | | $ | 3,315 | | | $ | 82,519 | | Customer relationships | | $ | 122,961 | | | $ | (47,226) | | | $ | (33,608) | | | $ | 141 | | | $ | 42,268 | |
Other intangibles | Other intangibles | | 41,293 | | | (34,234) | | | — | | | 643 | | | 7,702 | | Other intangibles | | 41,838 | | | (35,613) | | | (3,127) | | | (14) | | | 3,084 | |
Total definite-lived intangible assets | | 160,940 | | | (74,677) | | | — | | | 3,958 | | | 90,221 | | |
Total | | Total | | 164,799 | | | (82,839) | | | (36,735) | | | 127 | | | 45,352 | |
Indefinite-lived intangible assets: | Indefinite-lived intangible assets: | | Indefinite-lived intangible assets: | |
Trademarks | Trademarks | | 45,300 | | | — | | | (6,300) | | | 832 | | | 39,832 | | Trademarks | | 39,832 | | | — | | | (12,738) | | | 35 | | | 27,129 | |
Total intangible assets | Total intangible assets | | $ | 206,240 | | | $ | (74,677) | | | $ | (6,300) | | | $ | 4,790 | | | $ | 130,053 | | Total intangible assets | | $ | 204,631 | | | $ | (82,839) | | | $ | (49,473) | | | $ | 162 | | | $ | 72,481 | |
Amortization expense on definite-lived intangible assets was $5.9$3.1 million and $5.6$5.9 million for the nine-month periods ended November 27, 202126, 2022 and November 28, 2020,27, 2021, respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At November 27, 2021,26, 2022, the estimated future amortization expense for definite-lived intangible assets was:
| (In thousands) | (In thousands) | | Remainder of Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 | | Fiscal 2026 | (In thousands) | | Remainder of 2023 | | 2024 | | 2025 | | 2026 | | 2027 |
Estimated amortization expense | Estimated amortization expense | | $ | 2,075 | | | $ | 8,262 | | | $ | 8,082 | | | $ | 7,638 | | | $ | 7,621 | | Estimated amortization expense | | $ | 1,136 | | | $ | 4,393 | | | $ | 4,363 | | | $ | 4,346 | | | $ | 4,292 | |
6.Debt
As of NovemberDuring the second quarter ended August 27, 2021,2022, we had aamended and extended our committed revolving credit facility withto include maximum borrowings of up to $235$385 million with a maturity of June 2024. ThereAugust 2027. As part of the amendment, we repaid the $150 million term loan with borrowings under the revolving credit facility. As of November 26, 2022, outstanding borrowings under our revolving credit facility were $188.0 million, while there were no outstanding borrowings under the revolving credit facility as of November 27, 2021 and February 27, 2021. At November 27, 2021 and February 27, 2021, we also had a $150 million term loan with a maturity date of June 2024.26, 2022.
Our revolving credit facility and term loan containcontains two maintenance financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of EBITDA-to-interest expense. Both ratios are computed quarterly, with
EBITDA calculated on a rolling four-quarter basis. At November 27, 2021,26, 2022, we were in compliance with both financial covenants. Additionally, at November 27, 2021,26, 2022, we had a total of $16.4$12.3 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 20232024 to 2032 and reduce borrowing capacity under the revolving credit facility.
At November 27, 2021,26, 2022, debt included $13.0$12.0 million of industrial revenue bonds that mature in fiscal years 20232036 through 2043. In July 2021, twoMarch 2022, a $1.0 million industrial revenue bondsbond matured and werewas repaid. The fair value of all industrial revenue bonds approximated carrying value at November 27, 2021,26, 2022, due to the variable interest rates on these instruments. 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 ofAt November 27, 2021 and February 27, 2021,26, 2022, outstanding borrowings under our Canadian committed, revolving credit facilities were $3.7 million, while there were no outstanding borrowings outstanding under the facilities.Canadian facilities as of February 26, 2022.
Interest payments were $2.7$5.3 million and $3.7$2.7 million for the nine months ended November 27, 202126, 2022 and November 28, 2020,27, 2021, respectively.
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. 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; 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.
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Operating lease cost | | $ | 3,293 | | | $ | 3,422 | | | $ | 9,298 | | | $ | 10,321 | |
Short-term lease cost | | 144 | | | 357 | | | 804 | | | 821 | |
Variable lease cost | | 904 | | | 725 | | | 2,667 | | | 2,182 | |
| | | | | | | | |
Total lease cost | | $ | 4,341 | | | $ | 4,504 | | | $ | 12,769 | | | $ | 13,324 | |
Other supplemental information related to leases was as follows:
| | | | | | | | | | | | | | |
| | Nine Months Ended |
(In thousands except weighted-average data) | | November 26, 2022 | | November 27, 2021 |
| | | | |
Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 10,580 | | | $ | 10,744 | |
Lease assets obtained in exchange for new operating lease liabilities | | $ | 11,125 | | | $ | 3,107 | |
Weighted-average remaining lease term - operating leases | | 4.7 years | | 5.4 years |
Weighted-average discount rate - operating leases | | 3.14 | % | | 2.88 | % |
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 |
Operating lease cost | | $ | 3,422 | | | $ | 3,477 | | | $ | 10,321 | | | $ | 10,329 | |
Short-term lease cost | | 357 | | | 472 | | | 821 | | | 1,384 | |
Variable lease cost | | 725 | | | 678 | | | 2,182 | | | 2,071 | |
| | | | | | | | |
Total lease cost | | $ | 4,504 | | | $ | 4,627 | | | $ | 13,324 | | | $ | 13,784 | |
Other supplemental information related to leases was as follows:
| | | | | | | | | | | | | | |
| | Nine Months Ended |
(In thousands except weighted-average data) | | November 27, 2021 | | November 28, 2020 |
| | | | |
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 | | $ | 3,107 | | | $ | 19,623 | |
Weighted-average remaining lease term - operating leases | | 5.4 years | | 5.8 years |
Weighted-average discount rate - operating leases | | 2.88 | % | | 3.18 | % |
Future maturities of lease liabilities are as follows:
| | | | | | | | |
(In thousands) | | November 27, 202126, 2022 |
Remainder of Fiscal 20222023 | | $ | 3,501 | |
Fiscal 2023 | | 13,5633,243 | |
Fiscal 2024 | | 11,26112,587 | |
Fiscal 2025 | | 9,91511,326 | |
Fiscal 2026 | | 7,9039,371 | |
Fiscal 2027 | | 6,3957,960 | |
Fiscal 2028 | | 4,270 | |
Thereafter | | 6,7212,324 | |
Total lease payments | | 59,25951,081 | |
Less: Amounts representing interest | | 3,8173,226 | |
Present value of lease liabilities | | $ | 55,44247,855 | |
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 27, 2021, $1.226, 2022, $1.4 billion of these types of bonds were outstanding, of which $448.0$578.7 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 accrualthese accruals 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 27, 2021 | | November 28, 2020 | (In thousands) | | November 26, 2022 | | November 27, 2021 |
Balance at beginning of period | Balance at beginning of period | | $ | 14,999 | | | $ | 15,629 | | Balance at beginning of period | | $ | 13,923 | | | $ | 14,999 | |
Additional accruals | Additional accruals | | 6,678 | | | 4,175 | | Additional accruals | | 11,201 | | | 4,175 | |
| Claims paid | Claims paid | | (8,686) | | | (4,071) | | Claims paid | | (7,755) | | | (4,071) | |
| Balance at end of period | Balance at end of period | | $ | 12,991 | | | $ | 15,733 | | Balance at end of period | | $ | 17,369 | | | $ | 15,103 | |
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
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 $0.9 million and $4.6 million as of November 27, 2021 and February 27, 2021, respectively.
Letters of credit
At November 27, 2021,26, 2022, we had $16.4$12.3 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6. We also have a $6.9$3.4 million letter of credit which has been issued outside 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 $239.5$222.2 million as of November 27, 2021.26, 2022.
New Markets Tax Credit (NMTC) transactions
We have three outstanding NMTC arrangements which help to support operational expansion. Proceeds received from investors on these transactions are included within other current and other non-current liabilities in our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits. The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other non-current assets in our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase or for working capital purposes for each
project, we are required to hold cash dedicated to fund each capital project which is classified as restricted cash in 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 first quarter of fiscal 2023, one NMTC transaction was terminated, and a new NMTC transaction was established as a replacement. As a result of these transactions, $19.5 million in previous proceeds received were repaid and $19.5 million was contributed back to the Company as part of the newly established NMTC transaction. This NMTC transaction will be held for the remainder of the original seven-year term.
The table below provides a summary of our outstanding NMTC transactions (in millions):
| Inception date | Inception date | | Termination date | | Proceeds received | | Deferred costs | | Net benefit | Inception date | | Termination date | | Deferred Benefit | | 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 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 | |
May 2022(1) | | May 2022(1) | | August 2025 | | 6.1 | | | 1.6 | | | 4.5 | |
Total | Total | | $ | 15.8 | | | $ | 3.6 | | | $ | 12.2 | | Total | | $ | 15.3 | | | $ | 3.8 | | | $ | 11.5 | |
(1) Continuation of the August 2018 NMTC financing transaction
Litigation
The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. In December 2022, the claimant in an arbitration of one such claim was awarded $20 million. The Company intends to appeal the award and believes, after taking into account all currently available information, including the advice of counsel and the likelihood of available insurance coverage, that this award will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. 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 $6.0 million for the nine-month period ended November 26, 2022 and $4.8 million for the nine-month period ended November 27, 2021 and $6.2 million for the nine-month period ended November 28, 2020.2021.
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 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 | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Options | | Number of Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Outstanding at beginning of year | | 370,800 | | | $ | 23.04 | | | | | |
| | | | | | | | |
Awards exercised | | (145,060) | | | 23.04 | | | | | |
Awards canceled/expired | | (67,740) | | | 23.04 | | | | | |
Outstanding and expected to vest at November 26, 2022 | | 158,000 | | | $ | 23.04 | | | 0.7 years | | $ | 2,000,280 | |
| | | | | | | | |
| | | | | | | | |
For the nine-months ended November 27, 2021 and November 28, 2020,26, 2022, there were no cash proceeds from the exercise of stock options as all stock options were $4.1 million and $1.5 million, respectively.exercised on a stock-for-stock basis. 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, for$2.7 million. For the nine-months ended November 27, 2021, cash proceeds from the exercise of stock options was $4.1 million and November 28, 2020, 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.
Executive Compensation Program
compensation program
In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees. In each of the first quarterquarters of fiscal 2023 and 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.end of the respective performance periods. 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 additionala variable 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 share awards and units
Nonvested share activity, including restricted stock awards and 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 27, 2021 | | 475,227 | | | $ | 27.52 | | |
Nonvested at February 26, 2022 (1) | | Nonvested at February 26, 2022 (1) | | 488,944 | | | $ | 30.14 | |
Granted(1)(2) | Granted(1)(2) | | 235,028 | | | 35.48 | | Granted(1)(2) | | 182,493 | | | 46.10 | |
Vested | Vested | | (185,329) | | | 30.36 | | Vested | | (148,332) | | | 27.56 | |
Canceled(3) | Canceled(3) | | (23,306) | | | 29.68 | | Canceled(3) | | (44,932) | | | 36.02 | |
Nonvested at November 27, 2021(2) | | 501,620 | | | $ | 30.10 | | |
Nonvested at November 26, 2022(4) | | Nonvested at November 26, 2022(4) | | 478,173 | | | $ | 36.48 | |
(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.
(2)Includes a total of 38,654 nonvested share units granted and outstanding at target level for the 2023-2025 performance period.
(3) Includes a total of 9,690 nonvested share units cancelled for the fiscal 2022-2024 and fiscal 2023-2025 performance periods.
(4)Includes a total of 45,207 and 34,492 nonvested share units granted and outstanding at target level for the 2022-2024 and 2023-2025 performance periods, respectively.
At November 27, 2021,26, 2022, there was $11.0$11.4 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 2825 months. The total fair value of shares vested during the nine months ended November 27, 202126, 2022 was $6.9$6.2 million.
10.Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2018,2019, 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 2017,2018, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.
In the second quarter of fiscal 2023, the Company claimed certain tax deductions, including a worthless stock loss deduction, related to its investment in Sotawall Limited, a Canadian subsidiary. These deductions generated a net tax benefit of $13.7 million.
The total liability for unrecognized tax benefits was $4.0$5.5 million at November 27, 2021,26, 2022, compared to $3.8$3.3 million at February 27, 2021.26, 2022. The increase was primarily related to the tax deductions claimed during the second quarter of fiscal 2023 associated with the Company's investment in Sotawall Limited, a Canadian subsidiary. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense.
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 |
(In thousands) | | November 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 |
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 | | 352 | | | 342 | | | 293 | | | 282 | |
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) | | — | | | 159 | | | — | | | 238 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Basic earnings per share – weighted average common shares outstanding | | 21,870 | | | 24,957 | | | 22,043 | | | 25,166 | |
Weighted average effect of nonvested share grants and assumed exercise of stock options | | 408 | | | 352 | | | 413 | | | 293 | |
Diluted earnings per share – weighted average common shares and potential common shares outstanding | | 22,278 | | | 25,309 | | | 22,456 | | | 25,459 | |
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) | | 109 | | | — | | | 109 | | | — | |
12.Business Segment Data
We have 4four reporting segments:
•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 comprisingfor the outside skin and entrancesexterior 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 provides full-serviceintegrates technical services, project management, and field installation of the walls ofservices to design, engineer, fabricate, and install building glass windows and other curtainwall products making up the outside skin ofsystems.
•The Architectural Glass segment coats and fabricates, high-performance glass used in custom window and wall systems on commercial and institutional buildings.
•The Large-Scale Optical (LSO) segment manufactures value-addedhigh-performance glass and acrylic products primarily for custom framing, museum, and display applications.technical glass markets.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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. |
At the beginning of the first quarter of fiscal 2023, we began management of the Sotawall and Harmon businesses under the Architectural Services segment in order to create a single, unified offering for larger custom curtainwall projects. The fiscal 2022 segment results were recast for comparability.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
Net sales | | | | | | | | |
Architectural Framing Systems | | $ | 165,013 | | | $ | 141,462 | | | $ | 501,172 | | | $ | 415,203 | |
Architectural Services | | 102,031 | | | 105,404 | | | 312,151 | | | 292,506 | |
Architectural Glass | | 81,541 | | | 74,289 | | | 235,158 | | | 236,693 | |
Large-Scale Optical | | 26,660 | | | 27,351 | | | 76,988 | | | 75,122 | |
Intersegment eliminations | | (7,398) | | | (14,289) | | | (28,878) | | | (33,504) | |
Net sales | | $ | 367,847 | | | $ | 334,217 | | | $ | 1,096,591 | | | $ | 986,020 | |
Operating income (loss) | | | | | | | | |
Architectural Framing Systems | | $ | 22,089 | | | $ | 12,085 | | | $ | 66,266 | | | $ | 28,837 | |
Architectural Services | | 6,032 | | | 7,807 | | | 14,449 | | | 19,172 | |
Architectural Glass | | 7,461 | | | (1,277) | | | 19,087 | | | (16,143) | |
Large-Scale Optical | | 7,109 | | | 5,996 | | | 19,598 | | | 17,326 | |
Corporate and other | | (7,930) | | | (6,901) | | | (19,351) | | | (18,508) | |
Operating income | | $ | 34,761 | | | $ | 17,710 | | | $ | 100,049 | | | $ | 30,684 | |
| | | | | | | | |
|
|
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. ForDuring the three- and nine-month periods ended November 27, 2021,first quarter of fiscal 2023, we incurred $3.4 million and $24.2 million, respectively, of pre-tax costs associated withcompleted the execution of these plans with the sale of which $3.6the remaining manufacturing assets at our Architectural Glass location, in Dallas, Texas, for $4.1 million. The remaining assets had a carrying value of $3.4 million, and $22.1we recognized a gain on the sale of approximately $0.6 million, arenet of associated transaction costs, which is included withinas a reduction of 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | (In thousands) | | Architectural Framing | | Architectural Glass | | Corporate and other | | Total | (In thousands) | | Architectural Framing | | Architectural Glass | | Corporate & 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 | Balance at February 27, 2021 | | 2,872 | | | 230 | | | 161 | | | 3,263 | | Balance at February 27, 2021 | | $ | 2,872 | | | $ | 230 | | | $ | 161 | | | $ | 3,263 | |
Restructuring expense | Restructuring expense | | 1,984 | | | 884 | | | 1,221 | | | 4,089 | | Restructuring expense | | 2,000 | | | 1,036 | | | 1,039 | | | 4,075 | |
Payments | Payments | | (2,852) | | | (354) | | | (592) | | | (3,798) | | Payments | | (3,567) | | | (529) | | | (972) | | | (5,068) | |
Other adjustments | Other adjustments | | (269) | | | — | | | — | | | (269) | | Other adjustments | | (865) | | | — | | | — | | | (865) | |
Balance at November 27, 2021 | | $ | 1,735 | | | $ | 760 | | | $ | 790 | | | $ | 3,285 | | |
Balance at February 26, 2022 | | Balance at February 26, 2022 | | 440 | | | 737 | | | 228 | | | 1,405 | |
Restructuring expense | | Restructuring expense | | — | | | 116 | | | — | | | 116 | |
Payments | | Payments | | (203) | | | (690) | | | (203) | | | (1,096) | |
Other adjustments | | Other adjustments | | (152) | | | (18) | | | — | | | (170) | |
Balance at November 26, 2022 | | Balance at November 26, 2022 | | $ | 85 | | | $ | 145 | | | $ | 25 | | | $ | 255 | |
14. Subsequent Events
We have evaluated subsequent events for potential recognition and disclosure through the date of this filing. Subsequent tofiling and determined that there were no subsequent events that required recognition or disclosure in 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.financial statements.
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking statements
This Quarterly Report on Form 10-Q, including the section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “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.
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 27, 202126, 2022 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 the design and development of value-added glass and metal products and services for enclosing commercial buildings and framing and displays.services. Our four reporting segments are: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).
During fiscal 2022, we conducted a strategic review of our business and the markets we serve in order to establish a new enterprise strategy with three key elements, as discussed below:
1.Become the economic leader in our target markets. We will achieve this by developing a deep understanding of our target markets and aligning our businesses with clear go-to-market strategies to drive value for our customers through differentiated product and service offerings. We will also build a relentless focus on operational execution, driving productivity improvements, and maintaining a competitive cost structure, so that we may bring more value to our customers and improve our own profitability.
2.Actively manage our portfolio to drive higher margins and returns. We intend to shift our business mix toward higher operating margin offerings and improve our return on invested capital performance. We will accomplish this by allocating resources to grow our top performing businesses, actively addressing underperforming businesses, and investing to add new differentiated product and service offerings to accelerate our growth.
3.Strengthen our core capabilities. We are shifting from our historical, decentralized operating model, to one with center-led functional expertise that enables us to leverage the scale of the enterprise to better support the needs of the business. We are establishing a Company-wide operating system with common tools and processes that are based on the foundation of Lean and Continuous Improvement. This will be supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.
At the beginning of the first quarter of fiscal 2023, we began management of the Sotawall and Harmon businesses under the Architectural Services segment in order to create a single, unified offering for larger custom curtainwall projects. The comparative fiscal 2022 segment results for the Architectural Framing Systems and Architectural Services segments have been recast to reflect the move of the Sotawall business into the Architectural Services segment from the Architectural Framing Systems segment, effective at the start of the first quarter of fiscal 2023.
The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February 27, 202126, 2022 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.
Highlights of Third Quarter of Fiscal 20222023 Compared to Third Quarter of Fiscal 20212022
Net sales
Consolidated net sales increased 6.610.1 percent, or $20.6$33.6 million, and increased 6.911.2 percent, or $63.9$110.6 million, for the three- and nine-month periods ended November 27, 2021,26, 2022, compared to the same periods in the prior year, primarily driven by volume growth in the Architectural Services and LSO segments, as well as, flow-through from pricing actions taken to offset inflation within the Architectural Framing segment. LSO was closed for most of the firstSystems and second quarters of fiscal 2021, due to COVID-19.Architectural Glass segments.
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 27, 2021 | | November 28, 2020 | | November 27, 2021 | | November 28, 2020 | | November 26, 2022 | | November 27, 2021 | | November 26, 2022 | | November 27, 2021 |
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 | 80.6 | | | 77.8 | | | 81.7 | | | 77.7 | | Cost of sales | 76.5 | | | 80.6 | | | 76.5 | | | 81.7 | |
Gross margin | 19.4 | | | 22.2 | | | 18.3 | | | 22.3 | | |
Gross profit | | Gross profit | 23.5 | | | 19.4 | | | 23.5 | | | 18.3 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | 14.1 | | | 6.3 | | | 15.2 | | | 13.7 | | Selling, general and administrative expenses | 14.1 | | | 14.1 | | | 14.3 | | | 15.2 | |
Operating income | Operating income | 5.3 | | | 15.9 | | | 3.1 | | | 8.6 | | Operating income | 9.4 | | | 5.3 | | | 9.1 | | | 3.1 | |
Interest expense, net | Interest expense, net | 0.2 | | | 0.5 | | | 0.3 | | | 0.5 | | Interest expense, net | 0.7 | | | 0.2 | | | 0.5 | | | 0.3 | |
Other (expense) income, net | (0.9) | | | 0.2 | | | (0.3) | | | 0.1 | | |
Other expense, net | | Other expense, net | 0.2 | | | 0.9 | | | 0.2 | | | 0.3 | |
Earnings before income taxes | Earnings before income taxes | 4.2 | | | 15.5 | | | 2.5 | | | 8.2 | | Earnings before income taxes | 8.6 | | | 4.2 | | | 8.4 | | | 2.5 | |
Income tax expense | Income tax expense | 0.9 | | | 3.7 | | | 0.5 | | | 2.0 | | Income tax expense | 2.1 | | | 0.9 | | | 0.8 | | | 0.5 | |
Net earnings | Net earnings | 3.3 | % | | 11.9 | % | | 2.0 | % | | 6.2 | % | Net earnings | 6.5 | % | | 3.3 | % | | 7.6 | % | | 2.0 | % |
Effective tax rate | Effective tax rate | 21.7 | % | | 23.5 | % | | 19.6 | % | | 23.8 | % | Effective tax rate | 24.8 | % | | 21.7 | % | | 9.3 | % | | 19.6 | % |
Gross profit
Gross profit as a percent of sales (gross margin) was 23.5 percent for each of the three- and nine-month periods ended November 26, 2022, respectively, compared to 19.4 percent and 18.3 percent for the three- and nine-month periods ended November 27, 2021, compared to 22.2 percent2021. Both period improvements in gross margin were driven primarily by pricing actions that exceeded the inflation-related cost increases in the Architectural Framing Systems and 22.3 percent for the three- andArchitectural Glass segments. The nine-month periodsperiod ended November 28, 2020. Gross margin decreased26, 2022, includes the benefits from restructuring actions completed in the current year three- and nine-month periods compared tosecond quarter of the prior year primarily due toin the Architectural Glass and Architectural Framing Systems segments. The prior-year periods included $3.6 million and $22.1 million of restructuring charges which were included in cost of goods soldsales and incurred during the three- and nine-month periods of the current fiscal year, as well as inflationary pressure on raw materials and freight within the Architectural Glass and Architectural Framing Systems segments. These costs were partially offset by positive impacts from continued recovery of the LSO segment (which closed for most of the first and second quarters last year, based on COVID-related government directives).ended November 27, 2021.
Selling, general and administrative (SG&A) expenses
SG&A expenses as a percent of sales were 14.1 percent and 15.214.3 percent for the three- and nine-month periods ended November 27, 2021,26, 2022, respectively, compared to 6.314.1 percent and 13.715.2 percent for the prior year three- and nine-month periods. SG&A 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 prior-year periods. Additionally, SG&A expenses in the prior year 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, driving lower SG&A expensesdecreased as a percent of sales compared to the nine-month period in the prior year three- and nine-month periods. In addition, we recognized a benefit 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 prior year three- and nine-month periods, from a Canadian wage subsidy program offered to support Canadian businessesprimarily due to the ongoing impactsbenefits realized from previously completed restructuring actions.
Income tax expense
The effective income tax rate in the third quarter of fiscal 20222023 was 21.724.8 percent, compared to 23.521.7 percent in the same period last year, and 19.69.3 percent for the first nine months of fiscal 2022,2023, compared to 23.819.6 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 duringIn the second quarter of fiscal 2022.2023, the Company claimed certain tax deductions, including a worthless stock loss deduction, related to its investment in Sotawall Limited, a Canadian subsidiary. These deductions generated a net tax benefit of 13.7 million, and reduced our effective tax rate for the nine-month period of fiscal 2023 by approximately 14.8 percentage points.
Segment Analysis
Architectural Framing Systems
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Nine Months Ended |
(In thousands) | (In thousands) | | November 27, 2021 | | November 28, 2020 | | % Change | | November 27, 2021 | | November 28, 2020 | | % Change | (In thousands) | | November 26, 2022 | | November 27, 2021 | | % Change | | November 26, 2022 | | November 27, 2021 | | % Change |
Net sales | Net sales | | $ | 151,665 | | | $ | 136,688 | | | 11.0 | % | | $ | 453,476 | | | $ | 439,779 | | | 3.1 | % | Net sales | | $ | 165,013 | | | $ | 141,462 | | | 16.6 | % | | $ | 501,172 | | | $ | 415,203 | | | 20.7 | % |
Operating income | Operating income | | 10,689 | | | 7,218 | | | 48.1 | % | | 27,027 | | | 26,211 | | | 3.1 | % | Operating income | | 22,089 | | | 12,085 | | | 82.8 | % | | 66,266 | | | 28,837 | | | 129.8 | % |
Operating margin | Operating margin | | 7.0 | % | | 5.3 | % | | 6.0 | % | | 6.0 | % | | Operating margin | | 13.4 | % | | 8.5 | % | | 13.2 | % | | 6.9 | % | |
Architectural Framing Systems net sales increased $15.0$23.6 million, or 11.016.6 percent, and increased $13.7$86.0 million, or 3.120.7 percent, for the three- and nine-month periods ended November 27, 2021,26, 2022, respectively, compared to the prior-yearprior year periods, primarily driven by flow-through frominflation-related pricing actions taken to offset inflation.actions.
Operating margin increased 170490 basis points and 630 basis points for the three-month periodthree- and nine-month periods of the current year, compared to the same periodperiods in the prior year, primarily driven byreflecting improved pricing and mix, which more than offset the impact of inflation, and the benefits from restructuring actions which offset increased costs for materials, freight and labor. As previously announced, the segment incurred restructuring-related termination costscompleted in the secondprior year, which further strengthened our competitive position and third quartersmore than offset the impact 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 nine-month periods in the current and 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 prior-year three- and nine-month periods, respectively, as a result of a program to support Canadian businesses due to the ongoing impacts of the COVID-19 pandemic.cost inflation.
As of November 27, 2021,26, 2022, segment backlog was approximately $419$246 million, compared to approximately $406$286 million at the end of the prior quarter.quarter of the current fiscal year, and was approximately $269 million at the end of third quarter fiscal 2022. 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 into future business commitments 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 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 | % | | |
Net sales decreased $10.5 million, or 12.4 percent, and $11.6 million, or 4.7 percent, for the three- and nine-month periods ended November 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 | | Three Months Ended | | Nine Months Ended |
(In thousands) | (In thousands) | | November 27, 2021 | | November 28, 2020 | | % Change | | November 27, 2021 | | November 28, 2020 | | % Change | (In thousands) | | November 26, 2022 | | November 27, 2021 | | % Change | | November 26, 2022 | | November 27, 2021 | | % Change |
Net sales | Net sales | | $ | 91,971 | | | $ | 76,690 | | | 19.9 | % | | $ | 250,657 | | | $ | 213,911 | | | 17.2 | % | Net sales | | $ | 102,031 | | | $ | 105,404 | | | (3.2) | % | | $ | 312,151 | | | $ | 292,506 | | | 6.7 | % |
Operating income | Operating income | | 9,203 | | | 8,558 | | | 7.5 | % | | 20,982 | | | 20,470 | | | 2.5 | % | Operating income | | 6,032 | | | 7,807 | | | (22.7) | % | | 14,449 | | | 19,172 | | | (24.6) | % |
Operating margin | Operating margin | | 10.0 | % | | 11.2 | % | | 8.4 | % | | 9.6 | % | | Operating margin | | 5.9 | % | | 7.4 | % | | 4.6 | % | | 6.6 | % | |
Architectural Services net sales increased $15.3decreased $3.4 million, or 19.9 percent, and $36.7 million, or 17.23.2 percent for the three- and nine-month periodsthree-month period ended November 27, 2021,26, 2022, respectively, compared to the same periodsperiod in the prior year, driven by decreased project activity. In the comparative nine-month period ended November 26, 2022 net sales increased $19.6 million, or 6.7 percent compared to the same period in the prior year, driven by increased volume from executing projects in backlog.
Operating margin decreased 120150 basis points and 200 basis points in eachthe three- and nine-month periods of the current year, respectively, compared to the same periods in the prior year, primarily reflecting lower profitability on legacy Sotawall projects and costs related to investments to support future growth, partially offset by higher volume.
As of November 26, 2022, segment backlog was approximately $741 million, compared to approximately $785 million at the end of the prior quarter of the current fiscal year, and was approximately $722 million at the end of third quarter of fiscal 2022. Backlog, a non-GAAP financial measure, and the implication thereof is described within the Architectural Framing Systems discussion above.
Architectural Glass
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 | | % Change | | November 26, 2022 | | November 27, 2021 | | % Change |
Net sales | | $ | 81,541 | | | $ | 74,289 | | | 9.8 | % | | $ | 235,158 | | | $ | 236,693 | | | (0.6) | % |
Operating income (loss) | | 7,461 | | | (1,277) | | | 684.3 | % | | 19,087 | | | (16,143) | | | 218.2 | % |
Operating margin | | 9.1 | % | | (1.7) | % | | | | 8.1 | % | | (6.8) | % | | |
Net sales increased $7.3 million, or 9.8 percent, for the three-month period ended November 26, 2022, compared to the same period in the prior year, primarily reflecting improved pricing and mix. Net sales decreased $1.5 million, or 0.6 percent for the nine-month period ended November 26, 2022, compared to the same period in the prior year, primarily reflecting lower volume, mostly offset by improved pricing and mix.
In the current quarter, the segment had operating income of $7.5 million and operating margin of 9.1 percent, compared to operating loss of $1.3 million and negative operating margin of 1.7 percent in the same period of the prior year. The current year third quarter reflects improved pricing, mix and productivity gains, which combined to offset the impact of inflation, while the prior year period included $3.5 million of restructuring costs. For the nine-months ended November 26, 2022, the segment had operating income of $19.1 million and operating margin of 8.1 percent, compared to operating loss of $16.1 million and negative operating margin of 6.8 percent in the same period of the prior year, primarily related to the restructuring costs of $20.9 million incurred during the prior fiscal year. In addition, while the current-year period reflects improved pricing, productivity gains and the positive impacts of restructuring actions completed during the prior year, all of which offset the impact of inflation.
Large-Scale Optical (LSO)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 | | % Change | | November 26, 2022 | | November 27, 2021 | | % Change |
Net sales | | $ | 26,660 | | | $ | 27,351 | | | (2.5) | % | | $ | 76,988 | | | $ | 75,122 | | | 2.5 | % |
Operating income | | 7,109 | | | 5,996 | | | 18.6 | % | | 19,598 | | | 17,326 | | | 13.1 | % |
Operating margin | | 26.7 | % | | 21.9 | % | | | | 25.5 | % | | 23.1 | % | | |
LSO net sales decreased $0.7 million, or 2.5 percent, for the three-month period ended November 26, 2022 compared to the same period in the prior year driven by lower volume. In the comparative nine-month period ended November 26, 2022, net sales increased $1.9 million, or 2.5 percent, compared to the same period in the prior year, primarily driven by improved pricing.
Operating margin increased 480 basis points and 240 basis points in the three- and nine-month periods of the current year, compared to the same periods in the prior year, primarily reflecting a less favorable project mix. Additionally, the nine-month period was negatively impacteddriven by isolated performance challenges on certain projects experienced during the first quarter of fiscal 2022.
As of November 27, 2021, segment backlog of $572 million was unchanged from the endlower operating costs. A significant portion of the prior quarter. Segment backlog at the endlower operating costs was a non-recurring property tax adjustment contributing to a 210 basis points and 80 basis points of the third quarter of 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 |
(In thousands) | | November 27, 2021 | | November 28, 2020 | | % Change | | November 27, 2021 | | November 28, 2020 | | % Change |
Net sales | | $ | 27,351 | | | $ | 25,267 | | | 8.2 | % | | $ | 75,122 | | | $ | 48,438 | | | 55.1 | % |
Operating income (loss) | | 5,996 | | | 26,114 | | | (77.0) | % | | 17,326 | | | 25,131 | | | (31.1) | % |
Operating margin | | 21.9 | % | | 103.4 | % | | | | 23.1 | % | | 51.9 | % | | |
LSO net sales increased $2.1 million or 8.2 percent, and $26.7 million or 55.1 percentmargin increase for the three- and nine-month periods ended November 27, 2021, compared to the same periods in the prior year, reflecting a more favorable sales mix, as demand recovered from the impact of COVID in the prior year nine-month period. In fiscal 2021, most of the segment's customers and the segment's manufacturing operations were closed for a large part of the first and second quarters to comply with COVID-related government directives.current year, respectively.
The segment had operating income of $6.0 million
Liquidity 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, in the same periods of the prior year. The decreases for the fiscal 2022 periods are primarily the result of a $19.3 million gain on the sale-leaseback of a segment manufacturing facility recorded during the prior year third quarter.Capital Resources
| | | | | | | | | | | | | | |
Selected cash flow data | | Nine Months Ended |
(In thousands) | | November 26, 2022 | | November 27, 2021 |
Operating Activities | | | | |
Net cash provided by operating activities | | $ | 51,112 | | | $ | 86,291 | |
Investing Activities | | | | |
Capital expenditures | | (18,119) | | | (13,070) | |
| | | | |
Proceeds from sales of property, plant and equipment | | 5,212 | | | 1,347 | |
| | | | |
Financing Activities | | | | |
Borrowings on line of credit | | 430,879 | | | — | |
Repayment on debt | | (151,000) | | | (2,000) | |
Payments on line of credit | | (239,000) | | | — | |
Repurchase and retirement of common stock | | (74,312) | | | (29,164) | |
Dividends paid | | (14,415) | | | (15,050) | |
Liquidity and Capital Resources
| | | | | | | | | | | | | | |
Selected cash flow data | | Nine Months Ended |
(In thousands) | | November 27, 2021 | | November 28, 2020 |
Operating Activities | | | | |
Net cash provided by operating activities | | $ | 86,291 | | | $ | 120,512 | |
Investing Activities | | | | |
Capital expenditures | | (13,070) | | | (17,116) | |
| | | | |
Proceeds from sale of property, plant and equipment | | 1,347 | | | 23,724 | |
| | | | |
Financing Activities | | | | |
Borrowings on line of credit | | — | | | 193,332 | |
| | | | |
Payments on line of credit | | — | | | (237,500) | |
Repurchase and retirement of common stock | | (29,164) | | | (20,731) | |
Dividends paid | | (15,050) | | | (14,546) | |
Operating Activities. Net cash provided by operating activities was $86.3$51.1 million for the first nine months of fiscal 2022, a decrease of $34.2 million2023, compared to $86.3 million of net cash provided by operating activities in the prior-yearprior year period, reflecting a decline in net earnings of $38.0 million in the current-year period comparedincreased working capital required to the prior-year period, as well as, the impact of temporary actions related to COVID in the prior-year period.support revenue growth and inflation.
Investing Activities. Net cash used by investing activities was $11.6$12.0 million for the first nine months of fiscal 2022,2023, driven primarily by capital expenditures of $13.1$18.1 million, partially offset by proceeds received from sales of property, plant and equipment of $5.2 million. In the first nine months of the prior year, net cash providedused by investing activities was $5.5$11.6 million, primarily driven by proceeds of $23.7 million on the sale-leaseback of a building, offset by capital expenditures of $17.1$13.1 million. CapitalThe majority of our capital expenditures in the first nine months of the current year declined $4.0 million from theand prior year dueperiods are smaller in nature to slower investments while we conducted our strategic review.support future growth and cost reduction initiatives.
Financing Activities. Net cash used by financing activities was $44.0$51.6 million for the first nine months of fiscal 2022,2023, compared to $85.7 million in the prior-year period, primarily drivennet cash used by net debt repaymentsfinancing activities of $47.5 million in the prior year. Additionally, in the first nine months of the current year, we made share repurchases totaling $29.2 million, compared to $20.7$44.0 million in the prior year nine-month period. At November 27, 2021, we were in compliance withThe current year period was primarily driven by share repurchases and dividend payments totaling $88.7 million, partially offset by net debt borrowings of $40.9 million, while the financial covenants under our revolving credit facilityprior year period included $44.2 million of share repurchases and term loan.dividend payments.
We paid dividends totaling $15.1$14.4 million ($0.60000.6600 per share) in the first nine months of fiscal 2022,2023, compared to $14.5$15.1 million ($0.56250.6000 per share) in the comparable prior-yearprior year period. During the first nine months of fiscal 2023, we repurchased 1,571,139 shares under our authorized share repurchase program, for a total cost of $74.3 million. In the first nine months of fiscal 2022, we repurchased 755,384 shares under our authorizedthe share repurchase program, for a total cost of $28.8 million. In the first nine months of fiscal 2021, we repurchased 852,029 shares under the share repurchase program, for a total cost of $20.7 million. Since the inception of the share repurchase program in 2004, we have purchased a total of 7,888,00010,996,601 shares, at a total cost of $236.1$381.6 million. We currently haveAs of November 26, 2022, we had remaining authority to repurchase an additional 1,362,0001,253,399 shares under this program. We will continue to evaluate making future share repurchases, considering our cash flow, debt levels and market conditions, in the context of all our capital allocation options, with the goal of maximizing long-term value for our shareholders.
Other Financing Activities.Additional Liquidity Considerations. The following summarizes our significant contractual obligations that impactWe periodically evaluate our liquidity asrequirements, cash needs and availability of November 27, 2021:debt resources relative to acquisition plans, significant capital plans, and other working capital needs.
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| | Payments Due by Fiscal Period |
(In thousands) | | Remainder of Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 | | Fiscal 2026 | | Thereafter | | Total |
Debt obligations | | $ | — | | | $ | 1,000 | | | $ | — | | | $ | 150,000 | | | $ | — | | | $ | 12,000 | | | $ | 163,000 | |
Operating leases (undiscounted) | | 3,501 | | | 13,563 | | | 11,261 | | | 9,915 | | | 7,903 | | | 13,116 | | | 59,259 | |
Purchase obligations | | 61,169 | | | 166,446 | | | 8,530 | | | 1,433 | | | 1,433 | | | 487 | | | 239,498 | |
Total cash obligations | | $ | 64,670 | | | $ | 181,009 | | | $ | 19,791 | | | $ | 161,348 | | | $ | 9,336 | | | $ | 25,603 | | | $ | 461,757 | |
During the second quarter ended August 27, 2022, we amended and extended our committed revolving credit facility to include maximum borrowings of up to $385 million with a maturity of August 2027. As part of the amendment, we repaid the $150 million term loan with borrowings under the revolving credit facility. As of November 26, 2022, outstanding borrowings under our revolving credit facility were $188.0 million, while there were no outstanding borrowings under the revolving credit facility as of February 26, 2022. We are required to make periodic interest payments on our outstanding indebtedness, and future interest payments will be determined based on the amount of outstanding borrowings and prevailing interest rates during that time.
Our revolving credit facility contains two maintenance financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of EBITDA-to-interest expense. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At November 26, 2022, we were in compliance with both financial covenants. Additionally, at November 26, 2022, we had a total of $12.3 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2024 to 2032 and reduce borrowing capacity under the revolving credit facility.
We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. PurchaseFuture payments for such leases, excluding leases with initial terms of one year or less, were $51.1 million at November 26, 2022, with $3.2 million payable during the remainder of fiscal 2023.
As of November 26, 2022, we had $222.2 million of open purchase obligations, inof which payments totaling $53.4 million are expected to become due within the table aboveremainder of fiscal 2023. These purchase obligations primarily relate to raw material commitments and capital expenditures.expenditures and are not expected to impact future liquidity as amounts should be recovered through customer billings.
We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal 2022,2023, which will equal or exceed our minimum funding requirements.
As of November 27, 2021,26, 2022, we had reserves of $4.0$5.5 million for unrecognized tax benefits. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits will ultimately be settled.
We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance. At November 27, 2021, $1.226, 2022, $1.4 billion of these types of bonds were outstanding, of which $448.0$578.7 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.
During calendar year 2020, we took advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the CARESCoronavirus Aid, Relief, and Economic Security Act. This deferral allowed us to retain cash during calendar year 2020 that would have otherwise been remitted to the federal government. AtWe paid our first installment of these deferred social security taxes, totaling approximately $6.8 million, in the endfourth quarter of fiscal 2021, we had deferred tax payments2022, and paid our final installment of $13.6approximately $6.8 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 in two equal portions in calendar years 2021 and 2022.at the start of the fourth quarter of fiscal 2023.
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 fundmeet our workingshort-term and long-term liquidity and capital requirements, planned capital expenditures and dividend payments for at least the next 12 months. Whileexpenditure needs. In addition, we believe we have adequate sources of liquiditythe ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. We also believe we will be able to operate our business so as to continue to fundbe in compliance with our business for at leastexisting debt covenants over the next 12 months, the extent to which the ongoing COVID-19 pandemic may impact our results of operations or liquidity is uncertain. The extent to which COVID-19 will continue to impact our business will depend on 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 initiatives, which have been boosted by vaccine production and distribution.fiscal year.
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 hasBased on our year-to-date results and increasing confidence in our outlook, we have narrowed itsour guidance for full-year adjusted earnings to a range of $2.25$3.90 to $2.40$4.05 per diluteddiluted* share, up 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 salerange of its Architectural Glass facility in Statesboro, Georgia. The company intends$3.75 to exclude this gain from its adjusted earnings results. The company continues to$4.05. We expect a long-term average tax ratefull year revenue growth of approximately 24.510 percent, andprimarily driven by growth in our Architectural Framing Systems segment. The company continues to expect full-year capital expenditures of approximately $25 million, down$40 million.
* A reconciliation of non-GAAP guidance on adjusted earnings per diluted share (“Adjusted EPS”) to GAAP guidance is not available on a forward-looking basis without unreasonable effort due to the uncertainty of the magnitude and timing of future adjustments. These adjustments may include the impact of such items as impairment charges, restructuring costs, acquired project-related charges, and gains or losses from the previous estimate of approximately $35 million, assignificant asset sales. Accordingly, the company has slowed some investments while it conducted its strategic review.is unable to provide a reconciliation of Adjusted EPS to the most directly comparable GAAP financial measure or address the probable significance of the unavailable information, which could be material to the company's future financial results computed in accordance with GAAP.
Related Party Transactions
No material changes have occurred in the disclosure with respect to our related party transactions set forth in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.26, 2022.
Critical Accounting Policies
There have been no material changes to our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021,26, 2022, except as noted below.
Goodwill andImpairment of goodwill, indefinite-lived intangible asset impairmentassets and long-lived assets
Goodwill
DuringAt the thirdbeginning of the first quarter of fiscal 2022,2023, we combined certainbegan management of the Sotawall and Harmon businesses under the Architectural Services segment in order to create a single, unified offering for larger custom curtainwall projects, which resulted in the combination of the Sotawall and Harmon reporting units to form twointo a single reporting units, 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 Wausau, EFCO and 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 Window and Wall Systems and Storefront and Finishing Solutions reporting units. The goodwill of the five individual pre-integration reporting units was aggregated to the respective combined reporting units. We evaluated goodwill on a qualitative basis prior to and subsequent to this change for these reporting units and concluded that no adjustment to the carrying value of goodwill was necessarynecessary. Concurrent with the move of Sotawall from the Architectural Framing Systems segment to the Architectural Services segment effective at the start of our first quarter of fiscal 2023, goodwill was reallocated to the affected reporting units within each segment, using a relative fair value approach as a result of thisoutlined in ASC 350,
change.. In addition, for all reporting units, no qualitative indicators of impairment were identified during the thirdfirst quarter of fiscal 2023, and therefore, no interim quantitative goodwill impairment evaluation was performed.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 202126, 2022 for a complete discussion onof the Company’s market risk. There have been no material changes in market risk from those disclosed in our Annual Report on Form 10-K for the fiscal year endedsince February 27, 2021, except as noted below.26, 2022.
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
Contents
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 Interim 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 Interim 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 Interim 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 27, 2021,26, 2022, 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
The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. In December 2022, the claimant in an arbitration of one such claim was awarded $20 million. The Company intends to appeal the award and believes, after taking into account all currently available information, including the advice of counsel and the likelihood of available insurance coverage, that this award will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. 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.
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 27, 2021.26, 2022.
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 2022:2023:
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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 | |
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Period | | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b) |
August 28, 2022 to September 24, 2022 | | 3,351 | | | $ | 41.16 | | | — | | | 1,253,399 | |
September 25, 2022 to October 22, 2022 | | 1,639 | | | 38.22 | | | — | | | 1,253,399 | |
October 23, 2022 to November 26, 2022 | | — | | | — | | | — | | | 1,253,399 | |
Total | | 4,990 | | | $ | 40.57 | | | — | | | 1,253,399 | |
(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. We did not purchase any shares pursuant to our publicly announce repurchase program during the fiscal quarter.
(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, January 14, 2020, and October 7, 2021;2021, and June 22, 2022; and by 2,000,000 shares, announced on each of the announcement dates of October 3, 2018.2018 and January 14, 2022. The repurchase program does not have an expiration date.
Item 6.Exhibits
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101101# | The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 27, 2021,26, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of November 27, 202126, 2022 and February 27, 2021,26, 2022, (ii) the Consolidated Results of Operations for the three- and nine-months ended November 27, 202126, 2022 and November 28, 2020,27, 2021, (iii) the Consolidated Statements of Comprehensive Earnings for the three- and nine-months ended November 27, 202126, 2022 and November 28, 2020,27, 2021, (iv) the Consolidated Statements of Cash Flows for the nine-months ended November 27, 202126, 2022 and November 28, 2020,27, 2021, (v) the Consolidated Statements of Shareholders' Equity for the three- and nine-months ended November 27, 202126, 2022 and November 28, 2020,27, 2021, and (vi) Notes to Consolidated Financial Statements. |
104104# | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) |
| Exhibits marked with a (#) sign are filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | APOGEE ENTERPRISES, INC. |
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Date: January 6,December 29, 2022 | | By: /s/ Ty R. Silberhorn |
| | | Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer) |
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Date: January 6,December 29, 2022 | | By: /s/ Nisheet GuptaMark R. Augdahl |
| | | Nisheet GuptaMark R. Augdahl
Executive Vice President andInterim Chief Financial Officer (Principal (Principal Financial and Accounting Officer) |