UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


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

For the quarterly period ended ~~November 26, 2022~~May 27, 2023


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

For the transition period from to

Commission File Number: 0-6365

_________________________________

APOGEE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

_________________________________

Minnesota

41-0919654

(State or other jurisdiction of incorporation or organization)

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

4400 West 78th Street, Suite 520

Minneapolis

Minnesota

55435

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (952) 835-1874

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_________________________________

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

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

APOG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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

As of ~~December~~June 26, ~~2022, 22,213,890~~2023, 22,077,600 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except stock data)	(In thousands, except stock data)	November 26, 2022		February 26, 2022		(In thousands, except stock data)	May 27, 2023		February 25, 2023
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	21,746	$	37,583	Cash and cash equivalents	$	24,642	$	19,924
Restricted cash	Restricted cash	3,718		—		Restricted cash	—		1,549
Receivables, net	Receivables, net	222,554		168,592		Receivables, net	210,796		197,267
Inventories	Inventories	86,032		80,494		Inventories	80,579		78,441
Costs and earnings on contracts in excess of billings		32,964		30,403
Contract assets						Contract assets	45,086		59,403
Other current assets	Other current assets	29,676		20,820		Other current assets	32,622		26,517
Total current assets	Total current assets	396,690		337,892		Total current assets	393,725		383,101
Property, plant and equipment, net		231,173		249,995
Property, plant and equipment, net of accumulated depreciation of $439,930 and $431,710						Property, plant and equipment, net of accumulated depreciation of $439,930 and $431,710	246,343		248,867
Operating lease right-of-use assets	Operating lease right-of-use assets	44,198		47,912		Operating lease right-of-use assets	40,213		41,354
Goodwill	Goodwill	129,268		130,102		Goodwill	129,054		129,026
Intangible assets		68,825		72,481
Intangible assets, net						Intangible assets, net	66,308		67,375
Other non-current assets	Other non-current assets	48,292		49,481		Other non-current assets	45,556		45,642
Total assets	Total assets	$	918,446	$	887,863	Total assets	$	921,199	$	915,365
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	70,137	$	92,104	Accounts payable	$	77,638	$	86,549
Accrued payroll and related benefits	Accrued payroll and related benefits	55,528		50,977		Accrued payroll and related benefits	34,360		51,651

Billings in excess of costs and earnings on uncompleted contracts		29,121		8,659
Contract liabilities						Contract liabilities	36,283		28,011
Operating lease liabilities	Operating lease liabilities	11,077		12,744		Operating lease liabilities	11,655		11,806
Current portion long-term debt		—		1,000

Other current liabilities	Other current liabilities	66,174		67,462		Other current liabilities	73,223		64,532
Total current liabilities	Total current liabilities	232,037		232,946		Total current liabilities	233,159		242,549
Long-term debt	Long-term debt	203,735		162,000		Long-term debt	170,669		169,837
Non-current operating lease liabilities	Non-current operating lease liabilities	36,778		39,591		Non-current operating lease liabilities	31,688		33,072
Non-current self-insurance reserves	Non-current self-insurance reserves	21,062		22,544		Non-current self-insurance reserves	32,403		29,316
Other non-current liabilities	Other non-current liabilities	47,196		44,583		Other non-current liabilities	43,074		44,183
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 22,213,635 and 23,701,491 respectively		7,405		7,901
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 22,219,005 and 22,224,299 respectively						Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 22,219,005 and 22,224,299 respectively	7,406		7,408
Additional paid-in capital	Additional paid-in capital	144,358		149,713		Additional paid-in capital	147,897		146,816
Retained earnings	Retained earnings	258,836		254,825		Retained earnings	286,300		273,740

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(32,961)		(26,240)		Accumulated other comprehensive loss	(31,397)		(31,556)
Total shareholders’ equity	Total shareholders’ equity	377,638		386,199		Total shareholders’ equity	410,206		396,408
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	918,446	$	887,863	Total liabilities and shareholders’ equity	$	921,199	$	915,365

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands, except per share data)	(In thousands, except per share data)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands, except per share data)	May 27, 2023		May 28, 2022
Net sales	Net sales	$	367,847	$	334,217	$	1,096,591	$	986,020	Net sales	$	361,713	$	356,635
Cost of sales	Cost of sales	281,239		269,537		839,430		805,627		Cost of sales	268,727		271,018
Gross profit	Gross profit	86,608		64,680		257,161		180,393		Gross profit	92,986		85,617
Selling, general and administrative expenses	Selling, general and administrative expenses	51,847		46,970		157,112		149,709		Selling, general and administrative expenses	59,219		52,401
Operating income	Operating income	34,761		17,710		100,049		30,684		Operating income	33,767		33,216

Interest expense, net	Interest expense, net	2,590		528		5,494		2,838		Interest expense, net	2,036		1,206
Other expense, net	Other expense, net	552		3,057		2,035		3,266		Other expense, net	288		1,310
Earnings before income taxes	Earnings before income taxes	31,619		14,125		92,520		24,580		Earnings before income taxes	31,443		30,700
Income tax expense	Income tax expense	7,854		3,068		8,635		4,821		Income tax expense	7,867		7,969
Net earnings	Net earnings	$	23,765	$	11,057	$	83,885	$	19,759	Net earnings	$	23,576	$	22,731
Earnings per share - basic	Earnings per share - basic	$	1.09	$	0.44	$	3.81	$	0.79	Earnings per share - basic	$	1.08	$	1.01
Earnings per share - diluted	Earnings per share - diluted	$	1.07	$	0.44	$	3.74	$	0.78	Earnings per share - diluted	$	1.05	$	1.00
Weighted average basic shares outstanding	Weighted average basic shares outstanding	21,870		24,957		22,043		25,166		Weighted average basic shares outstanding	21,883		22,399
Weighted average diluted shares outstanding	Weighted average diluted shares outstanding	22,278		25,309		22,456		25,459		Weighted average diluted shares outstanding	22,386		22,651

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Net earnings	Net earnings	$	23,765	$	11,057	$	83,885	$	19,759	Net earnings	$	23,576	$	22,731
Other comprehensive (losses) earnings:
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		905		(868)		(3,911)		(842)
Other comprehensive earnings (loss):										Other comprehensive earnings (loss):
Unrealized gain (loss) on marketable securities, net of $33, $(74), of tax expense (benefit), respectively										Unrealized gain (loss) on marketable securities, net of $33, $(74), of tax expense (benefit), respectively	121		(276)
Unrealized loss on derivative instruments, net of $(121), $(1,317), of tax benefit, respectively										Unrealized loss on derivative instruments, net of $(121), $(1,317), of tax benefit, respectively	(397)		(4,316)
Foreign currency translation adjustments	Foreign currency translation adjustments	(1,295)		(2,515)		(2,340)		(935)		Foreign currency translation adjustments	435		1,732
Other comprehensive losses		(478)		(3,534)		(6,721)		(1,924)
Other comprehensive earnings (loss)										Other comprehensive earnings (loss)	159		(2,860)
Total comprehensive earnings	Total comprehensive earnings	$	23,287	$	7,523	$	77,164	$	17,835	Total comprehensive earnings	$	23,735	$	19,871

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Operating Activities	Operating Activities					Operating Activities
Net earnings	Net earnings	$	83,885	$	19,759	Net earnings	$	23,576	$	22,731
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	31,925		38,353		Depreciation and amortization	10,282		10,849
Share-based compensation	Share-based compensation	5,961		4,807		Share-based compensation	2,178		1,597
Deferred income taxes	Deferred income taxes	2,341		(5,412)		Deferred income taxes	(165)		4,400
Asset impairment		—		16,638

Gain on disposal of assets	Gain on disposal of assets	(1,484)		(1,250)		Gain on disposal of assets	(27)		(660)

Proceeds from New Markets Tax Credit transaction, net of deferred costs	Proceeds from New Markets Tax Credit transaction, net of deferred costs	18,390		—		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)		—		Settlement of New Markets Tax Credit transaction	—		(19,523)
Noncash lease expense	Noncash lease expense	8,924		9,302		Noncash lease expense	2,714		3,088
Other, net	Other, net	4,700		3,009		Other, net	(432)		952
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	(58,202)		6,443		Receivables	(13,476)		(18,468)
Inventories	Inventories	(5,822)		(2,657)		Inventories	(2,068)		(17,744)
Costs and earnings on contracts in excess of billings		(2,599)		1,168
Contract assets						Contract assets	14,368		(13,528)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(11,985)		5,440		Accounts payable and accrued expenses	(21,702)		(18,576)
Billings in excess of costs and earnings on uncompleted contracts		20,884		(4,474)
Contract liabilities						Contract liabilities	8,158		(1,907)
Refundable and accrued income taxes	Refundable and accrued income taxes	(14,391)		5,255		Refundable and accrued income taxes	7,590		4,238
Operating lease liability	Operating lease liability	(9,168)		(9,387)		Operating lease liability	(3,101)		(3,333)
Other, net		(2,724)		(703)
Net cash provided by operating activities		51,112		86,291
Prepaid expenses and other current assets						Prepaid expenses and other current assets	(6,608)		(2,968)
Net cash provided (used) by operating activities						Net cash provided (used) by operating activities	21,287		(30,462)
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(18,119)		(13,070)		Capital expenditures	(7,398)		(5,125)
Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	5,212		1,347		Proceeds from sales of property, plant and equipment	66		4,087

Sales/maturities of marketable securities						Sales/maturities of marketable securities	400		100

Other, net		923		76
Net cash used by investing activities	Net cash used by investing activities	(11,984)		(11,647)		Net cash used by investing activities	(6,932)		(938)
Financing Activities	Financing Activities					Financing Activities
Borrowings on line of credit	Borrowings on line of credit	430,879		—		Borrowings on line of credit	105,852		161,000
Repayment on debt	Repayment on debt	(151,000)		(2,000)		Repayment on debt	—		(1,000)
Payments on line of credit	Payments on line of credit	(239,000)		—		Payments on line of credit	(105,000)		(62,000)
Payments on debt issue costs		(790)		—
Proceeds from exercise of stock options		—		4,115

Repurchase and retirement of common stock	Repurchase and retirement of common stock	(74,312)		(29,164)		Repurchase and retirement of common stock	(5,193)		(74,312)
Dividends paid	Dividends paid	(14,415)		(15,050)		Dividends paid	(5,245)		(4,793)
Other, net	Other, net	(2,959)		(1,895)		Other, net	(1,677)		(1,271)
Net cash used by financing activities		(51,597)		(43,994)
(Decrease) increase in cash, cash equivalents and restricted cash		(12,469)		30,650
Net cash (used) provided by financing activities						Net cash (used) provided by financing activities	(11,263)		17,624
Increase (decrease) in cash, cash equivalents and restricted cash						Increase (decrease) in cash, cash equivalents and restricted cash	3,092		(13,776)
Effect of exchange rates on cash	Effect of exchange rates on cash	350		345		Effect of exchange rates on cash	77		64
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	37,583		47,277		Cash, cash equivalents and restricted cash at beginning of year	21,473		37,583
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	25,464	$	78,272	Cash, cash equivalents and restricted cash at end of period	$	24,642	$	23,871
Noncash Activity	Noncash Activity					Noncash Activity
Capital expenditures in accounts payable	Capital expenditures in accounts payable	$	1,557	$	1,095	Capital expenditures in accounts payable	$	2,115	$	766

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)


(In thousands)	(In thousands)	Common Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		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 26, 2022		23,701	$	7,901	$	149,713	$	254,825	$	(26,240)	$	386,199
Balance at February 25, 2023													Balance at February 25, 2023	22,224	$	7,408	$	146,816	$	273,740	$	(31,556)	$	396,408
Net earnings	Net earnings	—	—		—		22,731		—		22,731		Net earnings	—	—		—		23,576		—		23,576
Unrealized loss on marketable securities, net of $74 tax benefit		—	—		—		—		(276)		(276)
Unrealized loss on derivative instruments, net of $1,317 tax benefit		—	—		—		—		(4,316)		(4,316)
Unrealized gain on marketable securities, net of $33 tax expense													Unrealized gain on marketable securities, net of $33 tax expense	—	—		—		—		121		121
Unrealized loss on foreign currency hedge, net of $121 tax benefit													Unrealized loss on foreign currency hedge, net of $121 tax benefit	—	—		—		—		(397)		(397)
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		1,732		1,732		Foreign currency translation adjustments	—	—		—		—		435		435
Issuance of stock, net of cancellations	Issuance of stock, net of cancellations	100	33		23		—		—		56		Issuance of stock, net of cancellations	155	52		13		(9)		—		56
Share-based compensation	Share-based compensation	—	—		1,597		—		—		1,597		Share-based compensation	—	—		2,178		—		—		2,178

Share repurchases	Share repurchases	(1,571)	(524)		(10,350)		(63,438)		—		(74,312)		Share repurchases	(120)	(40)		(829)		(4,324)		—		(5,193)
Other share retirements	Other share retirements	(30)	(10)		(198)		(1,120)		—		(1,328)		Other share retirements	(40)	(14)		(281)		(1,438)		—		(1,733)
Cash dividends	Cash dividends	—	—		—		(4,793)		—		(4,793)		Cash dividends	—	—		—		(5,245)		—		(5,245)
Balance at May 28, 2022		22,200	$	7,400	$	140,785	$	208,205	$	(29,100)	$	327,290
Net earnings		—	—		—		37,389		—		37,389
Unrealized loss on marketable securities, net of $28 tax benefit		—	—		—		—		(106)		(106)
Unrealized loss on derivative instruments, net of $152 tax benefit		—	—		—		—		(500)		(500)
Foreign currency translation adjustments		—	—		—		—		(2,777)		(2,777)
Issuance of stock, net of cancellations		(14)	(5)		61		—		—		56
Share-based compensation		—	—		1,797		—		—		1,797
Exercise of stock options		36	12		(954)		—		—		(942)

Other share retirements		(13)	(4)		(114)		(540)		—		(658)
Cash dividends		—	—		—		(4,809)		—		(4,809)
Balance at August 27, 2022		22,209	$	7,403	$	141,575	$	240,245	$	(32,483)	$	356,740
Net earnings		—	—		—		23,765		—		23,765
Unrealized loss on marketable securities, net of $24 tax benefit		—	—		—		—		(88)		(88)
Unrealized gain on derivative instruments, net of $277 tax expense		—	—		—		—		905		905
Foreign currency translation adjustments		—	—		—		—		(1,295)		(1,295)
Issuance of stock, net of cancellations		9	3		250		(196)		—		57
Share-based compensation		—	—		2,567		—		—		2,567

Other share retirements		(4)	(1)		(34)		(165)		—		(200)
Cash dividends		—	—		—		(4,813)		—		(4,813)
Balance at November 26, 2022		22,214	$	7,405	$	144,358	$	258,836	$	(32,961)	$	377,638
Balance at May 27, 2023													Balance at May 27, 2023	22,219	$	7,406	$	147,897	$	286,300	$	(31,397)	$	410,206


(In thousands)	Common Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders' Equity
Balance at February 26, 2022	23,701	7,901		149,713		254,825		(26,240)		386,199
Net earnings	—	—		—		22,731		—		22,731
Unrealized loss on marketable securities, net of $74 tax benefit	—	—		—		—		(276)		(276)
Unrealized loss on derivative instruments, net of $1,317 tax benefit	—	—		—		—		(4,316)		(4,316)
Foreign currency translation adjustments	—	—		—		—		1,732		1,732
Issuance of stock, net of cancellations	100	33		23		—		—		56
Share-based compensation	—	—		1,597		—		—		1,597

Share repurchases	(1,571)	(524)		(10,350)		(63,438)		—		(74,312)
Other share retirements	(30)	(10)		(198)		(1,120)		—		(1,328)
Cash dividends	—	—		—		(4,793)		—		(4,793)
Balance at May 28, 2022	22,200	$	7,400	$	140,785	$	208,205	$	(29,100)	$	327,290

See accompanying notes to consolidated financial statements.

~~Table of Contents~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY~~

~~(Unaudited)~~

(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 $ (28,027) $ 492,745
Net earnings — — — 10,817 — 10,817
Unrealized gain on marketable securities, net of $0 tax expense — — — — — —
Unrealized gain on derivative instruments, net of $211 tax expense — — — — 692 692
Foreign currency translation adjustments — — — — 5,880 5,880
Issuance of stock, net of cancellations 90 30 (7) — — 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 $ (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 derivative instruments, net of $203 tax benefit — — — — (666) (666)
Foreign currency translation adjustments — — — — (4,300) (4,300)
Issuance of stock, net of cancellations 67 22 — — — 22
Share-based compensation — — 1,587 — — 1,587
Share repurchases (249) (83) (1,616) (8,095) — (9,794)
Other share retirements (30) (9) (197) (496) — (702)
Cash dividends — — — (5,025) — (5,025)
Balance at August 28, 2021 25,394 $ 8,465 $ 158,115 $ 336,398 $ (26,417) $ 476,561
Net earnings — — — 11,057 — 11,057
Unrealized loss on marketable securities, net of $40 tax benefit — — — — (151) (151)
Unrealized loss on derivative instruments, net of $265 tax benefit — — — — (868) (868)
Foreign currency translation adjustments — — — — (2,515) (2,515)
Issuance of stock, net of cancellations 1 — 22 — — 22
Share-based compensation — — 1,546 — — 1,546
Share repurchases (166) (55) (1,092) (5,598) — (6,745)
Other share retirements (2) (1) (12) (51) — (64)
Cash dividends — — — (4,990) — (4,990)
Balance at November 27, 2021 25,227 $ 8,409 $ 158,579 $ 336,816 $ (29,951) $ 473,853

~~See accompanying notes to consolidated financial statements.~~

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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 ~~26, 2022.~~25, 2023. 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~~three-month period ended ~~November 26, 2022~~May 27, 2023 are not necessarily indicative of the results to be expected for the full year.

AtReclassifications

Certain reclassifications of amounts previously reported have been made to the ~~beginning~~accompanying consolidated balance sheets, consolidated statements of cash flows and notes to consolidated financial statements to conform to current year presentation of contract assets and liabilities. These reclassifications had no impact on reported cash flows or total assets and liabilities.

Adoption of new accounting standards

In the current quarter, we adopted the guidance in ASU 2022-04, Liabilities – Supplier Finance Programs, Disclosure of Supplier Finance Program Obligations. The guidance requires that entities that use supplier finance programs disclose information about the nature and potential magnitude of the ~~first~~programs, activity during the period, and changes from period to period. Beginning in the current quarter, ~~of fiscal 2023,~~ we ~~began management of~~implemented a supplier financing arrangement with U.S. Bank that enables our suppliers, at their sole discretion, to sell their Apogee receivables (i.e., our payment obligations to the ~~Sotawall and Harmon businesses under the Architectural Services segment~~suppliers) to U.S. Bank on a non-recourse basis in order to ~~create~~be paid earlier than our payment terms provide. Our suppliers’ voluntary inclusion of invoices in the supplier financing arrangement has no bearing on our payment terms, the amounts we pay, or our liquidity. We have no economic interest in a ~~single, unified offering for larger custom curtainwall projects. The comparative fiscal 2022 segment results for~~supplier’s decision to participate in the ~~Architectural Framing Systems~~supplier financing program, and ~~Architectural Services segments have been recast~~we do not provide any guarantees in connection with it. As of May 27, 2023, the amount outstanding that remains unpaid to ~~reflect~~ the ~~move of~~bank totaled $2.1 million, and is reflected in accounts payable in 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.~~consolidated balance sheets.

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
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Recognized at shipment	Recognized at shipment	$	168,593	$	141,826	$	504,450	$	419,893	Recognized at shipment	$	152,655	$	161,164
Recognized over time	Recognized over time	199,254		192,391		592,141		566,127		Recognized over time	209,058		195,471
Total	Total	$	367,847	$	334,217	$	1,096,591	$	986,020	Total	$	361,713	$	356,635

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 to us from the customer.


(In thousands)	(In thousands)	November 26, 2022		February 26, 2022		(In thousands)	May 27, 2023		February 25, 2023
Trade accounts	Trade accounts	$	142,591	$	129,085	Trade accounts	$	139,204	$	140,732
Construction contracts	Construction contracts	50,423		12,857		Construction contracts	74,685		58,331
Contract retainage		31,395		28,782
Total receivables	Total receivables	224,409		170,724		Total receivables	213,889		199,063
Less: allowance for credit losses	Less: allowance for credit losses	1,855		2,132		Less: allowance for credit losses	3,093		1,796
Receivables, net	Receivables, net	$	222,554	$	168,592	Receivables, net	$	210,796	$	197,267

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The following table summarizes the activity in the allowance for credit ~~losses:~~losses for the three-month period ended:

(In thousands) November 26, 2022 February 26, 2022
Beginning balance $ 2,132 $ 1,947
Additions charged to costs and expenses 20 729
Deductions from allowance, net of recoveries (279) (514)
Other changes (1)
(18) (30)
Ending balance $ 1,855 $ 2,132
(1) Result of foreign currency effects

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(In thousands)	May 27, 2023
Beginning balance	$	1,796
Additions charged to costs and expenses	1,376
Deductions from allowance, net of recoveries	(82)
Foreign currency effects	3
Ending balance	$	3,093

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. 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 to us from 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 parts of our ~~businesses~~business 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 at which point amounts are released to us from the customer.

(In thousands) November 26, 2022 February 26, 2022
Contract assets $ 64,359 $ 59,185
Contract liabilities 31,657 11,373

The changes in contract assets and contract liabilities were 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
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Revenue recognized related to contract liabilities from prior year-end	Revenue recognized related to contract liabilities from prior year-end	$	3,473	$	1,687	$	36,630	$	18,266	Revenue recognized related to contract liabilities from prior year-end	$	22,745	$	35,926
Revenue recognized related to prior satisfaction of performance obligations	Revenue recognized related to prior satisfaction of performance obligations	4,640		5,051		9,586		12,568		Revenue recognized related to prior satisfaction of performance obligations	427		175

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. The transaction prices associated with unsatisfied performance obligations at ~~November 26, 2022~~May 27, 2023 are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:


(In thousands)	~~November 26, 2022~~May 27, 2023
Within one year	$	~~493,289~~459,780
Within two years	~~280,427~~262,496
Beyond two years	~~87,660~~81,710
Total	$	~~861,376~~803,986

3.Supplemental Balance Sheet Information

Inventories

(In thousands) November 26, 2022 February 26, 2022
Raw materials $ 43,722 $ 42,541
Work-in-process 17,081 18,144
Finished goods 25,229 19,809
Total inventories $ 86,032 $ 80,494


(In thousands)	May 27, 2023		February 25, 2023
Raw materials	$	39,167	$	36,869
Work-in-process	17,695		18,024
Finished goods	23,717		23,548
Total inventories	$	80,579	$	78,441

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Other current liabilities


(In thousands)	(In thousands)	November 26, 2022		February 26, 2022		(In thousands)	May 27, 2023		February 25, 2023
Warranties	Warranties	$	14,137	$	11,786	Warranties	$	17,124	$	14,872

Accrued self-insurance reserves						Accrued self-insurance reserves	14,823		14,447
Income and other taxes	Income and other taxes	5,832		15,770		Income and other taxes	13,552		7,129
Accrued self-insurance reserves		15,888		8,796
Accrued freight		1,917		2,078
Deferred revenue		2,536		2,714
Other	Other	25,864		26,318		Other	27,724		28,084
Total other current liabilities	Total other current liabilities	$	66,174	$	67,462	Total other current liabilities	$	73,223	$	64,532

Other non-current liabilities


(In thousands)	(In thousands)	November 26, 2022		February 26, 2022		(In thousands)	May 27, 2023		February 25, 2023
Deferred benefit from New Markets Tax Credit transactions	Deferred benefit from New Markets Tax Credit transactions	$	9,250	$	9,165	Deferred benefit from New Markets Tax Credit transactions	$	9,250	$	9,250
Deferred compensation plan						Deferred compensation plan	6,266		5,577
Retirement plan obligations	Retirement plan obligations	6,269		7,041		Retirement plan obligations	5,691		5,749
Deferred compensation plan		6,851		9,483
Deferred tax liabilities	Deferred tax liabilities	3,793		2,296		Deferred tax liabilities	1,433		1,417

Other	Other	21,033		16,598		Other	20,434		22,190
Total other non-current liabilities	Total other non-current liabilities	$	47,196	$	44,583	Total other non-current liabilities	$	43,074	$	44,183

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 26, 2022 $ 10,835 $ — $ 675 $ 10,160
February 26, 2022 11,862 45 123 11,784


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
May 27, 2023	$	10,225	$	—	$	550	$	9,675
February 25, 2023	10,647		—		702		9,945

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 26, 2022,~~May 27, 2023, 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	$	1,739	$	1,720	Due within one year	$	2,906	$	2,850
Due after one year through five years	Due after one year through five years	9,096		8,440		Due after one year through five years	7,319		6,825

Total	Total	$	10,835	$	10,160	Total	$	10,225	$	9,675

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.~~facility. As of ~~November 26, 2022,~~May 27, 2023, the interest rate swap contract had a notional value of $30.0 ~~million.~~million and has a maturity date of February 5, 2026.

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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 26, 2022,~~May 27, 2023, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S. dollar notional values of ~~$3.0~~$5.1 million and ~~$8.1~~$12.8 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)	(In thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value		(In thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value
November 26, 2022
May 27, 2023								May 27, 2023
Assets:	Assets:							Assets:
Money market funds	Money market funds	$	6,629	$	—	$	6,629	Money market funds	$	11,901	$	—	$	11,901

Municipal and corporate bonds	Municipal and corporate bonds	—		10,160		10,160		Municipal and corporate bonds	—		9,675		9,675
Cash surrender value of life insurance	Cash surrender value of life insurance	—		16,247		16,247		Cash surrender value of life insurance	—		8,188		8,188

Interest rate swap contract	Interest rate swap contract	—		1,917		1,917		Interest rate swap contract	—		1,522		1,522
Liabilities:	Liabilities:							Liabilities:
Deferred compensation	Deferred compensation	—		9,277		9,277		Deferred compensation	—		10,204		10,204
Foreign currency forward/option contract	Foreign currency forward/option contract	—		192		192		Foreign currency forward/option contract	—		147		147
Aluminum hedging contract	Aluminum hedging contract	—		2,382		2,382		Aluminum hedging contract	—		881		881

February 26, 2022
February 25, 2023								February 25, 2023
Assets:	Assets:							Assets:
Money market funds	Money market funds	$	19,288	$	—	$	19,288	Money market funds	$	8,062	$	—	$	8,062

Municipal and corporate bonds	Municipal and corporate bonds	—		11,784		11,784		Municipal and corporate bonds	—		9,945		9,945
Cash surrender value of life insurance	Cash surrender value of life insurance	—		17,831		17,831		Cash surrender value of life insurance	—		8,282		8,282

Aluminum hedging contract		—		2,133		2,133
Interest rate swap contract	Interest rate swap contract	—		718		718		Interest rate swap contract	—		1,817		1,817
Liabilities:	Liabilities:							Liabilities:
Deferred compensation	Deferred compensation	—		12,491		12,491		Deferred compensation	—		9,515		9,515
Foreign currency forward/option contract	Foreign currency forward/option contract	—		161		161		Foreign currency forward/option contract	—		206		206
Aluminum hedging contract								Aluminum hedging contract	—		1,075		1,075

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.

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Derivative instruments

The interest rate swap is measured at fair value using other observable market inputs, based off of benchmark interest rates.

~~Table of Contents~~

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.

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.

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, which resulted in the combination of the Sotawall and Harmon reporting units into a single reporting unit. 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 necessary. 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 outlined in ASC 350, Intangibles - Goodwill and Other. ~~In addition, for all reporting units, no qualitative indicators of impairment were identified during~~

During the first quarter of fiscal ~~2023,~~2024, we did not identify any qualitative indicators of impairment at any of our reporting units, and therefore, no interim quantitative goodwill impairment evaluation was performed.

The following table presents the carrying amount of goodwill attributable to each reporting segment 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)	(In thousands)	Architectural Framing Systems		Architectural Services		Architectural Glass		Large-Scale Optical		Total		(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
Balance at February 26, 2022												Balance at February 26, 2022	$	93,181	$	1,120	$	25,244	$	10,557	$	130,102

Reallocation among reporting units (1)												Reallocation among reporting units (1)	(2,048)		2,048		—		—		—
Foreign currency translation												Foreign currency translation	(996)		(137)		57		—		(1,076)
Balance at February 25, 2023												Balance at February 25, 2023	90,137		3,031		25,301		10,557		129,026

Foreign currency translation	Foreign currency translation	82		—		(78)		—		4		Foreign currency translation	(18)		(2)		48		—		28
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
Balance at May 27, 2023												Balance at May 27, 2023	$	90,119	$	3,029	$	25,349	$	10,557	$	129,054

(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.	(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.											(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.

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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~~During the ~~impairment analysis performed in the fourth~~first quarter of fiscal ~~2022, the fair value~~2024, we did not identify any qualitative indicators of ~~each of our~~

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~~trade names and trademarks exceeded the carrying amount. However, due to triggering events identified in the fourth quarter of fiscal 2022, resulting from the finalization~~impairment at any of our plans for integrating the Sotawall business into the Architectural Services 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 that Sotawall had an immaterial fair value, resulting in the trade name being fully impaired as of fiscal 2022 year-end. We recognized this amount asreporting units, and therefore, no interim quantitative goodwill impairment ~~expense in the fourth quarter ended February 26, 2022.~~evaluation was performed.

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 a 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 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		Foreign Currency Translation		Net
November 26, 2022
May 27, 2023												May 27, 2023
Definite-lived intangible assets:	Definite-lived intangible assets:											Definite-lived intangible assets:
Customer relationships	Customer relationships	$	89,495	$	(48,843)	$	—	$	(2,077)	$	38,575	Customer relationships	$	86,798	$	(50,319)	$	19	$	36,498
Other intangibles	Other intangibles	39,449		(35,300)		—		(815)		3,334		Other intangibles	38,360		(35,409)		13		2,964
Total	Total	128,944		(84,143)		—		(2,892)		41,909		Total	125,158		(85,728)		32		39,462
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:											Indefinite-lived intangible assets:
Trademarks	Trademarks	27,129		—		—		(213)		26,916		Trademarks	26,851		—		(5)		26,846
Total intangible assets	Total intangible assets	$	156,073	$	(84,143)	$	—	$	(3,105)	$	68,825	Total intangible assets	$	152,009	$	(85,728)	$	27	$	66,308
February 26, 2022
February 25, 2023												February 25, 2023
Definite-lived intangible assets:	Definite-lived intangible assets:											Definite-lived intangible assets:
Customer relationships	Customer relationships	$	122,961	$	(47,226)	$	(33,608)	$	141	$	42,268	Customer relationships	$	89,495	$	(49,404)	$	(2,697)	$	37,394
Other intangibles	Other intangibles	41,838		(35,613)		(3,127)		(14)		3,084		Other intangibles	39,404		(35,229)		(1,045)		3,130
Total	Total	164,799		(82,839)		(36,735)		127		45,352		Total	128,899		(84,633)		(3,742)		40,524
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:											Indefinite-lived intangible assets:
Trademarks	Trademarks	39,832		—		(12,738)		35		27,129		Trademarks	27,129		—		(278)		26,851
Total intangible assets	Total intangible assets	$	204,631	$	(82,839)	$	(49,473)	$	162	$	72,481	Total intangible assets	$	156,028	$	(84,633)	$	(4,020)	$	67,375

Amortization expense on definite-lived intangible assets was ~~$3.1~~$1.0 million and ~~$5.9~~$4.2 million for the ~~nine-month~~three-month periods ended ~~November 26,~~May 27, 2023 and May 28, 2022, ~~and November 27, 2021,~~ respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At ~~November 26, 2022,~~May 27, 2023, the estimated future amortization expense for definite-lived intangible assets was:


(In thousands)	(In thousands)	Remainder of 2023		2024		2025		2026		2027		(In thousands)	2024		2025		2026		2027		2028
Estimated amortization expense	Estimated amortization expense	$	1,136	$	4,393	$	4,363	$	4,346	$	4,292	Estimated amortization expense	$	3,195	$	4,239	$	4,223	$	4,392	$	3,892

6.Debt

~~During the second quarter ended August~~As of May 27, ~~2022,~~2023, we ~~amended and extended our~~had a committed revolving credit facility ~~to include~~with Wells Fargo Bank, N.A. as administrative agent, and other lenders with maximum borrowings of up to $385 million ~~with~~and a maturity date of August 5, 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 outstandingOutstanding borrowings under the revolving credit facility were $155.0 million and $156.0 million as of May 27, 2023 and February ~~26, 2022.~~25, 2023, respectively.

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quarters must separate qualifying acquisitions. Both ratios are computed quarterly, with

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EBITDA calculated on a rolling four-quarter basis. At ~~November 26, 2022,~~May 27, 2023, we were in compliance with both financial covenants. ~~Additionally,~~

Borrowings under the credit facility bear floating interest at ~~November 26, 2022,~~either the Base Rate or Term SOFR, plus a margin based on the Leverage Ratio (as defined in the Credit Agreement). For Base Rate borrowings, the margin ranges from 0.125% to 0.75%. For Term SOFR borrowings, the margin ranges from 1.135% to 1.85%.

The facility also contains an "accordion" provision. Under this provision, we can request that the facility be increased by as much $200.0 million. Any Lender may elect or decline to participate in the requested increase at the Lender’s sole discretion.

At May 27, 2023, 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. As of May 27, 2023, the amount available for revolving borrowings under the Wells Fargo credit facility was $217.7 million.

At ~~November 26, 2022,~~May 27, 2023, debt included $12.0 million of industrial revenue bonds that mature in fiscal years 2036 through 2043. ~~In March 2022, a $1.0 million industrial revenue bond matured and was repaid.~~ The fair value of all industrial revenue bonds approximated carrying value at ~~November 26, 2022,~~May 27, 2023, due to the variable interest rates on these instruments.

We also maintain two Canadian committed, revolving credit facilities with the Bank of Montreal totaling $25.0 million (USD). The Canadian committed revolving credit facilities expire annually in February, but can be renewed each year solely at our discretion until August 2027, therefore, we have classified all outstanding amounts under these facilities as long-term debt within our consolidated balance sheets. At May 27, 2023 and February 25, 2023, outstanding borrowings under these Canadian committed, revolving credit facilities were $3.7 million and $1.8 million, respectively. At May 27, 2023, the total amount available for revolving borrowings under the Bank of Montreal credit facilities was $21.3 million. The Bank of Montreal credit facilities have two maintenance financial covenants that are identical to those contained in the Wells Fargo credit facility. At May 27, 2023, we were in compliance with both financial covenants.

Our Wells Fargo credit facility, ~~term loan~~Bank of Montreal credit facilities 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). At November 26, 2022, outstanding borrowings~~Interest payments under ~~our Canadian committed, revolving credit~~the Wells Fargo and Bank of Montreal facilities were ~~$3.7 million, while there were no outstanding borrowings under the Canadian facilities as of February 26, 2022.~~

~~Interest payments were $5.3~~$2.4 million and ~~$2.7~~$1.1 million for the ~~nine~~three months ended ~~November 26,~~May 27, 2023 and May 28, 2022, ~~and November 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					Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Operating lease cost	Operating lease cost	$	3,293	$	3,422	$	9,298	$	10,321	Operating lease cost	$	3,276	$	3,051
Short-term lease cost	Short-term lease cost	144		357		804		821		Short-term lease cost	10		314
Variable lease cost	Variable lease cost	904		725		2,667		2,182		Variable lease cost	755		906

Total lease cost	Total lease cost	$	4,341	$	4,504	$	12,769	$	13,324	Total lease cost	$	4,041	$	4,271

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Other supplemental information related to leases was as follows:


		Nine Months Ended							Three Months Ended
(In thousands except weighted-average data)	(In thousands except weighted-average data)	November 26, 2022			November 27, 2021			(In thousands except weighted-average data)	May 27, 2023			May 28, 2022

Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	10,580		$	10,744		Cash paid for amounts included in the measurement of operating lease liabilities	$	3,742		$	3,537
Lease assets obtained in exchange for new operating lease liabilities	Lease assets obtained in exchange for new operating lease liabilities	$	11,125		$	3,107		Lease assets obtained in exchange for new operating lease liabilities	$	1,580		$	168
Weighted-average remaining lease term - operating leases	Weighted-average remaining lease term - operating leases	4.7 years			5.4 years			Weighted-average remaining lease term - operating leases	4.4 years			5.2 years
Weighted-average discount rate - operating leases	Weighted-average discount rate - operating leases	3.14		%	2.88		%	Weighted-average discount rate - operating leases	3.27		%	2.86		%

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Future maturities of lease liabilities are as follows:


(In thousands)	~~November 26, 2022~~May 27, 2023
Remainder of Fiscal ~~2023~~2024	$	~~3,243~~
~~Fiscal 2024~~	~~12,587~~9,477
Fiscal 2025	~~11,326~~11,785
Fiscal 2026	~~9,371~~9,379
Fiscal 2027	7,960
Fiscal 2028	~~4,270~~4,324
Fiscal 2029	1,547
Thereafter	~~2,324~~2,226
Total lease payments	~~51,081~~46,698
Less: Amounts representing interest	~~3,226~~3,355
Present value of lease liabilities	$	~~47,855~~43,343

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 26, 2022, $1.4~~May 27, 2023, $1.3 billion of these types of bonds were outstanding, of which ~~$578.7~~$503.4 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 these accruals in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume.


		Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Balance at beginning of period	Balance at beginning of period	$	13,923	$	14,999	Balance at beginning of period	$	17,893	$	13,923
Additional accruals	Additional accruals	11,201		4,175		Additional accruals	4,353		4,069

Claims paid	Claims paid	(7,755)		(4,071)		Claims paid	(2,148)		(2,525)
Balance at end of period	Balance at end of period	$	17,369	$	15,103	Balance at end of period	$	20,098	$	15,467

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.

Letters of credit

At ~~November 26, 2022,~~May 27, 2023, we had $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 $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 ~~$222.2~~$31.6 million as of ~~November 26, 2022.~~May 27, 2023.

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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 current and 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

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project, we are required to hold cash dedicated to fund each 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	Termination date	Deferred Benefit		Deferred costs		Net benefit
June 2016	June 2023	$	6.0	$	1.2	$	4.8
September 2018	September 2025	3.2		1.0		2.2
May 2022(1)	August 2025	6.1		1.6		4.5
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~~has appealed 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

As part of our compensation structure, we grant stock-based compensation awards to certain employees and non-employee directors during the fiscal year. These awards may be in the form of incentive stock options (to employees only), nonstatutory options, or nonvested share awards and units, all of which are granted at a price or with an exercise price equal to the fair market value of the Company’s stock at the date of award. Refer to our Form 10-K for further information on our share-based compensation plans.

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The table below sets forth the number of stock-based compensation awards granted during the three-months ended May 27, 2023, along with the weighted average grant date fair value:


Awards	Number of Awards	Weighted Average Exercise Price
Restricted stock awards and restricted stock units(1)	159,286	$	42.77
Performance share units ("PSUs")(2)	47,402	$	43.59

(1) Represent service condition awards which generally vest over a two- or three-year period.
(2) Represent performance condition awards with the grant equal to the target number of performance shares based on the share price at grant date. These grants allow for the right to receive a variable number of shares, between 0% and 200% of target, dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Total share-based compensation expense included in the results of operations was ~~$6.0~~$2.2 million for the ~~nine-month~~three-month period ended ~~November 26, 2022~~May 27, 2023, and ~~$4.8~~$1.6 million for the ~~nine-month~~three-month period ended ~~November 27, 2021.~~

~~Stock options~~

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

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 26, 2022, there were no cash proceeds from the exercise of stock options as all stock options were 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 $2.7 million. For the nine-months ended November 27, 2021, cash proceeds from the exercise of stock options was $4.1 million and 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.

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~~Executive 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 quarters 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 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 a 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 Number of Shares and Units Weighted Average Grant Date Fair Value
Nonvested at February 26, 2022 (1)
488,944 $ 30.14
Granted (2)
182,493 46.10
Vested (148,332) 27.56
Canceled (3)
(44,932) 36.02
Nonvested at November 26, 2022(4)
478,173 $ 36.48

~~(1) 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.~~May 28, 2022.

At ~~November 26, 2022,~~May 27, 2023, there was ~~$11.4~~$10.3 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 2520 months. The total fair value of shares vested during the ~~nine~~three months ended ~~November 26, 2022~~May 27, 2023 was ~~$6.2~~$5.5 million.

As of May 27, 2023, we had remaining stock options outstanding and expense to vest of 158,000, with a weighted average exercise price of $23.04 and an aggregate intrinsic value of $2.0 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 ~~2019,~~2020, or state and local income tax examinations for years prior to fiscal ~~2013.~~2015. The Company is not currently under U.S. federal examination for years subsequent to fiscal year ~~2018,~~2019, 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 ~~$5.5~~$5.2 million at ~~November 26, 2022,~~May 27, 2023, compared to ~~$3.3~~$5.3 million at February ~~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.~~25, 2023. 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:

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		Three Months Ended		Nine Months Ended			Three Months Ended
(In thousands)	(In thousands)	November 26, 2022	November 27, 2021	November 26, 2022	November 27, 2021	(In thousands)	May 27, 2023	May 28, 2022
Basic earnings per share – weighted average common shares outstanding	Basic earnings per share – weighted average common shares outstanding	21,870	24,957	22,043	25,166	Basic earnings per share – weighted average common shares outstanding	21,883	22,399
Weighted average effect of nonvested share grants and assumed exercise of stock options	Weighted average effect of nonvested share grants and assumed exercise of stock options	408	352	413	293	Weighted average effect of nonvested share grants and assumed exercise of stock options	503	252
Diluted earnings per share – weighted average common shares and potential common shares outstanding	Diluted earnings per share – weighted average common shares and potential common shares outstanding	22,278	25,309	22,456	25,459	Diluted earnings per share – weighted average common shares and potential common shares outstanding	22,386	22,651
Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	109	—	109	—	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)	229	106

12.Business Segment Data

We have four reporting segments:

•The Architectural Framing Systems segment designs, engineers, fabricates and finishes aluminum window, curtainwall, storefront and entrance systems for the exterior of buildings.

•The Architectural Services segment integrates technical services, project management, and field installation services to design, engineer, fabricate, and install building glass and curtainwall systems.

•The Architectural Glass segment coats and fabricates, high-performance glass used in custom window and wall systems on commercial buildings.

•The Large-Scale Optical (LSO) segment manufactures high-performance glass and acrylic products for custom framing, museum, and technical glass markets.

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		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Net sales
Segment net sales										Segment net sales
Architectural Framing Systems	Architectural Framing Systems	$	165,013	$	141,462	$	501,172	$	415,203	Architectural Framing Systems	$	164,162	$	163,292
Architectural Glass										Architectural Glass	97,202		76,265
Architectural Services	Architectural Services	102,031		105,404		312,151		292,506		Architectural Services	89,418		103,388
Architectural Glass		81,541		74,289		235,158		236,693
Large-Scale Optical	Large-Scale Optical	26,660		27,351		76,988		75,122		Large-Scale Optical	22,456		25,162
Intersegment eliminations	Intersegment eliminations	(7,398)		(14,289)		(28,878)		(33,504)		Intersegment eliminations	(11,525)		(11,472)
Net sales	Net sales	$	367,847	$	334,217	$	1,096,591	$	986,020	Net sales	$	361,713	$	356,635
Operating income (loss)
Segment operating income (loss)										Segment operating income (loss)
Architectural Framing Systems	Architectural Framing Systems	$	22,089	$	12,085	$	66,266	$	28,837	Architectural Framing Systems	$	19,945	$	23,665
Architectural Glass										Architectural Glass	16,521		5,169
Architectural Services	Architectural Services	6,032		7,807		14,449		19,172		Architectural Services	(596)		2,927
Architectural Glass		7,461		(1,277)		19,087		(16,143)
Large-Scale Optical	Large-Scale Optical	7,109		5,996		19,598		17,326		Large-Scale Optical	5,525		6,498
Corporate and other	Corporate and other	(7,930)		(6,901)		(19,351)		(18,508)		Corporate and other	(7,628)		(5,043)
Operating income	Operating income	$	34,761	$	17,710	$	100,049	$	30,684	Operating income	$	33,767	$	33,216

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,~~During the second quarter of fiscal 2022, we announced plans to realign and simplify our business structure. ~~During~~The execution of these plans was completed during the first quarter of fiscal 2023, ~~we completed the execution of these plans~~ with the sale of the 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 we recognized a gain on the sale of approximately $0.6 million, net of associated transaction costs, which is included as a reduction of cost of sales within our consolidated statements of ~~operations.~~

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operations for the prior-year period.

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~~have been paid ~~within~~as of the ~~current~~end of the first quarter of fiscal ~~year.~~2024.


(In thousands)	(In thousands)	Architectural Framing		Architectural Glass		Corporate & Other		Total		(In thousands)	Architectural Framing		Architectural Glass		Corporate & Other		Total
Balance at February 27, 2021		$	2,872	$	230	$	161	$	3,263
Restructuring expense		2,000		1,036		1,039		4,075
Balance at February 26, 2022										Balance at February 26, 2022	$	440	$	737	$	228	$	1,405

Payments	Payments	(3,567)		(529)		(972)		(5,068)		Payments	(124)		(378)		(68)		(570)
Other adjustments	Other adjustments	(865)		—		—		(865)		Other adjustments	(14)		(17)		—		(31)
Balance at February 26, 2022		440		737		228		1,405
Restructuring expense		—		116		—		116
Balance at May 28, 2022										Balance at May 28, 2022	302		342		160		804

Balance at February 25, 2023										Balance at February 25, 2023	$	62	$	23	$	—	$	85

Payments	Payments	(203)		(690)		(203)		(1,096)		Payments	(62)		(23)		—		(85)
Other adjustments		(152)		(18)		—		(170)
Balance at November 26, 2022		$	85	$	145	$	25	$	255

Balance at May 27, 2023										Balance at May 27, 2023	$	—	$	—	$	—	$	—

~~14. Subsequent Events~~

We have evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined that there were no subsequent events that required recognition or disclosure in the consolidated 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

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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 ~~26, 2022~~25, 2023 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. Our four reporting segments are: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).

~~During~~In 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.

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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.~~Improvement, which we are calling "Apogee Management System or AMS". This will be supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

AtWe have made significant progress toward these financial targets through the ~~beginning~~execution of our strategy. We advanced our AMS initiatives, which have resulted in meaningful productivity improvements, particularly in Architectural Glass. We increased our focus on differentiated products and services, and effectively managed pricing to share in the ~~first quarter of fiscal 2023,~~value we ~~began management of~~delivered for our customers. We have focused on sustainable cost improvements and improvements to quality, service and delivery, while shifting mix toward more differentiated offerings. We integrated the Sotawall ~~and Harmon businesses under~~business into the Architectural Services segment, in order to create a single, unified offering for larger custom curtainwall projects. ~~The comparative fiscal 2022 segment results for~~We advanced several initiatives to strengthen our core capabilities, driving the ~~Architectural Framing Systems~~standardization of key business processes and ~~Architectural Services segments have been recast to reflect~~systems. We also relaunched our talent development and leadership training programs and added key talent across 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.~~organization.

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February ~~26, 2022~~25, 2023 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

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Highlights of ~~Third~~First Quarter of Fiscal 2024 Compared to First Quarter of Fiscal 2023 ~~Compared to Third Quarter of Fiscal 2022~~

Net sales

Consolidated net sales increased ~~10.1 percent,~~1.4%, or ~~$33.6 million, and 11.2 percent, or $110.6~~$5.1 million, for the ~~three- and nine-month periods~~three-month period ended ~~November 26, 2022,~~May 27, 2023, compared to the same ~~periods~~period in the prior year, primarily driven by ~~flow-through from pricing actions taken to offset inflation within~~strong growth in the Architectural ~~Framing Systems and~~Glass segment, partially offset by a decline in the Architectural ~~Glass segments.~~Services segment.

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
		November 26, 2022		November 27, 2021		November 26, 2022		November 27, 2021			May 27, 2023		May 28, 2022
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales	100.0	%	100.0	%
Cost of sales	Cost of sales	76.5		80.6		76.5		81.7		Cost of sales	74.3		76.0
Gross profit	Gross profit	23.5		19.4		23.5		18.3		Gross profit	25.7		24.0
Selling, general and administrative expenses	Selling, general and administrative expenses	14.1		14.1		14.3		15.2		Selling, general and administrative expenses	16.4		14.7
Operating income	Operating income	9.4		5.3		9.1		3.1		Operating income	9.3		9.3
Interest expense, net	Interest expense, net	0.7		0.2		0.5		0.3		Interest expense, net	0.6		0.3
Other expense, net	Other expense, net	0.2		0.9		0.2		0.3		Other expense, net	0.1		0.4
Earnings before income taxes	Earnings before income taxes	8.6		4.2		8.4		2.5		Earnings before income taxes	8.7		8.6
Income tax expense	Income tax expense	2.1		0.9		0.8		0.5		Income tax expense	2.2		2.2
Net earnings	Net earnings	6.5	%	3.3	%	7.6	%	2.0	%	Net earnings	6.5	%	6.4	%
Effective tax rate	Effective tax rate	24.8	%	21.7	%	9.3	%	19.6	%	Effective tax rate	25.0	%	26.0	%

Gross profit

Gross profit as a percent of sales (gross margin) was ~~23.5 percent~~25.7% for ~~each of~~ the ~~three- and nine-month periods~~three-month period ended ~~November 26, 2022, respectively,~~May 27, 2023, compared to ~~19.4 percent and 18.3 percent~~24.0% for the ~~three- and nine-month periods~~three-month period ended ~~November 27, 2021. Both period improvements in gross margin were~~May 28, 2022. The improvement was driven primarily by pricing actions that exceeded the inflation-related cost increases in the Architectural Framing Systems and Architectural Glass segments. The nine-month period ended November 26, 2022, includes the benefits from restructuring actions completed in the second quarter of the prior yearstrong performance in the Architectural Glass segment, partially offset primarily by lower margins in the Architectural Services 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 sales and incurred during the three- and nine-month periods ended November 27, 2021.segment.

Selling, general and administrative (SG&A) expenses

SG&A expenses as a percent of sales ~~were 14.1 percent and 14.3 percent~~was 16.4% for the ~~three- and nine-month periods~~three-month period ended ~~November 26, 2022, respectively,~~May 27, 2023, compared to ~~14.1 percent and 15.2 percent~~14.7% for the prior year ~~three- and nine-month periods.~~three-month period. SG&A ~~decreased~~increased as a percent of sales compared to the ~~nine-month~~three-month period in the prior year primarily due to an increase in compensation related expenses, higher consulting costs, and higher allowance for credit losses.

Interest expense

Interest expense as a percent of sales was 0.6% for the ~~benefits realized from previously completed restructuring actions.~~

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three-month period ended May 27, 2023, compared to 0.3% for the prior year three-month period, primarily due to an increase in interest rates for the current year period.

Income tax expense

The effective income tax rate in the ~~third~~first quarter of fiscal ~~2023~~2024 was ~~24.8 percent,~~25.0%, compared to ~~21.7 percent~~26.0% in the same period last year, ~~and 9.3 percent for~~primarily due to an increase to the ~~first nine months of fiscal 2023, compared~~valuation allowance related to ~~19.6 percent~~foreign net operating loss carryforwards in the prior year period. 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, and reduced our effective tax rate for the nine-month period of fiscal 2023 by approximately 14.8 percentage points.year.

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Segment Analysis

The following table summarizes net sales, operating income (loss) and operating margin by segment and consolidated total.


	Three Months Ended
(In thousands, except percentages)	May 27, 2023			May 28, 2022
Segment net sales
Architectural Framing Systems	$	164,162		$	163,292
Architectural Glass	97,202			76,265
Architectural Services	89,418			103,388
Large-Scale Optical	22,456			25,162
Intersegment eliminations	(11,525)			(11,472)
Net sales	$	361,713		$	356,635
Segment operating income (loss)
Architectural Framing Systems	$	19,945		$	23,665
Architectural Glass	16,521			5,169
Architectural Services	(596)			2,927
Large-Scale Optical	5,525			6,498
Corporate and other	(7,628)			(5,043)
Operating income	$	33,767		$	33,216
Segment operating margin
Architectural Framing Systems	12.1		%	14.5		%
Architectural Glass	17.0			6.8
Architectural Services	(0.7)			2.8
Large-Scale Optical	24.6			25.8
Corporate and other	N/M			N/M
Operating income	9.3		%	9.3		%
N/M Indicates calculation not meaningful.

Architectural Framing Systems


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	November 26, 2022			November 27, 2021			% Change		November 26, 2022			November 27, 2021			% Change		(In thousands)	May 27, 2023			May 28, 2022			% Change
Net sales	Net sales	$	165,013		$	141,462		16.6	%	$	501,172		$	415,203		20.7	%	Net sales	$	164,162		$	163,292		0.5	%
Operating income	Operating income	22,089			12,085			82.8	%	66,266			28,837			129.8	%	Operating income	19,945			23,665			(15.7)	%
Operating margin	Operating margin	13.4		%	8.5		%			13.2		%	6.9		%			Operating margin	12.1		%	14.5		%

Architectural Framing Systems net sales increased ~~$23.6~~$0.9 million, or ~~16.6 percent, and $86.0 million, or 20.7 percent,~~0.5%, for the ~~three- and nine-month periods~~three-month period ended ~~November 26, 2022, respectively,~~May 27, 2023, compared to the prior year ~~periods, primarily~~period, driven by ~~inflation-related~~improved pricing ~~actions.~~and mix, which offset lower volume, as the segment continues to increase focus on target markets where it can provide differentiated offerings.

Operating margin ~~increased 490 basis points and 630~~decreased 240 basis points for the ~~three- and nine-month periods~~three-month period of the current year, compared to the same ~~periods~~period in the prior year, primarily reflecting ~~improved pricing~~favorable timing of inventory flows and ~~mix, which more than offset the impact of inflation, and the benefits from restructuring actions completed~~aluminum prices in the prior year, which ~~further strengthened our competitive position and more than offset the impact of cost inflation.~~did not repeat in this year's first quarter.

As of ~~November 26, 2022,~~May 27, 2023, segment backlog was approximately ~~$246~~$221 million, compared to approximately ~~$286~~$243 million at the end of the prior quarter, ~~of the current fiscal year,~~ and ~~was~~to approximately ~~$269~~$310 million at the end of ~~third~~the first quarter of fiscal ~~2022.~~2023. 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.

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Architectural ~~Services~~Glass


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	November 26, 2022			November 27, 2021			% Change		November 26, 2022			November 27, 2021			% Change		(In thousands)	May 27, 2023			May 28, 2022			% Change
Net sales	Net sales	$	102,031		$	105,404		(3.2)	%	$	312,151		$	292,506		6.7	%	Net sales	$	97,202		$	76,265		27.5	%
Operating income	Operating income	6,032			7,807			(22.7)	%	14,449			19,172			(24.6)	%	Operating income	16,521			5,169			219.6	%
Operating margin	Operating margin	5.9		%	7.4		%			4.6		%	6.6		%			Operating margin	17.0		%	6.8		%

~~Architectural Services net~~

Net sales ~~decreased $3.4~~increased $20.9 million, or ~~3.2 percent~~27.5%, for the three-month period ended ~~November 26, 2022, respectively,~~May 27, 2023, compared to the same period in the prior year, driven by improved pricing, higher volume, and a more favorable sales mix, reflecting the segment's strategic shift to emphasize premium, high-performance products.

Operating margin increased by 10.2 percentage points primarily driven by improved pricing, favorable mix, and increased volume, partially offset by cost inflation.

Architectural Services


	Three Months Ended
(In thousands)	May 27, 2023			May 28, 2022			% Change
Net sales	$	89,418		$	103,388		(13.5)	%
Operating (loss) income	(596)			2,927			N/M
Operating margin	(0.7)		%	2.8		%
N/M Indicates calculation not meaningful.

Architectural Services net sales decreased ~~project activity. In~~$14.0 million, or 13.5% for the ~~comparative nine-month~~three-month period ended ~~November 26, 2022 net sales increased $19.6 million, or 6.7 percent~~May 27, 2023, compared to the same period in the prior year, ~~driven by increased volume from executing projects in backlog.~~primarily reflecting lower volume.

~~Operating~~In the current quarter, the segment had negative operating margin ~~decreased 150 basis points and 200 basis points~~of 0.7%, compared to operating margin of 2.8% in the ~~three- and nine-month periods~~same period of ~~the current year, respectively, compared to the same periods in~~ the prior year, primarily ~~reflecting~~due to the impact of lower estimated profitability levels on ~~legacy Sotawall~~certain projects, the unfavorable leverage impact of lower net sales, and severance costs related to ~~investments to support future growth, partially offset by higher volume.~~a facility closure.

As of ~~November 26, 2022,~~May 27, 2023, segment backlog was approximately ~~$741~~$709 million, compared to approximately ~~$785~~$727 million at the end of the prior quarter, ~~of the current fiscal year,~~ and ~~was~~to approximately ~~$722~~$681 million at the end of ~~third~~the first quarter of fiscal ~~2022.~~2023. Backlog, a non-GAAP financial measure, and the ~~implication~~implications thereof, isare described within the Architectural Framing Systems discussion above.

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Large-Scale Optical (LSO)

~~Architectural Glass~~


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	November 26, 2022			November 27, 2021			% Change		November 26, 2022			November 27, 2021			% Change		(In thousands)	May 27, 2023			May 28, 2022			% Change
Net sales	Net sales	$	81,541		$	74,289		9.8	%	$	235,158		$	236,693		(0.6)	%	Net sales	$	22,456		$	25,162		(10.8)	%
Operating income (loss)		7,461			(1,277)			684.3	%	19,087			(16,143)			218.2	%
Operating income																		Operating income	5,525			6,498			(15.0)	%
Operating margin	Operating margin	9.1		%	(1.7)		%			8.1		%	(6.8)		%			Operating margin	24.6		%	25.8		%

~~Net~~LSO net sales ~~increased $7.3~~decreased $2.7 million, or ~~9.8 percent,~~10.8%, 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,May 27, 2023 compared to the same period in the prior year, primarily reflecting lower volume ~~mostly offset by improved pricing~~due to timing of customer orders and ~~mix.~~customer inventory destocking.

~~In the current quarter, the segment had operating income of $7.5 million and operating~~Operating margin ~~of 9.1 percent, compared to operating loss of $1.3 million and negative operating margin of 1.7 percent~~decreased 120 basis points in the ~~same~~three-month 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.~~reflecting the unfavorable leverage impact of lower net sales.

~~Operating margin~~Corporate and other

Our corporate and other expenses increased ~~480 basis points and 240 basis points in~~$2.6 million for the ~~three- and nine-month periods of the current year,~~three-month period ended May 27, 2023 compared to the same ~~periods~~period in the prior year, primarily ~~driven by lower operating~~due to an increase in compensation expense and higher consulting costs. A significant portion of the lower operating costs was a non-recurring property tax adjustment contributing to a 210 basis points and 80 basis points of the margin increase for the three- and nine-month periods of the current year, respectively.

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Liquidity and Capital Resources


Selected cash flow data	Selected cash flow data	Nine Months Ended				Selected cash flow data	Three Months Ended
(In thousands)	(In thousands)	November 26, 2022		November 27, 2021		(In thousands)	May 27, 2023		May 28, 2022
Operating Activities	Operating Activities					Operating Activities
Net cash provided by operating activities		$	51,112	$	86,291
Net cash provided (used) by operating activities						Net cash provided (used) by operating activities	$	21,287	$	(30,462)
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(18,119)		(13,070)		Capital expenditures	(7,398)		(5,125)

Proceeds from sales of property, plant and equipment	Proceeds from sales of property, plant and equipment	5,212		1,347		Proceeds from sales of property, plant and equipment	66		4,087

Net cash used by investing activities						Net cash used by investing activities	(6,932)		(938)
Financing Activities	Financing Activities					Financing Activities
Borrowings on line of credit	Borrowings on line of credit	430,879		—		Borrowings on line of credit	105,852		161,000
Repayment on debt		(151,000)		(2,000)

Payments on line of credit	Payments on line of credit	(239,000)		—		Payments on line of credit	(105,000)		(62,000)
Repurchase and retirement of common stock	Repurchase and retirement of common stock	(74,312)		(29,164)		Repurchase and retirement of common stock	(5,193)		(74,312)
Dividends paid	Dividends paid	(14,415)		(15,050)		Dividends paid	(5,245)		(4,793)
Net cash (used) provided by financing activities						Net cash (used) provided by financing activities	(11,263)		17,624

~~Table~~We rely on cash provided by operations for the Company’s material cash requirements, including working capital needs, capital expenditures, satisfaction of ~~Contents~~

contractual commitments (including principal and interest payments on our outstanding indebtedness) and shareholder return through dividend payments and share repurchases.

Operating Activities. Net cash provided by operating activities was ~~$51.1~~$21.3 million for the first ~~nine~~three months of fiscal ~~2023,~~2024, compared to ~~$86.3~~$30.5 million of net cash ~~provided~~used by operating activities in the prior year period, primarily reflecting ~~increased~~lower working capital ~~required to support revenue growth and inflation.~~requirements for the current year period.

Investing Activities. Net cash used by investing activities was ~~$12.0~~$6.9 million for the first ~~nine~~three months of fiscal ~~2023,~~2024, driven primarily by capital expenditures of ~~$18.1 million, partially offset by proceeds received from sales of property, plant and equipment of $5.2~~$7.4 million. In the first ~~nine~~three months of the prior year, net cash used by investing activities was ~~$11.6~~$0.9 million, primarily driven by capital expenditures of ~~$13.1~~$5.1 million, partially offset by proceeds from sales of property, plant and equipment of $4.1 million. The majority of our capital expenditures in the current year and prior year periods are ~~smaller in nature~~ to support future growth and cost reduction initiatives.

Financing Activities. Net cash used by financing activities was ~~$51.6~~$11.3 million for the first ~~nine~~three months of fiscal ~~2023,~~2024, compared to net cash ~~used~~provided by financing activities of ~~$44.0~~$17.6 million in the prior year period. The usage in the 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~~$10.4 million, while the prior year period included ~~$44.2~~$99.0 million of net debt borrowings, partially offset by $79.1 million of share repurchases and dividend payments.

We paid dividends totaling ~~$14.4~~$5.2 million ($~~0.6600~~0.24 per share) in the first ~~nine~~three months of fiscal ~~2023,~~2024, compared to ~~$15.1~~$4.8 million ($~~0.6000~~0.22 per share) in the comparable prior year period. During the first ~~nine~~three months of fiscal ~~2023,~~2024, we repurchased ~~1,571,139~~119,916 shares under our authorized share repurchase program, for a total cost of ~~$74.3~~$5.2 million. In the first ~~nine~~three months of fiscal ~~2022,~~2023, we repurchased ~~755,384~~1,571,139 shares under the share repurchase program, for a total cost of ~~$28.8~~$74.3 million. 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, October 7, 2021, and June 22, 2022; and by 2,000,000 shares, on each of the announcement dates of October 3, 2018 and January 14, 2022. The repurchase program does not have an expiration date. Since the inception of the share repurchase program in 2004, we have purchased a total of ~~10,996,601~~11,116,517 shares, at a total cost of ~~$381.6~~$386.8 million. As of ~~November 26, 2022,~~May 27, 2023, we had remaining authority to repurchase an additional ~~1,253,399~~1,133,483 shares under this program. We ~~will continue~~may also elect to ~~evaluate making future~~repurchase additional shares of common stock under our authorization, subject to limitations contained in our debt agreements and based upon our assessment of a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities. We may finance share repurchases ~~considering our~~with available cash, ~~flow,~~additional debt ~~levels and market conditions, in the context~~or other sources of ~~all our capital allocation options, with the goal of maximizing long-term value for our shareholders.~~financing.

Additional Liquidity Considerations. We periodically evaluate our liquidity requirements, cash needs and availability of debt resources relative to acquisition plans, significant capital plans, and other working capital needs.

~~During~~

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As of the ~~second~~end of the first quarter ~~ended August 27, 2022,~~of fiscal 2024, we ~~amended and extended our~~had a committed revolving credit facility ~~to include~~with maximum borrowings of up to $385 million, with a maturity date of August ~~2027. As part of the amendment, we repaid the $150 million term loan with borrowings under the~~5, 2027, and two Canadian committed, revolving credit ~~facility. As of November 26, 2022,~~facilities totaling $25 million (USD). At May 27, 2023, we had outstanding borrowings under our committed, revolving credit facility ~~were $188.0~~of $155.0 million, ~~while there were no~~and $3.7 million outstanding ~~borrowings~~ under the Canadian committed, revolving credit ~~facility as of February 26, 2022.~~facility. 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 of 3.25 and maintain a minimum ratio of EBITDA-to-interest ~~expense.~~expense of 3.00. In the event we make an acquisition for which the purchase price is greater than $75 million, we can elect to increase the maximum debt-to-EBITDA ratio to 3.75 for a period of four consecutive fiscal quarters, commencing with the fiscal quarter in which a qualifying acquisition occurs. No more than two acquisition "holidays" can occur during the term of the facility, and at least two fiscal quarters must separate qualifying acquisitions. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At ~~November 26, 2022,~~May 27, 2023, we were in compliance with both financial ~~covenants.~~ covenants (which are identical in both of our revolving credit facilities).

Borrowings under the credit facility bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Leverage Ratio (as defined in the Credit Agreement). For Base Rate borrowings the margin ranges from 0.125% to 0.75%. For Term SOFR borrowings the margin ranges from 1.135% to 1.85%.

Additionally, at ~~November 26, 2022,~~May 27, 2023, 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. As of May 27, 2023, the amount available for revolving borrowings under the Wells Fargo credit facility was $217.7 million.

We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. Future payments for such leases, excluding leases with initial terms of one year or less, were ~~$51.1~~$46.7 million at ~~November 26, 2022,~~May 27, 2023, with ~~$3.2~~$9.5 million payable during the remainder of fiscal ~~2023.~~2024.

As of ~~November 26, 2022,~~May 27, 2023, we had ~~$222.2~~$31.6 million of open purchase obligations, of which payments totaling ~~$53.4~~$22.4 million are expected to become due ~~within~~during the remainder of fiscal ~~2023.~~2024. These purchase obligations primarily relate to raw material commitments and capital expenditures and are not expected to impact future liquidity, as amounts should be recovered through customer billings.

We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal ~~2023,~~2024, which will equal or exceed our minimum funding requirements.

As of ~~November 26, 2022,~~May 27, 2023, we had reserves of ~~$5.5~~$5.2 million for unrecognized tax benefits. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits will ultimately be settled.

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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 26, 2022, $1.4~~May 27, 2023, $1.3 billion of these types of bonds were outstanding, of which ~~$578.7~~$503.4 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~~We continue to evaluate acquisition opportunities on a regular basis. We may finance acquisition activity with available cash, the issuance of shares of common stock, additional debt, or other sources of financing, depending upon the size and nature of any such transaction and the status of the option to defer remittance of the employer portion of Social Security tax as provided in the Coronavirus Aid, Relief, and Economic Security Act. This deferral allowed us to retain cash during calendar year 2020 that would have otherwise been remitted to the federal government. We paid our first installment of these deferred social security taxes, totaling approximately $6.8 million, in the fourth quarter of fiscal 2022, and paid our final installment of approximately $6.8 millioncapital markets at the ~~start~~time of ~~the fourth quarter of fiscal 2023.~~such acquisition.

Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit ~~facility,~~facilities, we believe that our sources of liquidity will be adequate to meet our short-term and long-term liquidity and capital expenditure needs. In addition, we believe that we have the ability currently to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. We also believe that we will be able to operate our business so as to continue to be in compliance with our existing debt covenants over the next fiscal year.

We 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~~

~~Based on our year-to-date results and increasing confidence in our outlook, we have narrowed our guidance for full-year adjusted earnings to a range~~

Table of $3.90 to $4.05 per diluted* share, up from the previously announced range of $3.75 to $4.05. We expect full year revenue growth of approximately 10 percent, primarily driven by growth in our Architectural Framing Systems segment. The company continues to expect full-year capital expenditures of approximately $40 million.

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* 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 significant asset sales. Accordingly, the company 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 ~~26, 2022.~~25, 2023.

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 ~~26, 2022, except as noted below.~~

~~Impairment of goodwill, indefinite-lived intangible assets and long-lived assets~~

~~Goodwill~~

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, which resulted in the combination of the Sotawall and Harmon reporting units into a single reporting unit. 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 necessary. 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 outlined in ASC 350, ~~Intangibles - Goodwill and Other~~. In addition, for all reporting units, no qualitative indicators of impairment were identified during the first quarter of fiscal 2023, and therefore, no interim quantitative goodwill impairment evaluation was performed.25, 2023.

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 ~~26, 2022~~25, 2023 for a discussion of the Company’s market risk. There have been no material changes in market risk since February ~~26, 2022.~~25, 2023.

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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 26, 2022,~~May 27, 2023, 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

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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 ~~26, 2022.~~25, 2023.

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~~first quarter of fiscal ~~2023:~~2024:

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


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)
February 26, 2023 to March 25, 2023	1,432	$	45.73	—	1,253,399
March 26, 2023 to April 22, 2023	45,000	43.65		45,000	1,208,399
April 23, 2023 to May 27, 2023	114,084	42.92		74,916	1,133,483
Total	160,516	$	43.37	119,916	1,133,483

(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, October 7, 2021, and June 22, 2022; and by 2,000,000 shares, on each of the announcement dates of October 3, 2018 and January 14, 2022. The repurchase program does not have an expiration date.

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Item 6.Exhibits


3.1			Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year-ended February 28, 2004.)
3.2			Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on January 16, 2020.)
3.3			Amended and Restated Bylaws of Apogee Enterprises, Inc. (Incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter-ended May 29, 2021).
10.1			O ffer Letter dated March 2, 2023 between Apogee Enterprises, Inc. and Matthew J. Osberg. Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on March 2, 2023.
31.1#			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2#			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1#			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101#			The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~November 26, 2022,~~May 27, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of ~~November 26, 2022~~May 27, 2023 and February ~~26, 2022,~~25, 2023, (ii) the Consolidated Results of Operations for the ~~three-~~three-months ended May 27, 2023 and ~~nine-months ended November 26,~~May 28, 2022, ~~and November 27, 2021,~~ (iii) the Consolidated Statements of Comprehensive Earnings for the ~~three-~~three-months ended May 27, 2023 and ~~nine-months ended November 26,~~May 28, 2022, ~~and November 27, 2021,~~ (iv) the Consolidated Statements of Cash Flows for the ~~nine-months~~three-months ended ~~November 26,~~May 27, 2023 and May 28, 2022, ~~and November 27, 2021,~~ (v) the Consolidated Statements of Shareholders' Equity for the ~~three-~~three-months ended May 27, 2023 and ~~nine-months ended November 26,~~May 28, 2022, ~~and November 27, 2021,~~ and (vi) Notes to Consolidated Financial Statements.
104#			Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
			Exhibits marked with a (#) sign are filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	APOGEE ENTERPRISES, INC.

Date: ~~December 29, 2022~~June 28, 2023	By: /s/ Ty R. Silberhorn
		Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer)


Date: ~~December 29, 2022~~June 28, 2023	By: /s/ ~~Mark R. Augdahl~~Matthew J. Osberg
		~~Mark R. Augdahl~~Matthew J. Osberg ~~Interim~~Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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		Page
PART I	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets	4

	Consolidated Results of Operations	5

	Consolidated Statements of Comprehensive Earnings	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Shareholders' Equity	8

	Notes to Consolidated Financial Statements	109

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	2726

PART II	Other Information

Item 1.	Legal Proceedings	2726

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	2827

Signatures		2928


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


Nonvested shares and units	Number of Shares and Units	Weighted Average Grant Date Fair Value
Nonvested at February 26, 2022 (1)	488,944	$	30.14
Granted (2)	182,493	46.10
Vested	(148,332)	27.56
Canceled (3)	(44,932)	36.02
Nonvested at November 26, 2022(4)	478,173	$	36.48