UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended May 30, 2020
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-6365
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APOGEE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
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Minnesota | | | | 41-0919654 |
(State or other jurisdiction of incorporation or organization) | | | | (I.R.S. Employer Identification No.) |
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Minnesota | | | | 41-0919654 |
(State or other jurisdiction of incorporation or organization) | | | | (I.R.S. Employer Identification No.) |
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4400 West 78th Street, Suite 520 | Minneapolis | Minnesota | | 55435 |
(Address of principal executive offices) | | | | (Zip Code) |
Registrant’s telephone number, including area code: (952) (952) 835-1874
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common stock, par value $0.33 1/3 per share | | APOG | | NASDAQ Global SelectThe Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | o | | Accelerated filer | | x |
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Large accelerated filer | | x | | Accelerated filer | | o |
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Non-accelerated filer | | o | | Smaller reporting company | | ☐ |
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Emerging growth company | | ☐ | | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No
As of July 7, 2020, 26,356,670June 28, 2021, 25,526,814 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
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PART I | | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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PART II | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 6. | | |
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PART I. FINANCIAL INFORMATION
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Item 1. | Financial Statements |
Item 1.Financial Statements
CONSOLIDATED BALANCE SHEETS
(unaudited)
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(In thousands, except stock data) | | May 29, 2021 | | February 27, 2021 |
Assets | | | | |
Current assets | | | | |
Cash and cash equivalents | | $ | 36,469 | | | $ | 47,277 | |
| | | | |
Receivables, net | | 172,433 | | | 175,917 | |
Inventories | | 70,867 | | | 72,823 | |
Costs and earnings on contracts in excess of billings | | 28,390 | | | 29,497 | |
Other current assets | | 23,973 | | | 25,160 | |
Total current assets | | 332,132 | | | 350,674 | |
Property, plant and equipment, net | | 292,296 | | | 298,443 | |
Operating lease right-of-use assets | | 56,277 | | | 58,864 | |
Goodwill | | 131,461 | | | 130,098 | |
Intangible assets | | 131,980 | | | 130,053 | |
Other non-current assets | | 46,557 | | | 46,967 | |
Total assets | | $ | 990,703 | | | $ | 1,015,099 | |
Liabilities and Shareholders’ Equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 74,312 | | | $ | 76,204 | |
Accrued payroll and related benefits | | 37,041 | | | 50,125 | |
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Billings on contracts in excess of costs and earnings | | 16,873 | | | 22,789 | |
Operating lease liabilities | | 12,438 | | | 13,251 | |
Current portion of debt | | 3,000 | | | 2,000 | |
Other current liabilities | | 44,541 | | | 53,183 | |
Total current liabilities | | 188,205 | | | 217,552 | |
Long-term debt | | 162,000 | | | 163,000 | |
Non-current operating lease liabilities | | 47,184 | | | 48,439 | |
Non-current self-insurance reserves | | 25,784 | | | 24,880 | |
Other non-current liabilities | | 69,979 | | | 68,483 | |
Commitments and contingent liabilities (Note 8) | | | | |
Shareholders’ equity | | | | |
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 25,605,924 and 25,713,688 respectively | | 8,535 | | | 8,571 | |
Additional paid-in capital | | 158,341 | | | 154,958 | |
Retained earnings | | 352,130 | | | 357,243 | |
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Accumulated other comprehensive loss | | (21,455) | | | (28,027) | |
Total shareholders’ equity | | 497,551 | | | 492,745 | |
Total liabilities and shareholders’ equity | | $ | 990,703 | | | $ | 1,015,099 | |
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(In thousands, except stock data) | | May 30, 2020 | | February 29, 2020 |
Assets | | | | |
Current assets | | | | |
Cash and cash equivalents | | $ | 11,636 |
| | $ | 14,952 |
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Receivables, net of allowance for doubtful accounts | | 156,304 |
| | 196,806 |
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Inventories | | 75,285 |
| | 71,089 |
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Costs and earnings on contracts in excess of billings | | 65,980 |
| | 73,582 |
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Other current assets | | 21,488 |
| | 25,481 |
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Total current assets | | 330,693 |
| | 381,910 |
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Property, plant and equipment, net | | 320,073 |
| | 324,386 |
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Operating lease right-of-use assets | | 49,911 |
| | 52,892 |
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Goodwill | | 190,544 |
| | 185,516 |
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Intangible assets | | 136,071 |
| | 140,191 |
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Other non-current assets | | 44,332 |
| | 44,096 |
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Total assets | | $ | 1,071,624 |
| | $ | 1,128,991 |
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Liabilities and Shareholders’ Equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 62,369 |
| | $ | 69,056 |
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Accrued payroll and related benefits | | 25,630 |
| | 40,119 |
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Billings on contracts in excess of costs and earnings | | 15,321 |
| | 32,696 |
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Operating lease liabilities | | 10,462 |
| | 11,272 |
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Current portion of debt | | 155,400 |
| | 5,400 |
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Other current liabilities | | 110,348 |
| | 118,314 |
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Total current liabilities | | 379,530 |
| | 276,857 |
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Long-term debt | | 55,500 |
| | 212,500 |
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Non-current operating lease liabilities | | 40,814 |
| | 43,163 |
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Non-current self-insurance reserves | | 24,140 |
| | 22,831 |
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Other non-current liabilities | | 67,496 |
| | 56,862 |
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Commitments and contingent liabilities (Note 8) | | | | |
Shareholders’ equity | | | | |
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 26,368,864 and 26,443,166 respectively | | 8,790 |
| | 8,814 |
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Additional paid-in capital | | 153,862 |
| | 154,016 |
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Retained earnings | | 382,225 |
| | 388,010 |
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Common stock held in trust | | (696 | ) | | (685 | ) |
Deferred compensation obligations | | 696 |
| | 685 |
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Accumulated other comprehensive loss | | (40,733 | ) | | (34,062 | ) |
Total shareholders’ equity | | 504,144 |
| | 516,778 |
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Total liabilities and shareholders’ equity | | $ | 1,071,624 |
| | $ | 1,128,991 |
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See accompanying notes to consolidated financial statements.
4
CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)
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| | Three Months Ended | | |
(In thousands, except per share data) | | May 29, 2021 | | May 30, 2020 | | | | |
Net sales | | $ | 326,006 | | | $ | 289,095 | | | | | |
Cost of sales | | 258,296 | | | 228,844 | | | | | |
Gross profit | | 67,710 | | | 60,251 | | | | | |
Selling, general and administrative expenses | | 51,668 | | | 53,782 | | | | | |
Operating income | | 16,042 | | | 6,469 | | | | | |
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Interest expense, net | | 1,238 | | | 1,414 | | | | | |
Other expense, net | | 315 | | | 1,049 | | | | | |
Earnings before income taxes | | 14,489 | | | 4,006 | | | | | |
Income tax expense | | 3,672 | | | 1,130 | | | | | |
Net earnings | | $ | 10,817 | | | $ | 2,876 | | | | | |
Earnings per share - basic | | $ | 0.43 | | | $ | 0.11 | | | | | |
Earnings per share - diluted | | $ | 0.42 | | | $ | 0.11 | | | | | |
Weighted average basic shares outstanding | | 25,402 | | | 26,168 | | | | | |
Weighted average diluted shares outstanding | | 25,822 | | | 26,418 | | | | | |
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| | Three Months Ended |
(In thousands, except per share data) | | May 30, 2020 | | June 1, 2019 |
Net sales | | $ | 289,095 |
| | $ | 355,365 |
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Cost of sales | | 228,844 |
| | 274,398 |
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Gross profit | | 60,251 |
| | 80,967 |
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Selling, general and administrative expenses | | 53,782 |
| | 57,926 |
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Operating income | | 6,469 |
| | 23,041 |
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Interest and other expense, net | | 2,463 |
| | 2,611 |
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Earnings before income taxes | | 4,006 |
| | 20,430 |
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Income tax expense | | 1,130 |
| | 4,987 |
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Net earnings | | $ | 2,876 |
| | $ | 15,443 |
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Earnings per share - basic | | $ | 0.11 |
| | $ | 0.58 |
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Earnings per share - diluted | | $ | 0.11 |
| | $ | 0.58 |
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Weighted average basic shares outstanding | | 26,168 |
| | 26,597 |
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Weighted average diluted shares outstanding | | 26,418 |
| | 26,843 |
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See accompanying notes to consolidated financial statements.
5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)
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| | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Net earnings | | $ | 10,817 | | | $ | 2,876 | | | | | |
Other comprehensive earnings (loss): | | | | | | | | |
Unrealized gain on marketable securities, net of $0 and $26 of tax expense, respectively | | 0 | | | 97 | | | | | |
Unrealized gain (loss) on derivative instruments, net of $211 and $(189) of tax expense (benefit), respectively | | 692 | | | (617) | | | | | |
Foreign currency translation adjustments | | 5,880 | | | (6,151) | | | | | |
Other comprehensive earnings (loss) | | 6,572 | | | (6,671) | | | | | |
Total comprehensive earnings (loss) | | $ | 17,389 | | | $ | (3,795) | | | | | |
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| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Net earnings | | $ | 2,876 |
| | $ | 15,443 |
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Other comprehensive (loss) earnings: | | | | |
Unrealized gain on marketable securities, net of $26 and $47 of tax expense, respectively | | 97 |
| | 181 |
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Unrealized (loss) gain on derivative instruments, net of ($189) and $2 of tax (benefit) expense, respectively | | (617 | ) | | 5 |
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Foreign currency translation adjustments | | (6,151 | ) | | (2,560 | ) |
Other comprehensive loss | | (6,671 | ) | | (2,374 | ) |
Total comprehensive (loss) earnings | | $ | (3,795 | ) | | $ | 13,069 |
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See accompanying notes to consolidated financial statements.
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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| | Three Months Ended |
(In thousands) | | May 29, 2021 | | May 30, 2020 |
Operating Activities | | | | |
Net earnings | | $ | 10,817 | | | $ | 2,876 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 12,980 | | | 12,540 | |
Share-based compensation | | 1,674 | | | 1,406 | |
Deferred income taxes | | 941 | | | (738) | |
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Noncash lease expense | | 3,098 | | | 2,945 | |
Other, net | | 58 | | | 1,039 | |
Changes in operating assets and liabilities: | | | | |
Receivables | | 4,455 | | | 39,650 | |
Inventories | | 2,252 | | | (4,700) | |
Costs and earnings on contracts in excess of billings | | 1,205 | | | 7,558 | |
Accounts payable and accrued expenses | | (22,449) | | | (22,334) | |
Billings on contracts in excess of costs and earnings | | (6,434) | | | (17,181) | |
Refundable and accrued income taxes | | 1,410 | | | 2,847 | |
Operating lease liability | | (3,113) | | | (2,781) | |
Other | | (11) | | | 849 | |
Net cash provided by operating activities | | 6,883 | | | 23,976 | |
Investing Activities | | | | |
Capital expenditures | | (4,705) | | | (8,606) | |
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Other | | 557 | | | (1,082) | |
Net cash used by investing activities | | (4,148) | | | (9,688) | |
Financing Activities | | | | |
Borrowings on line of credit | | 0 | | | 139,500 | |
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Payments on line of credit | | 0 | | | (146,500) | |
Proceeds from exercise of stock options | | 4,115 | | | 0 | |
Repurchase and retirement of common stock | | (12,625) | | | (4,731) | |
Dividends paid | | (5,035) | | | (4,872) | |
Other | | (712) | | | (731) | |
Net cash used by financing activities | | (14,257) | | | (17,334) | |
Decrease in cash and cash equivalents | | (11,522) | | | (3,046) | |
Effect of exchange rates on cash | | 714 | | | (270) | |
Cash, cash equivalents and restricted cash at beginning of year | | 47,277 | | | 14,952 | |
Cash, cash equivalents and restricted cash at end of period | | $ | 36,469 | | | $ | 11,636 | |
Noncash Activity | | | | |
Capital expenditures in accounts payable | | $ | 1,058 | | | $ | 1,458 | |
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| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Operating Activities | | | | |
Net earnings | | $ | 2,876 |
| | $ | 15,443 |
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Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 12,540 |
| | 11,102 |
|
Share-based compensation | | 1,406 |
| | 1,618 |
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Deferred income taxes | | (738 | ) | | 6,438 |
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Noncash lease expense | | 2,945 |
| | 2,902 |
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Other, net | | 1,039 |
| | (1,762 | ) |
Changes in operating assets and liabilities: | | | | |
Receivables | | 39,650 |
| | (16,982 | ) |
Inventories | | (4,700 | ) | | 835 |
|
Costs and earnings on contracts in excess of billings | | 7,558 |
| | (6,007 | ) |
Accounts payable and accrued expenses | | (22,334 | ) | | (15,317 | ) |
Billings on contracts in excess of costs and earnings | | (17,181 | ) | | (1,198 | ) |
Refundable and accrued income taxes | | 2,847 |
| | (4,369 | ) |
Operating lease liability | | (2,781 | ) | | (1,517 | ) |
Other | | 849 |
| | (928 | ) |
Net cash provided (used) by operating activities | | 23,976 |
| | (9,742 | ) |
Investing Activities | | | | |
Capital expenditures | | (8,606 | ) | | (11,198 | ) |
Other | | (1,082 | ) | | (824 | ) |
Net cash used by investing activities | | (9,688 | ) | | (12,022 | ) |
Financing Activities | | | | |
Borrowings on line of credit | | 139,500 |
| | 103,000 |
|
Payments on line of credit | | (146,500 | ) | | (55,500 | ) |
Repurchase and retirement of common stock | | (4,731 | ) | | (20,010 | ) |
Dividends paid | | (4,872 | ) | | (4,598 | ) |
Other | | (731 | ) | | (1,270 | ) |
Net cash (used) provided by financing activities | | (17,334 | ) | | 21,622 |
|
Decrease in cash and cash equivalents | | (3,046 | ) | | (142 | ) |
Effect of exchange rates on cash | | (270 | ) | | (143 | ) |
Cash, cash equivalents and restricted cash at beginning of year | | 14,952 |
| | 29,241 |
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Cash, cash equivalents and restricted cash at end of period | | $ | 11,636 |
| | $ | 28,956 |
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Noncash Activity | | | | |
Capital expenditures in accounts payable | | $ | 1,458 |
| | $ | 1,667 |
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See accompanying notes to consolidated financial statements.
7
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
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(In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income | | Total Shareholders' Equity |
Balance at February 27, 2021 | | 25,714 | | | $ | 8,571 | | | $ | 154,958 | | | $ | 357,243 | | | $ | (186) | | | $ | 186 | | | $ | (28,027) | | | $ | 492,745 | |
Net earnings | | — | | | — | | | — | | | 10,817 | | | — | | | — | | | — | | | 10,817 | |
Unrealized gain on marketable securities, net of $0 tax expense | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Unrealized loss on foreign currency hedge, net of $211 tax expense | | — | | | — | | | — | | | — | | | — | | | — | | | 692 | | | 692 | |
Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | 5,880 | | | 5,880 | |
Issuance of stock, net of cancellations | | 90 | | | 30 | | | (7) | | | — | | | (3) | | | 3 | | | — | | | 23 | |
Share-based compensation | | — | | | — | | | 1,674 | | | — | | | — | | | — | | | — | | | 1,674 | |
Exercise of stock options | | 179 | | | 60 | | | 4,055 | | | — | | | — | | | — | | | — | | | 4,115 | |
Share repurchases | | (357) | | | (119) | | | (2,218) | | | (10,288) | | | — | | | — | | | — | | | (12,625) | |
Other share retirements | | (20) | | | (7) | | | (121) | | | (607) | | | — | | | — | | | — | | | (735) | |
Cash dividends | | — | | | — | | | — | | | (5,035) | | | — | | | — | | | — | | | (5,035) | |
Balance at May 29, 2021 | | 25,606 | | | $ | 8,535 | | | $ | 158,341 | | | $ | 352,130 | | | $ | (189) | | | $ | 189 | | | $ | (21,455) | | | $ | 497,551 | |
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(In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income | | Total Shareholders' Equity |
Balance at February 29, 2020 | | 26,443 |
| | $ | 8,814 |
| | $ | 154,016 |
| | $ | 388,010 |
| | $ | (685 | ) | | $ | 685 |
| | $ | (34,062 | ) | | $ | 516,778 |
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Net earnings | | — |
| | — |
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| | 2,876 |
| | — |
| | — |
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| | 2,876 |
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Unrealized gain on marketable securities, net of $26 tax expense | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 97 |
| | 97 |
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Unrealized loss on foreign currency hedge, net of $189 tax benefit | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (617 | ) | | (617 | ) |
Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (6,151 | ) | | (6,151 | ) |
Issuance of stock, net of cancellations | | 183 |
| | 62 |
| | (39 | ) | | — |
| | (11 | ) | | 11 |
| | — |
| | 23 |
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Share-based compensation | | — |
| | — |
| | 1,406 |
| | — |
| | — |
| | — |
| | — |
| | 1,406 |
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Share repurchases | | (231 | ) | | (77 | ) | | (1,370 | ) | | (3,284 | ) | | — |
| | — |
| | — |
| | (4,731 | ) |
Other share retirements | | (26 | ) | | (9 | ) | | (151 | ) | | (505 | ) | | — |
| | — |
| | — |
| | (665 | ) |
Cash dividends | | — |
| | — |
| | — |
| | (4,872 | ) | | — |
| | — |
| | — |
| | (4,872 | ) |
Balance at May 30, 2020 | | 26,369 |
| | $ | 8,790 |
| | $ | 153,862 |
| | $ | 382,225 |
| | $ | (696 | ) | | $ | 696 |
| | $ | (40,733 | ) | | $ | 504,144 |
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(In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income | | Total Shareholders' Equity |
Balance at February 29, 2020 | | 26,443 | | | $ | 8,814 | | | $ | 154,016 | | | $ | 388,010 | | | $ | (685) | | | $ | 685 | | | $ | (34,062) | | | $ | 516,778 | |
Net earnings | | — | | | — | | | — | | | 2,876 | | | — | | | — | | | — | | | 2,876 | |
Unrealized gain on marketable securities, net of $26 tax expense | | — | | | — | | | — | | | — | | | — | | | — | | | 97 | | | 97 | |
Unrealized loss on foreign currency hedge, net of $189 tax benefit | | — | | | — | | | — | | | — | | | — | | | — | | | (617) | | | (617) | |
Foreign currency translation adjustments | | — | | | — | | | — | | | — | | | — | | | — | | | (6,151) | | | (6,151) | |
Issuance of stock, net of cancellations | | 183 | | | 62 | | | (39) | | | — | | | (11) | | | 11 | | | — | | | 23 | |
Share-based compensation | | — | | | — | | | 1,406 | | | — | | | — | | | — | | | — | | | 1,406 | |
| | | | | | | | | | | | | | | | |
Share repurchases | | (231) | | | (77) | | | (1,370) | | | (3,284) | | | — | | | — | | | — | | | (4,731) | |
Other share retirements | | (26) | | | (9) | | | (151) | | | (505) | | | — | | | — | | | — | | | (665) | |
Cash dividends | | — | | | — | | | — | | | (4,872) | | | — | | | — | | | — | | | (4,872) | |
Balance at May 30, 2020 | | 26,369 | | | $ | 8,790 | | | $ | 153,862 | | | $ | 382,225 | | | $ | (696) | | | $ | 696 | | | $ | (40,733) | | | $ | 504,144 | |
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(In thousands) | | Common Shares Outstanding | | Common Stock | | Additional Paid-In Capital | | Retained Earnings | | Common Stock Held in Trust | | Deferred Compensation Obligation | | Accumulated Other Comprehensive (Loss) Income | | Total Shareholders' Equity |
Balance at March 2, 2019 | | 27,015 |
| | $ | 9,005 |
| | $ | 151,842 |
| | $ | 367,597 |
| | $ | (755 | ) | | $ | 755 |
| | $ | (32,127 | ) | | $ | 496,317 |
|
Net earnings | | — |
| | — |
| | — |
| | 15,443 |
| | — |
| | — |
| | — |
| | 15,443 |
|
Unrealized gain on marketable securities, net of $47 tax expense | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 181 |
| | 181 |
|
Unrealized gain on foreign currency hedge, net of $2 tax expense | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 5 |
| | 5 |
|
Foreign currency translation adjustments | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (2,560 | ) | | (2,560 | ) |
Issuance of stock, net of cancellations | | 79 |
| | 26 |
| | 14 |
| | — |
| | (12 | ) | | 12 |
| | — |
| | 40 |
|
Share-based compensation | | — |
| | — |
| | 1,618 |
| | — |
| | — |
| | — |
| | — |
| | 1,618 |
|
Share repurchases | | (532 | ) | | (177 | ) | | (3,051 | ) | | (16,782 | ) | | — |
| | — |
| | — |
| | (20,010 | ) |
Other share retirements | | (32 | ) | | (11 | ) | | (183 | ) | | (1,266 | ) | | — |
| | — |
| | — |
| | (1,460 | ) |
Cash dividends | | — |
| | — |
| | — |
| | (4,598 | ) | | — |
| | — |
| | — |
| | (4,598 | ) |
Balance at June 1, 2019 | | 26,530 |
| | $ | 8,843 |
| | $ | 150,240 |
| | $ | 360,394 |
| | $ | (767 | ) | | $ | 767 |
| | $ | (34,501 | ) | | $ | 484,976 |
|
See accompanying notes to consolidated financial statements.
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| |
1. | Summary of Significant Accounting Policies |
1.Summary of Significant Accounting Policies
Basis of presentation
The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended February 29, 2020.27, 2021. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three-monththree-month period ended May 30, 202029, 2021 are not necessarily indicative of the results to be expected for the full year.
COVID-19 considerationsupdate
The ongoingDuring fiscal 2021, as a result of the global COVID-19 pandemic, continues to cause volatility and uncertainty in global markets impacting worldwide economic activity. We havewe experienced some delays in commercial construction projects and orders as a result of COVID-19. Inand other disruptions to our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increasedbusiness, including various physical distancing and health-related precautions. Withinprecautions, and we were required to close operations at two facilities in our LSOLarge-Scale Optical (LSO) segment temporary closurefor a portion of many retail locations resulted in the shutdown of our factories for most of the first quarter, in responsefiscal 2021 due to governmental “stay at home” directives.orders. We havewere also been impacted by quarantine-related absenteeism among our production workforce, resulting in labor and capacity constraints at some of our facilities. In the first quarter of fiscal 2022, the negative impacts on our business due to the COVID-19 pandemic have moderated. The extent to which COVID-19 will continue to impact our business in the future will depend in part on future developments andthe effectiveness of ongoing public health advancements,initiatives, which are highly uncertainhave been boosted by vaccine production and cannot be predicted with confidence. However, towards the end of our first quarter and into the second quarter, we began to see some early signs of improvement, including the gradual reopening of retailers, moderating project delays and fewer workforce absences.distribution.
Furthermore, in response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, business travel restrictions, and remote work capabilities, in addition to quarantine-related paid leave and other employee assistance programs.
Adoption of new accounting standards
In the current quarter, we adopted the guidance in ASU 2016-13,2019-12, Measurement of Credit LossesIncome Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU removed exceptions on Financial Instruments. The guidance providesintra-period tax allocations and reporting and provided simplification on accounting for a new impairment model on financial instruments which is based on expected credit losses, which was applied following a modified retrospective approach. Additionally, the new guidance makes targeted improvements to the impairment model for certain available-for-sale debt securities, including eliminating the concept of "other than temporary" from that model. The portion of the guidance related to available-for-sale debt securities was adopted following a prospective approach.franchise taxes, tax basis goodwill and tax law changes. The adoption of this ASU did not have a significant impact on earningsthe consolidated financial statements.
In the current quarter, we adopted the guidance in ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The adoption of this ASU did not have a significant impact on the consolidated financial condition. Refer to additional disclosures in Notes 2 and 4.statements.
Subsequent events
We have evaluated subsequent events for potential recognition and disclosure through the date of this filingfiling. Subsequent to the end of the quarter, we purchased 86,933 shares of stock under our authorized share repurchase program, at a total cost of $3.4 million.
2.Revenue, Receivables and determined that there were no subsequent events that required recognition or disclosure in the consolidated financial statements other than as described in Note 8.Contract Assets and Liabilities
| |
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 | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Recognized at shipment | | $ | 140,283 | | | $ | 116,163 | | | | | |
Recognized over time | | 185,723 | | | 172,932 | | | | | |
Total | | $ | 326,006 | | | $ | 289,095 | | | | | |
|
| | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Recognized at shipment | | $ | 116,163 |
| | $ | 155,265 |
|
Recognized over time | | 172,932 |
| | 200,100 |
|
Total | | $ | 289,095 |
| | $ | 355,365 |
|
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.
|
| | | | | | | | |
(In thousands) | | May 30, 2020 | | February 29, 2020 |
Trade accounts | | $ | 122,092 |
| | $ | 141,126 |
|
Construction contracts | | 12,630 |
| | 20,808 |
|
Contract retainage | | 23,778 |
| | 37,341 |
|
Total receivables | | 158,500 |
| | 199,275 |
|
Less: allowance for credit losses | | (2,196 | ) | | (2,469 | ) |
Net receivables | | $ | 156,304 |
| | $ | 196,806 |
|
9
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Trade accounts | | $ | 123,501 | | | $ | 120,534 | |
Construction contracts | | 2,181 | | | 12,163 | |
Contract retainage | | 49,006 | | | 45,167 | |
Total receivables | | 174,688 | | | 177,864 | |
Less: allowance for credit losses | | 2,255 | | | 1,947 | |
Net receivables | | $ | 172,433 | | | $ | 175,917 | |
The following table summarizes the activity in the allowance for credit losses:
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Beginning balance | | $ | 1,947 | | | $ | 2,469 | |
Additions charged to costs and expenses | | 332 | | | 389 | |
Deductions from allowance, net of recoveries | | (69) | | | (887) | |
Other changes (1) | | 45 | | | (24) | |
Ending balance | | $ | 2,255 | | | $ | 1,947 | |
(1) Result of foreign currency effects | | | | |
|
| | | | |
(In thousands) | | May 30, 2020 |
Beginning balance | | $ | 2,469 |
|
Additions charged to costs and expenses | | 69 |
|
Deductions from allowance, net of recoveries | | (274 | ) |
Other changes (1) | | (68 | ) |
Ending balance | | $ | 2,196 |
|
(1) Result of foreign currency effects | | |
Contract assets and liabilities
Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts. Retainage is classified within receivables and deferred revenue is classified within other current liabilities on our consolidated balance sheets.
The time period between when performance obligations are complete and when payment is due is not significant. In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Contract assets | | $ | 77,396 | | | $ | 74,664 | |
Contract liabilities | | 18,955 | | | 25,000 | |
| | | | |
|
| | | | | | | | |
(In thousands) | | May 30, 2020 | | February 29, 2020 |
Contract assets | | $ | 89,757 |
| | $ | 110,923 |
|
Contract liabilities | | 18,209 |
| | 35,954 |
|
The decrease in contract assets was mainly due to a reduction in contract retainage. The change in contract assets and contract liabilities was mainly due to timing of project activity within our businesses that operate under long-term contracts.
| | | | | | | | | | | | | | | | | | |
Other contract-related disclosures | | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Revenue recognized related to contract liabilities from prior year-end | | $ | 14,100 | | | $ | 13,011 | | | | | |
Revenue recognized related to prior satisfaction of performance obligations | | 2,164 | | | 2,877 | | | | | |
|
| | | | | | | | |
Other contract-related disclosures | | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Revenue recognized related to contract liabilities from prior year-end | | $ | 13,011 |
| | $ | 14,194 |
|
Revenue recognized related to prior satisfaction of performance obligations | | 2,877 |
| | 1,949 |
|
Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that timeframe. Generally, these contracts are in our businesses with long-term contracts which recognize revenue over time. As of May 30, 2020,29, 2021, the transaction price associated with unsatisfied performance obligations was approximately $995.9$855.0 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
|
| | | | |
(In thousands) | | May 30, 2020 |
Within one year | | $ | 434,077 |
|
Within two years | | 417,457 |
|
Beyond | | 144,325 |
|
Total | | $ | 995,859 |
|
| | | | | | | | |
3.(In thousands) | Supplemental Balance Sheet Information | May 29, 2021 |
Within one year | | $ | 464,123 | |
Within two years | | 306,360 | |
Beyond | | 84,478 | |
Total | | $ | 854,961 | |
3.Supplemental Balance Sheet Information
Inventories
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Raw materials | | $ | 36,751 | | | $ | 36,681 | |
Work-in-process | | 19,210 | | | 18,932 | |
Finished goods | | 14,906 | | | 17,210 | |
Total inventories | | $ | 70,867 | | | $ | 72,823 | |
|
| | | | | | | | |
(In thousands) | | May 30, 2020 | | February 29, 2020 |
Raw materials | | $ | 38,502 |
| | $ | 36,611 |
|
Work-in-process | | 17,221 |
| | 17,520 |
|
Finished goods | | 19,562 |
| | 16,958 |
|
Total inventories | | $ | 75,285 |
| | $ | 71,089 |
|
Other current liabilities
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Warranties | | $ | 12,023 | | | $ | 12,298 | |
Accrued project losses | | 1,697 | | | 4,572 | |
Property and other taxes | | 7,265 | | | 7,459 | |
Accrued self-insurance reserves | | 2,620 | | | 6,482 | |
Other | | 20,936 | | | 22,372 | |
Total other current liabilities | | $ | 44,541 | | | $ | 53,183 | |
|
| | | | | | | | |
(In thousands) | | May 30, 2020 | | February 29, 2020 |
Warranties | | $ | 12,421 |
| | $ | 12,822 |
|
Accrued project losses | | 48,054 |
| | 48,962 |
|
Property and other taxes | | 6,315 |
| | 5,952 |
|
Accrued self-insurance reserves | | 7,343 |
| | 8,307 |
|
Other | | 36,215 |
| | 42,271 |
|
Total other current liabilities | | $ | 110,348 |
| | $ | 118,314 |
|
Other non-current liabilities
| | | | | | | | | | | | | | |
(In thousands) | | May 29, 2021 | | February 27, 2021 |
Deferred benefit from New Market Tax Credit transactions | | $ | 15,717 | | | $ | 15,717 | |
Retirement plan obligations | | 7,706 | | | 7,730 | |
Deferred compensation plan | | 13,429 | | | 13,507 | |
Deferred tax liabilities | | 9,851 | | | 8,310 | |
Deferred payroll taxes | | 6,789 | | | 6,789 | |
Other | | 16,487 | | | 16,430 | |
Total other non-current liabilities | | $ | 69,979 | | | $ | 68,483 | |
|
| | | | | | | | |
(In thousands) | | May 30, 2020 | | February 29, 2020 |
Deferred benefit from New Market Tax Credit transactions | | $ | 15,717 |
| | $ | 15,717 |
|
Retirement plan obligations | | 8,242 |
| | 8,294 |
|
Deferred compensation plan | | 8,298 |
| | 8,452 |
|
Deferred tax liabilities | | 13,915 |
| | 7,940 |
|
Other | | 21,324 |
| | 16,459 |
|
Total other non-current liabilities | | $ | 67,496 |
| | $ | 56,862 |
|
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 |
May 29, 2021 | | $ | 12,372 | | | $ | 384 | | | $ | 7 | | | $ | 12,749 | |
February 27, 2021 | | 12,517 | | | 386 | | | 10 | | | 12,893 | |
|
| | | | | | | | | | | | | | | | |
(In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
May 30, 2020 | | $ | 12,595 |
| | $ | 403 |
| | $ | 5 |
| | $ | 12,993 |
|
February 29, 2020 | | 11,692 |
| | 275 |
| | — |
| | 11,967 |
|
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 May 30, 2020,29, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.
|
| | | | | | | | |
(In thousands) | | Amortized Cost | | Estimated Fair Value |
Due within one year | | $ | 898 |
| | $ | 911 |
|
Due after one year through five years | | 7,017 |
| | 7,255 |
|
Due after five years through 10 years | | 3,880 |
| | 4,019 |
|
Due beyond 15 years | | 800 |
| | 808 |
|
Total | | $ | 12,595 |
| | $ | 12,993 |
|
11
| | | | | | | | | | | | | | |
(In thousands) | | Amortized Cost | | Estimated Fair Value |
Due within one year | | $ | 713 | | | $ | 717 | |
Due after one year through five years | | 8,507 | | | 8,812 | |
Due after five years through 10 years | | 2,352 | | | 2,392 | |
| | | | |
Due beyond 15 years | | 800 | | | 828 | |
Total | | $ | 12,372 | | | $ | 12,749 | |
Derivative instruments
We use interest rate swaps, foreign exchange forward contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.
In August 2019,fiscal 2020, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility.facility and term loan. As of May 30, 2020,29, 2021, the interest rate swap contract had a notional value of $65$40 million.
We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign currency cash flow hedgeexchange rates (primarily related to the Canadian dollar). These contracts generally withhave an original maturity date of less than one year, to hedge foreign currency exchange rate risk.year. As of May 30, 2020,29, 2021, we held foreign exchange forward contracts and aluminum fixed/floating swaps with a U.S. dollar notional valuevalues of $34.3$10.5 million with the objective of reducing the exposure to fluctuations in the Canadian dollar and the Euro.$5.8 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) | | Quoted Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Total Fair Value |
May 29, 2021 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 13,991 | | | $ | 0 | | | $ | 13,991 | |
| | | | | | |
Municipal and corporate bonds | | — | | | 12,749 | | | 12,749 | |
Cash surrender value of life insurance | | — | | | 18,474 | | | 18,474 | |
Foreign currency forward/option contracts | | — | | | 577 | | | 577 | |
Aluminum hedge contracts | | — | | | 872 | | | 872 | |
| | | | | | |
Liabilities: | | | | | | |
Deferred compensation | | — | | | 14,888 | | | 14,888 | |
| | | | | | |
Interest rate swap contract | | — | | | 361 | | | 361 | |
| | | | | | |
February 27, 2021 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 26,034 | | | $ | 0 | | | $ | 26,034 | |
Municipal and corporate bonds | | — | | | 12,893 | | | 12,893 | |
Cash surrender value of life insurance | | — | | | 18,632 | | | 18,632 | |
Foreign currency forward/option contracts | | — | | | 606 | | | 606 | |
Aluminum hedge contracts | | — | | | 363 | | | 363 | |
| | | | | | |
Liabilities: | | | | | | |
Deferred compensation | | — | | | 13,507 | | | 13,507 | |
| | | | | | |
Interest rate swap contract | | — | | | 504 | | | 504 | |
|
| | | | | | | | | | | | |
(In thousands) | | Quoted Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Total Fair Value |
May 30, 2020 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 3,689 |
| | $ | — |
| | $ | 3,689 |
|
Commercial paper | | — |
| | 500 |
| | 500 |
|
Municipal and corporate bonds | | — |
| | 12,993 |
| | 12,993 |
|
Cash surrender value of life insurance | | — |
| | 15,777 |
| | 15,777 |
|
Liabilities: | | | | | | |
Deferred compensation | | — |
| | 13,889 |
| | 13,889 |
|
Foreign currency forward/option contract | | — |
| | 239 |
| | 239 |
|
Interest rate swap contract | | — |
| | 1,085 |
| | 1,085 |
|
| | | | | | |
February 29, 2020 | | | | | | |
Assets: | | | | | | |
Money market funds | | $ | 2,689 |
| | $ | — |
| | $ | 2,689 |
|
Commercial paper | | — |
| | 1,500 |
| | 1,500 |
|
Municipal and corporate bonds | | — |
| | 11,967 |
| | 11,967 |
|
Cash surrender value of life insurance | | — |
| | 16,560 |
| | 16,560 |
|
Liabilities: | | | | | | |
Deferred compensation | | — |
| | 14,042 |
| | 14,042 |
|
Foreign currency forward/option contract | | — |
| | 340 |
| | 340 |
|
Interest rate swap contract | | — |
| | 561 |
| | 561 |
|
Money market funds and commercial paper
Fair value of money market funds was determined based on quoted prices for identical assets in active markets. Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets. These assets are included within cash and cash equivalents on our consolidated balance sheets.
Municipal and corporate bonds
Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified within our consolidated balance sheets as other current or other non-current assets based on maturity date.
Cash surrender value of life insurance and deferred compensation
Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. Changes in cash surrender value are recorded in other expense. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.
Derivative instruments
The interest rate swap is measured at fair value using other observable market inputs, based off of benchmark interest rates. Forward foreign exchange and fixed/floating aluminum contracts are measured at fair value using other observable market inputs, such as quotations on forward foreign exchange points, and foreign currency exchange rates.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.rates and aluminum prices.
Nonrecurring fair
5.Goodwill and Other Intangible Assets
Goodwill
Goodwill represents the excess of the cost over the 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 measurementsof goodwill may not be recoverable.
Certain assets are measured at fair value
Based on a nonrecurring basis and are subject to fair value adjustmentsthe impairment analysis performed in certain circumstances. These include certain long-lived assets that are written down tothe fourth quarter of fiscal 2021, estimated fair value when they are determined to be impaired, utilizingwas in excess of carrying value at six of our eight reporting units. However, estimated fair value did not exceed carrying value for two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall. As a valuation approach incorporating Level 3 inputs.result, as of February 27, 2021, we incurred goodwill impairment expense of $46.7 million and $17.1 million in our EFCO and Sotawall reporting units, respectively. The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, represents the total accumulated goodwill impairment expenses recorded.
| |
5. | Goodwill and Other Identifiable Intangible Assets |
The carrying amount of goodwill attributable to each reporting segment was:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Architectural Framing Systems | | Architectural Glass | | Architectural Services | | Large-Scale Optical | | Total |
Balance at February 29, 2020 | | $ | 148,183 | | | $ | 25,656 | | | $ | 1,120 | | | $ | 10,557 | | | $ | 185,516 | |
Adjustment (1) | | 6,315 | | | — | | | — | | | — | | | 6,315 | |
Impairment expense | | (63,769) | | | — | | | — | | | — | | | (63,769) | |
Foreign currency translation | | 2,370 | | | (334) | | | 0 | | | 0 | | | 2,036 | |
Balance at February 27, 2021 | | 93,099 | | | 25,322 | | | 1,120 | | | 10,557 | | | 130,098 | |
| | | | | | | | | | |
| | | | | | | | | | |
Foreign currency translation | | 1,457 | | | (94) | | | 0 | | | 0 | | | 1,363 | |
Balance at May 29, 2021 | | $ | 94,556 | | | $ | 25,228 | | | $ | 1,120 | | | $ | 10,557 | | | $ | 131,461 | |
| | | | | | | | | | |
(1) During the first quarter of fiscal 2021, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements. |
|
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Architectural Framing Systems | | Architectural Glass | | Architectural Services | | Large-Scale Optical | | Total |
Balance at March 2, 2019 | | $ | 148,446 |
| | $ | 25,709 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 185,832 |
|
Foreign currency translation | | (263 | ) | | (53 | ) | | — |
| | — |
| | (316 | ) |
Balance at February 29, 2020 | | 148,183 |
| | 25,656 |
| | 1,120 |
| | 10,557 |
| | 185,516 |
|
Adjustment (1) | | 6,315 |
| | — |
| | — |
| | — |
| | 6,315 |
|
Foreign currency translation | | (955 | ) | | (332 | ) | | — |
| | — |
| | (1,287 | ) |
Balance at May 30, 2020 | | $ | 153,543 |
| | $ | 25,324 |
| | $ | 1,120 |
| | $ | 10,557 |
| | $ | 190,544 |
|
| | | | | | | | | | |
(1) During the quarter ended May 30, 2020, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements. |
Other intangible assets
We evaluate goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units. Therefore, we performed a quantitative goodwill impairment evaluation as of May 30, 2020 at these four reporting units, EFCO Corporation ("EFCO"), Alumicor Limited ("Alumicor"), Sotawall Limited ("Sotawall") and Viracon, Inc ("Viracon").
Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis. If the fair value of a reporting unit exceeds the carrying value, goodwill impairment is not indicated.
We base our determination of fair value on a discounted cash flow methodology that involves significant judgment and projections of future performance. We also consider a market approach in our analysis by reviewing available data from recent transactions of comparable public companies when available. Assumptions about future revenues and expenses, capital expenditures and changes in working capital are based on the annual operating plan and long-term business plan for each reporting unit. These plans take into consideration numerous factors, including historical experience, current and future operational plans, anticipated future economic conditions and growth expectations for the industries and end markets in which we participate. These plans also take into consideration our assessment of risks inherent in our projections of future cash flows. Due to the inherent uncertainties involved in making estimates and assumptions, actual results may differ from those assumed in the forecasts. Inputs used to estimate these fair values included significant unobservable inputs that reflect the Company's assumptions about the inputs that market participants would use and, therefore, the fair value assessments are classified within Level 3 of the fair value hierarchy. We derived the discount rates using a capital asset pricing model and analyzing published rates for industries relevant to the reporting units to estimate the cost of equity financing. We used discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in the internally developed forecasts, updated for recent events.
Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and Alumicor, and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall and Viracon. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. While these discount rates have increased from the time of our annual goodwill impairment evaluation at year-end, impairment is not indicated at this time due to the long-term future performance expectations for these businesses.
The gross carrying amount of other intangible assets and related accumulated amortization was:
|
| | | | | | | | | | | | | | | | |
(In thousands) | | Gross Carrying Amount | | Accumulated Amortization | | Foreign Currency Translation | | Net |
May 30, 2020 | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | |
Customer relationships | | $ | 119,647 |
| | $ | (34,136 | ) | | $ | (2,304 | ) | | $ | 83,207 |
|
Other intangibles | | 41,095 |
| | (32,271 | ) | | (824 | ) | | 8,000 |
|
Total definite-lived intangible assets | | 160,742 |
| | (66,407 | ) | | (3,128 | ) | | 91,207 |
|
Indefinite-lived intangible assets: | | | | | | | | |
Trademarks | | 45,300 |
| | — |
| | (436 | ) | | 44,864 |
|
Total intangible assets | | $ | 206,042 |
| | $ | (66,407 | ) | | $ | (3,564 | ) | | $ | 136,071 |
|
February 29, 2020 | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | |
Customer relationships | | $ | 120,239 |
| | $ | (33,121 | ) | | $ | (592 | ) | | $ | 86,526 |
|
Other intangibles | | 41,069 |
| | (32,516 | ) | | (189 | ) | | 8,364 |
|
Total definite-lived intangible assets | | 161,308 |
| | (65,637 | ) | | (781 | ) | | 94,890 |
|
Indefinite-lived intangible assets: | | | | | | | | |
Trademarks | | 45,421 |
| | — |
| | (120 | ) | | 45,301 |
|
Total intangible assets | | $ | 206,729 |
| | $ | (65,637 | ) | | $ | (901 | ) | | $ | 140,191 |
|
We hold intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. We evaluate the reasonableness of the useful life and test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our year-end,fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic. Therefore, we performed an interim impairment evaluation on indefinite-lived intangible assets as of May 30, 2020. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If an impairment loss is recognized, the adjusted carrying amount becomes the asset's new accounting basis.
Fair value is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the
extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires
us to estimate the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. The assessment of fair value involves significant judgment and projections about future performance. In determining the discounted future revenue in our fair value analysis, we utilized a discount rate of 11.5 percent for EFCO and Alumicor and a discount rate
of 10.9 percent for Sotawall. A royalty rate of 1.5 percent was utilized for Alumicor and EFCO and a royalty rate of 2.0 percent was utilized for Sotawall. We utilized a long-term growth rate of 3.0 percent in the fair value analysis for all reporting units. Based on our analysis, the fair value of each of our trade names and trademarks exceeded carrying amount,
except for the EFCO tradename, within our Architectural Framing Systems segment. The fair value determined for the EFCO tradename was less than its carrying value by $6.3 million; this amount andwas recognized as impairment was not indicated. We continue to conclude thatexpense in the useful lifefourth quarter ended February 27, 2021, as reflected in the table below.
The gross carrying amount of our indefinite-livedother intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.and related accumulated amortization was:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Gross Carrying Amount | | Accumulated Amortization | | Impairment Expense | | Foreign Currency Translation | | Net |
May 29, 2021 | | | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | | | |
Customer relationships | | $ | 122,961 | | | $ | (43,192) | | | $ | — | | | $ | 3,973 | | | $ | 83,742 | |
Other intangibles | | 41,936 | | | (35,426) | | | — | | | 976 | | | 7,486 | |
Total definite-lived intangible assets | | 164,897 | | | (78,618) | | | — | | | 4,949 | | | 91,228 | |
Indefinite-lived intangible assets: | | | | | | | | | | |
Trademarks | | 39,832 | | | — | | | — | | | 920 | | | 40,752 | |
Total intangible assets | | $ | 204,729 | | | $ | (78,618) | | | $ | — | | | $ | 5,869 | | | $ | 131,980 | |
February 27, 2021 | | | | | | | | | | |
Definite-lived intangible assets: | | | | | | | | | | |
Customer relationships | | $ | 119,647 | | | $ | (40,443) | | | $ | — | | | $ | 3,315 | | | $ | 82,519 | |
Other intangibles | | 41,293 | | | (34,234) | | | — | | | 643 | | | 7,702 | |
Total definite-lived intangible assets | | 160,940 | | | (74,677) | | | — | | | 3,958 | | | 90,221 | |
Indefinite-lived intangible assets: | | | | | | | | | | |
Trademarks | | 45,300 | | | — | | | (6,300) | | | 832 | | | 39,832 | |
Total intangible assets | | $ | 206,240 | | | $ | (74,677) | | | $ | (6,300) | | | $ | 4,790 | | | $ | 130,053 | |
Amortization expense on definite-lived intangible assets was $1.8$2.0 million and $1.9$1.8 million for the three-month periods ended May 29, 2021 and May 30, 2020, and June 1, 2019, respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At May 30, 2020,29, 2021, the estimated future amortization expense for definite-lived intangible assets was:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Remainder of Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 | | Fiscal 2026 |
Estimated amortization expense | | $ | 6,257 | | | $ | 8,302 | | | $ | 8,041 | | | $ | 7,651 | | | $ | 7,635 | |
|
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Remainder of Fiscal 2021 | | Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 |
Estimated amortization expense | | $ | 5,858 |
| | $ | 7,807 |
| | $ | 7,716 |
| | $ | 7,039 |
| | $ | 7,111 |
|
As of May 30, 2020,29, 2021, we had a committed revolving credit facility with maximum borrowings of up to $235 million maturing inwith a maturity of June 2024, and a $150 million term loan maturing in April 2021. As of May 30, 2020, our total debt2024. There were 0 outstanding was $210.9 million, compared to $217.9 million as of February 29, 2020. Outstanding borrowings under the revolving credit facility were $40.5 million, as of May 30, 2020,29, 2021 and $47.5February 27, 2021. At May 29, 2021 and February 27, 2021, we also had a $150 million asterm loan with a maturity date of February 29, 2020.June 2024.
Our revolving credit facility and term loan contain two financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of interest expense-to-EBITDA. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At May 30, 2020,29, 2021, we were in compliance with both financial covenants. Additionally, at May 30, 2020,29, 2021, we had a total of $24.7$18.7 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 20212022 to 20322023 and reduce borrowing capacity under the revolving credit facility.
At May 30, 2020,29, 2021, debt included $20.4$15.0 million of industrial revenue bonds that mature in fiscal years 20212022 through 2043. The fair value of the industrial revenue bonds approximated carrying value at May 30, 2020,29, 2021, due to the variable interest rates on these instruments. All debt would be classified as Level 2 within the fair value hierarchy described in Note 4.
We also maintain two Canadian committed, revolving credit facilities totaling $25.0 million (USD). As of May 30, 202029, 2021 and February 29, 2020,27, 2021, there were 0 borrowings were outstanding under the facilities.
Interest payments were $1.4$1.1 million and $2.4$1.4 million for the three months ended May 29, 2021 and May 30, 2020, respectively.
and June 1, 2019, 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 and lease expense is recognized on a straight-line basis over the lease term. Our leases have remaining lease terms of one to ten years, some of which include renewal options that can extend the lease for up to an additional ten years at our sole discretion. We have made an accounting policy election not to record leases with an original term of 12 months or less on our consolidated balance sheet and 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 nonleasenon 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 | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Operating lease cost | | $ | 3,381 | | | $ | 3,561 | | | | | |
Short-term lease cost | | 225 | | | 470 | | | | | |
Variable lease cost | | 723 | | | 747 | | | | | |
| | | | | | | | |
Total lease cost | | $ | 4,329 | | | $ | 4,778 | | | | | |
|
| | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Operating lease cost | | $ | 3,561 |
| | $ | 3,373 |
|
Short-term lease cost | | 470 |
| | 682 |
|
Variable lease cost | | 747 |
| | 713 |
|
Total lease cost | | $ | 4,778 |
| | $ | 4,768 |
|
Other supplemental information related to leases was as follows:
| | | | | | | | | | | | | | |
| | Three Months Ended |
(In thousands except weighted-average data) | | May 29, 2021 | | May 30, 2020 |
| | | | |
Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 3,602 | | | $ | 3,327 | |
Lease assets obtained in exchange for new operating lease liabilities | | $ | 465 | | | $ | 158 | |
Weighted-average remaining lease term - operating leases | | 5.8 years | | 5.8 years |
Weighted-average discount rate - operating leases | | 2.96 | % | | 3.60 | % |
|
| | | | | | | | |
| | Three Months Ended |
(In thousands except weighted-average data) | | May 30, 2020 | | June 1, 2019 |
Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 3,327 |
| | $ | 3,300 |
|
Lease assets obtained in exchange for new operating lease liabilities | | $ | 158 |
| | $ | 706 |
|
Weighted-average remaining lease term - operating leases | | 5.8 years |
| | 5.5 years |
|
Weighted-average discount rate - operating leases | | 3.60 | % | | 3.74 | % |
Future maturities of lease liabilities are as follows:
|
| | | | |
(In thousands) | | May 30, 2020 |
Remainder of Fiscal 2021 | | $ | 9,168 |
|
Fiscal 2022 | | 10,933 |
|
Fiscal 2023 | | 10,070 |
|
Fiscal 2024 | | 8,090 |
|
Fiscal 2025 | | 6,256 |
|
Fiscal 2026 | | 5,008 |
|
Thereafter | | 6,378 |
|
Total lease payments | | 55,903 |
|
Less: Amounts representing interest | | (4,627 | ) |
Present value of lease liabilities | | $ | 51,276 |
|
As of May 30, 2020, we have $5.7 million additional future operating lease commitments for leases that have not yet commenced.
| | | | | | | | |
8.(In thousands) | Commitments and Contingent Liabilities | May 29, 2021 |
Remainder of Fiscal 2022 | | $ | 10,459 | |
Fiscal 2023 | | 12,689 | |
Fiscal 2024 | | 10,736 | |
Fiscal 2025 | | 9,458 | |
Fiscal 2026 | | 7,583 | |
Fiscal 2027 | | 6,097 | |
Thereafter | | 6,590 | |
Total lease payments | | 63,612 | |
Less: Amounts representing interest | | (3,990) | |
Present value of lease liabilities | | $ | 59,622 | |
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 May 30, 2020, $1.029, 2021, $1.2 billion of these types of bonds were outstanding, of which $582.3$527.3 million is in our backlog. These bonds do not have stated expiration dates. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.
Warranty and project-related contingencies
We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume. A warranty rollforward follows:
| | | | | | | | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 29, 2021 | | May 30, 2020 |
Balance at beginning of period | | $ | 14,999 | | | $ | 15,629 | |
Additional accruals | | 2,478 | | | 511 | |
Claims paid | | (2,930) | | | (939) | |
| | | | |
Balance at end of period | | $ | 14,547 | | | $ | 15,201 | |
|
| | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Balance at beginning of period | | $ | 15,629 |
| | $ | 16,737 |
|
Additional accruals | | 511 |
| | 1,787 |
|
Claims paid | | (939 | ) | | (2,771 | ) |
Balance at end of period | | $ | 15,201 |
| | $ | 15,753 |
|
Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of our Architectural Framing Systems businesses. We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages. The liability for these types of project-related contingencies was $48.1$1.7 million and $49.0$4.6 million as of May 30, 202029, 2021 and February 29, 2020,27, 2021, respectively. Subsequent to the end of the quarter, in June 2020, we settled contract claims related to a majority of these project-related contingencies on a legacy EFCO project for an amount equal to the contingency recorded at May 30, 2020.
Letters of credit
At May 30, 2020,29, 2021, we had $24.7$18.7 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6. Subsequent to the end of the quarter, in connection with the settlement of contract claims related toWe also have a legacy EFCO project referenced above, the original project performance and payment bond was replaced, which required a $25.0$6.9 million letter of credit. The letter of credit for the replacement bond waswhich has been issued outside of our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.
Purchase obligations
Purchase obligations for raw material commitments and capital expenditures totaled $177.2$235.9 million as of May 30, 2020.29, 2021.
New Markets Tax Credit (NMTC) transactions
We have entered into four separatethree outstanding NMTC programsarrangements which help to support our operational expansion. Proceeds received from investors on these transactions are included within other current and non-current liabilities on our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. Therefore, uponUpon 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 non-current assets on our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase for each project, we are required to hold cash dedicated to fund each capital project which is classified as restricted cash on 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.
The table below provides a summary of our outstanding NMTC transactions (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Inception date | | Termination date | | Proceeds received | | Deferred costs | | Net benefit |
| | | | | | | | |
June 2016 | | June 2023 | | $ | 6.0 | | | $ | 1.2 | | | $ | 4.8 | |
August 2018 | | August 2025 | | 6.6 | | | 1.3 | | | 5.3 | |
September 2018 | | September 2025 | | 3.2 | | | 1.0 | | | 2.2 | |
Total | | | | $ | 15.8 | | | $ | 3.5 | | | $ | 12.3 | |
|
| | | | | | | | | | | | | | |
Inception date | | Termination date | | Proceeds received | | Deferred costs | | Net benefit |
November 2013 | | October 2020 | | $ | 10.7 |
| | $ | 3.3 |
| | $ | 7.4 |
|
June 2016 | | May 2023 | | 6.0 |
| | 1.2 |
| | 4.8 |
|
August 2018 | | July 2025 | | 6.6 |
| | 1.3 |
| | 5.3 |
|
September 2018 | | August 2025 | | 3.2 |
| | 1.0 |
| | 2.2 |
|
Total | | | | $ | 26.5 |
| | $ | 6.8 |
| | $ | 19.7 |
|
Litigation
On November 5, 2018, a shareholder filed a purported securities class action against the Company and certain named executive officers. On March 25, 2020, the District Court granted the Company's motion to dismiss without prejudice this matter. On May 5, 2020, the District Court entered final judgment. Plaintiffs’ have waived their right to appeal. The Company views this matter as closed.
On December 17, 2018, a different shareholder filed a derivative lawsuit, purportedly on behalf of the Company, against certain of our executive officers and directors claiming breaches of fiduciary duty, waste of corporate assets and unjust enrichment. On May 29, 2020, the parties filed a joint stipulation and order dismissing this matter without prejudice. The Company views this matter as closed.
In addition to the foregoing, the Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.
| |
9. | Share-Based Compensation |
9.Share-Based Compensation
Total share-based compensation expense included in the results of operations was $1.7 million for the three-month period ended May 29, 2021 and $1.4 million for the three-month period ended May 30, 2020 and $1.6 million for the three-month period ended June 1, 2019.2020.
Stock options and SARs
Stock option and SAR activity for the current three-month period is summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock options and SARs | | Number of Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Outstanding at February 27, 2021 | | 633,700 | | | $ | 23.04 | | | | | |
| | | | | | | | |
Awards exercised | | (178,564) | | | 23.04 | | | | | |
Awards canceled | | (37,036) | | | 23.04 | | | | | |
Outstanding at May 29, 2021 | | 418,100 | | | $ | 23.04 | | | 9.1 years | | $ | 6,258,957 | |
Vested or expected to vest at May 29, 2021 | | 418,100 | | | $ | 23.04 | | | 9.1 years | | $ | 6,258,957 | |
| | | | | | | | |
|
| | | | | | | | | | | | | |
Stock options and SARs | | Number of Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value |
Outstanding at February 29, 2020 | | 100,341 |
| | $ | 8.34 |
| | | | |
Awards exercised | | — |
| | — |
| | | | |
Outstanding and exercisable at May 30, 2020 | | 100,341 |
| | $ | 8.34 |
| | 1.3 years | | $ | 1,235,198 |
|
NoFor the three-months ended May 29, 2021, cash proceeds from the exercise of stock options were $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 $2.7 million. NaN awards were issued or exercised during the three-months ended May 30, 20202020.
Executive Compensation Program
In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees. In the first quarter of fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date. The number of share units issued at grant is equal to the target number of performance shares and June 1, 2019, respectively.allows for the right to receive an additional number of shares dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.
Nonvested sharesshare awards and share units
Nonvested share activity, including performance share units, for the current three-month period is summarized as follows:
| | | | | | | | | | | | | | |
Nonvested shares and units | | Number of Shares and Units | | Weighted Average Grant Date Fair Value |
Nonvested at February 27, 2021 | | 475,227 | | | $ | 27.52 | |
Granted(1) | | 141,956 | | | 34.71 | |
Vested | | (52,892) | | | 24.82 | |
| | | | |
Nonvested at May 29, 2021(1) | | 564,291 | | | $ | 29.58 | |
|
| | | | | | | |
Nonvested shares and units | | Number of Shares and Units | | Weighted Average Grant Date Fair Value |
Nonvested at February 29, 2020 | | 309,259 |
| | $ | 40.58 |
|
Granted | | 182,693 |
| | 18.86 |
|
Vested | | (61,318 | ) | | 43.61 |
|
Nonvested at May 30, 2020 | | 430,634 |
| | $ | 30.93 |
|
(1)Includes a total of 52,023 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.
At May 30, 2020,29, 2021, there was $2.7$11.3 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 2631 months. The total fair value of shares vested during the three months ended May 30, 202029, 2021 was $1.3$1.9 million.
10.Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2017,2018, or
state and local income tax examinations for years prior to fiscal 2013. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2016,2017, and there is limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.
The total liability for unrecognized tax benefits was $4.1$3.8 million at May 30, 202029, 2021 and at February 29, 2020.27, 2021, respectively. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.4 million during the next 12 months due to lapsing of statutes.
11.Earnings per Share
The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Basic earnings per share – weighted average common shares outstanding | | 25,402 | | | 26,168 | | | | | |
Weighted average effect of nonvested share grants and assumed exercise of stock options | | 420 | | | 250 | | | | | |
Diluted earnings per share – weighted average common shares and potential common shares outstanding | | 25,822 | | | 26,418 | | | | | |
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) | | 8 | | | 150 | | | | | |
|
| | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Basic earnings per share – weighted average common shares outstanding | | 26,168 |
| | 26,597 |
|
Weighted average effect of nonvested share grants and assumed exercise of stock options | | 250 |
| | 246 |
|
Diluted earnings per share – weighted average common shares and potential common shares outstanding | | 26,418 |
| | 26,843 |
|
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) | | 150 |
| | 104 |
|
12.Business Segment Data
The Company has
We have 4 reporting segments:
•The Architectural Framing Systems Architectural Glass, Architectural Services and Large-Scale Optical (LSO).
The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings.
•The Company has aggregated 6 operating segments into this reporting segment based on their similar products, customers, distribution methods, production processes and economic characteristics.
The Architectural Glass segment fabricates coated, high-performance glass used globally in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.
•The Architectural Services segment designs, engineers, fabricates and installsprovides full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.
•The LSOLarge-Scale Optical (LSO) segment manufactures value-added glass and acrylic products primarily for framing and display applications.
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | | | |
Net sales | | | | | | | | |
Architectural Framing Systems | | $ | 151,840 | | | $ | 150,164 | | | | | |
Architectural Glass | | 83,031 | | | 76,911 | | | | | |
Architectural Services | | 75,656 | | | 63,551 | | | | | |
Large-Scale Optical | | 24,228 | | | 6,312 | | | | | |
Intersegment eliminations | | (8,749) | | | (7,843) | | | | | |
Net sales | | $ | 326,006 | | | $ | 289,095 | | | | | |
Operating income (loss) | | | | | | | | |
Architectural Framing Systems | | $ | 8,060 | | | $ | 7,296 | | | | | |
Architectural Glass | | 2,128 | | | (494) | | | | | |
Architectural Services | | 4,537 | | | 5,343 | | | | | |
Large-Scale Optical | | 5,847 | | | (3,132) | | | | | |
Corporate and other | | (4,530) | | | (2,544) | | | | | |
Operating income | | $ | 16,042 | | | $ | 6,469 | | | | | |
|
| | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Net sales from operations | | | | |
Architectural Framing Systems | | $ | 150,164 |
| | $ | 180,522 |
|
Architectural Glass | | 76,911 |
| | 100,291 |
|
Architectural Services | | 63,551 |
| | 65,147 |
|
Large-Scale Optical | | 6,312 |
| | 21,259 |
|
Intersegment eliminations | | (7,843 | ) | | (11,854 | ) |
Net sales | | $ | 289,095 |
| | $ | 355,365 |
|
Operating income (loss) from operations | | | | |
Architectural Framing Systems | | $ | 7,296 |
| | $ | 12,273 |
|
Architectural Glass | | (494 | ) | | 6,399 |
|
Architectural Services | | 5,343 |
| | 4,573 |
|
Large-Scale Optical | | (3,132 | ) | | 4,177 |
|
Corporate and other | | (2,544 | ) | | (4,381 | ) |
Operating income | | $ | 6,469 |
| | $ | 23,041 |
|
Due to the varying combinations and integration of individual window, storefront and curtainwall systems, it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported.
| |
Item 2. | 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, |
Forward-looking statements
This discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should”“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 of the Company’s near-term results, based on current information available pertaining to the Company, including the risk factors noted under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2020.beliefs. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results.
Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other riskInformation about factors include, but are not limited to,that could materially affect our results can be found in the risks and uncertainties set forth under Item 1A“Risk Factors” section of the Company’sour Annual Report on Form 10-K for the fiscal year ended February 29, 2020.27, 2021 and in subsequent filings with the U.S. Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.
We also wish to caution investors that other factors might in the future prove to be important in affecting the Company’s results of operations. New factors emerge from time to time; it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
We are a leader in certain technologies involving the design and development of value-added glass and metal products and services for enclosing commercial buildings and framing and displays. Our four reporting segments are: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).
The ongoing COVID-19 pandemic continues to cause volatility and uncertainty in global markets impacting worldwide economic activity. We have experienced some delays in commercial construction projects and orders as a result of COVID-19. In our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions. Within our LSO segment, temporary closure of many retail locations resulted in the shutdown of our factories for most of the first quarter, in response to governmental “stay at home” directives. We have also been impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at some of our facilities. The extent to which COVID-19 will impact our business will depend on future developments and public health advancements, which are highly uncertain and cannot be predicted with confidence. However, towards the end of our first quarter and into the second quarter, we began to see some early signs of improvement, including the gradual reopening of retailers, moderating project delays and fewer workforce absences.
Furthermore, in response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, business travel restrictions, and remote work capabilities, in addition to quarantine-related paid leave and other employee assistance programs.
The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February 29, 202027, 2021 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.
Highlights of First Quarter of Fiscal 20212022 Compared to First Quarter of Fiscal 20202021
Net sales
Consolidated net sales were $289.1 million, a decrease of 18.6increased 12.8 percent, or $66.3$36.9 million, for the first quarterthree-month period ended May 30, 2020,29, 2021, compared to net sales of $355.4 millionthe same period in the prior year, period, reflecting COVID-19 relatedprimarily driven by volume declinesgrowth in eachthe LSO, Architectural Services and Architectural Glass segments. LSO was closed for most of the company's segments.first quarter of fiscal 2021, due to COVID-19.
The relationship between various components of operations, as a percentage of net sales, is presented below:
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| May 29, 2021 | | May 30, 2020 | | | | |
Net sales | 100.0 | % | | 100.0 | % | | | | |
Cost of sales | 79.2 | | | 79.2 | | | | | |
Gross margin | 20.8 | | | 20.8 | | | | | |
Selling, general and administrative expenses | 15.8 | | | 18.6 | | | | | |
Operating income | 4.9 | | | 2.2 | | | | | |
Interest expense, net | 0.4 | | | 0.5 | | | | | |
Other income, net | 0.1 | | | 0.4 | | | | | |
Earnings before income taxes | 4.4 | | | 1.4 | | | | | |
Income tax expense | 1.1 | | | 0.4 | | | | | |
Net earnings | 3.3 | % | | 1.0 | % | | | | |
Effective tax rate | 25.3 | % | | 28.2 | % | | | | |
|
| | | | | |
| Three Months Ended |
| May 30, 2020 | | June 1, 2019 |
Net sales | 100.0 | % | | 100.0 | % |
Cost of sales | 79.2 |
| | 77.2 |
|
Gross profit | 20.8 |
| | 22.8 |
|
Selling, general and administrative expenses | 18.6 |
| | 16.3 |
|
Operating income | 2.2 |
| | 6.5 |
|
Interest and other expense, net | 0.9 |
| | 0.7 |
|
Earnings before income taxes | 1.4 |
| | 5.7 |
|
Income tax expense | 0.4 |
| | 1.4 |
|
Net earnings | 1.0 | % | | 4.3 | % |
Effective tax rate | 28.2 | % | | 24.4 | % |
Gross profit
Gross profit as a percent of sales (gross margin) was 20.8 percent forin each of the three-month periodperiods ended May 29, 2021 and May 30, 2020, compared to 22.8 percent2020. Gross margin was positively impacted by strong recovery of the LSO segment (which closed for the three-month period ended June 1, 2019. This decrease was largely driven by lower volumes inmost of the first quarter duelast year to COVID-19-related project delays.comply with COVID-related directives) and improved margins in the Architectural Glass segment, which offset margin declines within the Architectural Framing Systems and Architectural Services segments. Each of our segments experienced inflation in operating costs, especially freight and materials costs, during the quarter. While we are undertaking measures to offset these costs, we expect this trend to continue through fiscal 2022.
Selling, general and administrative (SG&A) expenses
SG&A expenses as a percent of sales were 18.615.8 percent for the three-month period ended May 30, 2020,29, 2021, compared to 16.318.6 percent infor the prior year three-month period. SG&A increaseddecreased as a percent of sales compared to the same period in the prior year primarily due to leverage on lower sales, partially offset byongoing well controlled spending across all segments of the impactbusiness, as well as a benefit of cost cutting measures put in place by$2.7 million during the Company in responsefirst quarter of fiscal 2022, from a Canadian wage subsidy program offered to support Canadian businesses due to the currentongoing impacts of the COVID-19 environment.pandemic.
Income tax expense
The effective tax rate in the first quarter of fiscal 20212022 was 28.225.3 percent, compared to 24.428.2 percent in the priorsame period last year, period. The increaseprimarily due to favorable provisions in the tax rate was primarily driven by discrete tax expense relativeCoronavirus, Aid, Relief and Economic Security Act ("CARES Act") impacting the first quarter of fiscal 2022 and the negative impact of unfavorable permanent items in relation to reduced earnings forin the quarter.first quarter of fiscal 2021.
Segment Analysis
Architectural Framing Systems
| | | | Three Months Ended | | Three Months Ended | |
(In thousands) | | May 30, 2020 | | June 1, 2019 | | % Change | (In thousands) | | May 29, 2021 | | May 30, 2020 | | % Change | |
Net sales | | $ | 150,164 |
| | $ | 180,522 |
| | (16.8 | )% | Net sales | | $ | 151,840 | | | $ | 150,164 | | | 1.1 | % | |
Operating income | | 7,296 |
| | 12,273 |
| | (40.6 | )% | Operating income | | 8,060 | | | 7,296 | | | 10.5 | % | |
Operating margin | | 4.9 | % | | 6.8 | % | | | Operating margin | | 5.3 | % | | 4.9 | % | | |
Architectural Framing Systems net sales declined $30.4increased $1.7 million, or 16.81.1 percent, for the three-month period ended May 30, 2020,29, 2021, compared to the prior-year period, primarily reflecting lower volume dueimproved pricing. This improvement was partially offset by unfavorable project performance and mix, compared to several COVID-19 related project delays and disruptions, particularly in regions with more state and local government restrictions on construction activity.the prior-year period.
Operating margin decreased 190increased 40 basis points for the three-month period of the current year, compared to the same period in the prior year, reflecting benefits from cost-saving actions, which offset increased costs for materials and freight. In addition, this segment benefited from a Canadian wage subsidy of $2.7 million in the lower volume, partially offset byfirst quarter of fiscal 2022, as a result of a program to support Canadian businesses due to the impactongoing impacts of cost reduction actions.the COVID-19 pandemic.
As of May 30, 2020,29, 2021, segment backlog was approximately $421$423 million, compared to approximately $430$411 million last quarter.at the end of the prior quarter, and $421 million at the end of the first quarter of the prior year. Backlog represents the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which may be expected to be recognized as revenue in the future. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. We view backlog as one indicator of future revenues, particularly in our longer-lead time businesses. In addition to backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period and are not included in backlog. We have strong visibility beyond backlog, as projects awarded, verbal commitments and bidding activities are not included in backlog.
Architectural Glass
| | | | Three Months Ended | | Three Months Ended | |
(In thousands) | | May 30, 2020 | | June 1, 2019 | | % Change | (In thousands) | | May 29, 2021 | | May 30, 2020 | | % Change | |
Net sales | | $ | 76,911 |
| | $ | 100,291 |
| | (23.3 | )% | Net sales | | $ | 83,031 | | | $ | 76,911 | | | 8.0 | % | |
Operating income | | (494 | ) | | 6,399 |
| | N/M | Operating income | | 2,128 | | | (494) | | | N/M | |
Operating margin | | (0.6 | )% | | 6.4 | % | | | Operating margin | | 2.6 | % | | (0.6) | % | | |
Net sales decreased $23.4increased $6.1 million, or 23.38.0 percent, for the three-month period ended May 30, 2020,29, 2021, compared to the same period in the prior year. The decrease reflects lower volumes dueyear, driven by increased volume and a more favorable sales mix.
Segment operating income increased to project timing and delays and significant production disruptions caused by COVID-19 related workforce absences at its largest facility.
The segment had$2.1 million, with operating margin of 2.6 percent, for the three-month period ended May 29, 2021, compared to an operating loss of $0.5 million and operating margin wasof (0.6) percent down from operating incomein the same period of $6.4 millionthe prior year. The improved profitability was driven by increased productivity in core glass operations, the more favorable sales mix, and margin of 6.4 percent in last year's first quarter, due to leverage on the lower volume andhigher volumes, which offset the impact of COVID-19 relatedhigher material and freight costs.
Architectural Services
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | % Change | | | | | | |
Net sales | | $ | 75,656 | | | $ | 63,551 | | | 19.0 | % | | | | | | |
Operating income | | 4,537 | | | 5,343 | | | (15.1) | % | | | | | | |
Operating margin | | 6.0 | % | | 8.4 | % | | | | | | | | |
|
| | | | | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 | | % Change |
Net sales | | $ | 63,551 |
| | $ | 65,147 |
| | (2.4 | )% |
Operating income | | 5,343 |
| | 4,573 |
| | 16.8 | % |
Operating margin | | 8.4 | % | | 7.0 | % | | |
Architectural Services net sales declined $1.6increased $12.1 million, or 2.419.0 percent, for the three-month period ended May 30, 2020, over29, 2021, compared to the same period in the prior year, reflecting certain COVID-19 related project delays.driven by increased volume from executing projects in backlog.
Operating margin increased 140decreased 240 basis points to 6.0 percent for the three-month period of the current year, compared to the same period in the prior year, driven by strongprimarily reflecting isolated performance challenges on certain projects and a less favorable project execution, disciplined project selection, and effective cost management.mix.
As of May 30, 2020,29, 2021, segment backlog was approximately $685$559 million, compared to approximately $660$571 million last quarter.as of the end of the prior quarter, and $685 million at the end of the first quarter of the prior year. Backlog is defineddescribed within the Architectural Framing Systems discussion above.
Large-Scale Optical (LSO)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
(In thousands) | | May 29, 2021 | | May 30, 2020 | | % Change | | | | | | |
Net sales | | $ | 24,228 | | | $ | 6,312 | | | 283.8 | % | | | | | | |
Operating income (loss) | | 5,847 | | | (3,132) | | | N/M | | | | | | |
Operating margin | | 24.1 | % | | (49.6) | % | | | | | | | | |
|
| | | | | | | | | | | |
| | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 | | % Change |
Net sales | | $ | 6,312 |
| | $ | 21,259 |
| | (70.3 | )% |
Operating income | | (3,132 | ) | | 4,177 |
| | N/M |
Operating margin | | (49.6 | )% | | 19.6 | % | | |
LSO net sales decreased $14.9increased $17.9 million or 70.3283.8 percent, for the three-month period ended May 30, 2020, over29, 2021, compared to the same period in the prior year. In the prior year as most offirst quarter, the segment's retail customers and manufacturing operations were closed for a large part of the quarter to comply with various state and localCOVID-related government directives. In response to the lower demand, and to comply with state government directives, the segment closed its two manufacturing locations in March 2020, through the remainder of the first quarter. These facilities are expected to resume operations late in the second quarter.
The segment had anoperating income of $5.8 million and operating margin of 24.1 percent for the three-month period ended May 29, 2021, compared to operating loss of $3.1 million and operating margin of (49.6) percent forin the three-monthsame period ended May 30, 2020, compared to operating income of $4.2 million and operating margin of 19.6 percent in last year's first quarter, reflecting the impact of the lowerprior year primarily driven by the increased sales volume.
Liquidity and Capital Resources
| | | | | | | | | | | | | | |
Selected cash flow data | | Three Months Ended |
(In thousands) | | May 29, 2021 | | May 30, 2020 |
Operating Activities | | | | |
Net cash provided by operating activities | | $ | 6,883 | | | $ | 23,976 | |
Investing Activities | | | | |
Capital expenditures | | (4,705) | | | (8,606) | |
| | | | |
| | | | |
| | | | |
Financing Activities | | | | |
Borrowings on line of credit | | — | | | 139,500 | |
| | | | |
Payments on line of credit | | — | | | (146,500) | |
Repurchase and retirement of common stock | | (12,625) | | | (4,731) | |
Dividends paid | | (5,035) | | | (4,872) | |
|
| | | | | | | | |
Selected cash flow data | | Three Months Ended |
(In thousands) | | May 30, 2020 | | June 1, 2019 |
Operating Activities | | | | |
Net cash provided by operating activities | | $ | 23,976 |
| | $ | (9,742 | ) |
Investing Activities | | | | |
Capital expenditures | | (8,606 | ) | | (11,198 | ) |
Financing Activities | | | | |
Borrowings on line of credit | | 139,500 |
| | 103,000 |
|
Payments on line of credit | | (146,500 | ) | | (55,500 | ) |
Repurchase and retirement of common stock | | (4,731 | ) | | (20,010 | ) |
Dividends paid | | (4,872 | ) | | (4,598 | ) |
Operating Activities. CashNet cash provided by operating activities was $24.0$6.9 million for the first three months of fiscal 2021, an increase2022, a decrease of $33.7$17.1 million compared to the prior-year period, primarily due to strongreflecting increased working capital management.needs related to revenue growth.
Investing Activities. Net cash used inby investing activities was $9.7$4.1 million for the first three months of fiscal 2021, primarily due to2022, driven by capital expenditures of $8.6 million, while in$4.7 million. In the first three months of the prior year, net cash used by investing activities was $12.0$9.7 million, primarily due todriven by capital expenditures of $11.2$8.6 million.
Financing Activities. Net cash used inby financing activities was $17.3$14.3 million for the first three months of fiscal 2021,2022, compared to net cash provided by financing activities of $21.6$17.3 million forin the prior-year period, primarily due to $7.0 million of net payments onreflecting both borrowings and debt repayments in the line of creditprior year, and higher share repurchases in the current year compared to net borrowings of $47.5 million in the prior year period. During April 2020, the Company extended the maturity of its $150 million term loan to April 2021.first quarter. At May 30, 2020,29, 2021, we were in compliance with the financial covenants inunder our revolving credit facility and term loan.
We paid dividends totaling $4.9$5.0 million ($0.18750.2000 per share) in the first three months of fiscal 20212022, compared to $4.6$4.9 million ($0.1750.1875 per share) in the comparable prior-year period. In March 2020,During the first three months of fiscal 2022, we repurchased 231,492341,000 shares under our authorized share repurchase program, for a total cost of $4.7$12.2 million. We have since temporarily suspended share repurchases. In the first three months of fiscal 2020,2021, we repurchased 531,997231,492 shares under our authorizedthe share repurchase program, for a total cost of $20.0$4.7 million. WeSince the inception of the share repurchase program in 2004, we have purchased a total of 6,186,4047,473,616 shares, at a total cost of $179.1 million, since the fiscal 2004 inception of this
program.$219.5 million. We currently have remaining authority to repurchase an additional 2,063,596776,384 shares under this program. We will continue to evaluate making future share repurchases, considering our cash flow, and debt levels and market conditions, includingin the continuing effectscontext of all our capital allocation options ensuring that we maximize the COVID-19 pandemic, and other potential uses of cash.long-term value for our shareholders.
Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of May 30, 2020:29, 2021:
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| | Payments Due by Fiscal Period |
(In thousands) | | Remainder of Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 | | Fiscal 2026 | | Thereafter | | Total |
Debt obligations | | $ | 2,000 | | | $ | 1,000 | | | $ | — | | | $ | 150,000 | | | $ | — | | | $ | 12,000 | | | $ | 165,000 | |
Operating leases (undiscounted) | | 10,459 | | | 12,689 | | | 10,736 | | | 9,458 | | | 7,583 | | | 12,687 | | | 63,612 | |
Purchase obligations | | 170,377 | | | 60,599 | | | 1,606 | | | 1,433 | | | 1,433 | | | 487 | | | 235,935 | |
Total cash obligations | | $ | 182,836 | | | $ | 74,288 | | | $ | 12,342 | | | $ | 160,891 | | | $ | 9,016 | | | $ | 25,174 | | | $ | 464,547 | |
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| | Payments Due by Fiscal Period |
(In thousands) | | Remainder of Fiscal 2021 | | Fiscal 2022 | | Fiscal 2023 | | Fiscal 2024 | | Fiscal 2025 | | Thereafter | | Total |
Debt obligations | | $ | 5,400 |
| | $ | 152,000 |
| | $ | 1,000 |
| | $ | — |
| | $ | 40,500 |
| | $ | 12,000 |
| | $ | 210,900 |
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Operating leases (undiscounted) | | 9,168 |
| | 10,933 |
| | 10,070 |
| | 8,090 |
| | 6,256 |
| | 11,386 |
| | 55,903 |
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Purchase obligations | | 146,927 |
| | 29,868 |
| | 277 |
| | 127 |
| | — |
| | — |
| | 177,199 |
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Total cash obligations | | $ | 161,495 |
| | $ | 192,801 |
| | $ | 11,347 |
| | $ | 8,217 |
| | $ | 46,756 |
| | $ | 23,386 |
| | $ | 444,002 |
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We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. Purchase obligations in the table above relate to raw material commitments and capital expenditures.
We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal 2021,2022, which will equal or exceed our minimum funding requirements.
As of May 30, 2020,29, 2021, we had reserves of $4.1 million and $0.9$3.8 million for unrecognized tax benefits and environmental liabilities, respectively. We currently expect approximately $0.4 million of the unrecognized tax benefits to lapse during the next 12 months.benefits. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits and environmental liabilities will ultimately be settled.
We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance. At May 30, 2020, $1.029, 2021, $1.2 billion of these types of bonds were outstanding, of which $582.3$527.3 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 2020, we took advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the CARES Act. This deferral allowed us to retain cash during calendar year 2020 that would have otherwise been remitted to the federal government. At the end of fiscal 2021, we had deferred tax payments of $13.6 million, which are included within accrued payroll and other benefits and other non-current liabilities on our consolidated balance sheets. The deferred tax payments will be repaid in two equal portions in calendar years 2021 and 2022.
Due to our ability to generate strong cash from operations and our borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments for at least the next 12 months.
COVID-19 Consideration. While we believe we have adequate sources of liquidity to continue to fund our business for at least the next 12 months, the extent to which the ongoing COVID-19 situationpandemic may impact our results of operations or liquidity is uncertain. To date, weThe extent to which COVID-19 will continue to impact our business will depend on future developments and public health advancements, which have experienced some delays in commercial construction projectsbeen buoyed by vaccine production and orders due to COVID-19. While the construction and construction-related industriesdistribution.
Off-balance sheet arrangements. We have no off-balance sheet arrangements that have or are considered an "essential business or service" in most jurisdictions in which we operate, site closures or project and order delays have occurred and increased social distancing and health-related precautions are required on many work sites, which may cause additional project delays and additional costs to be incurred. Within the LSO segment, we have also experienced the temporary closure of many of our customer's retail locations and we temporarily shut down our factories in this segment. We expect this global pandemicreasonably likely to have an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict. At this time, we do not expect that the impact from the coronavirus outbreak will have a significantcurrent or future effect on our liquidity. As demonstratedfinancial condition, changes in the first quarter, we are proactively taking steps to increase available cash on hand including, but not limited to, active working capital management and targeted reductions in discretionary operatingfinancial condition, revenues or expenses, and capital expenditures. Given the speed and frequency of continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, liquidity, capital expenditures, or financial position. To the extentcapital resources that our customers and suppliers are adversely impacted by the coronavirus outbreak, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations and/or impact our liquidity.is material to investors.
Outlook
Our full-year earnings guidance is a range of $2.20 to $2.40 per diluted share. This guidance includes $7 to $10 million of expected pre-tax costs related to investments in transformation initiatives. We continue to expect a full-year tax rate of approximately 24.5 percent, and full-year capital expenditures of approximately $45 million.
Related Party Transactions
No material changes have occurred in the disclosure with respect to our related party transactions set forth in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020.27, 2021.
Critical Accounting Policies
NoThere have been no material changes have occurred in the disclosure ofto our critical accounting policies set forthfrom those disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020, other than as described below.27, 2021.
Goodwill and indefinite-lived intangible asset impairment
Goodwill
We evaluate goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units. Therefore, we performed an interim goodwill impairment evaluation as of May 30, 2020. If the fair value of a reporting unit exceeds the carrying value, goodwill impairment is not indicated. Our accounting policy related to goodwill has not changed from that disclosed in our Annual Report on Form 10-K.
Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. However, the estimated fair value did not exceed carrying value by a significant margin at two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units. If the impacts that we have experienced from COVID-19 continue at the current or worsening levels, this will likely have a negative impact on our forecasted revenue and profitability and this could result in an indication of goodwill impairment in future periods.
Indefinite-lived intangible assets
We hold intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. We evaluate the reasonableness of the useful life and test indefinite-lived intangible assets for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic. Therefore, the Company performed a quantitative indefinite-lived intangible asset impairment evaluation as of May 30, 2020. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If an impairment loss is recognized, the adjusted carrying amount becomes the asset's new accounting basis. Our accounting policy for indefinite-lived intangible assets has not changed from that disclosed in our Annual Report on Form 10-K.
Fair value is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires us to estimate the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. The assessment of fair value involves significant judgment and projections about future performance. In determining the discounted future revenue in our fair value analysis, we used discount rates that are appropriate with the risks and uncertainties inherent in the respective businesses in the range of 10.9 percent to 11.5 percent, royalty rates of 1.5 to 2.0 percent, and a long-term growth rate of 3.0 percent. Based on our analysis, the fair value of each of our trade names exceeded its carrying amount and impairment was not indicated. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 3.Quantitative and Qualitative Disclosures About Market Risk
No
Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2021 for a complete discussion on the Company’s market risk. There have been no material changes have occurred to the disclosures of quantitative and qualitativein market risk set forthfrom those disclosed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020.27, 2021.
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Item 4. | Item 4.Controls and Procedures |
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a) | Evaluation of disclosure controls and procedures: As of the end of the period covered by this report (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. |
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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 May 30, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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a)Evaluation of disclosure controls and procedures: As of the end of the period covered by this report (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. b)Changes in internal controls: There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended May 29, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
Murray Mayer v. Apogee Enterprises, Inc., et al
On November 5, 2018, Murray Mayer, individually and on behalf of all others similarly situated, filed a purported securities class action lawsuit against the Company and our Chief Executive Officer and our Chief Financial Officer in the United States District Court for the District of Minnesota. On February 26, 2019, the Court appointed as lead plaintiffs the City of Cape Coral Municipal Firefighters’ Retirement Plan and the City of Cape Coral Municipal Police Officers’ Retirement Plan. On March 25, 2020, the District Court granted the Company's motion to dismiss without prejudice this matter. On May 5, 2020, the District Court entered final judgment. Plaintiffs have waived their right to appeal. The Company views this matter as closed.
Justin Buley v. Apogee Enterprises, Inc. et al
On December 17, 2018, Justin Buley filed a derivative lawsuit, purportedly on behalf of the Company, against our Chief Executive Officer, our Chief Financial Officer and eight of the nine non-executive members of our Board of Directors, in the Fourth Judicial District of the State of Minnesota. The complaint alleged claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment. On May 29, 2020, the parties filed a joint stipulation and order dismissing this matter without prejudice. The Company views this matter as closed.
Other Matters
In addition to the foregoing, the Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.
Item 1A.Risk Factors
There have been no material changes or additions to our risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020, except as noted below.
27, 2021.
The novel coronavirus (COVID-19) pandemic, efforts to mitigate the pandemic, and the related weakening economic conditions, have impacted our business and could have a significant negative impact on our operations, liquidity, financial condition and financial results
In the last quarter
Table of our fiscal 2020, a novel strain of coronavirus, COVID-19, started to impact the global economic environment causing extreme volatility and uncertainty in global markets. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic and we started to see certain impacts to our business. This contagious disease outbreak, which has continued to spread, and the related adverse public health developments, and government orders to "stay in place" have adversely affected work forces, economies and financial markets globally. Quarantines and "stay in place" orders, the timing and length of containment and eradication solutions, travel restrictions, absenteeism by infected workers, labor shortages or other disruptions to our supply chain or our customers, have adversely impacted our sales and operating results and have resulted in some project delays. InContents
addition, the pandemic has resulted in an economic downturn that could affect the ability of our customers to obtain financing for projects and therefore impact demand for our products and services. Order lead times could be extended or delayed and our pricing or pricing of suppliers for needed materials could increase. Some critical materials, products or services may become unavailable if the regional or global spread were significant enough to prevent alternative sourcing. Accordingly, we are considering alternative product sourcing in the event that material supply becomes problematic.
To date, we have experienced some delays in commercial construction projects due to COVID-19. While the construction and construction-related industries are considered an "essential business or service" in most jurisdictions in which we operate, site closures or project delays have occurred and increased social distancing and health-related precautions are required on many work sites, which may cause additional project delays and additional costs to be incurred. Within the LSO segment, we also experienced the temporary closure of many of our customer's retail locations and we temporarily shut down our factories in this segment to comply with government "stay in place" orders. We expect this global pandemic to have an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict. The global outbreak of COVID-19 continues to rapidly evolve. The extent to which COVID-19 will impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate severity and spread of the disease, the duration of the outbreak, travel restrictions and social distancing requirements in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
Given the speed and frequency of the continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, liquidity or financial position. To the extent that our customers and suppliers are adversely impacted by the coronavirus outbreak, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations and/or impact our liquidity.
Goodwill and indefinite-lived intangible asset impairment
Our assets include a significant amount of goodwill and indefinite-lived intangible assets. We evaluate goodwill and indefinite-lived intangibles for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units. The assessment of impairment requires determination of estimated fair value, generally using a discounted cash flow analysis, which involves significant judgment and projections about future performance.
Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis. Each of our nine business units represents a reporting unit for the goodwill impairment analysis. Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. However, the estimated fair value did not exceed carrying value by a significant margin at two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units. If the impacts that we have experienced from COVID-19 continue at the current or worsening levels, this will likely have a negative impact on our forecasted revenue and profitability and this could result in an indication of goodwill impairment in future periods.
Fair value of our indefinite-lived intangible assets is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires estimation of the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic. Therefore, the Company performed a quantitative indefinite-lived intangible asset impairment evaluation as of May 30, 2020. Based on our analysis, the fair value of each of our trade names exceeded its carrying amount and impairment was not indicated. In determining the discounted future revenue in our fair value analysis, we used discount rates that are appropriate with the risks and uncertainties inherent in the respective businesses in the range of 10.9 percent to 11.5 percent, royalty rates of 1.5 to 2.0 percent, and a long-term growth rate
of 3.0 percent. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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 first quarter of fiscal 2021:2022:
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Period | | Total Number of Shares Purchased (a) (c) | | 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 28, 2021 to March 27, 2021 | | — | | | $ | — | | | — | | | 1,117,384 | |
March 28, 2021 to April 24, 2021 | | 202,369 | | | 35.82 | | | 201,000 | | | 916,384 | |
April 25, 2021 to May 29, 2021 | | 175,264 | | | 34.42 | | | 140,000 | | | 776,384 | |
Total | | 377,633 | | | $ | 35.08 | | | 341,000 | | | 776,384 | |
(a)The shares in this column represent the total number of shares that were repurchased by us pursuant to our publicly announced repurchase program, plus the shares surrendered to us by plan participants to satisfy withholding tax obligations related to share-based compensation.
(b)In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock. The Board increased the authorization by 750,000 shares, announced on January 24, 2008; by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016, January 9, 2018, and January 14, 2020; and by 2,000,000 shares, announced on October 3, 2018. The repurchase program does not have an expiration date.
(c)This column includes 15,757 shares related to the stock purchase agreement between the Company and Joseph F. Puishys dated May 26, 2021.
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Period | | Total Number of Shares Purchased (a) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b) |
March 1, 2020 to March 28, 2020 | | 234,272 |
| | $ | 21.72 |
| | 231,492 |
| | 2,063,596 |
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March 29, 2020 to April 25, 2020 | | 2,590 |
| | 18.83 |
| | — |
| | 2,063,596 |
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April 26, 2020 to May 30, 2020 | | 20,133 |
| | 20.48 |
| | — |
| | 2,063,596 |
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Total | | 256,995 |
| | $ | 20.86 |
| | 231,492 |
| | 2,063,596 |
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(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. |
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(b) | In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock. The Board increased the authorization by 750,000 shares, announced on January 24, 2008; by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016, January 9, 2018, and January 14, 2020; and by 2,000,000 shares, announced on October 3, 2018. The repurchase program does not have an expiration date. |
Item 6.Exhibits
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101 | The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 30, 2020 are furnished herewith,29, 2021, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of May 30, 202029, 2021 and February 29, 2020,27, 2021, (ii) the Consolidated Results of Operations for the three-months ended May 29, 2021 and May 30, 2020, and June 1, 2019, (iii) the Consolidated Statements of Comprehensive Earnings for the three-months ended May 29, 2021 and May 30, 2020, and June 1, 2019, (iv) the Consolidated Statements of Cash Flows for the three-months ended May 29, 2021 and May 30, 2020, and June 1, 2019, (v) the Consolidated Statements of Shareholders' Equity for the three-months ended May 29, 2021 and May 30, 2020, and June 1, 2019, and (vi) Notes to Consolidated Financial Statements. |
104 | Cover Page formattedInteractive Data File (formatted as Inline Extensible Business Reporting LanguageiXBRL and contained in Exhibit 101.101) |
| Exhibits marked with a (#) sign are filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | APOGEE ENTERPRISES, INC. |
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Date: July 1, 2021 | | APOGEE ENTERPRISES, INC.By: /s/ Ty R. Silberhorn |
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Date: July 9, 2020 | | By: /s/ Joseph F. Puishys |
| | | Joseph F. Puishys
Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer)
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Date: July 9, 20201, 2021 | | By: /s/ Nisheet Gupta |
| | | Nisheet Gupta Executive Vice President and
Chief Financial Officer (Principal Financial and Accounting Officer) |