APOG Apogee Enterprises, Inc. - 10-K

ITEM 1A. RISK FACTORS

Our businesses face many risks. Any of the risks discussed below, or elsewhere in this Form 10-K or our other filings with the Securities and Exchange Commission, could have a material adverse impact on our business, financial condition or operating results.

Market and Industry Risks

North American and global economic and industry-related business conditions materially adversely affect our sales and results of operations

Our Architectural Metals, Architectural Services, Architectural Glass Segments, and a portion of our Performance Surfaces Segment are influenced by North American economic conditions and the cyclical nature of the North American non-residential construction industry. The non-residential construction industry is impacted by macroeconomic trends, such as availability of credit, employment levels, consumer confidence, interest rates and commodity prices. In addition, changes in architectural design trends, demographic trends, and/or remote work trends could impact demand for our products and services. To the extent changes in these factors negatively impact the overall non-residential construction industry, our business, operating results and financial condition could be significantly adversely impacted.

A significant portion of our Performance Surfaces Segment primarily depends on the strength of the U.S. retail custom picture framing industry. This industry is heavily influenced by consumer confidence and the conditions of the U.S. economy. A decline in consumer confidence, whether as a result of an economic slowdown, uncertainty regarding the future or other factors, could materially and adversely reflect the operating results of the segment.

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Global instability and uncertainty arising from events outside of our control, such as significant natural disasters, political crises, public health crises, and/or other catastrophic events could materially adversely affect our results of operations

Natural disasters, political crises, public health crises, and other catastrophic events or other events outside of our control, may negatively impact our facilities or the facilities of third parties on which we depend, have broader adverse impacts on the non-residential construction market, consumer confidence and spending, and/or impact both the well-being of our employees and our ability to operate our facilities. These types of disruptions or other events outside of our control could affect our business negatively, cause delays or cancellation of non-residential construction projects or cause us to temporarily close our facilities, harming our operating results. In addition, if any of our facilities, including our manufacturing, finishing or distribution facilities, or the facilities of our suppliers, third-party service providers, or customers, is affected by natural disasters, political crises, public health crises, or other catastrophic events or events outside of our control, our business and operating results could be materially impacted.

New competitors or specific actions of our existing competitors could materially harm our business

We operate in competitive industries in which the actions of our existing competitors or new competitors could result in loss of customers and/or market share. Changes in our competitors' products, prices or services could negatively impact our share of demand and our operating results.

Strategic Risks

We could be unable to effectively manage and implement our enterprise strategy, which could have a material adverse effect on our business, financial condition, and results of operations

Our strategy includes accelerating leadership in targeted markets by deepening customer insight, aligning capabilities and investments around customer needs, and strengthening competitive differentiation for disciplined portfolio growth and to drive consistent execution, enhance customer value, and position the Company for sustainable, growth‑oriented performance. Execution of this strategy requires additional investments of time and resources and could fail to achieve the desired results. For example, we may be unable to increase our sales and earnings by strengthening competitive differentiation of our product and service offerings. We may fail to accurately predict future customer needs and preferences, and thus focus on the wrong core capabilities.

Risks related to acquisitions, divestitures and restructuring programs could adversely affect our operating results

We continue to look for strategic business opportunities to drive long-term growth and operating efficiencies, which may include acquisitions, divestitures and/or restructuring plans. We frequently evaluate our brand and product portfolios and may consider acquisitions that complement our business or divestitures of businesses that we no longer believe to be an appropriate strategic fit.

As we consider and execute acquisitions, we may incur the following risks, among others: difficulties with integrating operations, technologies, products, and employees; failing to realize expected revenue growth and cost synergies from integration initiatives; increasing debt levels to finance an acquisition; failing to fully anticipate changes in cash flows or other market-based assumptions or conditions that cause the value of acquired assets to fall below book value, requiring impairment of intangible assets including goodwill; identifying contingent liabilities subsequent to closing an acquisition; and entering markets in which we have no or limited experience.

As we consider and execute future divestitures, we may be exposed to the following risks, among others: inability to find appropriate buyers; difficulties in executing transactions on favorable terms; separating divested business operations with minimal impact to our remaining operations; incur write-offs and impairment charges; and challenges effectively managing any transition service arrangements.

As we consider and execute restructuring plans, we may be exposed to the following risks, among others: failure to successfully complete the initiative in a timely manner, or at all; not advancing our business strategy as expected; not accurately predicting costs; not realizing anticipated cost savings, efficiencies, synergies, financial targets and other benefits; and the loss of key employees and/or reduced employee morale and productivity.

Any acquisition, divestiture or restructuring plan, if not favorably executed by management, could have a material adverse effect on our operating results and/or financial condition.

Operational Risks

Loss of key personnel and inability to source sufficient labor could adversely affect our operating results

An important aspect of our success depends on the skills of Company leadership, construction project managers and other key technical personnel, and our ability to secure sufficient manufacturing and installation labor. In recent years, low U.S. unemployment has caused increased competition for experienced construction project managers and other labor. If we are

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unable to retain existing employees and/or recruit and train additional employees with the requisite skills and experience, our operating results could be adversely impacted.

If we are unable to manage our supply and distribution chains effectively our results of operations will be negatively affected

Our Architectural Metal and Architectural Services Segments use aluminum as a significant input to their products. Our operating results in those two segments could continue to be negatively impacted by supply chain disruptions and adverse price movements in the market for raw aluminum. In recent years, we have seen increased volatility in the price of aluminum that we purchase from both domestic and international sources. Due to our Architectural Metals and presence in Canada, we have cross-border activity, as our Canadian businesses purchase inputs from U.S.-based suppliers and sell to U.S.-based customers. Continued significant changes in U.S. trade policy with Canada could, therefore, have an adverse impact on our operating results.

Our Architectural Glass and Performance Surfaces Segments use float glass as a significant input to their products. Increases in demand for float glass may lead to lower supply or higher costs to acquire. Failure to acquire a sufficient supply of float glass on terms as favorable as current terms could negatively impact our operating results.

Our suppliers are subject to the fluctuations in general economic cycles. Global economic conditions and trade policies may impact their ability to operate their businesses. They may also be impacted by the increasing costs or availability of raw materials, labor and distribution, resulting in demands for less attractive contract terms or an inability for them to meet our requirements or conduct their own businesses. The performance and financial condition of one or more suppliers may cause us to alter our business terms or to cease doing business with a particular supplier or suppliers, or change our sourcing practices generally, which could in turn adversely affect our business and financial condition. If we encounter problems with distribution, our ability to deliver our products to market could be adversely affected. Our operations are vulnerable to interruptions in the event of work stoppages, whether due to public health concerns, labor disputes or shortages, and natural disasters that may affect our distribution and transportation to job sites. Moreover, our distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to data and system security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. If we encounter problems with our distribution systems, our ability to meet customer and consumer expectations, manage inventory, manage transportation-related costs, complete sales and achieve operating efficiencies could be adversely affected.

Project management and installation issues could adversely affect our operating results

Some of our segments are occasionally awarded fixed-price contracts that do not include escalation clauses on material and labor costs. These bids are required before all aspects of a construction project are known. An underestimate in the amount of labor required and/or cost of materials for a project; a change in the timing of the delivery of product; system design errors; difficulties or errors in execution; or significant project delays, caused by us or other trades, could result in failure to achieve the expected results. Any one or more of such issues could result in losses on individual contracts that could negatively impact our operating results.

Information technology failures and cybersecurity threats could adversely affect our operations and/or our reputation

We rely on information technology systems, some of which are managed by third parties, to process, transmit, and store electronic information and to support critical business processes, including our manufacturing operations, financial systems, and data availability across the enterprise. The reliability and availability of these systems are essential to maintaining efficient operations and timely, accurate financial reporting. Disruptions to these systems—whether caused by cyber‑attacks, unauthorized access, system failures, human error, or third‑party service provider issues—could result in operational downtime, production disruptions, loss or unavailability of critical data, and increased costs, which could adversely affect our business and results of operations.

Our systems have in the past been, and may in the future be, subject to cyber‑attacks and other attempts to breach, damage, disrupt, or otherwise compromise our information technology infrastructure, none of which have been material to us in the last three fiscal years. Cyber threats continue to evolve in frequency and sophistication, including through the use of emerging technologies such as advanced forms of artificial intelligence. In addition, employee error, social engineering, and the use of non‑company‑managed networks in connection with remote or flexible work arrangements may increase the risk of unauthorized access to our systems or data.

A significant cybersecurity incident could lead to the compromise or loss of confidential business information, intellectual property, or personal data, disruption of manufacturing or financial operations, misstatement or unavailability of financial data, reputational harm, regulatory investigations, litigation, and the imposition of fines or penalties under applicable data privacy and security laws. We are subject to numerous cybersecurity, data protection, and privacy requirements imposed by law, regulation, and contract, and changes in these requirements—including regulations governing artificial intelligence and machine learning—could increase our compliance costs or otherwise adversely affect our business.

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While we maintain security measures and controls designed to reduce cybersecurity risks, including certain preventative and recovery measures and reliance on third‑party safeguards, these measures may not be effective in preventing all incidents. Any failure to maintain the confidentiality, integrity, security, and availability of our information technology systems or the data they process could materially adversely affect our business, operating results, and financial condition.

Legislative, Regulatory and Tax Risks

Changes in trade policies may result in increased costs and could adversely affect our operating results

The impact of geopolitical tensions, including the effects of changing trade policies and tariffs in the U.S. or countries where we sell our products and services or procure products, could have a material adverse effect on our business. In particular, political or trade disputes, or future phases of trade negotiations with Canada that could lead to the imposition of tariffs or other trade actions could require us to take further action to mitigate those effects. We may be unable to pass through additional tariff costs to our customers through price increases, and may be unable to secure adequate alternative sources of supply. Our inability to offset higher tariff costs could have a material adverse effect on our operating results, profitability, customer relationships and future cash flow.

Violations of legal and regulatory compliance requirements, including environmental laws, and changes in existing legal and regulatory requirements, may have a negative impact on our business and results of operations

We are subject to a legal and regulatory framework imposed under federal and state laws and regulatory agencies, including laws and regulations that apply specifically to U.S. public companies and laws and regulations applicable to our manufacturing and construction site operations. Our efforts to comply with evolving laws, regulations, and reporting standards, including climate-related regulations, may increase our general and administrative expenses, divert management time and attention, or limit our operational flexibility, all of which could have a material adverse effect on our business, financial position, and results of operations. Additionally, new laws, rules, and regulations, or changes to existing laws or their interpretations, could create added legal and compliance costs and uncertainty for us.

We use hazardous materials in our manufacturing operations, and have air and water emissions that require controls. Accordingly, we are also subject to federal, state, local and foreign environmental laws and regulations, including those governing the storage and use of hazardous materials and disposal of wastes. A violation of such laws and regulations, or a release of such substances, may expose us to various claims, including claims by third parties, as well as remediation costs and fines.

Product quality issues and product liability claims could adversely affect our operating results

We manufacture and/or install a significant portion of our products based on the specific requirements of each customer. We believe that future orders of our products or services will depend on our ability to maintain the performance, reliability, quality and timely delivery standards required by our customers. 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, and there is no certainty we will prevail on these claims. If our products have performance, reliability or quality problems, or products are installed using incompatible glazing materials or installed improperly (by us or a customer), we may experience additional warranty and other expenses; reduced or canceled orders; higher manufacturing or installation costs; or delays in the collection of accounts receivable. Additionally, product liability and warranty claims, including relating to the performance, reliability or quality of our products and services, could result in costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages that could negatively impact our operating results. There is also no assurance that the number and value of product liability and warranty claims will not increase as compared to historical claim rates, or that our warranty reserve at any particular time is sufficient. No assurance can be given that coverage under insurance policies, if applicable, will be adequate to cover future product liability claims against us. If we are unable to recover on insurance claims including through self insurance coverages, in whole or in part, or if we exhaust our available insurance coverage at some point in the future, then we might be forced to expend our own funds on legal fees and settlement or judgment costs, which could negatively impact our profitability, results of operations, cash flows and financial condition.

Our judgments regarding the accounting for tax positions and the resolution of tax disputes, as well as any changes in tax legislation may impact our net earnings and cash flow

Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria prescribed by applicable accounting standards. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and financial results. Additionally, we are subject to audits in the various taxing jurisdictions in which we conduct business. In cases where audits are conducted and issues are raised, a number of years may elapse before such issues are finally resolved. Unfavorable resolution of any tax matter could increase the

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effective tax rate, which could have an adverse effect on our operating results and cash flow. The impact of future tax legislation in the U.S. or abroad is always uncertain. Changes in such laws could adversely impact our effective income tax rate.

Financial Risks

Results can differ significantly from our expectations and the expectations of analysts, which could have an adverse effect on the market price of our common stock

From time to time, we may provide financial projections to our shareholders, lenders, investment community, and other stakeholders. Our projections are based on management’s best estimate utilizing prevailing business and economic conditions as well as other relevant information available at the time. These projections are highly subjective and are based upon a variety of factors that could change materially over time. As a result, our future actual results could vary materially from our projections which could have an adverse impact on the market price of our common stock.

Changes in macroeconomic factors may negatively impact our profitability

Rising interest rates, inflation, and higher input costs, could reduce the demand for our products and services and impact our profitability. Higher interest rates make it more expensive for our customers to finance construction projects, and as a result, may reduce the number of projects available to us and the demand for our products and services, and also increase the interest expenses associated with our borrowings. Cost inflation, including significant cost increases for freight, aluminum, glass, paint, wood-based and other materials used in our operations, has impacted, and could continue to impact, our profitability. Furthermore, in some of our segments, we operate on contracts wherein we bear part or all of the risk of inflation on materials costs and the cost of installation services. Our ability to mitigate these costs, or recover the cost increases through price increases, may lag the cost increases, which could negatively impact our margins.

We may experience further impairment of our goodwill, indefinite- and definite-lived intangible assets and long-lived assets, in the future, which could adversely impact our financial condition and results of operations

Our assets include a significant amount of goodwill, indefinite- and definite-lived intangible assets and long-lived assets. We evaluate goodwill and indefinite-lived intangible assets for impairment annually in our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. We evaluate definite-lived intangible assets and long-lived assets for impairment if events or changes in circumstances indicate that the carrying value of the long-lived asset may not be recoverable. The assessment of impairment involves significant judgment and projections about future performance.

The revenue and cash flow projections used in our annual impairment valuation analysis are 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 and we could incur a non-cash impairment expense that would negatively impact our financial condition and results of operations.

Failure to maintain effective internal controls over financial reporting could adversely impact our ability to timely and accurately report financial results and comply with our reporting obligations, which could materially affect our business

Regardless of how internal financial reporting control systems are designed, implemented, and enforced, they cannot ensure with absolute certainty that our internal control objectives will be met in every instance. Because of the inherent limitations of all such systems, our internal controls over financial reporting may not always prevent or detect misstatements. Failure to maintain effective internal control over financial reporting could adversely affect our ability to accurately and timely report financial results, to prevent or detect fraud, or to comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002, which could necessitate a restatement of our financial statements, and/or result in an investigation, or the imposition of sanctions, by regulators. Such failure could additionally expose us to litigation and/or reputational harm, impair our ability to obtain financing, or increase the cost of any financing we obtain. All of these impacts could adversely affect the price of our common stock and our business overall.

Our liquidity or cost of capital may be materially adversely affected by constraints or changes in the capital and credit markets, interest rates and limitations under our financing arrangements

We need sufficient sources of liquidity to fund our working capital requirements, service our outstanding indebtedness and finance business opportunities. Without sufficient liquidity, we could be forced to curtail our operations, or we may not be able to pursue business opportunities. The principal sources of our liquidity are funds generated from operating activities, available cash, credit facilities, and other debt arrangements. If our sources of liquidity do not satisfy our requirements, we may need to seek additional financing. The future availability of financing will depend on a variety of factors, such as economic and market conditions, the regulatory environment for banks and other financial institutions, the availability of credit and our reputation with potential lenders. These factors could materially adversely affect our liquidity, costs of borrowing and our ability to pursue business opportunities or grow our business.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist the reader in understanding our financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, and is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes in Item 8. Financial Statements and Supplementary Data in this Form 10-K.

Additional information about results of operations and financial condition for fiscal 2025 and 2024 (including the detailed discussion of the prior fiscal year 2025 to 2024 year-over-year changes) can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections in our Annual Report on Form 10-K for the year ended March 1, 2025.

Overview

We are a leading provider of architectural products and services for enclosing buildings, and high-performance coating products used in applications for preservation, protection and enhanced viewing. Our four reporting segments are: Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces.

On October 31, 2025, the Company announced the separation of its Chief Executive Officer. In connection with this separation agreement, the Board of Directors approved the accelerated vesting of certain outstanding unvested restricted stock awards and performance share unit awards previously granted. See Note 13 to our Consolidated Financial Statements for additional information.

In the first quarter of fiscal 2026, we announced Project Fortify Phase 2 to drive cost efficiencies, primarily in the Architectural Metals, Architectural Services and Corporate Segments. An extension of Phase 2 was announced on January 7, 2026 to drive additional cost savings in Architectural Metals and Corporate. Phase 2 focused on further optimizing our operating footprint and aligning resources to enable a more effective operating model. The actions of Phase 2 resulted in $27.4 million of pre-tax charges and are expected to deliver annualized pre-tax cost savings of approximately $26 million. The actions associated with Phase 2 were substantially completed in the fourth quarter of fiscal 2026. See Note 18 to our Consolidated Financial Statements for additional information.

As a result of a March 2025 appellate court decision confirming a December 2022 arbitration award, the Company paid the arbitration award, including accrued post-judgment interest, in the amount of $24.7 million, on April 7, 2025. As a result of the decision, we recorded expense of $9.4 million, which represents the impact of the award amount net of existing reserves and estimated insurance proceeds. This impact was recorded in cost of goods sold in the fourth quarter of fiscal 2025. See Note 10 to our Consolidated Financial Statements for additional information.

During the third quarter of fiscal 2025, we acquired UW Solutions for $240.9 million. UW Solutions is a U.S. based, vertically integrated manufacturer of high-performance coated substrates, differentiated by its proprietary formulations and coating application processes. The business serves a broad range of customers in attractive end markets, including building products for distribution centers and manufacturing facilities, as well as premium products for the graphic arts market. See Note 17 to our Consolidated Financial Statements for additional information.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with U.S. GAAP, we also provide certain non-GAAP financial measures. These measures are not in accordance with, nor are they a substitute for U.S. GAAP measures, and may not be comparable to similarly titled measures used by other companies. For each of these non-GAAP measures, we provide a reconciliation of the differences between the non-GAAP measure and the most directly comparable GAAP measure, (see "Reconciliation of Non-GAAP Financial Measures" in this Item 7), and an explanation of why we believe the non-GAAP measure provides useful information to management and investors.

Non-GAAP measures include:

• Adjusted net earnings and adjusted earnings per diluted share (adjusted diluted EPS), used by the Company to assess performance on a more comparable basis from period-to-period by excluding amounts that management does not consider part of core operating results.

• Adjusted EBITDA, defined as adjusted net earnings before interest, taxes, depreciation, and amortization, and adjusted EBITDA margin, defined as adjusted EBITDA as a percentage of net sales. We use adjusted EBITDA and adjusted EBITDA margin to assess segment performance and make decisions about the allocation of operating and capital resources by analyzing recent results, trends, and variances of each segment in relation to forecasts and historical performance.

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Management uses these measures to evaluate the Company’s historical and prospective financial performance, measure operational profitability on a consistent basis, as a factor in determining executive compensation, and to provide enhanced transparency to the investment community.

Results of Operations

The following tables provide various components of our operations for fiscal years 2026, 2025 and 2024 and percentages reflecting annual changes in such amounts and as a percentage of net sales in each fiscal year.

Our fiscal year ends on the Saturday closest to the last day of February. Fiscal 2026 and fiscal 2025 each consisted of 52 weeks, while fiscal 2024 consisted of 53 weeks.

% Change

(Dollars in thousands)

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Operating income

Interest expense, net

Other (income) expense, net

Earnings before income taxes

Income tax expense

Net earnings

Diluted earnings per share

N/M - Indicates calculation is not meaningful

(Percentage of net sales)

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Operating income

Interest expense, net

Other (income) expense, net

Earnings before income taxes

Income tax expense

Net earnings

Effective income tax rate

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The following table summarizes the changes in net sales from fiscal 2025 to fiscal 2026.

(In thousands, except percentages)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Intersegment eliminations

Consolidated

Fiscal 2025 net sales

Organic business (1)

Acquisition (2)

Fiscal 2026 net sales

Total net sales growth (decline)

Organic business (1)

Acquisition (2)

Organic business is defined as (declines) growth in net sales from legacy businesses and from acquired businesses, twelve months after the acquisition date.

On November 4, 2024, we completed the acquisition of UW Solutions. For additional information see Note 17 to the accompanying Consolidated Financial Statements.

Comparison of Fiscal 2026 to Fiscal 2025

• Consolidated net sales were $1.40 billion compared to $1.36 billion, an increase of 3.2%, primarily driven by $65.3 million of inorganic sales contribution from the acquisition of UW Solutions in the Performance Surfaces Segment. This was partially offset by lower volume, primarily as a result of lower demand, primarily in the Architectural Glass and Metals Segments.

• Gross margin decreased to 22.7% of net sales, compared to 26.4%, primarily due to higher aluminum costs, impacts from lower volume, and higher health insurance costs, partially offset productivity improvements including savings from Project Fortify 2 and lower risk-based insurance and incentive compensation expense. Additionally, fiscal 2025 gross margin was impacted by a non-recurring $9.4 million arbitration award expense.

• SG&A expense decreased $6.8 million to 16.7% of net sales, compared to 17.8% of net sales. The decrease was primarily due to lower incentive compensation expense, lower acquisition related expenses, and benefits from cost savings of Fortify Phase 2, partially offset by increased amortization associated with the UW Solutions transaction.

• Operating income was $84.5 million and operating margin declined to 6.0%, compared to 8.7% in the prior year.

• Interest expense, net was $14.0 million, compared to $6.2 million, primarily driven by a higher average debt balance resulting from the acquisition of UW Solutions.

• Other income was $7.0 million, compared to $0.6 million, driven by a $6.7 million gain from settling a New Markets Tax Credit transaction.

• Income tax expense as a percentage of earnings before income tax was 30.1%, compared to 24.4% for fiscal 2025. The increase in the effective tax rate was primarily due to an increase in tax expense on discrete items in fiscal year 2026.

• Diluted EPS was $2.52, compared to $3.89.

Segment Analysis

Disclosures related to our business segments are included in Note 16 of our Consolidated Financial Statements. We manage our business in four reportable segments: Architectural Metals, Architectural Services, Architectural Glass and Performance Surfaces.

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The following table presents net sales, adjusted EBITDA and adjusted EBITDA margin by segment and the consolidated total.

% Change

(Dollars in thousands)

Segment net sales

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Total segment sales

Intersegment eliminations

Net sales

Segment adjusted EBITDA

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Corporate and Other

Adjusted EBITDA

Segment adjusted EBITDA margin

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Adjusted EBITDA margin

Architectural Metals

Comparison of Fiscal 2026 to Fiscal 2025

• Net sales were $504.0 million, compared to $524.7 million, due to lower volume, partially offset by favorable price.

• Adjusted EBITDA was $54.1 million, or 10.7% of net sales, compared to $70.6 million, or 13.5% of net sales. The decline in Adjusted EBITDA margin was primarily driven by inflation, including higher aluminum costs, and the impact of lower volume, partially offset by pricing, cost savings from Project Fortify Phase 2 and lower incentive compensation costs.

Architectural Services

Comparison of Fiscal 2026 to Fiscal 2025

• Net sales were $439.2 million, compared to $419.9 million. The increase in net sales was driven by increased volume, partially offset by unfavorable project mix and lower pricing.

• Adjusted EBITDA was $30.9 million, or 7.0% of net sales, compared to $33.5 million, or 8.0% of net sales. The decline in Adjusted EBITDA margin was primarily due to the impact of unfavorable project mix, lower price, and direct tariff expenses, partially offset by the impact of increased volume and lower incentive compensation costs.

• For the years ended February 28, 2026 and March 1, 2025, gross favorable and unfavorable cumulative catch-up adjustments on our longer-term contracts for changes in estimates were as follows:

(in thousands)

Gross favorable adjustments

Gross unfavorable adjustments

Net adjustments

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Architectural Glass

Comparison of Fiscal 2026 to Fiscal 2025

• Net sales were $283.7 million, compared to $322.2 million. The decrease in net sales was primarily driven by lower volume and price due to lower end-market demand.

• Adjusted EBITDA was $45.7 million, or 16.1% of net sales, compared to $71.7 million, or 22.2% of net sales. The decline in Adjusted EBITDA margin was primarily driven by the impact from lower volume and price, and higher manufacturing costs, partially offset by lower incentive compensation costs.

Performance Surfaces

Comparison of Fiscal 2026 to Fiscal 2025

• Net sales were $198.0 million, compared to $122.1 million. The increase was driven by $65.3 million of inorganic sales contribution from the acquisition of UW Solutions, and higher volume and price.

• Adjusted EBITDA was $41.6 million, or 21.0% of net sales, compared to $30.9 million, or 25.3% of net sales. The decline in Adjusted EBITDA margin was primarily driven by higher manufacturing costs and the dilutive effect of lower adjusted EBITDA margin from the UW Solutions acquisition, partially offset by favorable product mix and price.

Corporate and Other

Comparison of Fiscal 2026 to Fiscal 2025

• Corporate and Other Adjusted EBITDA expense was $5.0 million, compared to $14.0 million. The decline in Corporate expense was primarily due to lower incentive compensation and risk-related insurance costs, partially offset by higher health insurance costs.

Backlog

Backlog is defined as the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which is expected to be recognized as revenue. Backlog is an operating measure used by management to assess future potential sales revenue. Backlog is not a term defined under GAAP and is not a measure of contract profitability. Backlog should not be used as the sole indicator of future revenue because we have a substantial number of projects with short lead times that book-and-bill within the same reporting period that are not included in backlog.

As of fiscal 2026 year-end, backlog in the Architectural Services Segment was $693.8 million, compared to $720.3 million at the end of the prior year.

Reconciliations of Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Twelve Months Ended February 28, 2026

(In thousands) (Unaudited)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Corporate and Other

Consolidated

Net earnings (loss)

Interest expense (income), net

Income tax (benefit) expense

Depreciation and amortization

EBITDA

Acquisition-related costs (1)

Restructuring costs (2)

CEO transition costs (3)

NMTC settlement gain (4)

Adjusted EBITDA

EBITDA margin

Adjusted EBITDA margin

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Twelve Months Ended March 01, 2025

(In thousands) (Unaudited)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Corporate and Other

Consolidated

Net earnings (loss)

Interest expense (income), net

Income tax expense (benefit)

Depreciation and amortization

EBITDA

Acquisition-related costs (1)

Restructuring costs (2)

Impairment expense (5)

Arbitration award expense (6)

Adjusted EBITDA

EBITDA margin

Adjusted EBITDA margin

Acquisition-related costs include one-time expenses incurred to integrate the UW Solutions acquisition and excludes $2.3 million of backlog amortization added back as part of depreciation and amortization above.

Restructuring costs related to Project Fortify. Costs incurred in fiscal year 2025 were associated with Phase 1 and costs incurred in fiscal year 2026 are associated with Phase 2, including $11.5 million of asset impairment charges in fiscal 2026.

Transition costs related to departure of Chief Executive Officer during the third quarter of fiscal 2026.

Gain related to the settlement of a New Markets Tax Credit transaction.

Impairment expense on intangible assets in the Architectural Metals Segment.

Expense related to an arbitration award, which represents the impact of the award amount net of existing reserves and estimated insurance proceeds.

Adjusted net earnings and adjusted diluted earnings per share

Twelve Months Ended

(In thousands) (Unaudited)

February 28, 2026

March 1, 2025

Net earnings

Acquisition-related costs (1)

Restructuring costs (2)

CEO transition costs (3)

NMTC settlement gain (4)

Impairment expense (5)

Arbitration award expense (6)

Income tax impact on above adjustments (7)

Adjusted net earnings

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Twelve Months Ended

(Shares in thousands) (Unaudited)

February 28, 2026

March 1, 2025

Diluted earnings per share

Acquisition-related costs (1)

Restructuring costs (2)

CEO transition costs (3)

NMTC settlement gain (4)

Impairment expense (5)

Arbitration award expense (6)

Income tax impact on above adjustments (7)

Adjusted diluted earnings per share

Weighted average diluted shares outstanding

Acquisition-related costs include one-time expenses incurred to integrate the UW Solutions acquisition.

Restructuring costs related to Project Fortify. Costs incurred in fiscal year 2025 were associated with Phase 1 and costs incurred in fiscal year 2026 are associated with Phase 2, including $11.5 million of asset impairment charges in fiscal 2026.

Transition costs related to departure of Chief Executive Officer during the third quarter of fiscal 2026.

Gain related to the settlement of a New Market Tax Credit transaction.

Impairment expense on intangible assets in the Architectural Metals Segment.

Expense related to an arbitration award, which represents the impact of the award amount net of existing reserves and estimated insurance proceeds.

Income tax impact reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred.

Liquidity and Capital Resources

We rely on cash provided by operations for our material cash requirements, including working capital needs, capital expenditures, satisfaction of contractual commitments (including principal and interest payments on our outstanding indebtedness) and shareholder return through dividend payments and share repurchases.

Operating Activities. Net cash provided by operating activities was $122.5 million, compared to $125.2 million. . The decline in cash provided by operating activities was driven by reduced net earnings, partially offset by a reduction in cash used for working capital.

Investing Activities. Net cash used by investing activities was $30.5 million, compared to $265.9 million. In fiscal 2026, cash was primarily used to fund capital expenditures of $27.3 million, while in fiscal 2025, cash was primarily used to fund the acquisition of UW Solutions for $232.2 million, in addition to funding capital expenditures of $35.6 million.

Financing Activities. Net cash used by financing activities was $96.2 million in fiscal 2026, compared to $146.0 million of net cash provided by financing activities in fiscal 2025. The use of cash in fiscal 2026 was primarily for net repayment of debt compared to obtaining debt funding in fiscal 2025 to support the acquisition of UW Solutions. Net cash used to repurchase common stock was $15.0 million and $45.4 million for fiscal 2026 and fiscal 2025, respectively.

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

On July 19, 2024, we entered into a Credit Agreement (the Credit Agreement) with Bank of America, N.A., as administrative agent, and other lenders. The Credit Agreement provides for an unsecured senior credit facility in an aggregate principal amount of up to $700.0 million, in which commitments were made through a $450.0 million, five-year revolving credit facility and a committed $250.0 million delayed draw term loan facility. Borrowings under the revolving credit facility can be in Canadian dollars (CAD) limited to $25.0 million USD. The term loan facility may be utilized in up to two draw downs, which are available to be made within one year after the closing date. The senior credit facility has a term of five years with a maturity date of July 19, 2029.

The Credit Agreement replaces the previous revolving credit facility with Wells Fargo Bank, N.A., as administrative agent, and other lenders, with maximum borrowings up to $385.0 million, and the two Canadian credit facilities with Bank of Montreal totaling $25.0 million USD.

The Credit Agreement contains two maintenance financial covenants that require our Consolidated Leverage Ratio (as defined in the Credit Agreement) to be less than 3.50 and our Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) to exceed 3.00. At February 28, 2026, we were in compliance with all covenants as defined under the terms of the Credit Agreement.

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The Credit Agreement also contains an acquisition "holiday." In the event we make an acquisition for which the purchase price is greater than $75 million, we can elect to increase the maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) to 4.00 for a period of four consecutive fiscal quarters, commencing with the fiscal quarter in which a qualifying acquisition occurs. No more than two acquisition holidays can occur during the term of the Credit Agreement, and at least two fiscal quarters must separate qualifying acquisitions.

Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term Secured Overnight Financing Rate (SOFR), or, for CAD borrowings, Canadian Overnight Repo Rate Average (CORRA) plus a margin based on the Consolidated Leverage Ratio (as defined in the Credit Agreement). For Base Rate borrowings, the margin ranges from 0.25% to 0.75%. For Term SOFR and CORRA borrowings, the margin ranges from 1.25% to 1.75%, with an incremental Term SOFR and CORRA adjustment of 0.10% and 0.29547%.

The Credit Agreement also contains an "accordion" provision. Under this provision, we can request that the senior credit facility be increased unlimited additional amounts. Any lender may elect or decline to participate in the requested increase at their sole discretion.

As of February 28, 2026, outstanding borrowings under the term loan facility were $212.3 million and outstanding borrowings under the revolving credit facility were $20.0 million. As of March 1, 2025, outstanding borrowings under the term loan and credit facility were $215.0 million and $70.0 million, respectively. Outstanding borrowings under the previous revolving credit facility were $50.0 million as of March 2, 2024. We had no outstanding borrowings under the Canadian facilities as of March 2, 2024.

At March 2, 2024, debt included $12.0 million of industrial revenue bonds. We had no outstanding industrial revenue bonds as of February 28, 2026, or March 1, 2025, as in the fourth quarter of fiscal 2025 we paid the remaining balance of these bonds, including principal and interest outstanding, without penalty.

At February 28, 2026, we had a total of $2.6 million of ongoing letters of credit that expire in fiscal year 2027 and reduce borrowing capacity under the revolving credit facility. As of February 28, 2026, the amount available for revolving borrowings was $427.4 million.

We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. Future payments for such leases, excluding leases with initial terms of one year or less, were $60.8 million at February 28, 2026, with $15.8 million payable within the next 12 months. See Note 8 to our Consolidated Financial Statements for further detail surrounding our lease obligations and the timing of expected future payments.

As of February 28, 2026, we had $15.1 million of open purchase obligations, primarily related to raw material commitments, of which payments totaling $9.3 million are expected to become due within the next 12 months.

As of February 28, 2026, we had reserves of $4.1 million for long-term unrecognized tax benefits. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits will ultimately be settled.

We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance. At February 28, 2026, $267.5 million of our backlog was bonded by performance bonds with a face value of $1.3 billion. These bonds have expiration dates that align with completion of the purchase order or contract. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

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

We continually review our portfolio of businesses and their assets and how they support our business strategy and performance objectives. As part of this review, we may acquire other businesses, pursue geographic expansion, take actions to manage capacity and further invest in, divest and/or sell parts of our current businesses.

Recently Issued Accounting Pronouncements

See Note 1 to our Consolidated Financial Statements in Item 8 of this Form 10-K for information pertaining to recently issued accounting pronouncements, incorporated herein by reference.

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Critical Accounting Policies and Estimates

Our analysis of operations and financial condition is based on our consolidated financial statements prepared in accordance with GAAP. Preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements, reported amounts of revenues and expenses during the reporting period and related disclosures of contingent assets and liabilities. Our estimates are evaluated on an ongoing basis and are drawn from historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results could differ under other assumptions or circumstances.

We consider the following items in our consolidated financial statements to require significant estimation or judgment.

Revenue recognition

We generate revenue from the design, engineering and fabrication of architectural glass, curtainwall, window, storefront and entrance systems, and from installing those products on non-residential buildings. We also manufacture value-added glass, acrylic, and industrial flooring products. Due to the diverse nature of our operations and various types of contracts with customers, we have businesses that recognize revenue over time and businesses that recognize revenue at a point in time. We believe the most significant areas of estimation and judgment are related to our businesses that recognize revenue using the over-time input method.

Approximately 35% of our total revenue in fiscal 2026 was from longer-term, fixed-price contracts, which are primarily in our Architectural Services Segment. The contracts in this segment have a single, bundled performance obligation, as this business generally provides interrelated products and services and integrates these products and services into a combined output specified by the customer. The customer obtains control of this combined output over time. We measure progress on these contracts following an input method, by comparing total costs incurred to-date to the total estimated costs for the contract, and record that proportion of the total contract price as revenue in the period. Contract costs include materials, labor and other direct costs related to contract performance. We believe this method of recognizing revenue is consistent with our progress in satisfying our contract obligations.

Due to the nature of the work required under these long-term contracts, the estimation of total costs remaining to complete on a project is subject to many variables and requires significant judgment. It is common for these contracts to contain potential bonuses or penalties which are generally awarded or charged upon certain project milestones or cost or timing targets, and can be based on customer discretion. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on our assessments of anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Long-term contracts are often modified to account for changes in contract specifications and requirements of work to be performed. We consider contract modifications to exist when the modification, generally through a change order, either creates new or changes existing enforceable rights and obligations, and we evaluate these types of modifications to determine whether they may be considered distinct performance obligations. In many cases, these contract modifications are for goods or services that are not distinct from the existing contract, due to the significant integration service provided in the context of the contract. Therefore, these modifications are generally accounted for as part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress is recognized as an adjustment to revenue, generally on a cumulative catch-up basis.

Due to the significant judgments utilized in our revenue recognition on long-term contracts, if subsequent actual results and/or updated assumptions, estimates, or projections were to materially change from those utilized at February 28, 2026, our results of operations in the future could be materially impacted.

Goodwill and indefinite-lived intangible asset valuation

Goodwill

We evaluate goodwill for impairment annually on the first day in our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. A reporting unit is an operating segment, or a component of an operating segment, for which discrete financial information is available and reviewed by segment management on a regular basis. The reporting units for our fiscal 2026 annual impairment test align with our Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces Segments.

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For the fiscal 2026 impairment test, we elected to bypass the qualitative assessment process and proceeded directly to comparing the estimated fair value of each of our reporting units to carrying value, including goodwill. If fair value exceeds the carrying value, goodwill impairment is not indicated. If the carrying amount of a reporting unit is higher than its estimated fair value, the excess is recognized as an impairment expense.

We estimate the fair value of a reporting unit using both the income approach and the market approach. The income approach uses a discounted cash flow methodology that involves significant judgment and projections of future performance. Assumptions about future revenues and future operating expenses, capital expenditures and changes in working capital are based on the annual operating plan and other business plans 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 projections are discounted using a weighted-average cost of capital, which considers the risk inherent in our projections of future cash flows. We determine the weighted-average cost of capital for this analysis by weighting the required returns on interest-bearing debt and common equity capital in proportion to their estimated percentages in an expected capital structure, using published data where possible. We used discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and in the internally developed forecasts. The market approach uses a multiple of earnings and revenue based on publicly traded companies.

Based on these analyses, estimated fair value exceeded carrying value at all of our reporting units. The discounted cash flow projections used in these analyses are 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 our reporting units and we could incur non-cash impairment expense that would negatively impact our net earnings. For example, keeping all other assumptions constant, a 100 basis point increase in the weighted average cost of capital would cause the estimated fair values of our reporting units to decrease in the range of $9 million to $39 million. In addition, keeping all other assumptions constant, a 100 basis point reduction in the long-term growth rate would cause the estimated fair values of our reporting units to decrease in the range of $11 million to $18 million. Given the amounts by which the fair value exceeds the carrying value for each of our reporting units, the decreases in estimated fair values described above would not have significantly impacted the results of our impairment tests.

Indefinite-lived intangible assets

We have intangible assets for certain acquired trade names and trademarks which we have determined to have indefinite useful lives. We evaluate the reasonableness of the useful lives and test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

For our fiscal 2026 annual impairment test, we bypassed a qualitative assessment and performed a quantitative impairment test to compare the fair value of each indefinite-lived intangible asset with its carrying value. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment expense is recognized in an amount equal to that excess. If an impairment expense 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 estimation of 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 the fair value analysis, we assumed a discount rate of 13%, a royalty rate of 1.5%, and a long-term growth rate of 1.0%. Based on our annual analysis, the fair value of our indefinite-lived intangible assets exceeded carrying value.

We continue to conclude that the useful lives of our indefinite-lived intangible assets are appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, impairment could be indicated on these indefinite-lived intangible assets.

Reserves for disputes and claims regarding product liability, warranties and other project-related contingencies

We are subject to claims associated with our products and services, principally as a result of disputes with our customers involving the performance or aesthetics of our products, some of which may be covered under our warranty policies. 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. We also 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. The time period from when a claim is asserted to when it is resolved, either by negotiation, settlement or litigation, can be several years. While we maintain various types of product liability insurance, the insurance policies include significant self-retention of risk in the form of policy deductibles. In addition, certain claims could be

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determined to be uninsured. We also actively manage the risk of these exposures through contract negotiations and proactive project management.

We reserve estimated exposures on known claims, as well as on a portion of anticipated claims for product warranty and rework costs, based on similar historical product liability claims, as a ratio of sales. We also reserve for estimated exposures on other claims as they are known and reasonably estimable.

Income taxes

We are required to make judgments regarding the potential tax effects of various financial transactions and ongoing operations to estimate our obligation to taxing authorities. These tax obligations include income, real estate, franchise and sales/use taxes. Judgments related to income taxes require the evaluation and recognition in our financial statements that a tax position is more-likely-than-not to be sustained on audit.

Judgment and estimation is required in developing a provision for income taxes and recognizing tax-related assets and liabilities and, if necessary, any valuation allowances. The interpretation of tax laws can involve uncertainty, since tax authorities may interpret such laws differently. Actual income tax could vary from estimated amounts and may result in favorable or unfavorable impacts to net income, cash flows and tax-related assets and liabilities. In addition, the effective tax rate may be affected by other changes, including the allocation of property, payroll and revenues between states.

We assess deferred tax assets for recoverability taking into consideration historical and anticipated earnings levels; the reversal of other existing temporary differences; available net operating losses and tax carryforwards; and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and amount of, a valuation allowance against deferred tax assets. As facts and circumstances change, adjustment to the valuation allowance may be required.

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