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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________ 
FORM 10-Q
 _________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 27, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 0-6365
_________________________________ 
APOGEE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
 _________________________________
Minnesota41-0919654
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
4400 West 78th Street, Suite 520MinneapolisMinnesota55435
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (952835-1874
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.33 1/3 per shareAPOGThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    o  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     x  Yes    o  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
  Accelerated filer
x
Non-accelerated filero  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes    x  No
As of January 3, 2022, 24,865,480 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.


Table of Contents
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
 
  
 Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.
3

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except stock data)November 27, 2021February 27, 2021
Assets
Current assets
Cash and cash equivalents$78,272 $47,277 
Receivables, net165,005 175,917 
Inventories75,437 72,823 
Costs and earnings on contracts in excess of billings28,323 29,497 
Other current assets19,837 25,160 
Total current assets366,874 350,674 
Property, plant and equipment, net254,838 298,443 
Assets held for sale9,256  
Operating lease right-of-use assets50,845 58,864 
Goodwill129,932 130,098 
Intangible assets123,553 130,053 
Other non-current assets46,793 46,967 
Total assets$982,091 $1,015,099 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable$80,995 $76,204 
Accrued payroll and related benefits48,017 50,125 
Billings on contracts in excess of costs and earnings18,458 22,789 
Operating lease liabilities11,834 13,251 
Current portion of debt1,000 2,000 
Other current liabilities57,586 53,183 
Total current liabilities217,890 217,552 
Long-term debt162,000 163,000 
Non-current operating lease liabilities43,608 48,439 
Non-current self-insurance reserves26,628 24,880 
Other non-current liabilities58,112 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 25,227,367 and 25,713,688 respectively
8,409 8,571 
Additional paid-in capital158,579 154,958 
Retained earnings336,816 357,243 
Accumulated other comprehensive loss(29,951)(28,027)
Total shareholders’ equity473,853 492,745 
Total liabilities and shareholders’ equity$982,091 $1,015,099 
See accompanying notes to consolidated financial statements.

4

Table of Contents
CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)
Three Months EndedNine Months Ended
(In thousands, except per share data)November 27, 2021November 28, 2020November 27, 2021November 28, 2020
Net sales$334,217 $313,583 $986,020 $922,162 
Cost of sales269,537 243,998 805,627 716,139 
Gross profit64,680 69,585 180,393 206,023 
Selling, general and administrative expenses46,970 19,835 149,709 126,590 
Operating income17,710 49,750 30,684 79,433 
Interest expense, net528 1,502 2,838 4,240 
Other (expense) income, net(3,057)472 (3,266)684 
Earnings before income taxes14,125 48,720 24,580 75,877 
Income tax expense3,068 11,447 4,821 18,070 
Net earnings$11,057 $37,273 $19,759 $57,807 
Earnings per share - basic $0.44 $1.44 $0.79 $2.22 
Earnings per share - diluted$0.44 $1.42 $0.78 $2.19 
Weighted average basic shares outstanding24,957 25,883 25,166 26,068 
Weighted average diluted shares outstanding25,309 26,225 25,459 26,350 
See accompanying notes to consolidated financial statements.

5

Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Unaudited)
Three Months EndedNine Months Ended
(In thousands)November 27, 2021November 28, 2020November 27, 2021November 28, 2020
Net earnings$11,057 $37,273 $19,759 $57,807 
Other comprehensive earnings (loss):
Unrealized (loss) gain on marketable securities, net of $(40), $0, $(39) and $39 of tax (benefit) expense, respectively
(151)(2)(147)145 
Unrealized (loss) gain on derivative instruments, net of $(265), $90, $(257) and $305 of tax (benefit) expense, respectively
(868)294 (842)997 
Foreign currency translation adjustments(2,515)899 (935)887 
Other comprehensive (loss) earnings(3,534)1,191 (1,924)2,029 
Total comprehensive earnings$7,523 $38,464 $17,835 $59,836 

See accompanying notes to consolidated financial statements.

6

Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
(In thousands)November 27, 2021November 28, 2020
Operating Activities
Net earnings$19,759 $57,807 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization38,353 38,000 
Share-based compensation4,807 6,163 
Deferred income taxes(5,412)5,012 
Asset impairment16,638  
Gain on disposal of assets(1,250)(19,346)
Noncash lease expense9,302 9,531 
Other, net3,009 (69)
Changes in operating assets and liabilities:
Receivables6,443 24,153 
Inventories(2,657)(2,722)
Costs and earnings on contracts in excess of billings1,168 44,501 
Accounts payable and accrued expenses5,440 (43,915)
Billings on contracts in excess of costs and earnings(4,474)(6,981)
Refundable and accrued income taxes5,255 12,424 
Operating lease liability(9,387)(9,168)
Other(703)5,122 
Net cash provided by operating activities86,291 120,512 
Investing Activities
Capital expenditures(13,070)(17,116)
Proceeds from sales of property, plant and equipment1,347 23,724 
Other76 (1,090)
Net cash (used) provided by investing activities(11,647)5,518 
Financing Activities
Borrowings on line of credit 193,332 
Repayments on debt(2,000)(5,400)
Payments on line of credit (237,500)
Proceeds from exercise of stock options4,115 1,456 
Repurchase and retirement of common stock(29,164)(20,731)
Dividends paid(15,050)(14,546)
Other (1,895)(2,309)
Net cash used by financing activities(43,994)(85,698)
Increase in cash and cash equivalents30,650 40,332 
Effect of exchange rates on cash345 129 
Cash, cash equivalents and restricted cash at beginning of year47,277 14,952 
Cash, cash equivalents and restricted cash at end of period$78,272 $55,413 
Noncash Activity
Capital expenditures in accounts payable$1,095 $684 
See accompanying notes to consolidated financial statements.

7

Table of Contents
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands)Common Shares OutstandingCommon StockAdditional Paid-In CapitalRetained EarningsCommon Stock Held in TrustDeferred Compensation ObligationAccumulated Other Comprehensive (Loss) IncomeTotal Shareholders' Equity
Balance at February 27, 202125,714 $8,571 $154,958 $357,243 $(186)$186 $(28,027)$492,745 
Net earnings— — — 10,817 — — — 10,817 
Unrealized gain on marketable securities, net of $0 tax expense
— — — — — — — — 
Unrealized gain on foreign currency hedge, net of $211 tax expense
— — — — — — 692 692 
Foreign currency translation adjustments— — — — — — 5,880 5,880 
Issuance of stock, net of cancellations90 30 (7)— (3)3 — 23 
Share-based compensation— — 1,674 — — — — 1,674 
Exercise of stock options179 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, 202125,606 $8,535 $158,341 $352,130 $(189)$189 $(21,455)$497,551 
Net loss— — — (2,116)— — — (2,116)
Unrealized gain on marketable securities, net of $2 tax expense
— — — — — — 4 4 
Unrealized loss on foreign currency hedge, net of $203 tax benefit
— — — — — — (666)(666)
Foreign currency translation adjustments— — — — — — (4,300)(4,300)
Issuance of stock, net of cancellations67 22  — (3)3 — 22 
Share-based compensation— — 1,587 — — — — 1,587 
Share repurchases(249)(83)(1,616)(8,095)— — — (9,794)
Other share retirements(30)(9)(197)(496)— — — (702)
Cash dividends— — — (5,025)— — — (5,025)
Balance at August 28, 202125,394 $8,465 $158,115 $336,398 $(192)$192 $(26,417)$476,561 
Net earnings— — — 11,057 — — — 11,057 
Unrealized loss on marketable securities, net of $40 tax benefit
— — — — — — (151)(151)
Unrealized loss on foreign currency hedge, net of $265 tax benefit
— — — — — — (868)(868)
Foreign currency translation adjustments— — — — — — (2,515)(2,515)
Issuance of stock, net of cancellations1  22 — (3)3 — 22 
Share-based compensation— — 1,546 — — — — 1,546 
Share repurchases(166)(55)(1,092)(5,598)— — — (6,745)
Other share retirements(2)(1)(12)(51)— — — (64)
Cash dividends— — — (4,990)— — — (4,990)
Balance at November 27, 202125,227 $8,409 $158,579 $336,816 $(195)$195 $(29,951)$473,853 






See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

(In thousands)Common Shares OutstandingCommon StockAdditional Paid-In CapitalRetained EarningsCommon Stock Held in TrustDeferred Compensation ObligationAccumulated Other Comprehensive (Loss) IncomeTotal Shareholders' Equity
Balance at February 29, 202026,443 $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 cancellations183 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, 202026,369 $8,790 $153,862 $382,225 $(696)$696 $(40,733)$504,144 
Net earnings— — — 17,658 — — — 17,658 
Unrealized gain on marketable securities, net of $13 tax expense
— — — — — — 50 50 
Unrealized gain on foreign currency hedge, net of $404 tax expense
— — — — — — 1,319 1,319 
Foreign currency translation adjustments— — — — — — 6,139 6,139 
Issuance of stock, net of cancellations121 41 (23)— (11)11 — 18 
Share-based compensation— — 2,256 — — — — 2,256 
Other share retirements(23)(8)(139)(390)— — — (537)
Cash dividends— — — (4,879)— — — (4,879)
Balance at August 29, 202026,467 $8,823 $155,956 $394,614 $(707)$707 $(33,225)$526,168 
Net earnings— — — 37,273 — — — 37,273 
Unrealized loss on marketable securities, net of $0 tax benefit
— — — — — — (2)(2)
Unrealized gain on foreign currency hedge, net of $90 tax expense
— — — — — — 294 294 
Foreign currency translation adjustments— — — — — — 899 899 
Issuance of stock, net of cancellations10 3 15 — 524 (524)— 18 
Share-based compensation— — 2,501 — — — — 2,501 
Exercise of stock options127 42 1,414 — — — — 1,456 
Share repurchases(620)(207)(3,781)(12,012)— — — (16,000)
Other share retirements(22)(7)(131)(331)— — — (469)
Cash dividends— — — (4,795)— — — (4,795)
Balance at November 28, 202025,962 $8,654 $155,974 $414,749 $(183)$183 $(32,034)$547,343 



See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Summary of Significant Accounting Policies

Basis of presentation
The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended February 27, 2021. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three- and nine-month periods ended November 27, 2021 are not necessarily indicative of the results to be expected for the full year.

COVID-19 update
During fiscal 2021, as a result of the global COVID-19 pandemic, we experienced some delays in commercial construction projects and orders and other disruptions to our business, including various physical distancing and health-related precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment for a portion of fiscal 2021 due to governmental orders. We were also impacted by quarantine-related absenteeism among our production workforce, resulting in labor constraints at some of our facilities. Through the first three quarters of fiscal 2022, the negative impacts on our business directly due to the COVID-19 pandemic have moderated. The extent to which COVID-19 will continue to impact our businesses in the future will depend on numerous evolving factors including, but not limited to, the emergence of new variants of the coronavirus, such as the Delta and Omicron variants, and the effectiveness of ongoing public health initiatives, which have been boosted by vaccine production and distribution.

Adoption of new accounting standards
At the beginning of fiscal 2022, we adopted the guidance in ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU removed exceptions on intra-period tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes. The adoption of this ASU did not have a significant impact on the consolidated financial statements.

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

Equity Investment
During the third quarter of fiscal 2022, an impairment of $3.0 million was recognized within other (expense) income within the consolidated results of operations related to a minority equity investment held by the Company which represents a write-down of the entire investment in the company.

2.Revenue, Receivables and Contract Assets and Liabilities

Revenue
The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):
Three Months EndedNine Months Ended
(In thousands)November 27, 2021November 28, 2020November 27, 2021November 28, 2020
Recognized at shipment$141,826 $129,132 $419,893 $379,292 
Recognized over time192,391 184,451 566,127 542,870 
Total$334,217 $313,583 $986,020 $922,162 

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
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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)November 27, 2021February 27, 2021
Trade accounts$124,890 $120,534 
Construction contracts16,266 12,163 
Contract retainage26,164 45,167 
Total receivables167,320 177,864 
Less: allowance for credit losses2,315 1,947 
Net receivables$165,005 $175,917 

The following table summarizes the activity in the allowance for credit losses:
(In thousands)November 27, 2021February 27, 2021
Beginning balance$1,947 $2,469 
Additions charged to costs and expenses635 389 
Deductions from allowance, net of recoveries(251)(887)
Other changes (1)
(16)(24)
Ending balance$2,315 $1,947 
      (1) Result of foreign currency effects

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

The time period between when performance obligations are complete and when payment is due is not significant. In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.
(In thousands)November 27, 2021February 27, 2021
Contract assets$54,487 $74,664 
Contract liabilities20,689 25,000 

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 disclosuresThree Months EndedNine Months Ended
(In thousands)November 27, 2021November 28, 2020November 27, 2021November 28, 2020
Revenue recognized related to contract liabilities from prior year-end$1,687 $2,044 $18,266 $16,239 
Revenue recognized related to prior satisfaction of performance obligations5,051 4,016 12,568 10,545 

Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that time frame. Generally, these contracts are found in our businesses that typically operate with long-term contracts, which recognize revenue over time. As of November 27, 2021, the transaction price associated with unsatisfied performance obligations was approximately $863.1 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
(In thousands)November 27, 2021
Within one year
$547,110 
Within two years
247,753 
Beyond68,209 
Total$863,072 
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3.Supplemental Balance Sheet Information

Inventories
(In thousands)November 27, 2021February 27, 2021
Raw materials$43,436 $36,681 
Work-in-process17,532 18,932 
Finished goods14,469 17,210 
Total inventories$75,437 $72,823 

Other current liabilities
(In thousands)November 27, 2021February 27, 2021
Warranties$10,889 $12,298 
Accrued project losses904 4,572 
Income and other taxes8,727 7,459 
Accrued self-insurance reserves9,431 6,482 
Accrued freight1,931 1,477 
Other25,704 20,895 
Total other current liabilities$57,586 $53,183 

Other non-current liabilities
(In thousands)November 27, 2021February 27, 2021
Deferred benefit from New Market Tax Credit transactions$9,165 $15,717 
Retirement plan obligations7,575 7,730 
Deferred compensation plan12,682 13,507 
Deferred tax liabilities4,773 8,310 
Deferred payroll taxes6,789 6,789 
Other17,128 16,430 
Total other non-current liabilities$58,112 $68,483 

4.Financial Instruments

Marketable securities
Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), we hold the following available-for-sale marketable securities, made up of municipal and corporate bonds: 
(In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated
Fair Value
November 27, 2021$12,337 $223 $33 $12,527 
February 27, 202112,517 386 10 12,893 

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

The amortized cost and estimated fair values of these bonds at November 27, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.
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(In thousands)Amortized CostEstimated Fair Value
Due within one year$1,011 $1,024 
Due after one year through five years9,536 9,716 
Due after five years through 10 years990 973 
Due beyond 15 years800 814 
Total$12,337 $12,527 

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

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

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign exchange rates (primarily related to the Canadian dollar). These contracts generally have an original maturity date of less than one year. As of November 27, 2021, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S. dollar notional values of $16.5 million and $8.0 million, respectively.

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

Fair value measurements
Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities.
(In thousands)Quoted Prices in
Active Markets
(Level 1)
Other Observable Inputs (Level 2)Total Fair Value
November 27, 2021