Apogee Enterprises, Inc 10-Q for FY2022 Q1

Apogee Enterprises, Inc. (APOG)

10-Q 2021-07-01 For: 2021-05-29

Added on April 04, 2026

About this 10-Q

Apogee Enterprises, Inc filed this 10-Q on July 1, 2021, covering the quarter ended May 29, 2021 (FY2022 Q1).

Headline figures

Quarter ended May 29, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $326.01M; up 12.8% from $289.1M a year earlier
Net income: $10.82M; up 276.1% from net income of $2.88M a year earlier
Diluted EPS: $0.42; up 281.8% from $0.11 a year earlier

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		Page
PART I	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets	4

	Consolidated Results of Operations	5

	Consolidated Statements of Comprehensive Earnings	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Shareholders' Equity	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II	Other Information

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 6.	Exhibits	24

Signatures		25


(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

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


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


	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

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


	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 $— and $26 of tax expense, respectively	—		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)


	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)


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)



Other	557		(1,082)
Net cash used by investing activities	(4,148)		(9,688)
Financing Activities
Borrowings on line of credit	—		139,500

Payments on line of credit	—		(146,500)
Proceeds from exercise of stock options	4,115		—
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


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


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


(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 $— 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


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


(In thousands)	May 29, 2021
Within one year	$	464,123
Within two years	306,360
Beyond	84,478
Total	$	854,961


(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		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


(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	$	—	$	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	$	—	$	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)	Architectural Framing Systems		Architectural Glass		Architectural Services		Large-Scale Optical		Total
Balance at February 29, 2020	$	148,183	$	25,656	$	1,120	$	10,557	$	185,516
Adjustment (1)	6,315		—		—		—		6,315
Impairment expense	(63,769)		—		—		—		(63,769)
Foreign currency translation	2,370		(334)		—		—		2,036
Balance at February 27, 2021	93,099		25,322		1,120		10,557		130,098


Foreign currency translation	1,457		(94)		—		—		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)	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


(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


(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 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)	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


	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		%


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


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


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


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)


	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


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


3.1			Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year-ended February 28, 2004.)
3.2			Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on January 16, 2020.)
3.3#			Amended and Restated Bylaws of Apogee Enterprises, Inc.
4.1#			Specimen Stock Certificate.
10.1#			Stock Repurchase Agreement between Apogee Enterprises, Inc. and Joseph F. Puishys, dated May 26, 2021.
10.2			Form of Restricted Stock Agreement under the Apogee Enterprises, Inc. 2019 Stock Incentive Plan (April 2021 Updates). (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on April 26, 2021)
10.3			Form of Performance Award Agreement under the Apogee Enterprises, Inc. 2019 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on April 26, 2021)
10.4			Form of Executive Short-Term Incentive Plan Memorandum. (Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed on April 26, 2021)
10.5			Executive Short-Term Incentive Plan Terms and Conditions. (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed on April 26, 2021)
31.1#			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2#			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1#			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended May 29, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of May 29, 2021 and February 27, 2021, (ii) the Consolidated Results of Operations for the three-months ended May 29, 2021 and May 30, 2020, (iii) the Consolidated Statements of Comprehensive Earnings for the three-months ended May 29, 2021 and May 30, 2020, (iv) the Consolidated Statements of Cash Flows for the three-months ended May 29, 2021 and May 30, 2020, (v) the Consolidated Statements of Shareholders' Equity for the three-months ended May 29, 2021 and May 30, 2020, and (vi) Notes to Consolidated Financial Statements.
104			Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
			Exhibits marked with a (#) sign are filed herewith.


	APOGEE ENTERPRISES, INC.

Date: July 1, 2021	By: /s/ Ty R. Silberhorn
		Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer)


Date: July 1, 2021	By: /s/ Nisheet Gupta
		Nisheet Gupta Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)


			/s/ Ty R. Silberhorn
			Ty R. Silberhorn President and Chief Executive Officer


			/s/ Nisheet Gupta
			Nisheet Gupta Executive Vice President and Chief Financial Officer


/s/ Ty R. Silberhorn
Ty R. Silberhorn President and Chief Executive Officer
July 1, 2021