x | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Minnesota | 41-0919654 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
4400 West 78th Street – Suite 520, Minneapolis, MN | 55435 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o | |||
Emerging growth company | o | |||||
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. | o |
Page | ||
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
Item 1. | Financial Statements |
In thousands, except stock data | June 2, 2018 | March 3, 2018 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 21,620 | $ | 19,359 | ||||
Short-term available for sale securities | 2,394 | 423 | ||||||
Receivables, net of allowance for doubtful accounts | 185,543 | 211,852 | ||||||
Inventories | 77,299 | 80,908 | ||||||
Costs and earnings on contracts in excess of billings | 39,365 | 4,120 | ||||||
Refundable income taxes | 2,356 | 2,040 | ||||||
Other current assets | 15,573 | 17,576 | ||||||
Total current assets | 344,150 | 336,278 | ||||||
Property, plant and equipment, net | 304,350 | 304,063 | ||||||
Available for sale securities | 12,738 | 8,630 | ||||||
Goodwill | 187,034 | 180,956 | ||||||
Intangible assets | 161,964 | 167,349 | ||||||
Other non-current assets | 25,079 | 25,044 | ||||||
Total assets | $ | 1,035,315 | $ | 1,022,320 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 72,050 | $ | 68,416 | ||||
Accrued payroll and related benefits | 29,076 | 36,646 | ||||||
Accrued self-insurance reserves | 5,047 | 10,933 | ||||||
Billings on contracts in excess of costs and earnings | 24,381 | 12,461 | ||||||
Other current liabilities | 74,269 | 79,696 | ||||||
Total current liabilities | 204,823 | 208,152 | ||||||
Long-term debt | 214,540 | 215,860 | ||||||
Long-term self-insurance reserves | 18,720 | 16,307 | ||||||
Other non-current liabilities | 72,645 | 70,646 | ||||||
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 28,225,767 and 28,158,042 respectively | 9,409 | 9,386 | ||||||
Additional paid-in capital | 154,261 | 152,763 | ||||||
Retained earnings | 386,518 | 373,259 | ||||||
Common stock held in trust | (831 | ) | (922 | ) | ||||
Deferred compensation obligations | 831 | 922 | ||||||
Accumulated other comprehensive loss | (25,601 | ) | (24,053 | ) | ||||
Total shareholders’ equity | 524,587 | 511,355 | ||||||
Total liabilities and shareholders’ equity | $ | 1,035,315 | $ | 1,022,320 |
Three Months Ended | ||||||||
In thousands, except per share data | June 2, 2018 | June 3, 2017 | ||||||
Net sales | $ | 336,531 | $ | 272,307 | ||||
Cost of sales | 255,801 | 202,013 | ||||||
Gross profit | 80,730 | 70,294 | ||||||
Selling, general and administrative expenses | 58,735 | 46,188 | ||||||
Operating income | 21,995 | 24,106 | ||||||
Interest income | 230 | 167 | ||||||
Interest expense | 1,949 | 444 | ||||||
Other (expense) income, net | (22 | ) | 179 | |||||
Earnings before income taxes | 20,254 | 24,008 | ||||||
Income tax expense | 4,881 | 7,904 | ||||||
Net earnings | $ | 15,373 | $ | 16,104 | ||||
Earnings per share - basic | $ | 0.55 | $ | 0.56 | ||||
Earnings per share - diluted | $ | 0.54 | $ | 0.56 | ||||
Weighted average basic shares outstanding | 28,189 | 28,851 | ||||||
Weighted average diluted shares outstanding | 28,437 | 28,861 |
Three Months Ended | |||||||||
In thousands | June 2, 2018 | June 3, 2017 | |||||||
Net earnings | $ | 15,373 | $ | 16,104 | |||||
Other comprehensive earnings: | |||||||||
Unrealized gain on marketable securities, net of $2 and $33 of tax expense, respectively | 10 | 62 | |||||||
Unrealized loss on foreign currency hedge, net of $92 and $0 of tax benefit, respectively | (304 | ) | — | ||||||
Foreign currency translation adjustments | (517 | ) | (718 | ) | |||||
Other comprehensive earnings | (811 | ) | (656 | ) | |||||
Total comprehensive earnings | $ | 14,562 | $ | 15,448 |
Three Months Ended | ||||||||
In thousands | June 2, 2018 | June 3, 2017 | ||||||
Operating Activities | ||||||||
Net earnings | $ | 15,373 | $ | 16,104 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 14,050 | 11,423 | ||||||
Share-based compensation | 1,514 | 1,403 | ||||||
Deferred income taxes | 4,094 | 2,540 | ||||||
Other, net | (440 | ) | (1,223 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Receivables | 26,183 | 5,125 | ||||||
Inventories | 6,578 | (8,093 | ) | |||||
Costs and earnings on contracts in excess of billings | (35,258 | ) | 381 | |||||
Accounts payable and accrued expenses | (19,715 | ) | (30,736 | ) | ||||
Billings on contracts in excess of costs and earnings | 11,933 | 5,109 | ||||||
Refundable and accrued income taxes | 301 | 4,867 | ||||||
Other, net | 730 | (988 | ) | |||||
Net cash provided by operating activities | 25,343 | 5,912 | ||||||
Investing Activities | ||||||||
Capital expenditures | (9,327 | ) | (11,430 | ) | ||||
Proceeds from sales of property, plant and equipment | 706 | — | ||||||
Purchases of marketable securities | (8,619 | ) | (1,535 | ) | ||||
Sales/maturities of marketable securities | 2,495 | 3,220 | ||||||
Other, net | (1,485 | ) | 1,742 | |||||
Net cash used in investing activities | (16,230 | ) | (8,003 | ) | ||||
Financing Activities | ||||||||
Borrowings on line of credit | 90,000 | 37,000 | ||||||
Payments on line of credit | (92,000 | ) | (31,000 | ) | ||||
Shares withheld for taxes, net of stock issued to employees | (1,433 | ) | (1,596 | ) | ||||
Dividends paid | (4,410 | ) | (4,002 | ) | ||||
Other | 712 | — | ||||||
Net cash (used in) provided by financing activities | (7,131 | ) | 402 | |||||
Increase (decrease) in cash and cash equivalents | 1,982 | (1,689 | ) | |||||
Effect of exchange rates on cash | 279 | 47 | ||||||
Cash, cash equivalents and restricted cash at beginning of year | 19,359 | 27,297 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 21,620 | $ | 25,655 | ||||
Noncash Activity | ||||||||
Capital expenditures in accounts payable | $ | 2,162 | $ | 4,201 |
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 | ||||||||||||||||||||
Balance at March 3, 2018 | 28,158 | $ | 9,386 | $ | 152,763 | $ | 373,259 | $ | (922 | ) | $ | 922 | $ | (24,053 | ) | ||||||||||||
Cumulative effect adjustment (see Note 1) | — | — | — | 2,999 | — | — | — | ||||||||||||||||||||
Reclassification of tax effects (see Note 1) | — | — | — | 737 | — | — | (737 | ) | |||||||||||||||||||
Net earnings | — | — | — | 15,373 | — | — | — | ||||||||||||||||||||
Unrealized gain on marketable securities, net of $2 tax expense | — | — | — | — | — | — | 10 | ||||||||||||||||||||
Unrealized loss on foreign currency hedge, net of $92 tax benefit | — | — | — | — | — | — | (304 | ) | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | (517 | ) | |||||||||||||||||||
Issuance of stock, net of cancellations | 90 | 30 | 35 | — | 91 | (91 | ) | — | |||||||||||||||||||
Share-based compensation | — | — | 1,514 | — | — | — | — | ||||||||||||||||||||
Exercise of stock options | 19 | 6 | 177 | — | — | — | — | ||||||||||||||||||||
Other share retirements | (41 | ) | (13 | ) | (228 | ) | (1,440 | ) | — | — | — | ||||||||||||||||
Cash dividends | — | — | — | (4,410 | ) | — | — | — | |||||||||||||||||||
Balance at June 2, 2018 | 28,226 | $ | 9,409 | $ | 154,261 | $ | 386,518 | $ | (831 | ) | $ | 831 | $ | (25,601 | ) | ||||||||||||
Balance at March 4, 2017 | 28,680 | $ | 9,560 | $ | 150,111 | $ | 341,996 | $ | (875 | ) | $ | 875 | $ | (31,090 | ) | ||||||||||||
Net earnings | — | — | — | 16,104 | — | — | — | ||||||||||||||||||||
Unrealized gain on marketable securities, net of $33 tax expense | — | — | — | — | — | — | 62 | ||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | (718 | ) | |||||||||||||||||||
Issuance of stock, net of cancellations | 52 | 17 | 39 | — | (11 | ) | 11 | — | |||||||||||||||||||
Share-based compensation | — | — | 1,403 | — | — | — | — | ||||||||||||||||||||
Exercise of stock options | 100 | 33 | 800 | — | — | — | — | ||||||||||||||||||||
Other share retirements | (44 | ) | (14 | ) | (246 | ) | (2,226 | ) | — | — | — | ||||||||||||||||
Cash dividends | — | — | — | (4,002 | ) | — | — | — | |||||||||||||||||||
Balance at June 3, 2017 | 28,788 | $ | 9,596 | $ | 152,107 | $ | 351,872 | $ | (886 | ) | $ | 886 | $ | (31,746 | ) |
1. | Summary of Significant Accounting Policies |
• | We have made an accounting policy election to account for shipping and handling activities that occur after control of the related goods transfers to the customer as fulfillment activities, instead of assessing such activities as performance obligations. |
• | We have made an accounting policy election to exclude from the transaction price all sales taxes related to revenue producing transactions collected from the customer for a government authority. |
• | We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be less than one year. These costs primarily relate to sales commissions and are included in selling, general and administrative expenses. |
• | We have not adjusted contract price for a significant financing component, as we expect the period between when our goods and services are transferred to the customer and when the customer pays for those goods and services to be less than a year. |
In thousands | As reported | Balances without adoption of ASC 606 | ||||||
Consolidated results of operations | ||||||||
Net sales | $ | 336,531 | $ | 327,251 | ||||
Cost of sales | 255,801 | 248,657 | ||||||
Gross profit | 80,730 | 78,594 | ||||||
Selling, general and administrative expenses | 58,735 | 58,386 | ||||||
Operating income | $ | 21,995 | $ | 20,208 | ||||
Income tax expense | $ | 4,881 | $ | 4,451 | ||||
Net earnings | 15,373 | 14,016 | ||||||
Consolidated balance sheet | ||||||||
Inventories | $ | 77,299 | $ | 86,655 | ||||
Costs and earnings on contracts in excess of billings | 39,365 | 15,265 | ||||||
Billings on contracts in excess of costs and earnings | 24,381 | 24,124 | ||||||
Other current liabilities | 74,269 | 73,297 | ||||||
Retained earnings | 386,518 | 384,876 |
2. | Acquisitions |
In thousands | |||
Net working capital | $ | 1,422 | |
Property, plant and equipment | 44,641 | ||
Goodwill | 90,429 | ||
Other intangible assets | 71,500 | ||
Less: Long-term liabilities acquired, net | 17,643 | ||
Net assets acquired | $ | 190,349 |
In thousands | Estimated fair value | Estimated useful life (in years) | ||||
Customer relationships | $ | 34,800 | 16 | |||
Tradename | 32,400 | Indefinite | ||||
Backlog | 4,300 | 1.5 | ||||
$ | 71,500 |
Three Months Ended | ||||||||
In thousands, except per share data | June 2, 2018 | June 3, 2017 | ||||||
Net sales | $ | 336,531 | $ | 341,686 | ||||
Net earnings | 16,090 | 17,445 | ||||||
Earnings per share | ||||||||
Basic | 0.57 | 0.62 | ||||||
Diluted | 0.57 | 0.61 |
3. | Revenue, Receivables and Contract Assets and Liabilities |
In thousands | ||||
Recognized at shipment | $ | 156,867 | ||
Recognized over time | 179,664 | |||
Total | $ | 336,531 |
In thousands | 2019 | 2018 | ||||||
Trade accounts | $ | 143,572 | $ | 157,562 | ||||
Construction contracts | 15,436 | 26,545 | ||||||
Construction contracts - retainage | 27,924 | 26,388 | ||||||
Other receivables | — | 2,887 | ||||||
Total receivables | 186,932 | 213,382 | ||||||
Less: allowance for doubtful accounts | (1,389 | ) | (1,530 | ) | ||||
Net receivables | $ | 185,543 | $ | 211,852 |
In thousands | June 2, 2018 | March 3, 2018 | ||||
Contract assets | 67,289 | 30,508 | ||||
Contract liabilities | 31,462 | 20,120 |
In thousands | ||||
Within one year | $ | 448,500 | ||
Within two years | 232,000 | |||
Beyond | 33,850 | |||
Total | $ | 714,350 |
4. | Supplemental Balance Sheet Information |
In thousands | June 2, 2018 | March 3, 2018 | |||||
Raw materials | $ | 36,934 | $ | 35,049 | |||
Work-in-process | 19,032 | 17,406 | |||||
Finished goods | 21,333 | 28,453 | |||||
Total inventories | $ | 77,299 | $ | 80,908 |
In thousands | June 2, 2018 | March 3, 2018 | |||||
Warranties | 17,908 | 18,110 | |||||
Acquired contract liabilities | 25,599 | 26,422 | |||||
Taxes, other than income taxes | 5,614 | 5,342 | |||||
Deferred revenue | 7,081 | 7,659 | |||||
Other | 18,067 | 22,163 | |||||
Total other current liabilities | $ | 74,269 | $ | 79,696 |
In thousands | June 2, 2018 | March 3, 2018 | |||||
Deferred benefit from New Market Tax Credit transactions | $ | 16,708 | $ | 16,708 | |||
Retirement plan obligations | 9,635 | 8,997 | |||||
Deferred compensation plan | 11,646 | 10,730 | |||||
Other | 34,656 | 34,211 | |||||
Total other non-current liabilities | $ | 72,645 | $ | 70,646 |
5. | Financial Instruments |
In thousands | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||
June 2, 2018 | 15,250 | 8 | (126 | ) | 15,132 | ||||||
March 3, 2018 | 9,183 | 8 | (138 | ) | 9,053 |
In thousands | Amortized Cost | Estimated Fair Value | |||||
Due within one year | $ | 2,394 | $ | 2,394 | |||
Due after one year through five years | 7,039 | 6,980 | |||||
Due after five years through 10 years | 4,563 | 4,512 | |||||
Due after 10 years through 15 years | 240 | 240 | |||||
Due beyond 15 years | 1,014 | 1,006 | |||||
Total | $ | 15,250 | $ | 15,132 |
In thousands | Quoted Prices in Active Markets (Level 1) | Other Observable Inputs (Level 2) | Total Fair Value | ||||||||
June 2, 2018 | |||||||||||
Cash equivalents | |||||||||||
Money market funds | $ | 2,179 | $ | — | $ | 2,179 | |||||
Short-term securities | |||||||||||
Mutual funds | 2,273 | — | 2,273 | ||||||||
Municipal and corporate bonds | — | 121 | 121 | ||||||||
Total short-term securities | 2,273 | 121 | 2,394 | ||||||||
Long-term securities | |||||||||||
Municipal and corporate bonds | — | 12,738 | 12,738 | ||||||||
Total assets at fair value | $ | 4,452 | $ | 12,859 | $ | 17,311 | |||||
March 3, 2018 | |||||||||||
Cash equivalents | |||||||||||
Money market funds | $ | 2,901 | $ | — | $ | 2,901 | |||||
Commercial paper | — | 400 | 400 | ||||||||
Total cash equivalents | 2,901 | 400 | 3,301 | ||||||||
Short-term securities | |||||||||||
Municipal and corporate bonds | — | 423 | 423 | ||||||||
Long-term securities | |||||||||||
Municipal and corporate bonds | — | 8,630 | 8,630 | ||||||||
Total assets at fair value | $ | 2,901 | $ | 9,453 | $ | 12,354 |
6. | Goodwill and Other Identifiable Intangible Assets |
In thousands | Architectural Framing Systems | Architectural Glass | Architectural Services | Large-Scale Optical | Total | ||||||||||||||
Balance at March 4, 2017 | $ | 63,701 | $ | 25,956 | $ | 1,120 | $ | 10,557 | $ | 101,334 | |||||||||
Goodwill acquired | 84,162 | — | — | — | 84,162 | ||||||||||||||
Goodwill adjustments for purchase accounting | (5,859 | ) | — | — | — | (5,859 | ) | ||||||||||||
Foreign currency translation | 1,304 | 15 | — | — | 1,319 | ||||||||||||||
Balance at March 3, 2018 | 143,308 | 25,971 | 1,120 | 10,557 | 180,956 | ||||||||||||||
Goodwill adjustments for purchase accounting | 6,267 | — | — | — | 6,267 | ||||||||||||||
Foreign currency translation | (193 | ) | 4 | — | — | (189 | ) | ||||||||||||
Balance at June 2, 2018 | $ | 149,382 | $ | 25,975 | $ | 1,120 | $ | 10,557 | $ | 187,034 |
In thousands | Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation | Net | ||||||||||||
June 2, 2018 | ||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||
Customer relationships | $ | 122,816 | $ | (21,997 | ) | $ | (386 | ) | $ | 100,433 | ||||||
Debt issue costs | 4,516 | (3,326 | ) | — | 1,190 | |||||||||||
Other intangibles | 37,181 | (25,731 | ) | (98 | ) | 11,352 | ||||||||||
Total definite-lived intangible assets | 164,513 | (51,054 | ) | (484 | ) | 112,975 | ||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||
Trademarks | 49,077 | — | (88 | ) | 48,989 | |||||||||||
Total intangible assets | $ | 213,590 | $ | (51,054 | ) | $ | (572 | ) | $ | 161,964 | ||||||
March 3, 2018 | ||||||||||||||||
Definite-lived intangible assets: | ||||||||||||||||
Customer relationships | $ | 122,816 | $ | (20,277 | ) | $ | (56 | ) | $ | 102,483 | ||||||
Debt issue costs | 4,516 | (3,248 | ) | — | 1,268 | |||||||||||
Other intangibles | 37,181 | (22,631 | ) | (30 | ) | 14,520 | ||||||||||
Total definite-lived intangible assets | 164,513 | (46,156 | ) | (86 | ) | 118,271 | ||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||
Trademarks | 48,461 | — | 617 | 49,078 | ||||||||||||
Total intangible assets | $ | 212,974 | $ | (46,156 | ) | $ | 531 | $ | 167,349 |
In thousands | Remainder of Fiscal 2019 | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | ||||||||||||||
Estimated amortization expense | $ | 8,190 | $ | 8,177 | $ | 8,171 | $ | 8,014 | $ | 7,626 |
7. | Debt |
8. | Commitments and Contingent Liabilities |
In thousands | Remainder of Fiscal 2019 | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | Thereafter | Total | ||||||||||||||||||||
Total minimum payments | $ | 11,290 | $ | 13,021 | $ | 9,847 | $ | 7,663 | $ | 6,771 | $ | 17,389 | $ | 65,981 |
Three Months Ended | |||||||
In thousands | June 2, 2018 | June 3, 2017 | |||||
Balance at beginning of period | $ | 22,517 | $ | 21,933 | |||
Additional accruals | 1,062 | 1,240 | |||||
Claims paid | (1,193 | ) | (973 | ) | |||
Balance at end of period | $ | 22,386 | $ | 22,200 |
9. | Share-Based Compensation |
Stock options and SARs | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||
Outstanding at March 3, 2018 | 129,901 | $ | 11.10 | ||||||||||
Awards exercised | (29,560 | ) | 20.43 | ||||||||||
Outstanding and exercisable at June 2, 2018 | 100,341 | 8.34 | 3.2 years | $ | 3,570,133 |
Nonvested shares and units | Number of Shares and Units | Weighted Average Grant Date Fair Value | |||||
Nonvested at March 3, 2018 | 266,180 | $ | 49.22 | ||||
Granted | 88,103 | 42.02 | |||||
Vested | (101,121 | ) | 45.97 | ||||
Canceled | (1,500 | ) | 41.44 | ||||
Nonvested at June 2, 2018 | 251,662 | 47.99 |
10. | Employee Benefit Plans |
Three Months Ended | ||||||||
In thousands | June 2, 2018 | June 3, 2017 | ||||||
Interest cost | $ | 127 | $ | 133 | ||||
Expected return on assets | (10 | ) | (10 | ) | ||||
Amortization of unrecognized net loss | 57 | 57 | ||||||
Net periodic benefit cost | $ | 174 | $ | 180 |
11. | Income Taxes |
12. | Earnings per Share |
Three Months Ended | ||||||
In thousands | June 2, 2018 | June 3, 2017 | ||||
Basic earnings per share – weighted average common shares outstanding | 28,189 | 28,851 | ||||
Weighted average effect of nonvested share grants and assumed exercise of stock options | 248 | 10 | ||||
Diluted earnings per share – weighted average common shares and potential common shares outstanding | 28,437 | 28,861 | ||||
Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares) | 147 | — |
13. | Segment Information |
• | The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings. The Company has aggregated six operating segments into this reporting segment based on their similar products, customers, distribution methods, production processes and economic characteristics. |
• | The Architectural Glass segment fabricates coated, high-performance glass used in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings. |
• | The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings. |
• | The LSO segment manufactures value-added glass and acrylic products primarily for framing and display applications. |
Three Months Ended | ||||||||
In thousands | June 2, 2018 | June 3, 2017 | ||||||
Net sales from operations | ||||||||
Architectural Framing Systems | $ | 179,037 | $ | 110,492 | ||||
Architectural Glass | 76,925 | 97,735 | ||||||
Architectural Services | 70,727 | 50,150 | ||||||
Large-Scale Optical | 20,761 | 18,603 | ||||||
Intersegment eliminations | (10,919 | ) | (4,673 | ) | ||||
Net sales | $ | 336,531 | $ | 272,307 | ||||
Operating income (loss) from operations | ||||||||
Architectural Framing Systems | $ | 12,339 | $ | 11,964 | ||||
Architectural Glass | 1,579 | 9,322 | ||||||
Architectural Services | 5,155 | 782 | ||||||
Large-Scale Optical | 4,981 | 4,050 | ||||||
Corporate and other | (2,059 | ) | (2,012 | ) | ||||
Operating income | $ | 21,995 | $ | 24,106 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended | |||||
June 2, 2018 | June 3, 2017 | ||||
Net sales | 100.0 | % | 100.0 | % | |
Cost of sales | 76.0 | 74.2 | |||
Gross profit | 24.0 | 25.8 | |||
Selling, general and administrative expenses | 17.5 | 17.0 | |||
Operating income | 6.5 | 8.8 | |||
Interest and other (expense) income, net | (0.5 | ) | — | ||
Earnings before income taxes | 6.0 | 8.8 | |||
Income tax expense | 1.5 | 2.9 | |||
Net earnings | 4.5 | % | 5.9 | % | |
Effective tax rate | 24.1 | % | 32.9 | % |
Three Months Ended | ||||||||||
In thousands | June 2, 2018 | June 3, 2017 | % Change | |||||||
Net sales | $ | 179,037 | $ | 110,492 | 62.0 | % | ||||
Operating income | 12,339 | 11,964 | 3.1 | % | ||||||
Operating margin | 6.9 | % | 10.8 | % |
Three Months Ended | ||||||||||
In thousands | June 2, 2018 | June 3, 2017 | % Change | |||||||
Net sales | $ | 76,925 | $ | 97,735 | (21.3 | )% | ||||
Operating income | 1,579 | 9,322 | (83.1 | )% | ||||||
Operating margin | 2.1 | % | 9.5 | % |
Three Months Ended | ||||||||||
In thousands | June 2, 2018 | June 3, 2017 | % Change | |||||||
Net sales | $ | 70,727 | $ | 50,150 | 41.0 | % | ||||
Operating income | 5,155 | 782 | 559.2 | % | ||||||
Operating margin | 7.3 | % | 1.6 | % |
Three Months Ended | ||||||||||
In thousands | June 2, 2018 | June 3, 2017 | % Change | |||||||
Net sales | $ | 20,761 | $ | 18,603 | 11.6 | % | ||||
Operating income | 4,981 | 4,050 | 23.0 | % | ||||||
Operating margin | 24.0 | % | 21.8 | % |
Selected cash flow data | Three Months Ended | ||||||
In thousands | June 2, 2018 | June 3, 2017 | |||||
Operating Activities | |||||||
Net cash provided by operating activities | $ | 25,343 | $ | 5,912 | |||
Investing Activities | |||||||
Capital expenditures | (9,327 | ) | (11,430 | ) | |||
Net sales (purchases) of marketable securities | (6,124 | ) | 1,685 | ||||
Financing Activities | |||||||
Proceeds from issuance of debt | 90,000 | 37,000 | |||||
Payments on debt | (92,000 | ) | (31,000 | ) | |||
Dividends paid | (4,410 | ) | (4,002 | ) |
Payments Due by Fiscal Period | |||||||||||||||||||||||||||
In thousands | Remainder of Fiscal 2019 | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | Thereafter | Total | ||||||||||||||||||||
Long-term debt obligations | $ | 121 | $ | 121 | $ | 5,521 | $ | 195,835 | $ | 1,063 | $ | 12,000 | $ | 214,661 | |||||||||||||
Operating leases (undiscounted) | 11,290 | 13,021 | 9,847 | 7,663 | 6,771 | 17,389 | 65,981 | ||||||||||||||||||||
Purchase obligations | 133,636 | 50,265 | 1,230 | 1,230 | — | — | 186,361 | ||||||||||||||||||||
Total cash obligations | $ | 145,047 | $ | 63,407 | $ | 16,598 | $ | 204,728 | $ | 7,834 | $ | 29,389 | $ | 467,003 |
Three Months Ended | |||||||||||
In thousands, except per share data | June 2, 2018 | June 3, 2017 | % Change | ||||||||
Net earnings | $ | 15,373 | $ | 16,104 | (5 | )% | |||||
Amortization of short-lived acquired intangibles | 2,870 | 2,054 | 40 | % | |||||||
Acquisition-related costs | — | 680 | (100 | )% | |||||||
Income tax impact on above adjustments (1) | (692 | ) | (899 | ) | (23 | )% | |||||
Adjusted net earnings | $ | 17,551 | $ | 17,939 | (2 | )% | |||||
Earnings per diluted common share | $ | 0.54 | $ | 0.56 | (4 | )% | |||||
Amortization of short-lived acquired intangibles | 0.10 | $ | 0.07 | 43 | % | ||||||
Acquisition-related costs | — | $ | 0.02 | (100 | )% | ||||||
Income tax impact on above adjustments (1) | (0.02 | ) | (0.03 | ) | (33 | )% | |||||
Adjusted earnings per diluted common share | $ | 0.62 | $ | 0.62 | — | % | |||||
(1) Income tax impact on adjustments was calculated using our effective income tax rates of 24.1% for the quarter ended June 2, 2018 and of 32.9% for the quarter ended June 3, 2017. |
Framing Systems Segment | Corporate | Consolidated | ||||||||||||||||
In thousands | Operating income | Operating margin | Operating income (loss) | Operating income | Operating margin | |||||||||||||
Three Months Ended June 2, 2018 | ||||||||||||||||||
Operating income (loss) | $ | 12,339 | 6.9 | % | $ | (2,059 | ) | $ | 21,995 | 6.5 | % | |||||||
Amortization of short-lived acquired intangibles | 2,870 | 1.6 | — | 2,870 | 0.9 | |||||||||||||
Adjusted operating income (loss) | $ | 15,209 | 8.5 | % | $ | (2,059 | ) | $ | 24,865 | 7.4 | % | |||||||
Three Months Ended June 3, 2017 | ||||||||||||||||||
Operating income (loss) | $ | 11,964 | 10.8 | % | $ | (2,012 | ) | $ | 24,106 | 8.9 | % | |||||||
Amortization of short-lived acquired intangibles | 2,054 | 1.9 | % | — | 2,054 | 0.8 | % | |||||||||||
Acquisition-related costs | — | — | % | 680 | 680 | 0.2 | % | |||||||||||
Adjusted operating income (loss) | $ | 14,018 | 12.7 | % | $ | (1,332 | ) | $ | 26,840 | 9.9 | % |
• | Revenue growth of approximately 10 percent over fiscal 2018. |
• | Operating margin of 8.9 percent to 9.4 percent. |
• | Earnings per diluted share of $3.35 to $3.55. |
• | Adjusted operating margin of 9.2 to 9.7 percent and adjusted earnings per diluted share of $3.48 to $3.68(1). |
• | Capital expenditures of $60 to $65 million. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
a) | Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. |
b) | Changes in internal controls: There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended June 2, 2018, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b) | |||||||||
March 4, 2018 to March 31, 2018 | — | $ | — | — | 1,240,068 | ||||||||
April 1, 2018 to April 28, 2018 | 2,714 | 41.68 | — | 1,240,068 | |||||||||
April 29, 2018 to June 2, 2018 | 38,150 | 41.11 | — | 1,240,068 | |||||||||
Total | 40,864 | $ | 41.27 | — | 1,240,068 |
(a) | The shares in this column represent the total number of shares that were surrendered to us by plan participants to satisfy stock-for-stock option exercises or withholding tax obligations related to share-based compensation. We did not purchase any shares pursuant to our publicly announced repurchase program during the fiscal quarter. |
(b) | In fiscal 2004, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock, announced on April 10, 2003. Subsequently, the Board of Directors increased the authorization by 750,000 shares, announced on January 24, 2008; and by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016 and January 9, 2018. The repurchase program does not have an expiration date. |
Item 6. | Exhibits |
101 | The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 2, 2018 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of June 2, 2018 and March 3, 2018, (ii) the Consolidated Results of Operations for the three months ended June 2, 2018 and June 3, 2017, (iii) the Consolidated Statements of Comprehensive Earnings for the three months ended June 2, 2018 and June 3, 2017, (iv) the Consolidated Statements of Cash Flows for the three months ended June 2, 2018 and June 3, 2017, (v) the Consolidated Statements of Shareholders' Equity for the three months ended June 2, 2018 and June 3, 2017, and (vi) Notes to Consolidated Financial Statements. |
APOGEE ENTERPRISES, INC. | |||
Date: July 12, 2018 | By: /s/ Joseph F. Puishys | ||
Joseph F. Puishys President and Chief Executive Officer (Principal Executive Officer) |
Date: July 12, 2018 | By: /s/ James S. Porter | ||
James S. Porter Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Apogee Enterprises, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Joseph F. Puishys | |
Joseph F. Puishys President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Apogee Enterprises, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James S. Porter | |
James S. Porter Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Joseph F. Puishys | |
Joseph F. Puishys President and Chief Executive Officer | |
July 12, 2018 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ James S. Porter | |
James S. Porter Executive Vice President and Chief Financial Officer | |
July 12, 2018 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jul. 11, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | APOGEE ENTERPRISES, INC. | |
Entity Central Index Key | 0000006845 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 02, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --03-02 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,271,461 |
Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.33 | $ 0.33 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 28,225,767 | 28,158,042 |
Common stock, shares outstanding | 28,225,767 | 28,158,042 |
Consolidated Results of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Income Statement [Abstract] | ||
Net sales | $ 336,531 | $ 272,307 |
Cost of sales | 255,801 | 202,013 |
Gross profit | 80,730 | 70,294 |
Selling, general and administrative expenses | 58,735 | 46,188 |
Operating income | 21,995 | 24,106 |
Interest income | 230 | 167 |
Interest expense | 1,949 | 444 |
Other income (expense), net | (22) | 179 |
Earnings before income taxes | 20,254 | 24,008 |
Income tax expense (benefit) | 4,881 | 7,904 |
Net earnings | $ 15,373 | $ 16,104 |
Earnings per share - basic | ||
Net earnings | $ 0.55 | $ 0.56 |
Earnings per share - diluted | ||
Net earnings | $ 0.54 | $ 0.56 |
Weighted average basic shares outstanding | 28,189 | 28,851 |
Weighted average diluted shares outstanding | 28,437 | 28,861 |
Consolidated Statements of Comprehensive Earnings (unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 15,373 | $ 16,104 |
Other comprehensive earnings: | ||
Unrealized gain on marketable securities, net of $2 and $33 of tax expense, respectively | 10 | 62 |
Unrealized loss on foreign currency hedge, net of $92 and $0 of tax benefit, respectively | (304) | 0 |
Foreign currency translation adjustments | (517) | (718) |
Other comprehensive earnings (loss) | (811) | (656) |
Total comprehensive earnings | $ 14,562 | $ 15,448 |
Consolidated Statements of Comprehensive Earnings (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Tax expense (benefit) on marketable securities | $ 2 | $ 33 |
Tax benefit on foreign currency hedge | $ 92 | $ 0 |
Consolidated Statement of Shareholders Equity (unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Tax expense on marketable securities | $ 2 | $ 33 |
Tax benefit on foreign currency hedge | $ 92 | $ 0 |
Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | 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 March 3, 2018. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three-month period ended June 2, 2018 are not necessarily indicative of the results to be expected for the full year. Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations. Significant accounting policies update Our significant accounting policies are included in Note 1 "Summary of Significant Accounting Policies and Related Data" of our Annual Report on Form 10-K for the year ended March 3, 2018. On March 4, 2018, we adopted ASC 606, Revenue from Contracts with Customers, and as a result, made updates to our significant accounting policy for 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 commercial buildings. We also manufacture value-added glass and acrylic 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. In the current period, approximately 46 percent of our total revenue is recognized at the time products are shipped from our manufacturing facilities, which is when control is transferred to our customer, consistent with past practices. These businesses do not generate contract-related assets or liabilities. Variable consideration associated with these contracts and orders, generally related to early pay discounts or volume rebates, is not considered significant. We also have three businesses which operate under long-term, fixed-price contracts, representing approximately 34 percent of our total revenue in the current period. This includes one business which changed revenue recognition practices due to the adoption of the new guidance, moving from recognizing revenue at shipment to an over-time method of revenue recognition. The contracts for these businesses have a single, bundled performance obligation, as these businesses generally provide interrelated products and services and integrate these products and services into a combined output specified by the customer. The customer obtains control of this combined output, generally integrated window systems or installed window and curtainwall systems, 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 revenue and costs incurred throughout 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 and are therefore 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. Typically, under these fixed-price contracts, we bill our customers following an agreed-upon schedule based on work performed. Because the progress billings do not generally correspond to our measurement of revenue on a contract, we generate contract assets when we have recognized revenue in excess of the amount billed to the customer. We generate contract liabilities when we have billed the customer in excess of revenue recognized on a contract. Finally, we have one business, making up approximately 20 percent of our total revenue in the current period, that recognizes revenue following an over-time output method based upon units produced. The customer is considered to have control over the products at the time of production, as the products are highly customized with no alternative use, and we have an enforceable right to payment for performance completed over the production period. We believe this over-time output method of recognizing revenue reasonably depicts the fulfillment of our performance obligations under our contracts. Previously, this business recognized revenue at the time of shipment. Billings still occur upon shipment. Therefore, contract assets are generated for the unbilled amounts on contracts when production is complete. Variable consideration associated with these orders, generally related to early pay discounts, is not considered significant. As outlined within the new accounting guidance, we elected several practical expedients in our transition to ASC 606:
Adoption of new accounting standards We adopted the new guidance in ASC 606 using the modified retrospective transition method applied to those contracts which were not complete as of March 4, 2018. Prior period amounts were not adjusted and therefore continue to be reported in accordance with the accounting guidance and our accounting policies in effect for those periods. Representing the cumulative effect of adopting ASC 606, we recorded a $3.0 million increase to the opening balance of retained earnings as of March 4, 2018. For the quarter ending June 2, 2018, the application of the new accounting guidance had the following impact on our consolidated financial statements:
The changes above are primarily a result of the transition of certain of our businesses from recognizing revenue at the time of shipment to over-time methods of revenue recognition. We also adopted ASU 2016-15, Statement of Cash Flows, and ASU 2016-18, Restricted Cash, this quarter. Both standards provide guidance for presentation of certain topics within the statement of cash flows, including presenting restricted cash within cash and cash equivalents, and they have been applied retrospectively for comparability across all periods. The adoption of these standards did not have a significant impact on our consolidated statements of cash flows. Finally, we elected to early adopt ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the current quarter. This standard permits a company to reclassify the disproportionate income tax effects of the 2017 Tax Cuts and Jobs Act on items within accumulated other comprehensive income ("AOCI") to retained earnings. The FASB refers to these amounts as “stranded tax effects.” As a result of this adoption, we reclassified income tax effects of $0.7 million resulting from tax reform from AOCI to retained earnings following a portfolio approach. These stranded tax effects are derived from the deferred tax balances on our pension obligations as a result of the lower U.S. federal corporate tax rate. Accounting standards not yet adopted In February 2016, the FASB issued ASU 2016-02, Leases, which provides for comprehensive changes to lease accounting. The new standard requires that a lessee recognize a lease obligation liability and a right-to-use asset for virtually all leases of property, plant and equipment, subsequently amortized over the lease term. The new standard is effective for fiscal years beginning after December 15, 2018, our fiscal year 2020. The adoption of this standard will result in reflecting assets and liabilities for the value of our leased property and equipment on our consolidated balance sheet, but we do not currently expect this guidance to have a significant impact on our consolidated results of operations. In January 2018, the FASB issued a proposed accounting standard update to the guidance that would allow an entity the option to adopt the guidance on a modified retrospective basis. Under the modified retrospective approach, an entity would recognize a cumulative effect adjustment of initially applying the guidance to the opening balance of retained earnings in the period of adoption. We are monitoring the status of the proposal. We have started the process of gathering and analyzing our lease contracts and are in the process of evaluating changes to our business processes, systems and controls needed to support recognition and disclosure under this new standard. Subsequent events We have evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined that there were no subsequent events that required recognition or disclosure in the consolidated financial statements. |
Revenue, Receivables and Contract Assets and Liabilities |
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Revenue, Receivables and Contract Assets and Liabilities | Revenue, Receivables and Contract Assets and Liabilities Revenue The following table disaggregates total revenue by timing of recognition (see Note 13 for disclosure of revenue by segment):
Receivables Trade and construction accounts receivable consist of amounts billed and due from customers. The amounts due are stated at their estimated net realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. This allowance is based on an assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables. Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.
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 our businesses which 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.
The increase in contract assets was due to additional businesses recognizing revenue in advance of billings, as a result of changing accounting policies for revenue recognition upon adoption of ASC 606. The increase in contract liabilities was due to timing of project activity within our businesses that operate under long-term contracts. In the first quarter of fiscal 2019, we recognized revenue of $9.1 million related to contract liabilities at March 4, 2018 and revenue of $2.3 million related to performance obligations satisfied in previous periods due to changes in contract estimates. Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that timeframe. Generally these contracts are in our businesses with long-term contracts which recognize revenue over time. As of June 2, 2018, the transaction price associated with unsatisfied performance obligations is approximately $714.4 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
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Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Total share-based compensation expense included in the results of operations was $1.5 million for the three-month period ended June 2, 2018 and $1.4 million for the three-month period ended June 3, 2017. Stock options and SARs Stock option and SAR activity for the current three-month period is summarized as follows:
Cash proceeds from the exercise of stock options were $0.2 million and $0.8 million for the three months ended June 2, 2018 and June 3, 2017, respectively. The aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $0.6 million during the three months ended June 2, 2018 and $4.8 million during the prior-year period. Nonvested shares and share units Nonvested share activity for the current three-month period is summarized as follows:
At June 2, 2018, there was $9.0 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 23 months. The total fair value of shares vested during the three months ended June 2, 2018 was $4.2 million. |
Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings per Share The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:
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Supplemental Balance Sheet Information |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information |
Other current liabilities
Other non-current liabilities
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Marketable Securities |
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Marketable securities We hold the following available-for-sale marketable securities, made up of municipal and corporate bonds:
We have a wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), which holds these municipal and corporate bonds. 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, which are generally high-quality municipal and corporate bonds, for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements. The amortized cost and estimated fair values of municipal bonds at June 2, 2018, 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.
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.
Cash equivalents Fair value of money market funds was determined based on quoted prices for identical assets in active markets. Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets. Short- and long-term securities Mutual funds were measured at fair value based on quoted prices for identical assets in active markets. Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified as short-term or long-term based on maturity date. Foreign currency instruments We periodically enter into forward purchase foreign currency contracts, generally with an original maturity date of less than one year, to hedge foreign currency exchange rate risk. As of June 2, 2018, we held foreign exchange forward contracts with a U.S. dollar notional value of $23.4 million, with the objective of reducing the exposure to fluctuations in the Canadian dollar and the Euro. The fair value of these contracts was a net liability of $0.2 million as of June 2, 2018. These forward contracts are measured at fair value using unobservable market inputs, such as quotations on forward foreign exchange points and foreign currency exchange rates, and would be classified as Level 2 within the fair value hierarchy above. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisitions EFCO On June 12, 2017, we acquired 100 percent of the stock of EFCO Corporation, a privately held U.S. manufacturer of architectural aluminum window, curtainwall, storefront and entrance systems for commercial construction projects, for $192 million in cash. The acquisition was funded through our committed revolving credit facility, with $7.5 million of the purchase price payable in equal installments over the subsequent three years. EFCO's results of operations have been included in our consolidated financial statements and within the Architectural Framing Systems segment since the date of acquisition. Those results include $65.3 million of sales and break-even operating income in the current period. The assets and liabilities of EFCO were recorded in our consolidated balance sheet as of the acquisition date, at their respective fair values. Fair value is estimated based on one or a combination of income, cost and/or market approaches, as determined based on the nature of the asset or liability, and the level of inputs available. With respect to assets and liabilities, the determination of fair value requires management to make subjective judgments as to projections of future operating performance, the appropriate discount rate to apply, long-term growth rates, etc. (i.e. - unobservable inputs classified as Level 3 inputs under the fair value hierarchy described in Note 5), which affect the amounts recorded in the purchase price allocation. The excess of the consideration transferred over the fair value of the identifiable assets, net of liabilities, is recorded as goodwill, which is indicative of the expected continued growth and development of EFCO. The purchase price allocation that follows is based on these estimated fair values of assets acquired and liabilities assumed, which was finalized in the current quarter:
Other intangible assets reflect the following:
The following table sets forth certain unaudited pro forma consolidated data for the combined company for the first quarter of fiscal 2019 and 2018, as if the EFCO acquisition had been consummated pursuant to its same terms at the beginning of the fiscal year preceding the acquisition date.
We have provided this unaudited pro forma information for comparative purposes only. This information does not necessarily reflect what the combined results of operations actually would have been had the acquisitions occurred at the beginning of fiscal year 2017. The information does not reflect the effect of any synergies or integration costs that will result from the acquisition. |
Goodwill and Other Identifiable Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets The carrying amount of goodwill attributable to each reporting segment was:
The gross carrying amount of other intangible assets and related accumulated amortization was:
Amortization expense on definite-lived intangible assets was $4.8 million and $3.4 million for the three-month periods ended June 2, 2018 and June 3, 2017, respectively. The amortization expense associated with debt issue costs is included in interest expense while the remainder is in selling, general and administrative expenses in the consolidated results of operations. At June 2, 2018, the estimated future amortization expense for definite-lived intangible assets was:
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Debt |
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Jun. 02, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt We maintain a committed revolving credit facility with maximum borrowings of up to $335.0 million, maturing in November 2021. Outstanding borrowings under our committed revolving credit facility were $193.0 million, as of June 2, 2018, and $195.0 million, as of March 3, 2018. Under this facility, we are subject to two financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of interest expense-to-EBITDA. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At June 2, 2018, we were in compliance with both financial covenants. Additionally, at June 2, 2018, we had a total of $23.5 million of ongoing letters of credit related to industrial revenue bonds and construction contracts that expire in fiscal 2019 and reduce availability of funds under our committed credit facility. At June 2, 2018, our debt also included $20.4 million of industrial revenue bonds that mature in fiscal years 2021 through 2043 and $0.4 million of long-term debt in Canada. The fair value of the industrial revenue bonds approximated carrying value at June 2, 2018, due to the variable interest rates on these instruments. All debt would be classified as Level 2 within the fair value hierarchy described in Note 5. We also maintain two Canadian revolving demand credit facilities totaling $12.0 million Canadian dollars. As of June 2, 2018, $0.7 million was outstanding under these facilities, and no borrowings were outstanding as of March 3, 2018. Borrowings under these facilities are made available at the sole discretion of the lenders and are payable on demand. The Company classifies any outstanding balances under these demand facilities as long-term debt, as outstanding amounts can be refinanced through our committed revolving credit facility. Interest payments were $1.8 million and $0.5 million for the three months ended June 2, 2018 and June 3, 2017, respectively. |
Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The Company sponsors two frozen defined-benefit pension plans: an unfunded Officers’ Supplemental Executive Retirement Plan and the Tubelite Inc. Hourly Employees’ Pension Plan. Components of net periodic benefit cost were:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2015, or state and local income tax examinations for years prior to fiscal 2011. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2014, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions. The total liability for unrecognized tax benefits at June 2, 2018 and March 3, 2018 was approximately $5.3 million and $5.1 million, respectively. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.6 million during the next 12 months due to lapsing of statutes. The Tax Cuts and Jobs Act (the Act) was enacted in December 2017. Among other provisions, the Act created a new tax on certain foreign sourced earnings under the Global Intangible Low-Taxed Income (“GILTI”) provision. Companies are allowed to make an accounting policy election of either treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred or factoring such amounts into the measurement of deferred taxes. We have completed our analysis of the GILTI provisions and are making an accounting policy election to recognize the tax expense on future U.S. inclusions of GILTI income, if any, as a current period expense when incurred. |
Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Operating lease commitments. As of June 2, 2018, the Company was obligated under non-cancelable operating leases for buildings and equipment. Certain leases provide for increased rental payments based upon increases in real estate taxes or operating costs. Future minimum rental payments under non-cancelable operating leases are:
Bond commitments. In the ordinary course of business, predominantly in our Architectural Services and Architectural Framing Systems segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance. At June 2, 2018, $238.7 million of our backlog was bonded by performance bonds with a face value of $535.0 million. Performance bonds do not have stated expiration dates, as we are generally released from the bonds upon completion of the contract. We have never been required to make any payments related to these performance bonds with respect to any of our current portfolio of businesses. Warranties. We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume. A warranty rollforward follows:
Letters of credit. At June 2, 2018, we had $23.5 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 7. Purchase obligations. Purchase obligations for raw material commitments and capital expenditures totaled $186.4 million as of June 2, 2018. Litigation. We are a party to various legal proceedings incidental to our normal operating activities. In particular, like others in the construction supply and services industry, our businesses are routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. We are also subject to litigation arising out of general liability, employment practices, workers' compensation and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on our results of operations, cash flows or financial condition. |
Segment Information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has four reporting segments: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).
Due to the varying combinations and integration of individual window, storefront and curtainwall systems, it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported. |
Basis of Presentation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of new accounting guidance | For the quarter ending June 2, 2018, the application of the new accounting guidance had the following impact on our consolidated financial statements:
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Revenue, Receivables and Contract Assets and Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregated revenue data | The following table disaggregates total revenue by timing of recognition (see Note 13 for disclosure of revenue by segment):
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Net receivables |
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Contract assets and liabilities |
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Performance obligations expected to be satisfied | The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Award transactions on stock options | ctivity for the current three-month period is summarized as follows:
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Nonvested share award transactions | Nonvested share activity for the current three-month period is summarized as follows:
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Earnings per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of basic and diluted earnings per share | The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:
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Supplemental Balance Sheet Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of inventories | Inventories
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Other current liabilities | Other current liabilities
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Other non-current liabilities | Other non-current liabilities
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Marketable Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost, gross unrealized gains and losses, and estimated fair values of investments available for sale | arketable securities, made up of municipal and corporate bonds:
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Schedule of amortized cost and estimated fair values of investments by contractual maturity | The amortized cost and estimated fair values of municipal bonds at June 2, 2018, 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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Fair value measurements |
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets and liabilities measured at fair value |
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Acquisitions Acquisition (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired | The purchase price allocation that follows is based on these estimated fair values of assets acquired and liabilities assumed, which was finalized in the current quarter:
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | Other intangible assets reflect the following:
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Business Acquisition, Pro Forma Information | The following table sets forth certain unaudited pro forma consolidated data for the combined company for the first quarter of fiscal 2019 and 2018, as if the EFCO acquisition had been consummated pursuant to its same terms at the beginning of the fiscal year preceding the acquisition date.
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Goodwill and Other Identifiable Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill attributable to each business segment | The carrying amount of goodwill attributable to each reporting segment was:
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Schedule of finite lived intangible assets | e gross carrying amount of other intangible assets and related accumulated amortization was:
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Schedule of estimated future amortization expense for identifiable intangible assets | At June 2, 2018, the estimated future amortization expense for definite-lived intangible assets was:
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Employee Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost | Components of net periodic benefit cost were:
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Commitments and Contingent Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future minimum rental payments under noncancelable operating leases | Future minimum rental payments under non-cancelable operating leases are:
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Guarantees and warranties | A warranty rollforward follows:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 02, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and operating income data |
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Revenue, Receivables and Contract Assets and Liabilities (Details 1) $ in Thousands |
3 Months Ended |
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Jun. 02, 2018
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Total | $ 336,531 |
Recognized at shipment | |
Disaggregation of Revenue [Line Items] | |
Total | 156,867 |
Recognized over time | |
Disaggregation of Revenue [Line Items] | |
Total | $ 179,664 |
Revenue, Receivables and Contract Assets and Liabilities (Details 2) - USD ($) $ in Thousands |
Mar. 02, 2019 |
Jun. 02, 2018 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | $ 213,382 | $ 186,932 |
Less: allowance for doubtful accounts | (1,530) | (1,389) |
Net receivables | 211,852 | 185,543 |
Trade accounts | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | 157,562 | 143,572 |
Construction contracts | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | 26,545 | 15,436 |
Construction contracts - retainage | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | 26,388 | 27,924 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total receivables | $ 2,887 | $ 0 |
Revenue, Receivables and Contract Assets and Liabilities (Details 3) - USD ($) $ in Thousands |
Mar. 02, 2019 |
Jun. 02, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 30,508 | $ 67,289 |
Contract liabilities | $ 20,120 | $ 31,462 |
Revenue, Receivables and Contract Assets and Liabilities (Details 4) $ in Millions |
3 Months Ended |
---|---|
Jun. 02, 2018
USD ($)
| |
Revenue from Contract with Customer [Abstract] | |
Revenue recognized related to contract liabilities at March 4, 2018 | $ 9.1 |
Revenue related to performance obligations satisfied in previous periods due to changes in contract estimates | $ 2.3 |
Share-Based Compensation (Details 1) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Award transactions on stock options | ||
Outstanding, Beginning | 129,901 | |
Outstanding shares awards exercised | (19,000) | (100,000) |
Outstanding, Ending | 100,341 | |
Award transactions on stock options, Weighted Average Exercise Price [Roll Forward] | ||
Weighted average exercise price, Beginning | $ 11.10 | |
Weighted average exercise price, Awards exercised | 20.43 | |
Weighted average exercise price, Ending | $ 8.34 | |
Weighted average remaining contractual life, Outstanding | 3 years 2 months | |
Aggregate intrinsic value, Outstanding | $ 3,570,133 | |
Deferred Compensation, Share-based Payments [Member] | ||
Award transactions on stock options | ||
Outstanding shares awards exercised | (29,560) |
Share-Based Compensation (Details 2) |
3 Months Ended |
---|---|
Jun. 02, 2018
$ / shares
shares
| |
Nonvested share award transactions | |
Nonvested Number, Beginning | shares | 266,180 |
Number of shares, Granted | shares | 88,103 |
Number of shares, Vested | shares | (101,121) |
Number of shares, Canceled | shares | (1,500) |
Nonvested Number, Ending | shares | 251,662 |
Nonvested share award transactions, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted average grant date fair value, Beginning | $ / shares | $ 49.22 |
Weighted average grant date fair value, Granted | $ / shares | 42.02 |
Weighted average grant date fair value, Vested | $ / shares | 45.97 |
Weighted average grant date fair value, Canceled | $ / shares | 41.44 |
Weighted average grant date fair value, Ending | $ / shares | $ 47.99 |
Share-Based Compensation (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation | $ 1,514 | $ 1,403 |
Cash proceeds from exercise of stock options | 200 | 800 |
Aggregate intrinsic value of securities | 600 | $ 4,800 |
Total unrecognized compensation cost related to nonvested share | $ 9,000 | |
Document Period End Date | Jun. 02, 2018 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average period, Nonvested | 23 months | |
Total fair value of shares vested | $ 4,200 |
Earnings per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Reconciliation of basic and diluted earnings per share | ||
Basic earnings per share – weighted average common shares outstanding | 28,189 | 28,851 |
Weighted average effect of nonvested share grants and assumed exercise of stock options | 248 | 10 |
Diluted earnings per share – weighted average common shares and potential common shares outstanding | 28,437 | 28,861 |
Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares) | 147 | 0 |
Supplemental Balance Sheet Information - Components of inventories (Details) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 36,934 | $ 35,049 |
Work-in-process | 19,032 | 17,406 |
Finished goods | 21,333 | 28,453 |
Total inventories | $ 77,299 | $ 80,908 |
Supplemental Balance Sheet Information - Other current liabilities (Details) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Warranties | $ 17,908 | $ 18,110 |
Acquired contract liabilities | 25,599 | 26,422 |
Taxes, other than income taxes | 5,614 | 5,342 |
Deferred revenue | 7,081 | 7,659 |
Other | 18,067 | 22,163 |
Total other current liabilities | $ 74,269 | $ 79,696 |
Supplemental Balance Sheet Information - Other non-current liabilities (Details) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Deferred benefit from New Market Tax Credit transactions | $ 16,708 | $ 16,708 |
Retirement plan obligations | 9,635 | 8,997 |
Deferred compensation plan | 11,646 | 10,730 |
Other | 34,656 | 34,211 |
Total other non-current liabilities | $ 72,645 | $ 70,646 |
Marketable Securities (Details) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 15,250 | |
Estimated Fair Value | 15,132 | |
June 2, 2018 | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 15,250 | $ 9,183 |
Gross Unrealized Gains | 8 | 8 |
Gross Unrealized Losses | 126 | 138 |
Estimated Fair Value | $ 15,132 | $ 9,053 |
Marketable Securities (Details 2) $ in Thousands |
Jun. 02, 2018
USD ($)
|
---|---|
Amortized Cost | |
Due within one year | $ 2,394 |
Due after one year through five years | 7,039 |
Due after five years through 10 years | 4,563 |
Due after 10 years through 15 years | 240 |
Due beyond 15 years | 1,014 |
Total | 15,250 |
Estimated Fair Value | |
Due within one year | 2,394 |
Due after one year through five years | 6,980 |
Due after five years through 10 years | 4,512 |
Due after 10 years through 15 years | 240 |
Due beyond 15 years | 1,006 |
Total | $ 15,132 |
Marketable Securities (Details Textual) - Designated as Hedging Instrument - Foreign Exchange Forward $ in Millions |
Jun. 02, 2018
USD ($)
|
---|---|
Derivatives, Fair Value [Line Items] | |
Dollar notional value | $ 23.4 |
Net liability | $ 0.2 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Cash equivalents | ||
Total cash equivalents | $ 3,301 | |
Total assets at fair value | $ 17,311 | 12,354 |
Quoted Prices in Active Markets (Level 1) | ||
Cash equivalents | ||
Total cash equivalents | 2,901 | |
Total assets at fair value | 4,452 | 2,901 |
Other Observable Inputs (Level 2) | ||
Cash equivalents | ||
Total cash equivalents | 400 | |
Total assets at fair value | $ 12,859 | $ 9,453 |
Acquisition (Details) - EFCO Corporation - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 12, 2017 |
Jun. 02, 2018 |
|
Business Acquisition [Line Items] | ||
Percentage of voting interests acquired | 100.00% | |
Sales | $ 65,300,000 | |
Operating income | $ 0 | |
Revolving credit facility | ||
Business Acquisition [Line Items] | ||
Debt payment to acquire business | $ 192,000,000 | |
Payable installment | $ 7,500,000 | |
Payment period | 3 years |
Acquisition (Details 1) - USD ($) $ in Thousands |
Jun. 02, 2018 |
Mar. 03, 2018 |
Jun. 12, 2017 |
Mar. 04, 2017 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 187,034 | $ 180,956 | $ 101,334 | |
EFCO Corporation | ||||
Business Acquisition [Line Items] | ||||
Net working capital | $ 1,422 | |||
Property, plant and equipment | 44,641 | |||
Goodwill | 90,429 | |||
Other intangible assets | 71,500 | |||
Less: Long-term liabilities acquired, net | 17,643 | |||
Net assets acquired | $ 190,349 |
Acquisition (Details 2) - EFCO Corporation $ in Thousands |
Jun. 12, 2017
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Other intangible assets | $ 71,500 |
Customer relationships | |
Business Acquisition [Line Items] | |
Other intangible assets | $ 34,800 |
Estimated useful life (in years) | 16 years |
Backlog | |
Business Acquisition [Line Items] | |
Other intangible assets | $ 4,300 |
Estimated useful life (in years) | 1 year 6 months |
Tradename | |
Business Acquisition [Line Items] | |
Other intangible assets | $ 32,400 |
Acquisitions (Details 3) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Business Combinations [Abstract] | ||
Net sales | $ 336,531 | $ 341,686 |
Net earnings | $ 16,090 | $ 17,445 |
Earnings per share | ||
Basic (USD per share) | $ 0.57 | $ 0.62 |
Diluted (USD per share) | $ 0.57 | $ 0.61 |
Goodwill and Other Identifiable Intangible Assets (Details 2) $ in Thousands |
Jun. 02, 2018
USD ($)
|
---|---|
Schedule of estimated future amortization expense for identifiable intangible assets | |
Estimated amortization expense, Remainder of Fiscal 2018 | $ 8,190 |
Estimated amortization expense, Fiscal 2019 | 8,177 |
Estimated amortization expense, Fiscal 2020 | 8,171 |
Estimated amortization expense, Fiscal 2021 | 8,014 |
Estimated amortization expense, Fiscal 2022 | $ 7,626 |
Goodwill and Other Identifiable Intangible Assets (Details Textual) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Goodwill and Other Identifiable Intangible Assets (Textual) [Abstract] | ||
Amortization expense on identifiable intangible assets | $ 4.8 | $ 3.4 |
Debt (Details) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 02, 2018
USD ($)
|
Jun. 03, 2017
USD ($)
|
Jun. 02, 2018
CAD ($)
|
Jun. 02, 2018
USD ($)
|
Mar. 03, 2018
CAD ($)
|
Mar. 03, 2018
USD ($)
|
|
Line of Credit Facility [Line Items] | ||||||
Document Period End Date | Jun. 02, 2018 | |||||
Interest payments | $ 1,800,000 | $ 500,000 | ||||
Revolving credit facility | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 12,000,000 | $ 335,000,000.0 | ||||
Outstanding borrowings | $ 700,000 | 193,000,000 | $ 0 | $ 195,000,000 | ||
Industrial Revenue Bonds | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt | 20,400,000 | |||||
Industrial Revenue Bonds | Letter of credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt | 23,500,000 | |||||
Canada | Industrial Revenue Bonds | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt | $ 400,000 |
Employee Benefit Plans (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018
USD ($)
plan
|
Jun. 03, 2017
USD ($)
|
|
Retirement Benefits [Abstract] | ||
Number of defined-benefit pension plans | plan | 2 | |
Components of net periodic benefit cost | ||
Interest cost | $ 127 | $ 133 |
Expected return on assets | (10) | (10) |
Amortization of unrecognized net loss | 57 | 57 |
Net periodic benefit cost | $ 174 | $ 180 |
Income Taxes (Details) - USD ($) $ in Millions |
Jun. 02, 2018 |
Mar. 03, 2018 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Liability for uncertain tax positions, current and noncurrent | $ 5.3 | $ 5.1 |
Liability for unrecognized tax benefit, expected decrease | $ 0.6 |
Commitments and Contingent Liabilities (Details) $ in Thousands |
Jun. 02, 2018
USD ($)
|
---|---|
Future minimum rental payments under noncancelable operating leases | |
Total minimum payments, Remainder of Fiscal 2018 | $ 11,290 |
Total minimum payments, Fiscal 2019 | 13,021 |
Total minimum payments, Fiscal 2020 | 9,847 |
Total minimum payments, Fiscal 2021 | 7,663 |
Total minimum payments, Fiscal 2022 | 6,771 |
Total minimum payments, Thereafter | 17,389 |
Total | $ 65,981 |
Commitments and Contingent Liabilities (Details 1) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Guarantees and warranties | ||
Balance at beginning of period | $ 22,517 | $ 21,933 |
Additional accruals | 1,062 | 1,240 |
Claims paid | (1,193) | (973) |
Balance at end of period | $ 22,386 | $ 22,200 |
Commitments and Contingent Liabilities (Details Textual) $ in Millions |
Jun. 02, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Company's backlog bonded by performance bonds | $ 238.7 |
Face value of performance bonds | 535.0 |
Line of Credit Facility [Line Items] | |
Purchase obligations | 186.4 |
Industrial Revenue Bonds | |
Line of Credit Facility [Line Items] | |
Debt | 20.4 |
Letter of credit | Industrial Revenue Bonds | |
Line of Credit Facility [Line Items] | |
Debt | $ 23.5 |
Segment Information Segment Information (Details Textual) |
3 Months Ended |
---|---|
Jun. 02, 2018
Segment
Reportable_Segment
| |
Segment Reporting [Abstract] | |
Number of Reportable Segments | Segment | 4 |
Number of Operating Segments | Reportable_Segment | 6 |
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jun. 02, 2018 |
Jun. 03, 2017 |
|
Sales and operating income data | ||
Net sales | $ 336,531 | $ 272,307 |
Operating income (loss) | 21,995 | 24,106 |
Architectural Glass | ||
Sales and operating income data | ||
Net sales | 76,925 | 97,735 |
Operating income (loss) | 1,579 | 9,322 |
Architectural Services | ||
Sales and operating income data | ||
Net sales | 70,727 | 50,150 |
Operating income (loss) | 5,155 | 782 |
Architectural Framing Systems | ||
Sales and operating income data | ||
Net sales | 179,037 | 110,492 |
Operating income (loss) | 12,339 | 11,964 |
Large-Scale Optical | ||
Sales and operating income data | ||
Net sales | 20,761 | 18,603 |
Operating income (loss) | 4,981 | 4,050 |
Intersegment eliminations | ||
Sales and operating income data | ||
Net sales | (10,919) | (4,673) |
Corporate and other | ||
Sales and operating income data | ||
Operating income (loss) | $ (2,059) | $ (2,012) |
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