APOGEE ENTERPRISES, INC. (APOG)

CIK: 0000006845. SIC: 3231 Glass Products, Made of Purchased Glass. Latest 10-K as of: 2026-04-24.

SIC breadcrumb: Manufacturing > SIC Major Group 32 > SIC 3231 Glass Products, Made of Purchased Glass

SEC company page: https://www.sec.gov/edgar/browse/?CIK=6845. Latest filing source: 0000006845-26-000023.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000006845.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000006845.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0000006845-26-000010.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-01-07. Report date: 2025-11-29.

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

Forward-looking statements

This Quarterly Report on Form 10-Q, including the section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain statements that are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “will,” “continue” or similar words or expressions. All forecasts and projections in this document are “forward-looking statements,” and are based on management’s current expectations or beliefs of the Company's near-term results, based on current information available pertaining to the Company. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results.

Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to, the risks and uncertainties set forth under “Risk Factors” section of our Annual Report on Form 10-K for the year ended March 1, 2025, and in subsequent filings with the U.S. Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.

We also wish to caution investors that other factors might in the future prove to be important in affecting the Company’s results of operations. New factors emerge from time to time; it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Measures

We have included in this report measures of financial performance that are not defined by U.S. GAAP. We believe that these measures provide useful information and include these measures in other communications to investors. For each of these non-GAAP financial measures, we provide a reconciliation of the differences between the non-GAAP measure and the most directly comparable U.S. GAAP measure (see “Reconciliation of Non-GAAP Financial Measures” in this Item 2 below), and an explanation of why we believe the non-GAAP measure provides useful information to management and investors. These non-GAAP measures should be viewed in addition to, and not in lieu of, the comparable U.S. GAAP measure.

Overview

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

Our enterprise strategy is based on the following three key elements:

1.Become the economic leader in our target markets. We have developed a deep understanding of our target markets and aligned our businesses with clear go-to-market strategies to drive value for our customers through differentiated product and service offerings. We are focused on operational execution, driving productivity improvements, and maintaining a competitive cost structure, so that we may bring more value to our customers and improve our own profitability.

2.Actively manage our portfolio to drive higher margins and returns. We are shifting our business mix toward higher operating margin offerings in order to improve our return on invested capital performance. We accomplish this by allocating resources to grow our top performing businesses, actively addressing underperforming businesses, and investing to add new differentiated product and service offerings to accelerate our growth and increase margins. We continually analyze our current portfolio of products, services, and capabilities to identify the best areas for future profitable growth. We also evaluate inorganic opportunities where we can deploy capital to acquire businesses that will be accretive to our long-term growth rate and operating margins.

3.Strengthen our core capabilities. We are shifting from our historical, decentralized operating model to one with center-led functional expertise that enables us to leverage the scale of the enterprise to better support the needs of the business. We have established a Company-wide operating system with common tools and processes based on the foundation of Lean and Continuous Improvement, which we call the “Apogee Management System.” Our strategy is

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supported by a robust talent management program and a commitment to strong governance to ensure compliance and drive sustainable performance.

Recent Developments

On April 23, 2025, we announced an extension of Project Fortify ("Project Fortify Phase 2" or "Phase 2") to drive further cost efficiencies, primarily in the Architectural Metals and Architectural Services Segments. Phase 2 focuses on further optimizing our operating footprint and aligning resources to enable a more effective operating model. We expect the actions of Phase 2 to incur approximately $28 million to $29 million of pre-tax charges. Phase 2 is expected to deliver annualized pre-tax cost savings of approximately $25 million to $26 million. We expect the actions associated with Phase 2 to be substantially completed by the end of the fourth quarter of fiscal 2026. See Note 14 for additional information.

On October 31, 2025, the Company announced the separation of its Chief Executive Officer. In connection with this separation agreement, the Board of Directors approved the accelerated vesting of certain outstanding unvested restricted stock awards and performance share unit awards previously granted. As a result of this modification, the Company recognized incremental stock-based compensation expense of $2.1 million during the third quarter of fiscal 2026, representing the fair value of the awards that would have otherwise vested over the remaining service periods. This amount is included in SG&A expenses in the Consolidated Results of Operations.

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended March 1, 2025, and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

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Results of Operations

The following tables provide various components of operations as year over year U.S. dollar and percentage change, as well as a percentage of net sales.

Three Months Ended

% of Net Sales

(in thousands, except percentages)

November 29, 2025

November 30, 2024

November 29, 2025

November 30, 2024

Net sales

$

348,563

$

341,344

100.0 

%

100.0 

%

Cost of sales

265,571

252,195

76.2 

%

73.9 

%

Gross profit

82,992

89,149

23.8 

%

26.1 

%

Selling, general and administrative expenses

58,113

60,520

16.7 

%

17.7 

%

Operating income

24,879

28,629

7.1 

%

8.4 

%

Interest expense, net

3,227

1,044

0.9 

%

0.3 

%

Other income, net

(2,458)

(60)

(0.7)

%

— 

%

Earnings before income taxes

24,110

27,645

6.9 

%

8.1 

%

Income tax expense

7,561

6,656

2.2 

%

1.9 

%

Net earnings

$

16,549

$

20,989

4.7 

%

6.1 

%

Effective tax rate

31.4 

%

24.1 

%

Nine Months Ended

% of Net Sales

(in thousands, except percentages)

November 29, 2025

November 30, 2024

November 29, 2025

November 30, 2024

Net sales

$

1,053,379

$

1,015,300

100.0 

%

100.0 

%

Cost of sales

812,654

729,975

77.1 

%

71.9 

%

Gross profit

240,725

285,325

22.9 

%

28.1 

%

Selling, general and administrative expenses

182,026

173,350

17.3 

%

17.1 

%

Operating income

58,699

111,975

5.6 

%

11.0 

%

Interest expense, net

11,148

2,634

1.1 

%

0.3 

%

Other income, net

(6,916)

(493)

(0.7)

%

— 

%

Earnings before income taxes

54,467

109,834

5.2 

%

10.8 

%

Income tax expense

16,956

27,268

1.6 

%

2.7 

%

Net earnings

$

37,511

$

82,566

3.6 

%

8.1 

%

Effective tax rate

31.1 

%

24.8 

%

Comparison of Third Quarter Fiscal 2026 to Third Quarter Fiscal 2025

•Consolidated net sales increased 2.1%, to $348.6 million, driven by $18.4 million of inorganic sales contribution from the acquisition of UW Solutions and favorable product mix, partially offset by lower volume.

•Gross margin decreased to 23.8%, compared to 26.1%, primarily due to impact of lower volume and price, higher aluminum, restructuring and health insurance costs, partially offset by lower incentive compensation expense.

•SG&A expense as a percent of net sales decreased to 16.7%, compared to 17.7%. The decrease was primarily due to lower acquisition-related costs and lower incentive compensation expense, partially offset by higher amortization expense related to the UW Solutions acquisition and incremental stock-based compensation expense related to CEO transition costs.

•Operating income declined to $24.9 million from $28.6 million, and operating margin decreased 130 basis points to 7.1%.

•Adjusted EBITDA increased to $46.1 million compared to $45.8 million and adjusted EBITDA margin decreased to 13.2% compared to 13.4%. The decrease in adjusted EBITDA margin was primarily driven by lower volume and price, higher aluminum and health insurance costs, partially offset by lower incentive compensation expense and benefits from cost savings related to Project Fortify Phase 2.

•Interest expense increased to $3.2 million, primarily due to a higher average debt balance resulting from the acquisition of UW Solutions in November 2024.

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•Other income was $2.5 million compared to $0.1 million. The change was due to a $2.1 million gain related to a New Markets Tax Credit recognized in the current period.

•Income tax expense as a percentage of earnings before income tax was 31.4%, compared to 24.1%. The increase in the effective tax rate was primarily due to an increase in tax expense for discrete items.

•Net earnings were $16.5 million compared to $21.0 million.

Comparison of First Nine Months Fiscal 2026 to First Nine Months Fiscal 2025

•Consolidated net sales increased 3.8%, to $1.1 billion, primarily driven by $65.3 million of inorganic sales contribution from the acquisition of UW Solutions. This was partially offset by lower volume and price as a result of lower demand.

•Gross margin decreased to 22.9%, compared to 28.1%, primarily due to lower price and volume, higher aluminum, restructuring and health insurance costs, partially offset by lower incentive compensation expenses.

•SG&A expenses as a percent of net sales increased to 17.3%, compared to 17.1%. The increase was primarily due to increased restructuring charges related to Project Fortify Phase 2, increased amortization expense associated with the UW Solutions transaction and incremental stock-based compensation expense related to CEO transition costs, partially offset by lower transaction-related costs and lower incentive compensation expense.

•Operating income declined to $58.7 million from $112.0 mil

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-04-24. Report date: 2026-02-28.

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

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

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

Overview

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

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

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

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

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

Non-GAAP Financial Measures

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

Non-GAAP measures include:

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

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

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

Results of Operations

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

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

% Change

(Dollars in thousands)

2026

2025

2024

2026 vs. 2025

2025 vs. 2024

Net sales

$

1,404,733 

$

1,360,994 

$

1,416,942 

3.2 

%

(3.9)

%

Cost of sales

1,085,259 

1,001,101 

1,049,814 

8.4 

%

(4.6)

%

Gross profit

319,474 

359,893 

367,128 

(11.2)

%

(2.0)

%

Selling, general and administrative expenses

235,000 

241,783 

233,295 

(2.8)

%

3.6 

%

Operating income

84,474 

118,110 

133,833 

(28.5)

%

(11.7)

%

Interest expense, net

13,976 

6,159 

6,669 

126.9 

%

(7.6)

%

Other (income) expense, net

(6,958)

(623)

(2,089)

N/M

N/M

Earnings before income taxes

77,456 

112,574 

129,253 

(31.2)

%

(12.9)

%

Income tax expense

23,325 

27,522 

29,640 

(15.2)

%

(7.1)

%

Net earnings

$

54,131 

$

85,052 

$

99,613 

(36.4)

%

(14.6)

%

Diluted earnings per share

$

2.52 

$

3.89 

$

4.51 

(35.2)

%

(13.7)

%

N/M - Indicates calculation is not meaningful

(Percentage of net sales)

2026

2025

2024

Net sales

100.0 

%

100.0 

%

100.0 

%

Cost of sales

77.3 

73.6 

74.1 

Gross profit

22.7 

26.4 

25.9 

Selling, general and administrative expenses

16.7 

17.8 

16.5 

Operating income

6.0 

8.7 

9.4 

Interest expense, net

1.0 

0.5 

0.5 

Other (income) expense, net

(0.5)

— 

(0.1)

Earnings before income taxes

5.5 

8.3 

9.1 

Income tax expense

1.7 

2.0 

2.1 

Net earnings

3.9 

%

6.2 

%

7.0 

%

Effective income tax rate

30.1 

%

24.4 

%

22.9 

%

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

(In thousands, except percentages)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Intersegment eliminations

Consolidated

Fiscal 2025 net sales

$

524,709 

$

419,861 

$

322,197 

$

122,131 

$

(27,904)

$

1,360,994 

Organic business (1)

(20,681)

19,371 

(38,538)

10,564 

7,752 

(21,532)

Acquisition (2)

— 

— 

— 

65,271 

— 

65,271 

Fiscal 2026 net sales

$

504,028 

$

439,232 

$

283,659 

$

197,966 

$

(20,152)

$

1,404,733 

Total net sales growth (decline)

(3.9)

%

4.6 

%

(12.0)

%

62.1 

%

(27.8)

%

3.2 

%

Organic business (1)

(3.9)

%

4.6 

%

(12.0)

%

8.6 

%

(27.8)

%

(1.6)

%

Acquisition (2)

— 

%

— 

%

— 

%

53.4 

%

— 

%

4.8 

%

(1)

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

(2)

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

Comparison of Fiscal 2026 to Fiscal 2025

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

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

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

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

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

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

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

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

Segment Analysis

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

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

% Change

(Dollars in thousands)

2026

2025

2024

2026 vs. 2025

2025 vs. 2024

Segment net sales

Architectural Metals

$

504,028 

$

524,709 

$

601,736 

(3.9)

%

(12.8)

%

Architectural Services

439,232 

419,861 

378,422 

4.6 

%

11.0 

%

Architectural Glass

283,659 

322,197 

378,449 

(12.0)

%

(14.9)

%

Performance Surfaces

197,966 

122,131 

99,223 

62.1 

%

23.1 

%

Total segment sales

1,424,885 

1,388,898 

1,457,830 

2.6 

%

(4.7)

%

Intersegment eliminations

(20,152)

(27,904)

(40,888)

(27.8)

%

(31.8)

%

Net sales

$

1,404,733 

$

1,360,994 

$

1,416,942 

3.2 

%

(3.9)

%

Segment adjusted EBITDA

Architectural Metals

$

54,109 

$

70,591 

$

90,029 

(23.3)

%

(21.6)

%

Architectural Services

30,856 

33,533 

18,376 

(8.0)

%

82.5 

%

Architectural Glass

45,699 

71,664 

77,738 

(36.2)

%

(7.8)

%

Performance Surfaces

41,643 

30,886 

27,273 

34.8 

%

13.2 

%

Corporate and Other

(5,004)

(14,021)

(35,119)

(64.3)

%

(60.1)

%

Adjusted EBITDA

$

167,303 

$

192,653 

$

178,297 

(13.2)

%

8.1 

%

Segment adjusted EBITDA margin

Architectural Metals

10.7 

%

13.5 

%

15.0 

%

Architectural Services

7.0 

%

8.0 

%

4.9 

%

Architectural Glass

16.1 

%

22.2 

%

20.5 

%

Performance Surfaces

21.0 

%

25.3 

%

27.5 

%

Adjusted EBITDA margin

11.9 

%

14.2 

%

12.6 

%

Architectural Metals

Comparison of Fiscal 2026 to Fiscal 2025

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

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

Architectural Services

Comparison of Fiscal 2026 to Fiscal 2025

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

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

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

(in thousands)

2026

2025

Gross favorable adjustments

$

32,810 

$

28,430 

Gross unfavorable adjustments

(23,978)

(12,123)

Net adjustments

$

8,832 

$

16,307 

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Architectural Glass

Comparison of Fiscal 2026 to Fiscal 2025

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

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

Performance Surfaces

Comparison of Fiscal 2026 to Fiscal 2025

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

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

Corporate and Other

Comparison of Fiscal 2026 to Fiscal 2025

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

Backlog

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

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

Reconciliations of Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Twelve Months Ended February 28, 2026

(In thousands) (Unaudited)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Corporate and Other

Consolidated

Net earnings (loss)

$

37,775 

$

12,193 

$

32,661 

$

24,659 

$

(53,157)

$

54,131 

Interest expense (income), net

1,733 

(310)

(699)

— 

13,252 

13,976 

Income tax (benefit) expense

(43)

(8)

295 

— 

23,081 

23,325 

Depreciation and amortization

14,813 

3,593 

13,442 

15,153 

2,997 

49,998 

EBITDA

54,278 

15,468 

45,699 

39,812 

(13,827)

141,430 

Acquisition-related costs (1)

— 

— 

— 

1,831 

313 

2,144 

Restructuring costs (2)

6,571 

15,388 

— 

— 

5,484 

27,443 

CEO transition costs (3)

— 

— 

— 

— 

3,026 

3,026 

NMTC settlement gain (4)

(6,740)

— 

— 

— 

— 

(6,740)

Adjusted EBITDA

$

54,109 

$

30,856 

$

45,699 

$

41,643 

$

(5,004)

$

167,303 

EBITDA margin

10.8 

%

3.5 

%

16.1 

%

20.1 

%

N/M

10.1 

%

Adjusted EBITDA margin

10.7 

%

7.0 

%

16.1 

%

21.0 

%

N/M

11.9 

%

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Twelve Months Ended March 01, 2025

(In thousands) (Unaudited)

Architectural Metals

Architectural Services

Architectural Glass

Performance Surfaces

Corporate and Other

Consolidated

Net earnings (loss)

$

40,345 

$

30,035 

$

60,451 

$

19,611 

$

(65,390)

$

85,052 

Interest expense (income), net

2,113 

10 

(408)

— 

4,444 

6,159 

Income tax expense (benefit)

7 

— 

(653)

— 

28,168 

27,522 

Depreciation and amortization

16,471 

3,978 

12,274 

9,086 

2,799 

44,608 

EBITDA

58,936 

34,023 

71,664 

28,697 

(29,979)

163,341 

Acquisition-related costs (1)

— 

— 

— 

2,189 

5,773 

7,962 

Restructuring costs (2)

4,021 

(490)

— 

— 

792 

4,323 

Impairment expense (5)

7,634 

— 

— 

— 

— 

7,634 

Arbitration award expense (6)

— 

— 

— 

— 

9,393 

9,393 

Adjusted EBITDA

$

70,591 

$

33,533 

$

71,664 

$

30,886 

$

(14,021)

$

192,653 

EBITDA margin

11.2 

%

8.1 

%

22.2 

%

23.5 

%

N/M

12.0 

%

Adjusted EBITDA margin

13.5 

%

8.0 

%

22.2 

%

25.3 

%

N/M

14.2 

%

(1)

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

(2)

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

(3)

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

(4)

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

(5)

Impairment expense on intangible assets in the Architectural Metals Segment.

(6)

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

Adjusted net earnings and adjusted diluted earnings per share

Twelve Months Ended

(In thousands) (Unaudited)

February 28, 2026

March 1, 2025

Net earnings

$

54,131 

$

85,052 

Acquisition-related costs (1)

2,144 

10,302 

Restructuring costs (2)

27,443 

4,323 

CEO transition costs (3)

3,026 

— 

NMTC settlement gain (4)

(6,740)

— 

Impairment expense (5)

— 

7,634 

Arbitration award expense (6)

— 

9,393 

Income tax impact on above adjustments (7)

(5,321)

(7,832)

Adjusted net earnings

$

74,683 

$

108,872 

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Twelve Months Ended

(Shares in thousands) (Unaudited)

February 28, 2026

March 1, 2025

Diluted earnings per share

$

2.52 

$

3.89 

Acquisition-related costs (1)

0.10 

0.47 

Restructuring costs (2)

1.28 

0.20 

CEO transition costs (3)

0.14 

— 

NMTC settlement gain (4)

(0.31)

— 

Impairment expense (5)

— 

0.35 

Arbitration award expense (6)

— 

0.43 

Income tax impact on above adjustments (7)

(0.25)

(0.36)

Adjusted diluted earnings per share

$

3.47 

$

4.97 

Weighted average diluted shares outstanding

21,517 

21,891 

(1)

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

(2)

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

(3)

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

(4)

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

(5)

Impairment expense on intangible assets in the Architectural Metals Segment.

(6)

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

(7)

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Recently Issued Accounting Pronouncements

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

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Critical Accounting Policies and Estimates

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

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

Revenue recognition

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

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

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

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

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

Goodwill and indefinite-lived intangible asset valuation

Goodwill

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

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

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

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

Indefinite-lived intangible assets

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

For our fiscal 2026 annual impairment test, we bypassed a qualitative assessment and performed a quantitative impairment test to compare the fair value of each indefinite-lived intangible asset with its carrying value. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment expense is recognized in an amount equal to that excess. If an impairment expense is recognized, the adjusted carrying amount becomes the asset's new accounting basis.

Fair value is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires estimation of future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. The assessment of fair value involves significant judgment and projections about future performance. In the fair value analysis, we assumed a discount rate of 13%, a royalty rate of 1.5%, and a long-term growth rate of 1.0%. Based on our annual analysis, the fair value of our indefinite-lived intangible assets exceeded carrying value.

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

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

We are subject to claims associated with our products and services, principally as a result of disputes with our customers involving the performance or aesthetics of our products, some of which may be covered under our warranty policies. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. We also are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services Segment. The time period from when a claim is asserted to when it is resolved, either by negotiation, settlement or litigation, can be several years. While we maintain various types of product liability insurance, the insurance policies include significant self-retention of risk in the form of policy deductibles. In addition, certain claims could be

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

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

Income taxes

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

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

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

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