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Apogee Enterprises Reports Fiscal 2026 First Quarter Results

1. APOG reported Q1 FY2026 results exceeding expectations amidst tough market conditions. 2. Net sales grew 4.6% to $346.6 million, bolstered by UW Solutions acquisition. 3. Gross margin dropped to 21.7% due to higher aluminum costs and restructuring charges. 4. Adjusted diluted EPS guidance raised for FY2026, indicating better second-half performance. 5. Tariffs impacted results, but mitigation plans are in place to offset effects.

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Why Bullish?

The increase in net sales and adjusted diluted EPS guidance points to positive momentum. Historical examples show that strong guided earnings often result in share price increases.

How important is it?

This article contains key performance indicators and a positive fiscal outlook that directly influences investor confidence in APOG.

Why Long Term?

The implications of a raised FY outlook suggest sustained growth potential in future quarters. Companies with solid growth ambitions tend to attract longer-term investments.

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MINNEAPOLIS--(BUSINESS WIRE)--Apogee Enterprises, Inc. (Nasdaq: APOG), a leading provider of architectural building products and services, as well as high-performance coated materials used in a variety of applications, today reported its results for the first quarter of fiscal 2026, ended May 31, 2025. The Company reported the following selected financial results: Ty R. Silberhorn, Apogee’s Chief Executive Officer, stated: “We are pleased to deliver results ahead of our expectations in the first quarter amid challenging market conditions and year-over-year headwinds. We are also raising our fiscal year outlook for net sales and adjusted diluted EPS as we build momentum for what we expect will be a stronger second half of the year.” Mr. Silberhorn continued, “Although tariffs adversely impacted our first quarter results, we continue to execute our mitigation plans and barring any material change to tariff policies, we expect to be able to substantially mitigate the impact of tariffs on the second half of the fiscal year.” Mr. Silberhorn concluded, “We also continue to be excited about the opportunities to build a platform for growth in our Performance Surfaces segment. Our recent investments in additional capacity, and the acquisition of UW Solutions, expand our market reach and broaden our product offerings. We are executing a structured integration plan to bring out the best in both businesses. We are encouraged by the early results of the acquisition, and they demonstrate how we can use our balance sheet to acquire assets to set us up for future growth.” Consolidated Results (First Quarter Fiscal 2026 compared to First Quarter Fiscal 2025) Net sales increased 4.6% to $346.6 million, primarily driven by $22.0 million of inorganic sales from the acquisition of UW Solutions. Growth from inorganic sales was partially offset by lower volume in Architectural Glass and a less favorable mix in Architectural Metals. Gross margin decreased to 21.7% from 29.8% primarily due to restructuring charges of $6.9 million, a less favorable mix and higher aluminum costs in Architectural Metals, and higher tariff expense in Architectural Services. Selling, general and administrative (SG&A) expense as a percent of net sales increased 240 basis points to 19.7%, primarily due to restructuring charges of $8.4 million and increased amortization expense associated with the UW Solutions transaction, partially offset by lower long-term incentive expense. Operating income decreased to $6.9 million, primarily driven by restructuring charges related to Project Fortify Phase 2 of $15.3 million, a less favorable mix and higher aluminum costs in Architectural Metals, higher tariff expense in Architectural Services, and increased amortization expense associated with the UW Solutions transaction, partially offset by lower long-term incentive expense. Adjusted EBITDA decreased to $34.4 million and adjusted EBITDA margin decreased to 9.9%. The decrease in adjusted EBITDA margin was primarily driven by a less favorable mix and higher aluminum costs in Architectural Metals, as well as higher tariff expense in Architectural Services, partially offset by lower long-term incentive expense. Net interest expense increased to $3.8 million, primarily due to increased debt resulting from the acquisition of UW Solutions. Income tax expense decreased to $5.1 million, primarily driven by lower earnings before taxes. Net income decreased from net earnings of $31.0 million to a net loss of $2.7 million. Diluted loss per share was $0.13. Adjusted diluted EPS was $0.56, primarily driven by lower adjusted operating income. Segment Results (First Quarter Fiscal 2026 Compared to First Quarter Fiscal 2025) Architectural Metals Architectural Metals net sales were $128.6 million, compared to $133.2 million, primarily reflecting a less favorable mix, partially offset by higher volume. Adjusted EBITDA was $9.4 million, or 7.3% of net sales, compared to $23.8 million, or 17.9% of net sales. The lower adjusted EBITDA margin was primarily driven by a less favorable mix, higher aluminum costs, unfavorable productivity, and unfavorable sales leverage, partially offset by the impact from higher volume. Architectural Services Architectural Services net sales were $106.5 million compared to $99.0 million, primarily due to increased volume. Adjusted EBITDA was $6.1 million, or 5.7% of net sales, compared to $6.6 million, or 6.6% of net sales. The decrease in adjusted EBITDA margin was primarily driven by the impact of higher tariff expense, partially offset by a more favorable mix of projects and favorable sales leverage. Segment backlog2 at the end of the quarter was $682.9 million, compared to $720.3 million at the end of the fourth quarter. Architectural Glass Architectural Glass net sales were $73.3 million, compared to $86.7 million, primarily reflecting reduced volume due to lower end-market demand. Adjusted EBITDA was $13.4 million, or 18.3% of net sales, compared to $20.2 million, or 23.3% of net sales. The lower adjusted EBITDA margin was primarily driven by unfavorable sales leverage. Performance Surfaces Performance Surfaces net sales were $42.3 million, compared to $21.2 million. Net sales included $22.0 million of inorganic sales contribution from the acquisition of UW Solutions. Adjusted EBITDA was $8.0 million, or 18.8% of net sales compared to $5.6 million, or 26.6% of net sales. The lower adjusted EBITDA margin was primarily driven by the dilutive impact of lower adjusted EBITDA margin from UW Solutions, unfavorable mix, and increased corporate allocations expense. Corporate and Other Corporate and other adjusted EBITDA expense was $2.4 million, compared to $3.7 million, primarily driven by lower long-term incentive expense. Financial Condition Net cash used in operating activities was $19.8 million, compared to $5.5 million net cash provided by operating activities in the prior year period. The change was primarily driven by lower net earnings and an increase in cash used for working capital including a net payment of $13.7 million for the settlement of an arbitration award. Net cash used by investing activities was $7.0 million, primarily related to capital expenditures. The Company returned $5.5 million of cash to shareholders through dividend payments. Quarter-end long-term debt increased to $311 million, which increased the Consolidated Leverage Ratio3 (as defined in the Company’s credit agreement) to 1.6x at the end of the quarter. Project Fortify As previously announced, in the first quarter of fiscal 2026, the Company began the second phase of Project Fortify (referred to as "Project Fortify Phase 2" or "Phase 2") to drive further cost efficiencies, primarily in the Architectural Services and Architectural Metals Segments. Phase 2 will further optimize the manufacturing footprint and align resources to enable a more effective operating model. The Company continues to expect the actions of Phase 2 to incur a total of approximately $24 million to $26 million in pre-tax charges, and deliver estimated annualized pre-tax cost savings of approximately $13 million to $15 million. During the first quarter, the Company incurred $15.3 million of pre-tax costs associated with Phase 2. The Company expects the actions associated with Phase 2 to be substantially completed by the end of the fourth quarter of fiscal 2026. Fiscal 2026 Outlook The Company is raising its outlook for the fiscal year for both net sales and diluted EPS. The Company now expects net sales in the range of $1.40 billion to $1.44 billion (previously $1.37 billion to $1.43 billion), diluted EPS in the range of $2.59 to $3.12 (previously $2.54 to $3.19) and adjusted diluted EPS in the range of $3.80 to $4.20 (previously $3.55 to $4.10). This includes a projected unfavorable EPS impact from tariffs of $0.35 to $0.45, which will mostly impact the first half of the fiscal year before mitigation efforts take full effect. The Company’s revised outlook assumes an effective tax rate of 33% and an adjusted effective tax rate of approximately 27.5%. The Company continues to assume capital expenditures between $35 million to $40 million. Conference Call Information The Company will host a conference call today at 8:00 a.m. Central Time to discuss this earnings release. This call will be webcast and is available in the Investor Relations section of the Company’s website, along with presentation slides, at https://www.apog.com/events-and-presentations. A replay and transcript of the webcast will be available on the Company’s website following the conference call. About Apogee Enterprises Apogee Enterprises, Inc. (Nasdaq: APOG) is a leading provider of architectural building products and services, as well as high-performance coated materials used in a variety of applications. Headquartered in Minneapolis, MN, our portfolio of industry-leading products and services includes architectural glass, windows, curtainwall, storefront and entrance systems, integrated project management and installation services, and high-performance coatings that provide protection, innovative design, and enhanced performance. For more information, visit www.apog.com. Use of Non-GAAP Financial Measures Management uses non-GAAP 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. Non-GAAP measures should be viewed in addition to, and not as a substitute for, the reported financial results of the Company prepared in accordance with GAAP. Other companies may calculate these measures differently, limiting the usefulness of the measures for comparison with other companies. This release and other financial communications may contain the following non-GAAP measures: Adjusted net earnings, adjusted diluted EPS, and adjusted EBITDA are used by the Company to provide meaningful supplemental information about its operating performance by excluding amounts that are not considered part of core operating results to enhance comparability of results from period to period. Adjusted EBITDA represents adjusted net earnings before interest, taxes, depreciation, and amortization. We use adjusted EBITDA 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. Consolidated Leverage Ratio is calculated as Consolidated Funded Indebtedness minus Unrestricted Cash at the end of the current period, divided by Consolidated EBITDA (calculated as EBITDA plus certain non-cash charges and allowed addbacks, less certain non-cash income, plus the pro forma effect of acquisitions and certain pro forma run-rate cost savings for acquisitions and dispositions, as applicable for the trailing twelve months ended as of the current period). All capitalized and undefined terms used in this bullet are defined in the Company’s credit agreement dated July 19, 2024. The Company is unable to present a quantitative reconciliation of forward-looking expected Consolidated Leverage Ratio to its most directly comparable forward-looking GAAP financial measure because such information is not available, and management cannot reliably predict all the necessary components of such GAAP financial measure without unreasonable effort or expense. In addition, the Company believes such reconciliation would imply a degree of precision that would be confusing or misleading to investors. Backlog is an operating measure used by management to assess future potential sales revenue. 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. It is most meaningful for the Architectural Services segment, due to the longer-term nature of their projects. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. Backlog should not be used as the sole indicator of future revenue because the Company has a substantial number of projects with short lead times that book-and-bill within the same reporting period that are not included in backlog. Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The words “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “will,” “continue,” and similar expressions are intended to identify “forward-looking statements”. These statements reflect Apogee management’s expectations or beliefs as of the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the results, performance, financial condition, prospects and opportunities of the Company, including the following: (A) North American and global economic conditions, including the cyclical nature of the North American and Latin American non-residential construction industries and the potential impact of an economic downturn or recession; (B) U.S. and global instability and uncertainty arising from events outside of our control; (C) actions of new and existing competitors; (D) departure of key personnel and ability to source sufficient labor; (E) product performance, reliability and quality issues; (F) project management and installation issues that could affect the profitability of individual contracts; (G) dependence on a relatively small number of customers in one operating segment; (H) financial and operating results that could differ from market expectations; (I) self-insurance risk related to a material product liability or other events for which the Company is liable; (J) maintaining our information technology systems and potential cybersecurity threats; (K) cost of regulatory compliance, including environmental regulations; (L) supply chain disruptions, including fluctuations in the availability and cost of materials used in our products and the impact of trade policies and regulations, including existing and potential future tariffs; (M) integration and future operating results of acquisitions, including but not limited to the acquisition of UW Solutions, and management of acquired contracts; (N) impairment of goodwill or indefinite-lived intangible assets; (O) our ability to successfully manage and implement our enterprise strategy; (P) our ability to maintain effective internal controls over financial reporting; (Q) our judgements regarding accounting for tax positions and resolution of tax disputes; (R) the impacts of cost inflation and interest rates; and (S) the impact of changes in capital and credit markets on our liquidity and cost of capital. The Company cautions investors that actual future results could differ materially from those described in the forward-looking statements and that other factors may in the future prove to be important in affecting the Company’s results, performance, prospects, or opportunities. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of each 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. More information concerning potential factors that could affect future financial results is included in the Company’s Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission. N/M - Indicates calculation is not meaningful. Segment net sales is defined as net sales for a certain segment and includes revenue related to intersegment transactions. Net sales intersegment eliminations are reported separately to exclude these sales from our consolidated total. Adjusted EBITDA represents adjusted net earnings before interest, taxes, depreciation, and amortization. More News From Apogee Enterprises, Inc.

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