Core Viewpoint - The article emphasizes the importance of value investing and highlights Apogee Enterprises (APOG) as a strong value stock based on its financial metrics and rankings [2][3][6] Company Metrics - Apogee Enterprises (APOG) holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is among the strongest value stocks currently available [3] - APOG has a Price-to-Book (P/B) ratio of 1.93, which is lower than the industry average of 2.28, suggesting it may be undervalued [4] - The P/B ratio for APOG has fluctuated between a high of 3.78 and a low of 1.68 over the past year, with a median of 2.70 [4] - The Price-to-Cash Flow (P/CF) ratio for APOG is 8.14, which is also below the industry average of 9.50, further indicating potential undervaluation [5] - Over the past year, APOG's P/CF has ranged from a high of 13.26 to a low of 6.12, with a median of 9.05 [5] - These metrics contribute to the strong Value grade for APOG, suggesting it is likely undervalued at present [6]

Financial Performance - Consolidated net sales increased by 4.6% to $346.6 million, driven by $22.0 million of inorganic sales from the acquisition of UW Solutions[111] - Gross margin decreased to 21.7% from 29.8%, primarily due to $6.9 million in restructuring charges and higher aluminum costs[111] - SG&A expenses rose by $10.7 million to 19.7% of net sales, influenced by $8.4 million in restructuring charges and increased amortization from the UW Solutions acquisition[111] - Operating income declined to $6.9 million from $41.4 million, with operating margin decreasing by 1,050 basis points to 2.0%[111] - Adjusted EBITDA decreased to $34.4 million from $52.6 million, with adjusted EBITDA margin falling to 9.9% from 15.9%[111] - The company reported a net loss of $2.7 million compared to net earnings of $31.0 million in the same period last year[117] - Adjusted net earnings for the three months ended May 31, 2025, were $11.85 million, compared to $31.86 million for the same period in the previous year[136] - The adjusted diluted earnings per share for the three months ended May 31, 2025, was $0.56, compared to $1.44 for the same period in the previous year[136] Segment Performance - Architectural Metals segment net sales decreased by 3.4% to $128.6 million, while Architectural Services increased by 7.6% to $106.5 million[116] - Performance Surfaces segment net sales surged by 99.3% to $42.3 million, reflecting strong growth[116] - Net sales for the period were $128.6 million, a decrease from $133.2 million, primarily due to a less favorable mix, partially offset by increased volume[125] - Adjusted EBITDA was $9.4 million, or 7.3% of net sales, down from $23.8 million, or 17.9% of net sales, driven by higher aluminum costs and unfavorable productivity[125] Cash Flow and Financing - Net cash used in operating activities was $19.8 million for the first three months of fiscal 2026, compared to cash provided of $5.5 million in the prior year period, primarily due to lower net earnings[139] - Net cash provided by financing activities was $17.6 million for the first three months of fiscal 2026, compared to $4.9 million of net cash used in the prior year period[141] - As of May 31, 2025, outstanding borrowings under the term loan facility were $215.0 million, and under the revolving credit facility were $96.0 million[150] - The total amount available for revolving borrowings was $351.4 million as of May 31, 2025[151] - Future lease payments, excluding leases with initial terms of one year or less, were $71.8 million at May 31, 2025, with $12.5 million payable during the remainder of fiscal 2026[152] - The company had $16.0 million of open purchase obligations, with $7.8 million expected to be due during the remainder of fiscal 2026[153] Strategic Initiatives - The company expects Project Fortify Phase 2 to incur approximately $24 million to $26 million in pre-tax charges, with expected annualized pre-tax cost savings of $13 million to $15 million[107] - The company is reviewing its portfolio and may pursue acquisitions, geographic expansion, and divestitures as part of its business strategy[158] Tax and Compliance - The effective tax rate increased to 211.9% from 24.5%, primarily due to lower earnings before income taxes[117] - The company was in compliance with all covenants under the Credit Agreement as of May 31, 2025[146] Other Information - The company recognized a loss on extinguishment of debt of $0.5 million related to the previous revolving credit facility[145] - The Credit Agreement provides for an unsecured senior credit facility of up to $700 million, including a $450 million revolving credit facility[143] - At May 31, 2025, $1.2 billion of surety or performance bonds were outstanding, with $339.2 million in backlog[155] - The company believes its sources of liquidity will be adequate to meet both short-term and long-term capital expenditure needs[157] - There have been no material changes in related party transactions or critical accounting policies since the last annual report[159][160] - There have been no material changes in market risk since March 1, 2025[161]

Core Insights - Apogee Enterprises, Inc. (APOG) reported earnings per share (EPS) of 56 cents for the first quarter of fiscal 2026, exceeding the Zacks Consensus Estimate of 50 cents, although this represents a 61.1% decrease year over year [1] - The company generated revenues of $347 million, a 4.6% increase year over year, driven by the acquisition of UW Solutions, surpassing the Zacks Consensus Estimate of $324 million [2] - Despite revenue growth, gross profit fell 24% year over year to $75 million, with gross margin contracting to 21.7% from 29.8% in the prior year [2] Financial Performance - Cost of sales increased by 16.7% year over year to $271 million, contributing to the decline in gross profit [2] - Selling, general and administrative expenses rose 18.7% year over year to $68 million, leading to an operating income drop of 83.3% year over year to $6.9 million [3] Segment Performance - Architectural Metals segment revenues decreased 3.4% year over year to $129 million, with adjusted EBITDA falling to $9.4 million from $23.8 million [4] - Architectural Glass segment revenues fell 15.5% year over year to $73 million, with adjusted EBITDA around $13 million compared to $20 million in the previous year [5] - Architectural Services segment revenues improved 7.6% year over year to $106.5 million, but adjusted EBITDA decreased by 7.7% year over year to $6.1 million [5] - Performance Surfaces segment revenues surged 99.3% year over year to $42 million, reflecting the contribution from the UW Solutions acquisition, with adjusted EBITDA increasing to $7.96 million from $5.6 million [6] Cash Position and Debt - At the end of the first quarter of fiscal 2026, Apogee had cash and cash equivalents of $32.8 million, down from $41 million at the end of fiscal 2025 [7] - Cash used from operating activities was $19.7 million in the first quarter, compared to a cash inflow of $5.5 million in the prior year [7] - Long-term debt increased to $311 million from $285 million at the end of fiscal 2025 [8] Guidance - Apogee raised its guidance for net revenues to $1.40-$1.44 billion for fiscal 2026, up from the previous range of $1.37-$1.43 billion [9] - The updated adjusted EPS guidance is now $3.80-$4.20, an increase from the prior range of $3.55-$4.10, despite anticipated tariff pressures [9][10] Stock Performance - Apogee's shares have declined by 30.7% over the past year, contrasting with an 8.2% growth in the industry [11]

Group 1 - Apogee Enterprises (APOG) is expected to experience revenue and margin improvement, with sales gaining momentum in the latter half of fiscal 2026 [1] - The anticipated growth is supported by a rebound in the Metals segment, improving trends in Glass, and solid organic demand [1]

Core Viewpoint - Apogee Enterprises reported strong fiscal Q1 2026 earnings that initially boosted stock prices, but underlying issues, particularly in GAAP earnings and cash flow, raise concerns about the sustainability of these results [1][5][6] Financial Performance - Apogee's Q1 sales reached $346.6 million, exceeding analyst expectations by over $20 million [3] - Adjusted earnings for the quarter were $0.56 per share, which is 24% higher than anticipated [3] - The company forecasts annual sales of at least $1.4 billion and adjusted earnings between $3.80 and $4.20 per share, surpassing Wall Street's estimate of $3.72 [4] GAAP Earnings and Cash Flow - Despite strong adjusted earnings, Apogee reported a GAAP loss of $0.13 per share for Q1 [6] - The company experienced negative free cash flow of $27 million [6] Management Commentary - CEO Ty Silberhorn indicated that tariffs negatively affected Q1 results and emphasized the need for measures to mitigate their impact in the second half of the fiscal year [6]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $346.6 million, primarily driven by $22 million of inorganic sales from the acquisition of UW Solutions [12] - Adjusted EBITDA margin decreased to 9.9%, primarily due to a less favorable mix and higher aluminum costs [13] - Adjusted diluted EPS declined to $0.56, driven by lower adjusted EBITDA, higher interest expense, and a higher adjusted effective tax rate [13] Business Line Data and Key Metrics Changes - Metals segment net sales declined by 3.4%, with adjusted EBITDA margin decreasing to 7.3% due to a less favorable mix and higher aluminum costs [13] - Services segment achieved a 7.6% increase in net sales, marking its fifth consecutive quarter of growth, although adjusted EBITDA margin decreased to 5.7% due to higher tariff expenses [14] - Glass segment net sales declined, with adjusted EBITDA margin moderating from elevated levels due to reduced volume from lower end market demand [14] - Performance Surfaces segment saw increased net sales driven by inorganic contributions from UW Solutions, with adjusted EBITDA margin declining to 18.8% [14] Market Data and Key Metrics Changes - The revenue pipeline for Glass is improving, positioning the segment for growth beginning in Q3 and into Q4 [8] - Metals showed solid sequential improvement from Q4, with expectations for continued improvement in Q2 [8][41] Company Strategy and Development Direction - The company is focusing on operational improvements and tariff mitigation efforts, with aggressive actions under Project Fortify expected to drive annualized savings of $13 million to $15 million [7][10] - The company is actively pursuing M&A opportunities to diversify its business mix and enhance growth prospects [11][18] Management's Comments on Operating Environment and Future Outlook - Management raised the fiscal year outlook for net sales and adjusted diluted EPS, expecting a strong second half driven by Performance Surfaces and improved glass results [11][19] - Management acknowledged ongoing market challenges but emphasized a focus on controllable factors to improve outlook [10] Other Important Information - The company expects net sales for the fiscal year to be in the range of $1.4 billion to $1.44 billion, with adjusted diluted EPS between $3.8 and $4.2 [16] - The unfavorable EPS impact from tariffs is estimated to be $0.35 to $0.45, primarily affecting the first half of the fiscal year [16] Q&A Session Summary Question: Can you elaborate on the glass business and the revenue pipeline? - Management noted good visibility six months out and mentioned a pivot to smaller jobs to fill gaps in market softness, with increasing confidence in quote activity and award rates [24][25] Question: What are the segment margin targets for different business groups? - Management indicated that metals and services face headwinds from tariffs, and while they may struggle to reach the bottom of their target ranges, they expect improvement in the second half [30][31] Question: What is driving the sequential improvement in the metals segment? - Management highlighted operational improvements and regaining customer confidence as key factors driving month-to-month sequential improvement [41][43] Question: What is the status of Project Fortify Phase two? - Management confirmed minimal savings in Q1, with more significant savings expected to materialize in Q2 [48] Question: Can you quantify the EPS impact from tariffs in Q1? - Management stated that the impact was initially estimated at $0.45 to $0.55, but has been revised to $0.35 to $0.45 for the full year, with favorable trends noted in Q1 [49][50]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $346.6 million, primarily driven by $22 million of inorganic sales from the acquisition of UW Solutions [10][11] - Adjusted EBITDA margin decreased to 9.9%, primarily due to a less favorable mix and higher aluminum costs [11] - Adjusted diluted EPS declined to $0.56, driven by lower adjusted EBITDA, higher interest expense, and a higher adjusted effective tax rate [11][12] Business Line Data and Key Metrics Changes - Metals segment net sales declined by 3.4%, with adjusted EBITDA margin decreasing to 7.3% due to a less favorable mix and higher aluminum costs [11][12] - Services segment achieved a 7.6% increase in net sales, marking its fifth consecutive quarter of growth, although adjusted EBITDA margin decreased to 5.7% due to higher tariff expenses [12] - Glass segment net sales declined, with adjusted EBITDA margin moderating due to reduced volume from lower end market demand [12] - Performance Surfaces segment saw net sales increase, driven by inorganic sales from UW Solutions, but adjusted EBITDA margin declined to 18.8% due to lower margins from UW Solutions [12] Market Data and Key Metrics Changes - The revenue pipeline for Glass is improving, positioning the segment for growth beginning in Q3 and Q4 [7][10] - Metals showed sequential improvement from Q4, with expectations for continued improvement in Q2 [6][11] Company Strategy and Development Direction - The company is focusing on operational improvements and cost mitigation strategies, particularly through Project Fortify Phase two, which is expected to drive annualized savings of $13 million to $15 million [6][10] - The company is actively pursuing M&A opportunities to diversify its business mix and enhance growth prospects [8][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building momentum for the second half of the fiscal year, driven by improvements in metals, growth in glass revenues, and strong organic growth in Performance Surfaces [17] - The company raised its fiscal year outlook for net sales and adjusted diluted EPS, expecting net sales in the range of $1.4 billion to $1.44 billion and adjusted diluted EPS between $3.8 and $4.2 [14][17] Other Important Information - The company is experiencing challenges due to increased tariffs but is implementing successful mitigation plans [6][10] - The balance sheet remains strong, with a consolidated leverage ratio of 1.6 and no near-term debt maturities [13] Q&A Session Summary Question: Can you elaborate on the glass business and the revenue pipeline? - Management noted good visibility six months out and mentioned a pivot to smaller jobs to fill gaps due to market softness, with improved quote activity and award rates [22][24] Question: What is the outlook for segment margin targets? - Management indicated that metals and services face headwinds due to tariffs, and while they hope to reach the bottom of their target ranges, it may be challenging in the first half [28][30] Question: What is driving the sequential improvement in the metals segment? - Management highlighted operational improvements and regaining customer confidence as key factors driving sales and margin improvements [40][42] Question: What is the status of Project Fortify Phase two? - Minimal savings were seen in Q1, with more expected to materialize in Q2, particularly following the closure of a Canadian facility [45][47] Question: Can you quantify the EPS impact from tariffs in Q1? - The impact was initially estimated at $0.45 to $0.55, but was updated to $0.35 to $0.45 for the full year, with a favorable trend noted in Q1 [48][50] Question: How is the M&A pipeline being affected by the current environment? - Management stated that while M&A activity has slowed due to macro issues, they continue to focus on strategic targets identified over the past two years [63][65]

Core Viewpoint - Apogee Enterprises reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, but down from $1.44 per share a year ago, indicating a significant decline in profitability [1][2] Financial Performance - The company achieved revenues of $346.62 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 7.08% and showing an increase from $331.52 million year-over-year [2] - Over the last four quarters, Apogee has exceeded consensus EPS estimates three times and topped revenue estimates twice [2] Stock Performance - Apogee Enterprises shares have declined approximately 44.5% since the beginning of the year, contrasting with the S&P 500's gain of 4.4% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.65 on revenues of $334.37 million, and for the current fiscal year, it is $3.80 on revenues of $1.39 billion [7] - The trend of estimate revisions prior to the earnings release was unfavorable, which may impact future stock performance [6] Industry Context - The Glass Products industry, to which Apogee belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a relatively strong position within the market [8]

Financial Performance - Apogee's Q1 FY26 net sales reached $346.6 million, a 4.6% year-over-year increase[13, 14] - Adjusted EBITDA was $34.4 million, a 34.7% decrease year-over-year[13, 14] - Adjusted EBITDA margin was 9.9%, a 600 bps decrease year-over-year[13, 14] - Adjusted diluted EPS was $0.56, a 61.1% decrease year-over-year[13, 14] Segment Results - Architectural Metals net sales were $128.6 million, a 3.4% decrease year-over-year, with an adjusted EBITDA margin of 7.3%, a 1060 bps decrease[21, 24] - Architectural Services net sales were $106.5 million, a 7.6% increase year-over-year, with an adjusted EBITDA margin of 5.7%, a 90 bps decrease[21, 24] - Architectural Glass net sales were $73.3 million, a 15.5% decrease year-over-year, with an adjusted EBITDA margin of 18.3%, a 500 bps decrease[21, 24] - Performance Surfaces net sales were $42.3 million, a 99.3% increase year-over-year, with an adjusted EBITDA margin of 18.8%, a 780 bps decrease[21, 24] FY26 Outlook - The company is increasing its full-year FY26 outlook for net sales to $1.40 billion - $1.44 billion[39] - The company is increasing its full-year FY26 outlook for adjusted diluted EPS to $3.80 to $4.20[39]

Financial Performance - Net sales increased by 4.6% to $346.6 million, driven by $22.0 million of inorganic sales from the acquisition of UW Solutions[4] - Net loss of $2.7 million compared to net earnings of $31.0 million in the prior year, representing a decline of 108.7%[1] - Adjusted EBITDA decreased by 34.7% to $34.4 million, with an adjusted EBITDA margin of 9.9%[1] - Diluted loss per share was $0.13, while adjusted diluted earnings per share was $0.56, a decrease of 61.1%[1] - Gross profit decreased by 24.0% to $75,125,000 from $98,855,000 year-over-year[21] - Operating income fell significantly by 83.3% to $6,931,000 compared to $41,381,000 in the prior year[21] - For the three months ended May 31, 2025, the consolidated net loss was $2.688 million, compared to a net earnings of $31.011 million for the same period in 2024[36] - Adjusted EBITDA for the three months ended May 31, 2025, was $34.384 million, with an adjusted EBITDA margin of 9.9%, compared to $52.622 million and 15.9% for the same period in 2024[36] - EBITDA for the three months ended May 31, 2025, was $18.685 million, down from $51.500 million in the same period in 2024[36] Cost and Expenses - Gross margin decreased to 21.7% from 29.8%, primarily due to restructuring charges and higher aluminum costs[4] - Selling, general and administrative (SG&A) expenses as a percentage of net sales increased by 240 basis points to 19.7%[4] - The company incurred $15.3 million in pre-tax costs associated with Project Fortify Phase 2 during the first quarter[12] - The company reported restructuring costs of $15.350 million related to Project Fortify Phase 2 for the three months ended May 31, 2025[37] - The company incurred acquisition-related costs of $349,000 for the three months ended May 31, 2025, related to the integration of the UW Solutions acquisition[41] - The company’s interest expense for the three months ended May 31, 2025, was $3.846 million, compared to $450,000 for the same period in 2024[36] - The income tax expense for the three months ended May 31, 2025, was $5.091 million, compared to $10.063 million for the same period in 2024[36] - The company reported a depreciation and amortization expense of $12.436 million for the three months ended May 31, 2025[36] Sales and Segment Performance - The Architectural Glass segment experienced a 15.5% decline in net sales, dropping to $73,273,000 from $86,703,000[32] - Performance Surfaces segment saw a significant increase in net sales by 99.3%, rising to $42,250,000 from $21,204,000[32] - Segment backlog at the end of the quarter was $682.9 million, down from $720.3 million at the end of the previous quarter[6] - Net sales for the three months ended May 31, 2025, were $346,622,000, representing a 4.6% increase compared to $331,516,000 for the same period in 2024[21] Financial Outlook - The company raised its fiscal year outlook for net sales to a range of $1.40 billion to $1.44 billion[13] - Projected unfavorable EPS impact from tariffs is estimated to be between $0.35 to $0.45, mostly affecting the first half of the fiscal year[13] - The fiscal 2026 outlook estimates diluted earnings per share to range from $2.59 to $3.12, with adjusted diluted earnings per share projected between $3.80 and $4.20[44] Assets and Liabilities - Total current assets increased slightly to $447,959,000 from $442,104,000[23] - Long-term debt increased to $311,000,000 from $285,000,000, indicating a rise in financial leverage[23] - Cash and cash equivalents at the end of the period were $32,831,000, down from $41,448,000 at the beginning of the period[25]