Core Viewpoint - The initial optimism regarding Apogee Enterprises, Inc. (APOG) at mid-forties levels has proven to be premature, indicating a need for a reassessment of the company's prospects [1]. Group 1: Company Overview - Apogee Enterprises, Inc. is under scrutiny following a period of optimism that has not materialized as expected [1]. Group 2: Investment Insights - The investment group "Value In Corporate Events" focuses on identifying opportunities through major corporate events such as IPOs, mergers & acquisitions, and earnings reports, providing insights to capitalize on these events [2].

Core Insights - Apogee Enterprises, Inc. (APOG) reported adjusted earnings per share (EPS) of $1.02 for Q3 fiscal 2026, missing the Zacks Consensus Estimate of $1.03 per share, and reflecting a 14.3% decrease from the prior-year quarter [1] - The company generated revenues of $349 million in the quarter, up 2.1% year over year, but still below the Zacks Consensus Estimate of $350 million [2] - Apogee's gross profit fell 6.9% year over year to $82.9 million, with gross margin decreasing to 23.8% from 26.1% in the prior year [3] Financial Performance - Cost of sales increased by 5.3% year over year to $266 million, leading to a decline in operating income to $24.8 million, down 13.1% from $28.6 million in the prior year [3] - The Architectural Metals segment saw revenues decline by 9.9% year over year to $124 million, while the Architectural Glass segment grew by 0.9% to $70.8 million [4][5] - The Performance Surfaces segment experienced significant growth, with revenues rising 59.6% year over year to $52.9 million, attributed to the acquisition of UW Solutions [6] Backlog and Cash Position - The backlog for the Architectural Services segment decreased to $775 million at the end of Q3, down from $792 million in the previous quarter [7] - Apogee had cash and cash equivalents of $41 million at the end of Q3, with cash provided by operating activities totaling $67 million for the first nine months of the fiscal year [8] Guidance and Stock Performance - The company revised its FY26 revenue guidance to $1.39 billion from a previous range of $1.39-$1.42 billion, and adjusted EPS guidance to $3.40-$3.50 from $3.60-$3.90, citing 30 cents of tariff-related headwinds [11] - Apogee's stock has declined by 37.1% over the past year, contrasting with the industry's growth of 18.9% [12]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Company Overview - Apogee Enterprises, Inc. (NASDAQ: APOG) is a significant player in the architectural building products and high-performance coated materials industry, headquartered in Minneapolis, known for innovative solutions in the construction sector [1] Financial Performance - On January 7, 2026, APOG reported earnings per share (EPS) of $0.76, which was below the estimated $1.03, indicating that profitability did not meet market expectations [2] - The actual revenue for the period was $348.6 million, slightly missing the estimated $349 million, reflecting a close alignment with market expectations [3] Valuation Metrics - APOG maintains a price-to-earnings (P/E) ratio of 17.43, suggesting that investors still value the company's earnings potential despite the EPS shortfall [2] - The price-to-sales ratio of 0.50 indicates that the stock is valued at half of its sales per share, appealing to value-focused investors [3] - The enterprise value to sales ratio of 0.70 shows the company's total valuation relative to its sales, while the enterprise value to operating cash flow ratio of 10.06 highlights the company's ability to cover its enterprise value with operating cash flow [4] Financial Health - APOG's debt-to-equity ratio of 0.61 indicates a balanced approach to financing its assets, using a mix of debt and equity [5] - The current ratio of 1.90 suggests that the company is well-positioned to cover its short-term liabilities with its short-term assets, reflecting strong liquidity [5]

Financial Performance - Consolidated net sales increased by 2.1% to $348.6 million, driven by $18.4 million of inorganic sales from the acquisition of UW Solutions[120] - Gross margin decreased to 23.8% from 26.1%, primarily due to lower volume and price, as well as higher aluminum and restructuring costs[120] - Operating income declined to $24.9 million from $28.6 million, with an operating margin decrease of 130 basis points to 7.1%[120] - Adjusted EBITDA increased to $46.1 million, while adjusted EBITDA margin decreased to 13.2% from 13.4%[120] - Net earnings were $16.5 million compared to $21.0 million, with an effective tax rate of 31.4% compared to 24.1%[120] - For the nine months ended, consolidated net sales increased by 3.8% to $1.1 billion, primarily due to $65.3 million from the acquisition of UW Solutions[125] - Gross margin for the nine months decreased to 22.9% from 28.1%, driven by lower price and volume, and higher costs[125] - Operating income for the nine months declined to $58.7 million from $112.0 million, with a decrease in operating margin of 540 basis points to 5.6%[125] - Adjusted EBITDA for the nine months ended November 29, 2025, was $124.9 million, a 17.6% decrease from $151.5 million in the same period last year[126] - Net earnings for the three months ended November 29, 2025, were $16,549,000, compared to $20,989,000 for the same period in 2024, a decrease of approximately 21.5%[143] - The company’s net earnings for the nine months ended November 29, 2025, were $37,511,000, compared to $82,566,000 for the same period in 2024, reflecting a decrease of approximately 54.6%[143] Segment Performance - Architectural Metals segment net sales decreased by 9.9% to $124.4 million, while adjusted EBITDA margin improved to 13.5%[130] - Performance Surfaces segment saw a significant increase in net sales by 59.6% to $52.9 million, with an adjusted EBITDA margin of 22.5%[130] - Architectural Glass segment net sales decreased by 12.4% to $216.3 million, with adjusted EBITDA margin declining to 16.9%[135] Costs and Expenses - Interest expense increased to $11.1 million, primarily due to a higher average debt balance from the acquisition of UW Solutions[125] - The company incurred restructuring costs of $5,080,000 for the three months ended November 29, 2025, compared to $912,000 for the same period in 2024, indicating a significant increase in restructuring expenses[143] - The company reported acquisition-related costs of $315,000 for the three months ended November 29, 2025, down from $5,873,000 in the prior year, showing a decrease of approximately 94.7%[143] Cash Flow and Liquidity - Net cash provided by operating activities was $66.6 million for the first nine months of fiscal 2026, a decrease from $95.1 million in the prior year period, primarily due to lower net earnings and increased working capital[147] - Net cash used in investing activities was $15.8 million for the first nine months of fiscal 2026, a significant decrease from $257.1 million in the prior-year period, primarily due to capital expenditures[148] - Net cash used in financing activities was $51.9 million for the first nine months of fiscal 2026, compared to $169.0 million provided by financing activities in the prior year, which included $250.0 million in proceeds for the acquisition of UW Solutions[149] - As of November 29, 2025, outstanding borrowings under the delayed draw term loan facility were $215.0 million, and under the revolving credit facility were $40.0 million[159] - The company has a total of $2.6 million of ongoing letters of credit related to the senior credit facility, with $407.4 million available for revolving borrowings as of November 29, 2025[160] - The company believes its sources of liquidity will be adequate to meet both short-term and long-term capital expenditure needs[165] Future Outlook - Project Fortify Phase 2 is expected to incur approximately $28 million to $29 million in pre-tax charges, with anticipated annualized pre-tax cost savings of $25 million to $26 million[116] - The backlog for the Architectural Services segment was approximately $774.7 million, up from $742.2 million at the end of the previous fiscal year[134] - The company is continually reviewing its portfolio for potential acquisitions, geographic expansion, and capacity management[166] - There have been no material changes in market risk since March 1, 2025, as disclosed in the Annual Report[169] Pension and Lease Obligations - The company expects to make contributions of $0.4 million to its defined-benefit pension plans in fiscal 2026, meeting minimum funding requirements[163] - Future lease payments, excluding leases with initial terms of one year or less, were $63.2 million at November 29, 2025, with $3.9 million payable during the remainder of fiscal 2026[161]

Labor Market - The U.S. job market is expected to show slow expansion, with an addition of 73,000 jobs in December and a decrease in the unemployment rate to 4.5% from 4.6% in the previous month [2] - Job growth in December is slightly higher than the 64,000 jobs added in November, which had the highest unemployment rate since 2021 [2] - Over the past months, tariffs have negatively impacted hiring, with an average addition of only 17,000 jobs per month from May to November, compared to 147,000 jobs per month in the year leading up to April 2025 [3] - Some experts believe the Bureau of Labor Statistics may be overestimating job growth, with Federal Reserve Chair Jerome Powell suggesting an average loss of 20,000 jobs per month since April [4] Albertsons - Albertsons Cos. reported weaker-than-expected Q3 net sales of $19.12 billion, slightly below the $19.16 billion consensus, leading to a 6% drop in shares [5][6] - Identical sales growth for Q3 was 2.4%, missing estimates due to delayed SNAP funding, which impacted sales by 10 to 20 basis points [6] - The company has lowered its full-year identical sales growth forecast to a range of 2.2% to 2.5%, down from 2.2% to 2.75%, citing impacts from the Inflation Reduction Act's Medicare Drug Price Negotiation Program [6] Apogee Enterprises - Apogee Enterprises has cut its fiscal 2026 outlook again, resulting in an 11% drop in stock price after lowering its full-year net sales and profit forecasts for the second consecutive quarter [16][17] - The company now expects fiscal 2026 net sales of $1.39 billion and adjusted earnings per share of $3.40 to $3.50, down from previous guidance of $1.39 billion to $1.42 billion and adjusted EPS of $3.60 to $3.90 [17] - CFO Matthew Osberg has resigned, and Mark Augdahl has been named interim CFO, following a recent change in CEO [18]

Core Viewpoint - Apogee Enterprises, Inc. has experienced a shift in analyst sentiment, reflected in the increasing consensus price targets, indicating changing market conditions and expectations for future performance [1][4]. Price Target Changes - Last month, analysts set an average price target of $95 for Apogee, suggesting strong positive sentiment and expectations of significant growth, linked to the company's recent performance [2][6]. - The average price target for Apogee was $71 in the last quarter, marking a substantial increase from the previous quarter, reflecting growing optimism despite challenges [3]. - A year ago, the average price target was $68, which has increased by $27, indicating growing confidence in Apogee's performance and potential [4]. Financial Performance - Apogee exceeded expectations for its second-quarter earnings and revenue, primarily due to gains in its UW Solutions segment, despite facing margin pressures from tariffs and an unfavorable product mix [2][6]. - Management has projected revenue for fiscal year 2026 to be between $1.39 billion and $1.42 billion, with adjusted earnings per share (EPS) expected to decrease to a range of $3.60 to $3.90 due to margin headwinds [3][6]. Valuation and Market Position - Apogee is considered attractively valued both on an absolute and relative basis, trading at low multiples compared to its peers, which may contribute to the positive sentiment among analysts [4][5]. - The company has been upgraded to a Zacks Rank 2 (Buy), indicating increased optimism regarding its earnings potential [5].

Core Viewpoint - Apogee Enterprises' stock experienced a significant decline of 13.7% after reporting Q3 2026 earnings that missed sales expectations despite slightly exceeding earnings per share forecasts [1][3]. Financial Performance - Apogee reported earnings of $0.77 per share under GAAP, which is 20% lower than the previous year's earnings, despite a 2% year-over-year sales growth [3]. - The company's sales totaled $348.6 million, falling short of the anticipated $355.3 million [1][3]. - The CEO attributed the disappointing results to increased costs related to aluminum, restructuring, and health insurance [3]. Segment Performance - Revenue growth was noted in architectural services and glass sales, while the architectural metals segment saw a 10% decline in sales [3]. - The performance surfaces segment, which includes coated glass and acrylics, experienced a notable 60% increase in sales, reaching $53 million [3]. Future Guidance - Management forecasts fiscal 2026 earnings to be between $3.40 and $3.50 per share, which is below Wall Street's expectation of $3.67 per share [4]. - Despite the earnings miss, Apogee's sales for the year are projected to approach the $1.4 billion forecast [5]. Valuation and Investment Consideration - With an expected earnings of $3.40, Apogee would have a price-to-earnings ratio of less than 10, and a dividend yield of 2.8% alongside a long-term earnings growth rate of 10% suggests the stock may not be overly expensive [5]. - There is a perspective that investors may be prematurely giving up on Apogee [5].

Core Viewpoint - Apogee Enterprises, Inc. is under investigation for potential securities law violations following a significant drop in its stock price after disappointing quarterly results and a lowered full-year outlook [2][4]. Group 1: Company Performance - Apogee Enterprises' shares fell over 13% in intraday trading after the company reported quarterly results that missed analyst expectations [2]. - The company cited weaker demand and margin pressure in its Architectural Glass segment as reasons for lowering its full-year outlook [2]. Group 2: Management Changes - Apogee disclosed the resignation of its Chief Financial Officer, Matthew Osberg, effective January 16, 2026 [2]. Group 3: Legal Investigation - Block & Leviton is investigating whether Apogee committed securities law violations and may file an action to recover losses for affected investors [4]. - Investors who have lost money on their Apogee investments are encouraged to contact Block & Leviton for potential recovery options [5].

Financial Data and Key Metrics Changes - Net sales increased by 2.1% to $348.6 million, driven by $18.4 million in inorganic sales from the acquisition of UW Solutions and favorable product mix, partially offset by lower volume, primarily in metals [10] - Adjusted EBITDA margin decreased slightly to 13.2%, primarily due to lower volume and price, as well as higher aluminum and health insurance costs [10] - Adjusted diluted EPS was $1.02, down year-over-year, primarily due to higher amortization and interest expense from the UW Solutions acquisition [11] Business Line Data and Key Metrics Changes - Metals segment net sales declined due to lower volume, but adjusted EBITDA margin improved to 13.5% driven by increased productivity and cost savings from Fortify Phase 2 [11] - Services segment achieved its seventh consecutive quarter of year-over-year net sales growth, with adjusted EBITDA margin increasing to 9.7% due to lower incentive compensation expense [11] - Glass segment net sales increased slightly to approximately $71 million, driven by increased volume and favorable mix, but adjusted EBITDA margin moderated due to lower price and higher material costs [12] Market Data and Key Metrics Changes - Average aluminum prices rose approximately 13% compared to the second quarter and over 50% compared to the third quarter of last year, impacting volume and margin compression in the Metals segment [15] - Backlog for services ended the quarter at $775 million, down slightly from Q2 but up over 4% compared to Q3 of last year [11] Company Strategy and Development Direction - The company remains focused on becoming the economic leader in target markets, managing its portfolio, and pursuing accretive M&A opportunities, with no change in strategic direction [19] - The UW Solutions acquisition is expected to contribute to market and geographical expansion, with fiscal 2026 expectations of $100 million in net sales and approximately 20% adjusted EBITDA margin [7] - The company aims to strengthen its core by driving more efficient operations and enabling sustained profitable growth [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenging macroeconomic factors but believes the company is well-positioned due to operational excellence and a strong balance sheet [8] - The company anticipates continued pressure on pricing and volume in both Metals and Glass segments, with expectations of cost headwinds from normalization of incentive compensation and higher health insurance costs [15] - Management is taking proactive measures, including expanding Project Fortify Phase 2, to manage near-term headwinds and position for growth opportunities [16] Other Important Information - The company reported net cash provided by operating activities of $29.3 million for Q3, down from $31 million in the prior year [12] - The balance sheet remains strong with a consolidated leverage ratio of 1.4x and significant capital available for future deployment [13] Q&A Session Summary Question: What is the board looking for in new leadership? - The company is looking for someone with deep growth and operational excellence experience, particularly in M&A integration [20] Question: Is the updated outlook primarily impacted by aluminum inflation? - Yes, both Metals and Glass segments are experiencing pressure from rising aluminum prices, impacting margins [27] Question: What is the focus on M&A activity going forward? - The company has a robust M&A pipeline and is actively pursuing opportunities, with the UW Solutions acquisition being a successful example [36] Question: How is the company managing pricing discipline in a competitive market? - The company is focused on maximizing EBITDA dollar contribution while protecting premium margins, despite challenges in volume and price [44] Question: What are the near-term priorities for growth? - The company is focused on delivering results, expanding Project Fortify Phase 2, and leveraging the Apogee Management System for cost structure improvements [64][66]