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]

Company Overview - Apogee Enterprises, Inc. (NASDAQ: APOG) has been facing significant challenges recently, particularly in its revenue, profits, and cash flow [1] Industry Insights - The focus of Crude Value Insights is on oil and natural gas, emphasizing cash flow and the companies that generate it, which leads to value and growth prospects [1]

Core Viewpoint - Apogee Enterprises, Inc. reported disappointing fourth-quarter fiscal 2025 results, leading to a 12% decline in share price, with adjusted EPS missing estimates and a significant year-over-year decrease in earnings and revenues [1][11]. Financial Performance - Adjusted EPS for Q4 fiscal 2025 was 89 cents, below the Zacks Consensus Estimate of 90 cents, and down 21.9% year over year [1] - Including one-time items, EPS was 11 cents, a decrease from 71 cents in the same quarter last year [2] - Revenues for the quarter were $346 million, a 4.5% decline year over year, but exceeded the Zacks Consensus Estimate of $336 million [2] - Cost of sales decreased by 0.8% to $271 million, while gross profit fell 15.7% to $74.6 million, resulting in a gross margin drop to 21.6% from 24.4% [3] Segment Performance - Architectural Metals segment revenues decreased 19.4% year over year to $112 million, with an operating loss of $5.7 million [5] - Architectural Glass segment revenues fell 21.9% to $75 million, with operating profit dropping to approximately $11 million [5] - Architectural Services segment saw a 10.9% revenue increase to $118 million, with operating income rising to $8.6 million [6] - Performance Surfaces segment revenues surged 76.7% to $48 million, attributed to the UW Solutions acquisition, with operating profit slightly down to $6.1 million [7] Cash Position and Debt - Cash and cash equivalents at the end of fiscal 2025 were $41 million, up from $37 million at the end of fiscal 2024 [8] - Cash generated from operating activities was $125 million, down from $204 million the previous year [8] - Long-term debt increased significantly to $285 million from $62 million at the end of fiscal 2024 [9] Fiscal Year 2025 Overview - For fiscal 2025, Apogee reported a record adjusted EPS of $4.97, up from $4.77 in the prior year, meeting the Zacks Consensus Estimate [11] - Total revenues for the year decreased by 3.9% to $1.36 billion, surpassing the Zacks Consensus Estimate of $1.35 billion [11] Fiscal Year 2026 Guidance - The company anticipates net revenues of $1.37-$1.43 billion for fiscal 2026, with adjusted EPS expected to be $3.55-$4.10, factoring in tariff-related headwinds [12] - The UW Solutions business is projected to contribute $100 million to net revenues in fiscal 2026 [13] Stock Performance - Apogee's shares have declined 34.4% over the past year, compared to a 17.3% decline in the industry [14]

Core Viewpoint - Apogee Enterprises experienced a significant decline in share price following disappointing fiscal fourth quarter and full-year 2025 earnings, with a nearly 13% drop in a session where the S&P 500 rose by 2% [1] Financial Performance - Net sales decreased by nearly 5% year over year, totaling less than $346 million, while GAAP net income plummeted by 84% to approximately $2.5 million, or $0.11 per share [2] - Operating income also fell by 22% to $0.89 per share, indicating a mixed quarter for the company [2][3] Segment Performance - Apogee's business is divided into four segments: architectural metals, architectural services, architectural glass, and performance services. Only two segments saw increases in net sales, with one benefiting from an acquisition. The architectural metals segment, the largest by revenue, reported a 19% decline in net sales to $112 million for the quarter [4] Future Guidance - Management's guidance for fiscal 2026 projects net sales between $1.37 billion and $1.43 billion, with operating income per share expected to be between $3.55 and $4.10. This contrasts with fiscal 2025 figures of $1.36 billion in net sales and $4.97 in operating income per share. The consensus analyst estimate for operating income remains at $4.97 per share [5] Overall Assessment - The company is currently in a slump, and a slight anticipated rise in annual net sales is unlikely to improve investor sentiment significantly [6]

Financial Data and Key Metrics Changes - Net sales for Q4 2025 decreased by 4.5% to $346 million, impacted by a 7.9% negative effect from an extra week in the previous year [41] - Adjusted diluted EPS declined by 22% to $0.89 per share, primarily due to lower adjusted operating income and higher interest expense [44] - Full-year adjusted operating margin improved by 70 basis points to 11%, driven by improved margins in services and lower quality-related costs [56] Business Line Data and Key Metrics Changes - Metals segment net sales fell by 19% to $112 million, with adjusted operating margin declining to 2.8% due to operational disruptions and unfavorable sales mix [46][47] - Services segment achieved a 10.9% increase in net sales, marking the fourth consecutive quarter of double-digit growth, with adjusted operating margin improving to 7.2% [49][50] - Glass segment's net sales declined, with adjusted operating margin dropping to 14.6% from 19.7% year-over-year, primarily due to lower volume [52] Market Data and Key Metrics Changes - The nonresidential construction market is expected to face continued headwinds in 2025, with leading indicators suggesting a cautious outlook for growth [24][25] - Interest rate-sensitive sectors like office and commercial are projected to decline, while sectors like education and healthcare show pockets of growth [25] Company Strategy and Development Direction - The company is focused on sustaining ROIC and margin gains while shifting more focus to growth, particularly through the integration of UW Solutions and pursuing M&A opportunities [18][38] - A second phase of Project Fortify is being implemented to drive further efficiencies and align operations with current market conditions [34][66] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertainty in the market due to tariffs and macroeconomic factors but remains confident in the company's ability to manage through these challenges [70][74] - The company expects full-year net sales for fiscal 2026 to be between $1,370 million and $1,430 million, with adjusted diluted EPS ranging from $3.55 to $4.10 [61] Other Important Information - The acquisition of UW Solutions is progressing well, contributing approximately $100 million in revenue and expected to deliver strong growth in the Performance Surfaces segment [61][95] - The company has a strong balance sheet with a consolidated leverage ratio of 1.3% and no near-term debt maturities, providing flexibility for future capital deployment [59] Q&A Session Summary Question: Can you provide more detail on the tariff impact on EPS? - The direct impact of tariffs is primarily related to the services segment, with efforts to accelerate production in the US to mitigate costs [78][81] Question: How is the integration of UW Solutions progressing? - Integration is substantially complete, with the business performing well and expected to achieve double-digit growth [95][96] Question: What is the outlook for cash flow in fiscal 2026? - Operating cash flow is expected to decline due to arbitration award payments and higher interest expenses [110]