Core Insights - Apogee Enterprises, Inc. (APOG) reported adjusted earnings per share (EPS) of 98 cents for Q2 fiscal 2026, exceeding the Zacks Consensus Estimate of 86 cents, but reflecting a 31.9% decrease from the prior-year quarter [1][10] - The company generated revenues of $358 million in the quarter, a 4.6% increase year-over-year, surpassing the Zacks Consensus Estimate of $334 million, driven by the acquisition of UW Solutions and higher Architectural Services volumes [2][10] - Apogee revised its fiscal 2026 guidance for net revenues to $1.39-$1.42 billion and adjusted EPS to $3.60-$3.90, down from previous estimates due to tariff headwinds and weaker margins [12] Financial Performance - Cost of sales increased by 12.4% year-over-year to $275.6 million, leading to a gross profit decline of 15.1% to $83 million, with gross margin decreasing to 23.1% from 28.4% [3] - Selling, general and administrative expenses rose by 0.7% to $56 million, while operating income fell by 35.9% to $27 million, resulting in an operating margin of 7.5% compared to 12.3% in the prior year [4] - Cash and cash equivalents stood at $39.5 million at the end of Q2 fiscal 2026, down from $41 million at the end of fiscal 2025, with cash provided by operating activities at $57.1 million [9] Segment Performance - Revenues in the Architectural Metals segment decreased by 0.3% year-over-year to $141 million, with adjusted EBITDA at $20.8 million [5] - Architectural Glass segment revenues fell by 19.9% to $72 million, with adjusted EBITDA around $12 million [6] - Performance Surfaces segment revenues surged by 144% to $48 million, with adjusted EBITDA increasing to $11.2 million [7] Backlog and Debt - The backlog for the Architectural Services segment increased to $792 million at the end of Q2 fiscal 2026, up from $682 million in the previous quarter [8] - Long-term debt decreased to $270 million at the end of Q2 fiscal 2026, down from $285 million at the end of fiscal 2025 [11] Stock Performance - Apogee's shares have declined by 45.1% over the past year, compared to a 25.8% decline in the industry [13]

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Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $358.2 million, driven by $24.9 million of inorganic sales from the acquisition of UW Solutions [8][10] - Adjusted EBITDA margin decreased to 12.4%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs [8][10] - Adjusted diluted EPS declined to $0.98, mainly driven by lower adjusted EBITDA and higher interest expense [8][10] Business Line Data and Key Metrics Changes - Performance Services net sales increased, driven by inorganic sales from UW Solutions and strong organic growth of 18.6% [9][10] - Metals segment net sales declined slightly, reflecting a less favorable mix, partially offset by higher volume and price [9] - Glass segment net sales declined, with adjusted EBITDA margin moderating due to reduced volume and price from lower end-market demand [9][10] Market Data and Key Metrics Changes - The competitive environment for glass has not improved, leading to lowered expectations for glass volume and price [4][10] - Higher aluminum costs are expected to pressure pricing and volume in the Metals segment [4][10] - Bid activity for glass business remains up compared to last year, but price pressures are impacting volume [4][10] Company Strategy and Development Direction - The company is focused on driving year-over-year net sales and adjusted EPS growth, primarily through Performance Services [5][10] - Strategic actions include tariff mitigation efforts and Project Fortify II to enhance organizational agility [7][10] - The company aims to pursue acquisitions that align with strategic and financial objectives, enhancing product offerings and geographic reach [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over changes impacting guidance but remains optimistic about growth in Performance Services [5][10] - The company anticipates challenges in the glass and metals segments due to competitive pressures and rising costs [4][10] - Despite macroeconomic challenges, management is confident in the company's strong cash flow and balance sheet for future success [15][10] Other Important Information - The One Big Beautiful Bill Act is expected to provide a cash tax benefit primarily impacting fiscal 2026 [11][10] - The company is updating its outlook for net sales to a range of $1.39 billion - $1.42 billion and adjusted diluted EPS to $3.60 - $3.90 [10][11] Q&A Session Summary Question: Can you expand on the organic growth in Performance Services? - Management noted strong growth in UW Solutions, particularly due to regained distribution and cross-selling opportunities [21][23] Question: What is driving the increase in services backlog? - The backlog growth was attributed to projects in the Northeast and efforts to expand into new markets [25][26] Question: What are the expectations for glass segment margins in the next two quarters? - Management expects mid-teens EBITDA margins despite top-line challenges, emphasizing a focus on preserving premium product pricing [32][33] Question: How much of the lowered guide for metals is due to cost pressure? - The pressure is mainly from higher aluminum costs, which have increased by approximately 20% during the second quarter [36][39] Question: Have there been shifts towards smaller or non-traditional projects? - There has been a shift towards smaller projects, particularly in the glass business, which has led to increased competition and lower margins [48][51] Question: What could impact the EPS guidance for FY 2026? - Continued upward cost pressure on aluminum and the effectiveness of cost control measures under Project Fortify II could impact EPS [52][53]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $358.2 million, driven by $24.9 million of inorganic sales from the acquisition of UW Solutions [8][10] - Adjusted EBITDA margin decreased to 12.4%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs [8][10] - Adjusted diluted EPS declined to $0.98, mainly driven by lower adjusted EBITDA and higher interest expense [8][10] Business Line Data and Key Metrics Changes - Performance Services net sales increased by 18.6% organically, primarily from improved retail channel distribution [9] - Metals segment net sales declined slightly, reflecting a less favorable mix, despite higher volume and price [9] - Glass segment net sales declined, with adjusted EBITDA margin moderating due to reduced volume and price from lower end-market demand [9][10] Market Data and Key Metrics Changes - The competitive environment for glass has not improved, leading to lower expectations for glass volume and price [4][10] - Aluminum costs increased by approximately 20% during the second quarter, impacting pricing and volume in the Metals segment [14][36] Company Strategy and Development Direction - The company is focused on driving year-over-year net sales and adjusted EPS growth, primarily through Performance Services [5][16] - Strategic actions include tariff mitigation efforts and Project Fortify II to enhance organizational agility [7][16] - The company is actively pursuing M&A opportunities that align with strategic and financial objectives [7][16] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over lowered expectations but remains optimistic about year-over-year growth in the second half of the fiscal year [5][15] - The company anticipates challenges in glass and metals due to competitive pricing pressures and rising aluminum costs [14][36] - Despite macroeconomic challenges, management is confident in the company's strong cash flow and balance sheet for future success [15][16] Other Important Information - The updated outlook for fiscal 2026 includes net sales in the range of $1.39 billion to $1.42 billion and adjusted diluted EPS in the range of $3.60 to $3.90 [10][11] - The One Big Beautiful Bill Act is expected to provide a cash tax benefit primarily impacting fiscal 2026 [11] Q&A Session Summary Question: Can you expand on the organic growth in Performance Services? - Management noted strong growth in UW Solutions, particularly due to regained distribution and cross-selling opportunities [21][23] Question: What is driving the increase in services backlog? - The backlog growth was attributed to projects in the Northeast and efforts to expand into new markets [25][26] Question: What are the expectations for the glass segment's margins? - Management expects mid-teens EBITDA margins for the glass segment despite competitive pressures [32][33] Question: How is the metals segment impacted by cost pressures? - The increase in aluminum costs is the main driver of pressure in the metals segment, affecting pricing and volume [36][39] Question: What is the outlook for Performance Services' flooring mix? - The flooring segment is expected to grow and now represents over half of the UW portfolio [41]

Financial Data and Key Metrics Changes - Net sales increased by 4.6% to $358.2 million, driven by $24.9 million of inorganic sales from the acquisition of UW Solutions [9][11] - Adjusted EBITDA margin decreased to 12.4%, primarily due to lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs [9][11] - Adjusted diluted EPS declined to $0.98, primarily driven by lower adjusted EBITDA and higher interest expense [9][11] Business Line Data and Key Metrics Changes - Performance Services net sales increased, driven by inorganic sales from UW Solutions and strong organic growth of 18.6% [10][11] - Architectural Services recorded net sales growth and a sequential backlog increase of over $100 million [4][10] - Glass segment net sales declined, with adjusted EBITDA margin moderating due to reduced volume and price from lower end-market demand [10][11] - Metals segment net sales declined slightly, reflecting a less favorable mix, partially offset by higher volume and price [10][11] Market Data and Key Metrics Changes - The competitive environment for glass has not improved, leading to lowered expectations for glass volume and price [5][12] - Higher aluminum costs are expected to pressure pricing and volume in the Metals segment [5][12] - Bid activity for glass business remains up versus last year, but price pressures are impacting volume [5][12] Company Strategy and Development Direction - The company is focused on acquisitions that fit strategic and financial objectives, aiming to add differentiated products and expand geographic reach [7][8] - Project Fortify II actions and tariff mitigation efforts are in place to enhance organizational agility [6][7] - The company aims to drive year-over-year net sales and adjusted EPS growth in the second half of the fiscal year, primarily through Performance Services [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over changes impacting guidance but remains optimistic about year-over-year growth in the second half [5][6] - The company is navigating a challenging macroeconomic environment while building a stronger foundation for future growth [6][17] - Management highlighted the importance of maintaining premium product pricing to protect margins despite competitive pressures [34][35] Other Important Information - The One Big Beautiful Bill Act is expected to provide a cash tax benefit primarily impacting fiscal 2026 [12] - The company has a consolidated leverage ratio of 1.5 and no near-term debt maturities, providing flexibility for future opportunities [11] Q&A Session Summary Question: Can you expand on the organic growth in Performance Services? - The strongest growth was seen in UW Solutions, regaining distribution and leveraging cross-selling opportunities [22][23] Question: What is driving the growth in the flooring side of the business? - Demand for flooring products is driven by automation in distribution centers, with significant interest from a global e-commerce retailer [24][25] Question: What is the reason for the increase in services backlog? - The backlog growth was driven by projects in the Northeast and efforts to expand into new markets [26][27] Question: What are the expectations for glass margins in the next two quarters? - Management expects mid-teens EBITDA margins despite competitive pressures [32][33] Question: How much of the lowered guide for metals is due to cost pressure? - The pressure is mainly from higher aluminum costs, impacting pricing and volume [36][37] Question: What is the realistic downside for FY2026 if market conditions worsen? - Continued upward cost pressure on aluminum could impact the EPS guidance range of $3.60 to $3.90 [50][51] Question: How sensitive is the surfaces segment to a potential slowdown? - Any significant slowdown is more likely to impact Q1 rather than Q3, with visibility into retail demand remaining stable [52][53]

Financial Performance - Apogee Enterprises, Inc's Q2 FY26 net sales reached $358.2 million, a 4.6% year-over-year increase[11, 12, 13] - Adjusted EBITDA for Q2 FY26 was $44.4 million, a 16.4% decrease year-over-year[12, 13] - The adjusted EBITDA margin for Q2 FY26 was 12.4%, a 310 bps decrease year-over-year[12, 13] - Adjusted diluted EPS for Q2 FY26 was $0.98, a 31.9% decrease year-over-year[12, 13] Segment Results - Architectural Metals net sales were $140.9 million, a 0.3% decrease year-over-year, with an adjusted EBITDA margin of 14.8%, a 90 bps decrease[20, 23] - Architectural Services net sales were $100.5 million, a 2.5% increase year-over-year, with an adjusted EBITDA margin of 5.0%, a 250 bps decrease[20, 23] - Architectural Glass net sales were $72.2 million, a 19.9% decrease year-over-year, with an adjusted EBITDA margin of 16.1%, a 1070 bps decrease[20, 23] - Performance Surfaces net sales were $48.4 million, a 144.0% increase year-over-year, with an adjusted EBITDA margin of 23.2%, a 10 bps increase[20, 23] Cash Flow and Balance Sheet - Free cash flow for the six months ended August 30, 2025, was $25.5 million, compared to $48.5 million for the same period in the previous year[24] - Total debt as of August 30, 2025, was $270.0 million[24] - Net debt as of August 30, 2025, was $230.5 million[24] FY26 Outlook - The company estimates tariffs to reduce full-year adjusted diluted EPS by $0.35 to $0.45[33, 42] - The updated full-year FY26 net sales outlook is $1.39 billion to $1.42 billion[38] - The updated full-year FY26 adjusted diluted EPS outlook is $3.60 to $3.90[38]

Core Points - Apogee Enterprises, Inc. has declared a quarterly cash dividend of $0.26 per share [1] - The dividend is scheduled to be payable on November 13, 2025, to shareholders of record as of October 29, 2025 [1] - Apogee Enterprises, Inc. is recognized as a leading provider of architectural building products and services, along with high-performance coated materials [1]

Company Performance - Apogee Enterprises Inc. reported better-than-expected second-quarter financial results, with shares gaining 1.4% to $42.00 in after-hours trading [2] - Levi Strauss & Co. reported third-quarter earnings of 34 cents per share, exceeding the analyst consensus estimate of 31 cents per share, and quarterly sales of $1.543 billion, surpassing the estimate of $1.501 billion; however, shares fell 7.7% to $22.65 in after-hours trading [2] - VolitionRX Ltd. announced a public offering of common stock and common stock warrants, leading to a 20% dip in shares to $0.48 in after-hours trading [2] - USANA Health Sciences Inc. reported preliminary third-quarter results with an adjusted loss of 15 cents per share and sales of $214.00 million, resulting in an 11.4% decline in shares to $23.26 in after-hours trading [2] - Nurix Therapeutics Inc. reported worse-than-expected third-quarter financial results, causing shares to fall 5.7% to $10.24 in after-hours trading [2]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Apogee reported **solid Q2 FY26 results** with **4.6% net sales increase to $358.2 million**, despite profitability declines [Second Quarter Fiscal 2026 Overview](index=1&type=section&id=Second%20Quarter%20Fiscal%202026%20Overview) Apogee Enterprises reported solid second-quarter fiscal 2026 results with a 4.6% increase in net sales, reaching $358.2 million, though net earnings and diluted EPS decreased | Metric | August 30, 2025 ($ in thousands) | August 31, 2024 ($ in thousands) | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | | Net sales | $358,194 | $342,440 | 4.6% | | Net earnings | $23,649 | $30,566 | (22.6)% | | Diluted earnings per share | $1.10 | $1.40 | (21.4)% | | Adjusted EBITDA | $44,368 | $53,122 | (16.5)% | | Adjusted EBITDA margin | 12.4 % | 15.5 % | | | Adjusted diluted earnings per share | $0.98 | $1.44 | (31.9)% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Ty R. Silberhorn highlighted solid Q2 results driven by revenue growth in Performance Surfaces and Architectural Services, emphasizing continued strategic execution and tariff mitigation - **Solid second quarter results** led by revenue growth in Performance Surfaces and Architectural Services[2](index=2&type=chunk) - Continued focus on executing strategy and tariff mitigation plans in a dynamic operating environment[2](index=2&type=chunk) - Growth potential unlocked by UW Solutions acquisition, combined with structural cost savings and operational efficiencies from Project Fortify Phase 2, will enhance ability to deliver sustained long-term value[2](index=2&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported a 4.6% increase in net sales to $358 million, with EBITDA and adjusted EBITDA margins at 12.4%, and updated its fiscal 2026 outlook - Net sales increased **4.6%** to **$358 million**[3](index=3&type=chunk) - EBITDA margin and adjusted EBITDA margin of **12.4%**[3](index=3&type=chunk) - Diluted earnings per share of **$1.10** and adjusted diluted earnings per share of **$0.98**[3](index=3&type=chunk) - Updates outlook for net sales and adjusted diluted EPS[3](index=3&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) This section details the company's Q2 FY26 consolidated financial performance, including sales, profitability, cash flow, debt, and updated fiscal year 2026 outlook [Second Quarter Fiscal 2026 Performance](index=2&type=section&id=Second%20Quarter%20Fiscal%202026%20Performance) Consolidated net sales increased by 4.6% to $358.2 million, primarily due to the UW Solutions acquisition and higher volume in Architectural Services, partially offset by declines in Architectural Glass and unfavorable mix in Architectural Metals - Consolidated net sales increased **4.6%** to **$358.2 million**, driven by **$24.9 million** inorganic sales from UW Solutions acquisition and higher volume in Architectural Services, offset by lower volume/price in Architectural Glass and **unfavorable mix** in Architectural Metals[8](index=8&type=chunk) - Gross margin decreased to **23.1%** (from **28.4%**) due to lower price/volume, **unfavorable mix**, and higher material, tariff, and health insurance costs, partially offset by lower incentive compensation[8](index=8&type=chunk) - Operating income declined to **$26.9 million** from **$42.0 million** (**35.9% decrease**), and operating margin decreased **480 basis points** to **7.5%**[8](index=8&type=chunk) - Adjusted EBITDA decreased to **$44.4 million** (from **$53.1 million**), and adjusted EBITDA margin decreased to **12.4%** (from **15.5%**), primarily due to lower price/volume, **unfavorable mix**, and higher material, tariff, and health insurance costs[8](index=8&type=chunk) - Interest expense increased to **$4.1 million** due to higher debt from the UW Solutions acquisition[8](index=8&type=chunk) - Other income was **$5.1 million**, primarily from a **$4.6 million** gain related to a New Market Tax Credit[8](index=8&type=chunk) - Income tax expense as a percentage of earnings before income tax was **15.4%** (compared to **25.7%**), primarily due to a decrease in tax expense for discrete items[8](index=8&type=chunk) [Financial Condition](index=3&type=section&id=Financial%20Condition) Net cash provided by operating activities in Q2 FY26 was $57.1 million, a slight decrease from the prior year, with year-to-date operating cash flow decreasing significantly due to lower net earnings and increased working capital usage | Metric | Q2 FY26 ($M) | Q2 FY25 ($M) | YTD FY26 ($M) | YTD FY25 ($M) | | :-------------------------------- | :----------- | :----------- | :------------ | :------------ | | Net cash provided by operating activities | $57.1M | $58.7M | $37.3M | $64.1M | - Year-to-date change in operating cash flow primarily driven by **lower net earnings** and an increase in cash used for working capital, including a **$13.7 million** arbitration award settlement[12](index=12&type=chunk) - Net cash used in investing activities was **$10.9 million**, primarily for capital expenditures[12](index=12&type=chunk) - Returned **$11 million** of cash to shareholders through dividend payments[12](index=12&type=chunk) - Quarter-end long-term debt decreased **$41 million** from Q1 to **$270 million**, reducing the **Consolidated Leverage Ratio** to **1.5x**[12](index=12&type=chunk) [Fiscal Year 2026 Outlook](index=3&type=section&id=Fiscal%20Year%202026%20Outlook) Apogee updated its fiscal 2026 outlook, projecting net sales between $1.39 billion and $1.42 billion, with adjusted diluted EPS between $3.60 and $3.90, including tariff impacts | Metric | Low Range (FY26 Outlook) | High Range (FY26 Outlook) | | :-------------------------- | :----------------------- | :------------------------ | | Net sales | $1.39 billion | $1.42 billion | | Diluted EPS | $2.79 | $3.19 | | Adjusted diluted EPS | $3.60 | $3.90 | - Projected unfavorable EPS impact from tariffs of **$0.35 to $0.45**[14](index=14&type=chunk) - Assumes an effective tax rate of approximately **27%**[14](index=14&type=chunk) - Continues to assume capital expenditures between **$35 million to $40 million**[14](index=14&type=chunk) [Segment Results (Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025)](index=2&type=section&id=Segment%20Results) This section provides a comparative analysis of net sales and adjusted EBITDA for each business segment in Q2 FY26 versus Q2 FY25 [Architectural Metals](index=2&type=section&id=Architectural%20Metals) Architectural Metals net sales slightly decreased to $140.9 million, with adjusted EBITDA declining to $20.8 million (14.8% of net sales) due to unfavorable mix and higher costs | Metric | Q2 FY26 ($M) | Q2 FY25 ($M) | % Change | | :-------------------- | :----------- | :----------- | :------- | | Net sales | $140.9M | $141.4M | (0.3)% | | Adjusted EBITDA | $20.8M | $22.2M | (6.3)% | | Adjusted EBITDA margin | 14.8% | 15.7% | | - Lower adjusted EBITDA margin primarily driven by **unfavorable mix** and **higher material and tariff costs**, partially offset by **lower incentive compensation expense**[5](index=5&type=chunk) [Architectural Services](index=2&type=section&id=Architectural%20Services) Architectural Services net sales increased to $100.5 million due to higher volume, but adjusted EBITDA decreased to $5.0 million (5.0% of net sales) primarily due to project mix | Metric | Q2 FY26 ($M) | Q2 FY25 ($M) | % Change | | :-------------------- | :----------- | :----------- | :------- | | Net sales | $100.5M | $98.0M | 2.5% | | Adjusted EBITDA | $5.0M | $7.3M | (31.7)% | | Adjusted EBITDA margin | 5.0% | 7.5% | | - Decrease in adjusted EBITDA margin primarily driven by **project mix**, partially offset by **lower short-term incentive compensation costs**[6](index=6&type=chunk) - **Segment backlog** at the end of the quarter was **$792.3 million**, compared to $682.9 million at the end of the first quarter[6](index=6&type=chunk) [Architectural Glass](index=2&type=section&id=Architectural%20Glass) Architectural Glass net sales significantly decreased to $72.2 million due to lower volume and price, resulting in adjusted EBITDA falling to $11.6 million (16.1% of net sales) | Metric | Q2 FY26 ($M) | Q2 FY25 ($M) | % Change | | :-------------------- | :----------- | :----------- | :------- | | Net sales | $72.2M | $90.1M | (19.9)% | | Adjusted EBITDA | $11.6M | $24.1M | (51.8)% |

Core Insights - Apogee Enterprises, Inc. reported its financial results for the second quarter of fiscal 2026, which ended on August 30, 2025 [1] Financial Performance - The company provided selected financial results for the three months ended August 30, 2025, compared to the same period in the previous year [1] - Specific financial metrics, including revenue and earnings per share, were highlighted, showing the percentage change year-over-year [1]