Financial Performance - Consolidated net sales increased by 0.5% to $341.3 million, driven by an $8.8 million inorganic sales contribution from the acquisition of UW Solutions[103] - Gross margin decreased to 26.1%, compared to 26.6%, primarily due to unfavorable sales leverage from lower volume and a less favorable product mix in the Architectural Framing Systems Segment[103] - Operating income declined to $28.6 million from $37.6 million, with an operating margin decrease of 270 basis points to 8.4%[103] - Consolidated net sales for the nine months ended decreased by 3.8% to $1,015.3 million, primarily driven by lower volume and mix[103] - Architectural Glass segment net sales decreased by 22.8% to $70.2 million, down from $90.9 million, primarily due to reduced volume from lower end-market demand[108] - Operating income for the company was $112.0 million, with an operating margin of 11.0%, reflecting a 40 basis point increase from the previous year[106] - Adjusted operating income grew by 8.1% to $121.1 million, with an adjusted operating margin improving to 11.9%[106] - The Architectural Services segment saw net sales increase by 10.8% to $104.9 million, driven by a more favorable mix of projects[108] - Consolidated operating income for the three months ended November 30, 2024, was $28,629,000, a decrease from $37,647,000 for the same period in 2023, reflecting a decline of approximately 24%[119] - The company reported net earnings of $20,989,000 for the three months ended November 30, 2024, compared to $26,974,000 for the same period in 2023, indicating a decrease of approximately 22%[128] - The company’s total operating income for the nine months ended November 30, 2024, was $111,975,000, compared to $111,967,000 for the same period in 2023, indicating stability in performance[123] - Net earnings for the three months ended November 30, 2024, were $20.989 million, a decrease of 22.0% compared to $26.974 million for the same period in 2023[135] Expenses and Costs - SG&A expenses rose by $7.9 million to 17.7% of net sales, attributed to acquisition-related expenses and restructuring costs related to Project Fortify[103] - SG&A expenses rose by $6.7 million to 17.1% of net sales, attributed to acquisition-related expenses and lower sales volume[106] - Corporate and Other expenses were $8.8 million, an increase from $6.9 million, mainly due to acquisition-related costs[110] - The total acquisition-related costs for the three months ended November 30, 2024, amounted to $5,873,000, which includes transaction costs of $3,748,000 and integration costs of $941,000[128] - Restructuring charges related to Project Fortify totaled $3,213,000 for the nine months ended November 30, 2024, which included $1.3 million of employee termination costs[125] Cash Flow and Financing - Net cash provided by operating activities decreased to $95.1 million for the first nine months of fiscal 2025, down from $129.3 million in the prior year period, primarily due to cash used for working capital[139] - Net cash used by investing activities increased significantly to $257.1 million for the first nine months of fiscal 2025, compared to $26.3 million in the prior year, mainly due to the acquisition of UW Solutions costing $233.1 million[140] - Net cash provided by financing activities was $169.0 million for the first nine months of fiscal 2025, compared to a net cash used of $100.4 million in the prior year, driven by $250.0 million proceeds from a delayed draw term loan for the UW Solutions acquisition[141] - The company entered into a Credit Agreement providing for an unsecured senior credit facility of up to $700.0 million, including a $450.0 million revolving credit facility and a $250.0 million delayed draw term loan[143] - As of November 30, 2024, outstanding borrowings under the term loan facility were $230.0 million, and under the revolving credit facility were $30.0 million[150] Tax and Interest - Interest expense, net decreased to $1.0 million, primarily due to lower weighted-average interest rates and higher interest income[103] - Interest expense decreased to $2.6 million from $5.7 million, primarily due to lower average debt levels[106] - The effective tax rate increased to 24.1% from 23.6% due to an increase in tax expense for discrete items[103] Acquisitions and Strategic Initiatives - The company acquired UW Solutions, a manufacturer of high-performance coated substrates, enhancing its product offerings in attractive end markets[96] - The company is focused on operational execution and productivity improvements to drive value for customers and improve profitability[93] - The backlog for Architectural Services was approximately $742.2 million, down from $792.1 million in the previous quarter[113] - The backlog amortization costs for the three months ended November 30, 2024, were $805,000, reflecting the value attributed to the contracted backlog purchased in the UW Solutions acquisition[128] Performance Metrics - Adjusted operating income for the nine months ended November 30, 2024, was $121,061,000, compared to $111,967,000 for the same period in 2023, representing an increase of about 8%[123] - The adjusted diluted EPS for the three months ended November 30, 2024, was $1.19, consistent with $1.23 for the same period in 2023[128] - The adjusted operating margin for the nine months ended November 30, 2024, was 11.9%, compared to 10.6% for the same period in 2023, showing an improvement[123] - Adjusted EBITDA for the nine months ended November 30, 2024, was $151.547 million, an increase of 6.0% from $142.187 million in the prior year[135] Liquidity and Funding - The company had $1.2 billion of surety or performance bonds outstanding, with $307.2 million in backlog as of November 30, 2024[156] - The company expects to make contributions of $0.4 million to its defined-benefit pension plans in fiscal 2025, meeting or exceeding minimum funding requirements[154] - The company is evaluating its liquidity requirements and believes it has adequate sources to meet short-term and long-term capital expenditure needs[157]

Core Viewpoint - Apogee Enterprises' stock is experiencing a significant decline despite reporting better-than-expected sales and earnings, primarily due to disappointing revenue growth and deteriorating profit margins [1][2][3]. Financial Performance - Apogee reported adjusted earnings of $1.19 per share on sales of $341.3 million, surpassing analyst expectations of $1.11 per share and $332.2 million in sales [1]. - Year-over-year revenue growth was only 0.5%, largely attributed to the acquisition of UW Interco, which contributed additional revenue [2]. - GAAP earnings were reported at $0.96 per share, significantly lower than the adjusted figures, with GAAP net profit down 22% year over year [3]. Operational Challenges - The CEO cited weak demand in end markets as a key factor for the disappointing results, leading to lower volume and an unfavorable product mix, particularly in Architectural Framing Systems [4]. - The acquisition of UW Interco also introduced acquisition-related expenses that negatively impacted profit margins [4]. Future Outlook - Management anticipates a 5% decline in full-year sales for fiscal 2025, with continued weak demand expected to affect sales in fiscal Q4 [5]. - Despite the challenges, Apogee expects to earn at least $4.90 per share on a GAAP basis for the year, suggesting a price-to-earnings ratio of approximately 12x based on a share price around $59 [6].

Financial Data and Key Metrics Changes - Revenue for the quarter was $341 million, consistent with last year, despite ongoing pressure from soft end market demand in non-residential construction [7][23] - Adjusted operating margin declined by 70 basis points, primarily due to unfavorable sales leverage from lower volume and higher costs [23] - Adjusted diluted EPS decreased by 3%, coming in at $1.19, mainly driven by lower adjusted operating income [23][32] Business Line Data and Key Metrics Changes - Framing net sales declined approximately 1% to $138 million, reflecting a less favorable product mix, while adjusted operating margin in framing decreased to 9.8% [24][25] - Glass segment saw a decline in net sales due to soft end market demand, with margins sensitive to changes in volume and pricing [25][26] - Services segment achieved 11% growth in net sales, with adjusted operating margin improving to 8.6%, marking the fourth consecutive quarter of year-over-year margin expansion [26][27] Market Data and Key Metrics Changes - Non-residential construction market remains challenging, with leading indicators like the Architectural Billing Index indicating a contracting market for over 20 months [12][15] - Interest rate-sensitive sectors such as office and commercial have been weaker, while sectors like education and healthcare continue to grow [14][15] - FMI's forecast for 2025 indicates 1% growth in the overall market, with declines in interest rate-sensitive verticals and growth in institutional verticals benefiting from government funding [15] Company Strategy and Development Direction - The company is focusing on diversifying its sales mix towards sectors with higher growth rates and leveraging the capabilities of UW Solutions for expansion into attractive market adjacencies [18][19] - The acquisition of UW Solutions is seen as a growth lever, with expectations of significant contributions to revenue and margin enhancement [10][36] - The leadership team is working on a new strategic plan to drive growth while expanding the margin profile, with details to be shared in the new fiscal year [20][21] Management's Comments on Operating Environment and Future Outlook - Management expects continued pressure in the first half of the next fiscal year, primarily in glass and framing, but remains optimistic about outperforming the industry [16][17] - The company anticipates that the downturn in construction will be short and shallow, with a focus on executing a backlog secured for much of fiscal 2026 [15][16] - Fiscal 2026 is expected to face headwinds, particularly in glass margins, but management is confident in the structural changes made to maintain target margins [37][38] Other Important Information - Cash from operations was strong at $31 million for the quarter, with a year-to-date total of $95 million [30] - The company executed a $250 million delayed draw term loan to fund the acquisition of UW Solutions, finishing the quarter with a consolidated leverage ratio of 1.3 times [30][31] - Full-year adjusted diluted EPS is expected to be at the bottom of the range of $4.90 to $5.20, including dilution from the UW Solutions acquisition [33] Q&A Session Summary Question: Can you discuss the end market weakness in the glass segment? - Management noted that volume pressure is significant, with expectations for continued volume decline in Q4, primarily in framing and glass [45][46] Question: What is the expected contribution from UW Solutions? - The company projects a $100 million contribution from UW Solutions in FY26 at a 20% adjusted EBITDA margin, with ongoing integration efforts [110] Question: How are the services business trends aligning with third-party forecasts? - Management indicated that the services business is expected to outperform the market slightly, despite some softness and choppiness in project awards [68][70] Question: What are the plans for capital deployment in FY26? - The company plans to focus on paying down debt while actively pursuing M&A opportunities, with a robust pipeline for potential acquisitions [56][58] Question: How does the company view the industrial flooring market's sensitivity to economic changes? - Management expressed confidence in the industrial flooring market's resilience, noting its reliance on R&R rather than new construction [92][94]

Apogee Enterprises, Inc. Nasdaq: APOG Fiscal 2025 Third Quarter Earnings Call January 7, 2025 University of Washington, NanoES – Seattle © Aaron Leitz Photography; courtesy of ZGF Non-GAAP measures & forward-looking statements This presentation contains non-GAAP financial measures which the Company uses to evaluate its historical and prospective financial performance, measure operational profitability on a consistent basis, as a factor in determining executive compensation, and to provide enhanced transpare ...

Press Release FOR RELEASE: January 7, 2025 APOGEE ENTERPRISES REPORTS FISCAL 2025 THIRD QUARTER RESULTS MINNEAPOLIS, MN, January 7, 2025 – Apogee Enterprises, Inc. (Nasdaq: APOG) today reported its results for the third quarter of fiscal 2025. The Company reported the following selected financial results: Adjusted operating income, adjusted operating margin, adjusted diluted earnings per share (EPS), adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures. See Use of Non-GAAP Financial M ...

The Zacks Glass Products industry faces challenges from weak demand, rising costs and labor shortages, dampening its near-term outlook. However, the growing preference for glass, driven by its recyclability and sustainability, supports its long-term potential in packaging and construction.Apogee Enterprises (APOG) has navigated these headwinds effectively, achieving improved margins and earnings through cost reductions, strategic pricing and its Project Fortify initiative. Its focus on innovation and acquis ...

The majority of U.S. stock indices ended lower on Nov. 12, as rising U.S. treasury yields posed a headwind to the equities’ rally witnessed over the past few days following the election results. The dismal performance of the bourses also reflected investors’ concern regarding U.S. inflation data, which is set to be released today.   In such a situation, an investor might not feel confident enough to invest in the stock market. However, a prudent investor knows that this is the right time to buy stocks that ...

Major U.S. stock indices ended in the green on Oct. 28, buoyed by investors' optimism about the projected better-than-expected results of a handful of big technology companies scheduled to report this week. The anticipated release of several important economic indicators this week, like a preliminary reading on thirdquarter gross domestic product and the September personal consumption expenditure, also might have pushed the prices at the bourses. This might encourage investors to spend on shares. However, k ...

Core Insights - Companies with favorable efficiency levels are more likely to attract investors due to their expected impressive returns, which are believed to correlate positively with price performance [1] - The efficiency ratio serves as an indicator of a company's financial health, analyzing how effectively it utilizes its assets and liabilities [1] Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a high ratio indicating effective collection of accounts receivable [2] - **Asset Utilization**: This ratio assesses a company's capability to convert assets into output, with higher values suggesting greater efficiency [2] - **Inventory Turnover**: This ratio indicates a company's ability to maintain an appropriate inventory level, with high values reflecting lower inventory relative to cost of goods sold (COGS) [3] - **Operating Margin**: This measure reflects a company's ability to control operating expenses, with higher values indicating more efficient management compared to peers [3] Screening Criteria - The screening process included a favorable Zacks Rank (1 Strong Buy) alongside efficiency ratios that exceed industry averages, narrowing down over 7,906 stocks to 13 [4] - The top three stocks identified through this screening process are Tilray Brands, Consol Energy, and Apogee Enterprises [4] Company Highlights - **Tilray Brands (TLRY)**: A cannabis-lifestyle and consumer packaged goods company with an average four-quarter positive earnings surprise of 30% [5] - **Consol Energy (CEIX)**: A producer and exporter of high-Btu bituminous thermal and crossover metallurgical coal, with an average four-quarter positive earnings surprise of 23.7% [6] - **Apogee Enterprises (APOG)**: A leader in architectural products and services, with an average four-quarter positive earnings surprise of 19.7% [7]

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