Apogee(US:APOG)2025-01-07 20:36Financial 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]