Financial Performance - Consolidated net sales increased by 4.6% to $346.6 million, driven by $22.0 million of inorganic sales from the acquisition of UW Solutions[111] - Gross margin decreased to 21.7% from 29.8%, primarily due to $6.9 million in restructuring charges and higher aluminum costs[111] - SG&A expenses rose by $10.7 million to 19.7% of net sales, influenced by $8.4 million in restructuring charges and increased amortization from the UW Solutions acquisition[111] - Operating income declined to $6.9 million from $41.4 million, with operating margin decreasing by 1,050 basis points to 2.0%[111] - Adjusted EBITDA decreased to $34.4 million from $52.6 million, with adjusted EBITDA margin falling to 9.9% from 15.9%[111] - The company reported a net loss of $2.7 million compared to net earnings of $31.0 million in the same period last year[117] - Adjusted net earnings for the three months ended May 31, 2025, were $11.85 million, compared to $31.86 million for the same period in the previous year[136] - The adjusted diluted earnings per share for the three months ended May 31, 2025, was $0.56, compared to $1.44 for the same period in the previous year[136] Segment Performance - Architectural Metals segment net sales decreased by 3.4% to $128.6 million, while Architectural Services increased by 7.6% to $106.5 million[116] - Performance Surfaces segment net sales surged by 99.3% to $42.3 million, reflecting strong growth[116] - Net sales for the period were $128.6 million, a decrease from $133.2 million, primarily due to a less favorable mix, partially offset by increased volume[125] - Adjusted EBITDA was $9.4 million, or 7.3% of net sales, down from $23.8 million, or 17.9% of net sales, driven by higher aluminum costs and unfavorable productivity[125] Cash Flow and Financing - Net cash used in operating activities was $19.8 million for the first three months of fiscal 2026, compared to cash provided of $5.5 million in the prior year period, primarily due to lower net earnings[139] - Net cash provided by financing activities was $17.6 million for the first three months of fiscal 2026, compared to $4.9 million of net cash used in the prior year period[141] - As of May 31, 2025, outstanding borrowings under the term loan facility were $215.0 million, and under the revolving credit facility were $96.0 million[150] - The total amount available for revolving borrowings was $351.4 million as of May 31, 2025[151] - Future lease payments, excluding leases with initial terms of one year or less, were $71.8 million at May 31, 2025, with $12.5 million payable during the remainder of fiscal 2026[152] - The company had $16.0 million of open purchase obligations, with $7.8 million expected to be due during the remainder of fiscal 2026[153] Strategic Initiatives - The company expects Project Fortify Phase 2 to incur approximately $24 million to $26 million in pre-tax charges, with expected annualized pre-tax cost savings of $13 million to $15 million[107] - The company is reviewing its portfolio and may pursue acquisitions, geographic expansion, and divestitures as part of its business strategy[158] Tax and Compliance - The effective tax rate increased to 211.9% from 24.5%, primarily due to lower earnings before income taxes[117] - The company was in compliance with all covenants under the Credit Agreement as of May 31, 2025[146] Other Information - The company recognized a loss on extinguishment of debt of $0.5 million related to the previous revolving credit facility[145] - The Credit Agreement provides for an unsecured senior credit facility of up to $700 million, including a $450 million revolving credit facility[143] - At May 31, 2025, $1.2 billion of surety or performance bonds were outstanding, with $339.2 million in backlog[155] - The company believes its sources of liquidity will be adequate to meet both short-term and long-term capital expenditure needs[157] - There have been no material changes in related party transactions or critical accounting policies since the last annual report[159][160] - There have been no material changes in market risk since March 1, 2025[161]
Apogee(APOG) - 2026 Q1 - Quarterly Report