Apogee(APOG) - 2026 Q2 - Quarterly Results

Executive Summary & Highlights Apogee reported solid Q2 FY26 results with 4.6% net sales increase to $358.2 million, despite profitability declines Second Quarter Fiscal 2026 Overview 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 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] - Continued focus on executing strategy and tariff mitigation plans in a dynamic operating environment[2] - 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] Key Financial Highlights 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] - EBITDA margin and adjusted EBITDA margin of 12.4%[3] - Diluted earnings per share of $1.10 and adjusted diluted earnings per share of $0.98[3] - Updates outlook for net sales and adjusted diluted EPS[3] Consolidated Financial Results 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 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] - 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] - 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] - 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] - Interest expense increased to $4.1 million due to higher debt from the UW Solutions acquisition[8] - Other income was $5.1 million, primarily from a $4.6 million gain related to a New Market Tax Credit[8] - 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] Financial Condition 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] - Net cash used in investing activities was $10.9 million, primarily for capital expenditures[12] - Returned $11 million of cash to shareholders through dividend payments[12] - Quarter-end long-term debt decreased $41 million from Q1 to $270 million, reducing the Consolidated Leverage Ratio to 1.5x[12] Fiscal Year 2026 Outlook 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] - Assumes an effective tax rate of approximately 27%[14] - Continues to assume capital expenditures between $35 million to $40 million[14] Segment Results (Second Quarter Fiscal 2026 Compared to Second Quarter Fiscal 2025) This section provides a comparative analysis of net sales and adjusted EBITDA for each business segment in Q2 FY26 versus Q2 FY25 Architectural Metals 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] Architectural Services 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] - 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] Architectural Glass 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)% |