Apogee(US:APOG)2026-01-07 12:04Financial Performance - Net sales for Q3 fiscal 2026 increased by 2.1% to $348.6 million compared to $341.3 million in Q3 fiscal 2025[4] - Net earnings decreased by 21.2% to $16.5 million, with diluted earnings per share down 19.8% to $0.77[4] - Operating income declined to $24.9 million, with an operating margin of 7.1%, down from 8.4%[8] - Gross profit decreased by 6.9% to $82,992,000 for the three months ended November 29, 2025, down from $89,149,000 in the prior year[24] - Operating income fell by 13.1% to $24,879,000 for the three months ended November 29, 2025, compared to $28,629,000 in 2024[24] - Net earnings for the three months ended November 29, 2025, were $16,549,000, a decline of 21.2% from $20,989,000 in the same period last year[24] - For the nine months ended November 29, 2025, consolidated net earnings were $37,511, a decrease from $82,566 for the same period in 2024, representing a decline of 54.5%[42] - Diluted earnings per share for the nine months ended November 29, 2025, were $1.74, down from $3.76 in the same period of 2024, a decline of 53.8%[46] Segment Performance - Architectural Metals segment net sales were $124.4 million, down from $138.0 million, with adjusted EBITDA margin improving to 13.5%[5] - Architectural Services segment net sales increased to $105.2 million, with a backlog of $774.7 million at the end of the quarter[6] - Performance Surfaces segment net sales rose to $53.0 million, including $18.4 million from the acquisition of UW Solutions[10] - Performance Surfaces segment saw a significant growth of 59.6% in net sales for the three months ended November 29, 2025, reaching $52,980,000 compared to $33,196,000 in the prior year[34] - The Architectural Glass segment experienced a 12.5% decrease in adjusted EBITDA for the three months ended November 29, 2025, totaling $11,534,000 compared to $13,180,000 in the previous year[34] - The Corporate and Other segment reported an adjusted EBITDA loss of $(4,272,000) for the three months ended November 29, 2025[34] - The Architectural Services segment achieved a 2.0% increase in adjusted EBITDA for the three months ended November 29, 2025, totaling $10,198,000 compared to $9,994,000 in the prior year[34] Financial Outlook - The company expects fiscal 2026 net sales to be approximately $1.39 billion, with diluted EPS projected between $2.49 and $2.65[14] - The fiscal 2026 outlook estimates diluted earnings per share to be between $2.49 and $2.65, with adjusted diluted earnings per share projected between $3.40 and $3.50[50] - Acquisition-related costs for fiscal 2026 are estimated to be between $0.09 and $0.12 per share[50] Cost Management and Restructuring - Project Fortify Phase 2 is expected to incur pre-tax charges of $28 million to $29 million, aiming for annualized cost savings of $25 million to $26 million[13] - The restructuring costs related to Project Fortify are expected to continue into fiscal year 2026, with Phase 2 costs anticipated[43] - The company reported restructuring costs of $23,554 for the nine months ended November 29, 2025, significantly higher than $3,213 for the same period in 2024[46] Cash Flow and Capital Expenditures - Net cash provided by operating activities for the nine months ended November 29, 2025, was $66,622,000, down from $95,130,000 in the prior year[28] - Capital expenditures for the nine months ended November 29, 2025, were $18,315,000, compared to $24,696,000 in the same period last year[28] Other Financial Metrics - Adjusted EBITDA increased to $46.1 million, with an adjusted EBITDA margin of 13.2%, down from 13.4%[4] - Adjusted EBITDA for the three months ended November 29, 2025, was $46,131,000, a slight increase of 0.7% from $45,803,000 in the same period last year[34] - Adjusted EBITDA for the nine months ended November 29, 2025, was $124,883, compared to $151,547 for the same period in 2024, reflecting a decrease of 17.6%[42] - The EBITDA margin for the nine months ended November 29, 2025, was 9.8%, down from 14.1% in the same period of 2024[42] Debt and Interest - Interest expense increased to $3.2 million due to a higher average debt balance from the acquisition of UW Solutions[8] Acquisition Impact - The acquisition of UW Solutions was completed on November 4, 2024, contributing to net sales growth in the Performance Surfaces segment[31] - The company plans to integrate the UW Solutions acquisition, which has incurred one-time expenses reflected in the financials[46] - The company incurred a gain of $6,740 related to the settlement of a New Market Tax Credit transaction in the nine months ended November 29, 2025[42]