Apogee Beats on Q3 Earnings, Anticipates Sales Decline in FY25

Core Viewpoint - Apogee Enterprises, Inc. reported adjusted EPS of $1.19 for Q3 fiscal 2025, exceeding estimates but reflecting a 3% decline year-over-year [1][2]. Financial Performance - Net sales increased by 0.5% year-over-year to $341 million, driven by an $8.8 million contribution from the acquisition of UW Solutions [3]. - Cost of sales rose by 1% to $252 million, leading to a gross profit decline of 1.3% to $89 million, with a gross margin contraction of 50 basis points to 26.1% [4][5]. - Operating income fell 24% to $28.6 million, with an operating margin of 8.4%, down from 11.1% in the prior year [7]. - Adjusted operating income was $35.4 million, a 6% decrease, with an adjusted operating margin of 10.4% [8]. Segment Performance - Architectural Framing Systems segment sales decreased by 1% to $138 million, with adjusted operating profit dropping to $13.6 million [9]. - Architectural Glass segment sales fell 23% to $70 million, with adjusted operating income down to $10 million [10]. - Architectural Services segment sales grew 10.8% to $105 million, with adjusted operating profit surging 70% to $9 million [11]. - Large-Scale Optical Technologies segment sales rose 27.6% to $33.2 million, including an $8.8 million contribution from UW Solutions, but operating profit decreased to $6.2 million [12]. Cash Position & Balance Sheet - Cash and cash equivalents increased to approximately $44 million from $37 million year-over-year [13]. - Long-term debt rose significantly to $272 million due to borrowings for the UW Solutions acquisition [14]. Acquisition Details - Apogee completed the acquisition of UW Solutions for $242 million, expected to contribute over $100 million to net sales in fiscal 2026 [15]. Guidance - The company anticipates a 5% decline in net sales for fiscal 2025, with adjusted EPS expected near the lower end of the guidance range of $4.90-$5.20 [16][17]. Stock Performance - Apogee's shares have increased by 36.7% over the past 12 months, contrasting with a 9.6% decline in the glass products industry [18].