Why Is Apogee Enterprises (APOG) Down 4.9% Since Last Earnings Report?

Core Viewpoint - Apogee Enterprises reported a mixed performance in its third-quarter fiscal 2025 earnings, with adjusted EPS exceeding expectations but overall sales and margins declining, leading to a cautious outlook for fiscal 2025 [2][16]. Financial Performance - Adjusted EPS for Q3 fiscal 2025 was $1.19, surpassing the Zacks Consensus Estimate of $1.14, but down 3% from the prior-year quarter [2][3]. - 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 [4][12]. - Gross profit declined by 1.3% to $89 million, with gross margin contracting by 50 basis points to 26.1% [5][8]. Cost and Expenses - Cost of sales rose by 1% to $252 million, contributing to the decline in gross profit [5]. - Selling, general and administrative expenses increased by 15% to $60.5 million, influenced by acquisition-related and restructuring expenses [7]. - Operating income fell by 24% to $28.6 million, with the operating margin decreasing to 8.4% from 11.1% in the prior-year quarter [8][9]. Segment Performance - Architectural Framing Systems segment sales decreased by 1% to $138 million, with adjusted operating profit dropping to $13.6 million [10]. - Architectural Glass segment sales plummeted by 23% to $70 million, with adjusted operating income down to $10 million [11]. - Architectural Services segment sales grew by 10.8% to $105 million, with adjusted operating profit surging 70% to $9 million [12]. - Large-Scale Optical Technologies segment sales rose by 27.6% to $33.2 million, including an $8.8 million contribution from UW Solutions [13]. Cash Position and Balance Sheet - Cash and cash equivalents stood at approximately $44 million, up from $37 million at the end of fiscal 2024 [14]. - Long-term debt increased significantly to $272 million, primarily due to borrowings for the acquisition of UW Solutions [15]. - The company returned $31.3 million to shareholders through dividends and share repurchases in the first nine months of fiscal 2025 [15]. Guidance for FY25 - Apogee anticipates a 5% decline in net sales for fiscal 2025, despite expecting a $30 million contribution from UW Solutions [16]. - Adjusted EPS is projected to be near the lower end of the guidance range of $4.90-$5.20, impacted by dilution from the acquisition and lower volumes [17].