Apogee(US:APOG)2026-01-07 15:02Financial Data and Key Metrics Changes - Net sales increased by 2.1% to $348.6 million, driven by $18.4 million in inorganic sales from the acquisition of UW Solutions and favorable product mix, partially offset by lower volume in metals [10] - Adjusted EBITDA margin decreased slightly to 13.2%, primarily due to lower volume and price, as well as higher aluminum and health insurance costs [10] - Adjusted diluted EPS was $1.02, down year-over-year, mainly due to higher amortization and interest expense from the UW Solutions acquisition [11] Business Line Data and Key Metrics Changes - Metals segment net sales declined due to lower volume, but adjusted EBITDA margin improved to 13.5% driven by increased productivity and cost savings from Fortify Phase Two [11] - Services segment achieved its seventh consecutive quarter of year-over-year net sales growth, with adjusted EBITDA margin increasing to 9.7% due to lower incentive compensation expense [11] - Glass segment net sales increased slightly to approximately $71 million, driven by increased volume and favorable mix, though adjusted EBITDA margin moderated due to lower price and higher material costs [12] Market Data and Key Metrics Changes - Average aluminum prices rose approximately 13% from Q2 to Q3 and are up over 50% compared to the same quarter last year, impacting volume and margin [15] - Backlog for services ended the quarter at $775 million, down slightly from Q2 but up over 4% compared to Q3 of last year [11] Company Strategy and Development Direction - The company aims to become the economic leader in target markets, manage its portfolio through creative M&A opportunities, and strengthen core operations for sustained profitable growth [8][19] - The acquisition of UW Solutions is expected to expand market reach and provide a platform for growth in fiscal 2027 and beyond [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenging macroeconomic factors but believes the company is well-positioned due to operational excellence, cost-out execution, and a strong balance sheet [8] - The company expects continued pressure from competitive market dynamics in both Metals and Glass segments, with margin compression anticipated to persist into fiscal 2027 [15] Other Important Information - The company is expanding the scope of Project Fortify Phase Two to include further restructuring actions, primarily in Metals and corporate, with expected pre-tax charges of approximately $28-$29 million and annual pre-tax cost savings of $25-$26 million [16] Q&A Session Summary Question: What is the board looking for in new leadership and any changes in strategic direction? - No change in strategy; focus remains on becoming the economic leader, managing the portfolio, and pursuing accretive M&A opportunities [19] Question: How is the company addressing the impact of rising aluminum prices? - Rising aluminum prices are impacting margins, and the company is focused on managing costs and implementing strategies to control expenses [27] Question: What is the company's approach to M&A activity moving forward? - The M&A pipeline is robust, with successful integration of UW Solutions and ongoing efforts to identify strategic acquisitions [36] Question: How does the company view its growth trajectory and ROIC metrics? - The strategy remains unchanged, with a focus on becoming the economic leader and managing the portfolio for growth opportunities [61] Question: What are the near-term priorities for the company? - Delivering results and focusing on Project Fortify Phase Two and the Apogee Management System to drive cost structure improvements [63][64]