APOG Apogee Enterprises Inc

• Net sales of $341 million
• Operating margin of 8.4%; and adjusted operating margin of 10.4%
• Diluted EPS of $0.96 and adjusted diluted EPS of $1.19
• Year-to-date cash flow from operations of $95 million
• Completed UW Solutions acquisition

Apogee Enterprises, Inc. (Nasdaq: APOG) today reported its results for the third quarter of fiscal 2025. The Company reported the following selected financial results:

 

 

Three Months Ended

 

 

(Unaudited, $ in thousands, except per share amounts)

 

November 30, 2024

 

November 25, 2023

 

% Change

Net sales

 

$

341,344

 

 

$

339,714

 

 

0.5

%

Operating income

 

$

28,629

 

 

$

37,647

 

 

(24.0

)%

Operating margin

 

 

8.4

%

 

 

11.1

%

 

 

Net earnings

 

$

20,989

 

 

$

26,974

 

 

(22.2

)%

Diluted earnings per share

 

$

0.96

 

 

$

1.23

 

 

(22.0

)%

Additional Non-GAAP Measures1

 

 

 

 

 

 

Adjusted operating income

 

$

35,414

 

 

$

37,647

 

 

(5.9

)%

Adjusted operating margin

 

 

10.4

%

 

 

11.1

%

 

 

Adjusted diluted earnings per share

 

$

1.19

 

 

$

1.23

 

 

(3.3

)%

Adjusted EBITDA

 

$

45,803

 

 

$

47,281

 

 

(3.1

)%

Adjusted EBITDA margin

 

 

13.4

%

 

 

13.9

%

 

 

Ty R. Silberhorn, Chief Executive Officer stated, “Our team remains focused on strengthening our operating foundation and positioning the company for long-term growth, despite continued pressure from soft demand in our end markets which is impacting results in the near term. During the quarter, we completed our acquisition of UW Solutions, expanding the capabilities and market opportunity in our LSO segment and creating a platform we expect to drive future growth.”

Closing of UW Solutions Acquisition

On November 4, 2024, the Company completed the acquisition of UW Interco, LLC (“UW Solutions”), a vertically integrated manufacturer of high-performance coated substrates used in graphic arts, building products, and other applications, for $242 million in cash.

Consolidated Results (Third Quarter Fiscal 2025 compared to Third Quarter Fiscal 2024)

• Net sales increased 0.5% to $341.3 million, driven by $8.8 million of inorganic sales contribution from the acquisition of UW Solutions and a more favorable mix of projects in Architectural Services, partially offset by less favorable mix in Architectural Framing Systems and lower volume in Architectural Glass.
• Gross margin decreased 50 basis points to 26.1%, primarily driven by the unfavorable sales leverage impact of lower volume, a less favorable product mix primarily in Architectural Framing Systems, higher incentive compensation expense, and higher lease expense, partially offset by a more favorable mix of projects in Architectural Services, lower quality related expense, and lower insurance-related costs.
• Selling, general and administrative (SG&A) expenses as a percent of net sales increased 220 basis points to 17.7%, primarily due to acquisition-related expenses associated with the UW Solutions transaction, restructuring expenses related to Project Fortify, and the unfavorable sales leverage impact of lower volume.
• Operating income declined to $28.6 million, and operating margin decreased to 8.4%. Adjusted operating income was $35.4 million and adjusted operating margin decreased by 70 basis points to 10.4%. The lower adjusted operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, less favorable product mix, higher incentive compensation expense, and higher lease expense, partially offset by a more favorable mix of projects in Architectural Services and lower insurance-related costs.
• Diluted earnings per share (EPS) was $0.96, compared to $1.23. Adjusted diluted EPS decreased to $1.19, primarily driven by lower adjusted operating income.

Segment Results (Third Quarter Fiscal 2025 Compared to Third Quarter Fiscal 2024)

Architectural Framing Systems

Architectural Framing Systems net sales were $138.0 million, compared to $139.6 million, primarily reflecting a less favorable product mix, partially offset by increased volume. Operating income was $12.7 million. Adjusted operating income was $13.6 million, or 9.8% of net sales, compared to $17.0 million, or 12.2% of net sales. The lower adjusted operating margin was primarily driven by the less favorable product mix as well as higher freight and compensation costs.

Architectural Glass

Architectural Glass net sales were $70.2 million, compared to $91.0 million, primarily reflecting reduced volume due to lower end-market demand. Operating income was $10.1 million, or 14.4% of net sales, compared to $15.2 million, or 16.7% of net sales. The lower operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, partially offset by improved productivity, favorable freight costs, and lower quality related expense.

Architectural Services

Architectural Services net sales grew 10.8% to $104.9 million, primarily due to a more favorable mix of projects and increased volume. Operating income improved to $9.7 million. Adjusted operating income increased to $9.0 million, or 8.6% of net sales, compared to $5.3 million, or 5.6% of net sales. The improvement in adjusted operating margin was primarily driven by a more favorable mix of projects, partially offset by higher incentive compensation and lease expenses. Segment backlog2 at the end of the quarter was $742.2 million, compared to $792.1 million at the end of the second quarter.

Large-Scale Optical

Large-Scale Optical net sales grew 27.6% to $33.2 million, compared to $26.0 million, which included $8.8 million of inorganic sales contribution from the acquisition of UW Solutions. Operating income was $4.8 million, or 14.6% of net sales, which included $1.3 million of acquisition-related costs. Adjusted operating income was $6.2 million, or 18.6% of net sales, and included $1.1 million related to UW Solutions. Adjusted operating income in the prior year period was $7.1 million, or 27.3% of net sales. The lower adjusted operating margin was primarily driven by the unfavorable sales leverage impact of lower organic volume and the dilutive impact of lower adjusted operating margin from UW Solutions.

Corporate and Other

Corporate and other expense increased to $8.8 million, compared to $6.9 million, primarily driven by $4.5 million of acquisition-related costs and $0.8 million of restructuring charges, partially offset by lower incentive compensation costs and lower insurance-related expenses.

Financial Condition

Net cash provided by operating activities in the third quarter was $31.0 million, compared to $66.7 million in the prior year period. The decrease was primarily driven by an increase in cash used for working capital. Fiscal year-to-date, net cash provided by operating activities was $95.1 million, compared to $129.3 million last year, primarily reflecting increased cash used for working capital. Net cash used by investing activities increased to $257.1 million for the first nine months of fiscal 2025, primarily related to $233.1 million used for the acquisition of UW Solutions. Fiscal year-to-date, capital expenditures were $24.7 million, compared to $27.0 million last year, and the Company has returned $31.3 million of cash to shareholders through share repurchases and dividend payments.

Quarter-end long-term debt increased to $272.0 million, as the Company increased borrowings on its existing credit facility to fund the acquisition of UW Solutions, which increased the Consolidated Leverage Ratio3 (as defined in the Company’s credit agreement) to 1.3x at the end of the quarter.

Fiscal 2025 Outlook

The Company now expects full-year net sales to decline approximately 5%, which includes an expected $30 million contribution from the acquisition of UW Solutions and the impact of lower-than-expected volume in the fourth quarter. This outlook continues to include approximately 2 percentage points of decline related to fiscal 2025 reverting to a 52-week year, and approximately 1 percentage point of decline related to the actions of Project Fortify to eliminate certain lower-margin product and service offerings.

The Company now expects full-year adjusted diluted EPS will be at the bottom of its guidance range of $4.90 to $5.20. This expectation includes the impact of approximately $0.05 of dilution related to the acquisition of UW Solutions and lower-than-expected volume in the fourth quarter. This outlook continues to include the expectation that the impact of the reversion to a 52-week year will reduce adjusted diluted EPS by approximately $0.20 compared to fiscal 2024 and that there will be no material impact to adjusted diluted EPS related to the adverse net sales impact of Project Fortify.

The Company now expects a total of $16 million to $17 million of pre-tax charges in connection with Project Fortify, leading to annualized cost savings of $13 million to $14 million. The Company continues to expect approximately 60% of these savings will be realized in fiscal 2025, and the remainder in fiscal 2026, with approximately 70% of the savings to be realized in Architectural Framing Systems, 20% in Architectural Services, and 10% in Corporate and Other. The Company now expects the plan to be substantially complete in the fourth quarter of fiscal 2025.

The Company continues to expect an effective tax rate of approximately 24.5%, and now expects capital expenditures between $40 million to $45 million.

Conference Call Information

The Company will host a conference call today at 8:00 a.m. Central Time to discuss this earnings release. This call will be webcast and is available in the Investor Relations section of the Company’s website, along with presentation slides, at https://www.apog.com/events-and-presentations. A replay and transcript of the webcast will be available on the Company’s website following the conference call.

About Apogee Enterprises

Apogee Enterprises, Inc. (Nasdaq: APOG) is a leading provider of architectural building products and services, as well as high-performance coated materials used in a variety of applications. Headquartered in Minneapolis, MN, our portfolio of industry-leading products and services includes architectural glass, windows, curtainwall, storefront and entrance systems, integrated project management and installation services, and high-performance coatings that provide protection, innovative design, and enhanced performance. For more information, visit www.apog.com.

Use of Non-GAAP Financial Measures

Management uses non-GAAP measures to evaluate the Company’s historical and prospective financial performance, measure operational profitability on a consistent basis, as a factor in determining executive compensation, and to provide enhanced transparency to the investment community. Non-GAAP measures should be viewed in addition to, and not as a substitute for, the reported financial results of the Company prepared in accordance with GAAP. Other companies may calculate these measures differently, limiting the usefulness of the measures for comparison with other companies. This release and other financial communications may contain the following non-GAAP measures:

• Adjusted operating income, adjusted operating margin, adjusted net earnings, and adjusted diluted EPS are used by the Company to provide meaningful supplemental information about its operating performance by excluding amounts that are not considered part of core operating results to enhance comparability of results from period to period.
• Adjusted EBITDA represents adjusted net earnings before interest, taxes, depreciation, and amortization. The Company believes adjusted EBITDA and adjusted EBITDA margin metrics provide useful information to investors and analysts about the Company’s core operating performance.
• Free cash flow is defined as net cash provided by operating activities, minus capital expenditures. The Company considers this measure an indication of its financial strength. However, free cash flow does not fully reflect the Company’s ability to freely deploy generated cash, as it does not reflect, for example, required payments on indebtedness and other fixed obligations.
• Consolidated Leverage Ratio is calculated as Consolidated Funded Indebtedness minus Unrestricted Cash at the end of the current period, divided by Consolidated EBITDA (calculated as EBITDA plus certain non-cash charges and allowed addbacks, less certain non-cash income, plus the pro forma effect of acquisitions and certain pro forma run-rate cost savings for acquisitions and dispositions, as applicable for the trailing twelve months ended as of the current period). All capitalized and undefined terms used in this bullet are defined in the Company’s credit agreement. The Company is unable to present a quantitative reconciliation of forward-looking expected Consolidated Leverage Ratio to its most directly comparable forward-looking GAAP financial measure because such information is not available, and management cannot reliably predict all the necessary components of such GAAP financial measure without unreasonable effort or expense. In addition, the Company believes such reconciliation would imply a degree of precision that would be confusing or misleading to investors.
• Backlog is an operating measure used by management to assess future potential sales revenue. Backlog is defined as the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which is expected to be recognized as revenue. It is most meaningful for the Architectural Services segment, due to the longer-term nature of their projects. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. Backlog should not be used as the sole indicator of future revenue because the Company has a substantial number of projects with short lead times that book-and-bill within the same reporting period that are not included in backlog.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The words “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should,” “will,” “continue,” and similar expressions are intended to identify “forward-looking statements”. These statements reflect Apogee management’s expectations or beliefs as of the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the results, performance, financial condition, prospects and opportunities of the Company, including the following: (A) North American and global economic conditions, including the cyclical nature of the North American and Latin American non-residential construction industries and the potential impact of an economic downturn or recession; (B) U.S. and global instability and uncertainty arising from events outside of our control; (C) actions of new and existing competitors; (D) departure of key personnel and ability to source sufficient labor; (E) product performance, reliability and quality issues; (F) project management and installation issues that could affect the profitability of individual contracts; (G) dependence on a relatively small number of customers in one operating segment; (H) financial and operating results that could differ from market expectations; (I) self-insurance risk related to a material product liability or other events for which the Company is liable; (J) maintaining our information technology systems and potential cybersecurity threats; (K) cost of regulatory compliance, including environmental regulations; (L) supply chain disruptions, including fluctuations in the availability and cost of materials used in our products and the impact of trade policies and regulations, including potential future tariffs; (M) integration and future operating results of acquisitions, including but not limited to the acquisition of UW Solutions, and management of acquired contracts; (N) impairment of goodwill or indefinite-lived intangible assets; (O) our ability to successfully manage and implement our enterprise strategy; (P) our ability to maintain effective internal controls over financial reporting; (Q) our judgements regarding the accounting for tax positions and the resolution of tax disputes; (R) the impact of cost inflation and interest rates; and (S) the impact of changes in capital and credit markets on our liquidity and cost of capital. The Company cautions investors that actual future results could differ materially from those described in the forward-looking statements and that other factors may in the future prove to be important in affecting the Company’s results, performance, prospects, or opportunities. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of each factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. More information concerning potential factors that could affect future financial results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 2, 2024, and in subsequent filings with the U.S. Securities and Exchange Commission.

____________________________

1 Adjusted operating income, adjusted operating margin, adjusted diluted earnings per share (EPS), adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures. See Use of Non-GAAP Financial Measures and reconciliations to the most directly comparable GAAP measures later in this press release.

2 Backlog is a non-GAAP financial measure. See Use of Non-GAAP Financial Measures later in this press release for more information.

3 Consolidated Leverage Ratio is a non-GAAP financial measure. See Use of Non-GAAP Financial Measures later in this press release for more information.

Apogee Enterprises, Inc.

Consolidated Condensed Statements of Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

(In thousands, except per share amounts)

 

November 30, 2024

 

November 25, 2023

 

% Change

 

November 30, 2024

 

November 25, 2023

 

% Change

Net sales

 

$

341,344

 

 

$

339,714

 

 

0.5

%

 

$

1,015,300

 

 

$

1,055,102

 

 

(3.8

)%

Cost of sales

 

 

252,195

 

 

 

249,409

 

 

1.1

%

 

 

729,975

 

 

 

776,440

 

 

(6.0

)%

Gross profit

 

 

89,149

 

 

 

90,305

 

 

(1.3

)%

 

 

285,325

 

 

 

278,662

 

 

2.4

%

Selling, general and administrative expenses

 

 

60,520

 

 

 

52,658

 

 

14.9

%

 

 

173,350

 

 

 

166,695

 

 

4.0

%

Operating income

 

 

28,629

 

 

 

37,647

 

 

(24.0

)%

 

 

111,975

 

 

 

111,967

 

 

—

%

Interest expense, net

 

 

1,044

 

 

 

1,454

 

 

(28.2

)%

 

 

2,634

 

 

 

5,720

 

 

(54.0

)%

Other (income) expense, net

 

 

(60

)

 

 

890

 

 

(106.7

)%

 

 

(493

)

 

 

(3,722

)

 

(86.8

)%

Earnings before income taxes

 

 

27,645

 

 

 

35,303

 

 

(21.7

)%

 

 

109,834

 

 

 

109,969

 

 

(0.1

)%

Income tax expense

 

 

6,656

 

 

 

8,329

 

 

(20.1

)%

 

 

27,268

 

 

 

26,092

 

 

4.5

%

Net earnings

 

$

20,989

 

 

$

26,974

 

 

(22.2

)%

 

$

82,566

 

 

$

83,877

 

 

(1.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.96

 

 

$

1.24

 

 

(22.6

)%

 

$

3.79

 

 

$

3.83

 

 

(1.0

)%

Diluted earnings per share

 

$

0.96

 

 

$

1.23

 

 

(22.0

)%

 

$

3.76

 

 

$

3.80

 

 

(1.1

)%

Weighted average basic shares outstanding

 

 

21,782

 

 

 

21,819

 

 

(0.2

)%

 

 

21,789

 

 

 

21,889

 

 

(0.5

)%

Weighted average diluted shares outstanding

 

 

21,917

 

 

 

22,013

 

 

(0.4

)%

 

 

21,937

 

 

 

22,093

 

 

(0.7

)%

Cash dividends per common share

 

$

0.25

 

 

$

0.24

 

 

4.2

%

 

$

0.75

 

 

$

0.72

 

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

26.1

%

 

 

26.6

%

 

 

 

 

28.1

%

 

 

26.4

%

 

 

Selling, general and administrative expenses

 

 

17.7

%

 

 

15.5

%

 

 

 

 

17.1

%

 

 

15.8

%

 

 

Operating margin

 

 

8.4

%

 

 

11.1

%

 

 

 

 

11.0

%

 

 

10.6

%

 

 

Apogee Enterprises, Inc.

Business Segment Information

(Unaudited)

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

(In thousands)

 

November 30, 2024

 

November 25, 2023

 

% Change

 

November 30, 2024

 

November 25, 2023

 

% Change

Segment net sales

 

 

 

 

 

 

 

 

 

 

 

 

Architectural Framing Systems

 

$

138,039

 

 

$

139,585

 

 

(1.1

)%

 

$

412,561

 

 

$

462,548

 

 

(10.8

)%

Architectural Glass

 

 

70,236

 

 

 

90,964

 

 

(22.8

)%

 

 

247,040

 

 

 

282,262

 

 

(12.5

)%

Architectural Services

 

 

104,921

 

 

 

94,662

 

 

10.8

%

 

 

301,966

 

 

 

272,144

 

 

11.0

%

Large-Scale Optical

 

 

33,196

 

 

 

26,009

 

 

27.6

%

 

 

74,232

 

 

 

72,110

 

 

2.9

%

Intersegment eliminations

 

 

(5,048

)

 

 

(11,506

)

 

(56.1

)%

 

 

(20,499

)

 

 

(33,962

)

 

(39.6

)%

Net sales

 

$

341,344

 

 

$

339,714

 

 

0.5

%

 

$

1,015,300

 

 

$

1,055,102

 

 

(3.8

)%

Segment operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Architectural Framing Systems

 

$

12,710

 

 

$

16,981

 

 

(25.2

)%

 

$

48,187

 

 

$

57,986

 

 

(16.9

)%

Architectural Glass

 

 

10,118

 

 

 

15,164

 

 

(33.3

)%

 

 

48,277

 

 

 

49,119

 

 

(1.7

)%

Architectural Services

 

 

9,730

 

 

 

5,288

 

 

84.0

%

 

 

21,483

 

 

 

8,211

 

 

161.6

%

Large-Scale Optical

 

 

4,842

 

 

 

7,100

 

 

(31.8

)%

 

 

13,481

 

 

 

17,288

 

 

(22.0

)%

Corporate and other

 

 

(8,771

)

 

 

(6,886

)

 

27.4

%

 

 

(19,453

)

 

 

(20,637

)

 

(5.7

)%

Operating income

 

$

28,629

 

 

$

37,647

 

 

(24.0

)%

 

$

111,975

 

 

$

111,967

 

 

—

%

Segment operating margin

 

 

 

 

 

 

 

 

 

 

 

 

Architectural Framing Systems

 

 

9.2

%

 

 

12.2

%

 

 

 

 

11.7

%

 

 

12.5

%

 

 

Architectural Glass

 

 

14.4

%

 

 

16.7

%

 

 

 

 

19.5

%

 

 

17.4

%

 

 

Architectural Services

 

 

9.3

%

 

 

5.6

%

 

 

 

 

7.1

%

 

 

3.0

%

 

 

Large-Scale Optical

 

 

14.6

%

 

 

27.3

%

 

 

 

 

18.2

%

 

 

24.0

%

 

 

Corporate and other

 

 

N/M

 

 

 

N/M

 

 

 

 

 

N/M

 

 

 

N/M

 

 

 

Operating margin

 

 

8.4

%

 

 

11.1

%

 

 

 

 

11.0

%

 

 

10.6

%

 

 

N/M - Indicates calculation is not meaningful

 

 

 

 

 

 

 

 

 

 

• Segment net sales is defined as net sales for a certain segment and includes revenue related to intersegment transactions.
• Net sales intersegment eliminations are reported separately to exclude these sales from our consolidated total.
• Segment operating income is equal to net sales, less cost of goods sold, SG&A, and any asset impairment charges associated with the segment.
• Segment operating income includes operating income related to intersegment sales transactions and excludes certain corporate costs that are not allocated at a segment level. We report these unallocated corporate costs separately in Corporate and Other.
• Operating income does not include any other income or expense, interest expense or a provision for income taxes.

Apogee Enterprises, Inc.

Consolidated Condensed Balance Sheets

(Unaudited)

(In thousands)

 

November 30, 2024

 

March 2, 2024

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

43,855

 

$

37,216

Receivables, net

 

 

187,799

 

 

173,557

Inventories, net

 

 

97,003

 

 

69,240

Contract assets

 

 

57,545

 

 

49,502

Other current assets

 

 

45,119

 

 

29,124

Total current assets

 

 

431,321

 

 

358,639

Property, plant and equipment, net

 

 

269,063

 

 

244,216

Operating lease right-of-use assets

 

 

63,663

 

 

40,221

Goodwill

 

 

234,814

 

 

129,182

Intangible assets, net

 

 

140,390

 

 

66,114

Other non-current assets

 

 

41,269

 

 

45,692

Total assets

 

$

1,180,520

 

$

884,064

Liabilities and shareholders' equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

 

96,372

 

 

84,755

Accrued compensation and benefits

 

 

39,432

 

 

53,801

Contract liabilities

 

 

46,165

 

 

34,755

Operating lease liabilities

 

 

14,958

 

 

12,286

Other current liabilities

 

 

66,982

 

 

59,108

Total current liabilities

 

 

263,909

 

 

244,705

Long-term debt

 

 

272,000

 

 

62,000

Non-current operating lease liabilities

 

 

54,188

 

 

31,907

Non-current self-insurance reserves

 

 

33,303

 

 

30,552

Other non-current liabilities

 

 

35,051

 

 

43,875

Total shareholders’ equity

 

 

522,069

 

 

471,025

Total liabilities and shareholders’ equity

 

$

1,180,520

 

$

884,064

Apogee Enterprises, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

 

Nine Months Ended

(In thousands)

 

November 30, 2024

 

November 25, 2023

Operating Activities

 

 

 

 

Net earnings

 

$

82,566

 

 

$

83,877

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

30,798

 

 

 

31,185

 

Share-based compensation

 

 

8,067

 

 

 

6,644

 

Deferred income taxes

 

 

5,109

 

 

 

1,296

 

Loss (gain) on disposal of assets

 

 

159

 

 

 

(50

)

Settlement of New Markets Tax Credit transaction

 

 

—

 

 

 

(4,687

)

Non-cash lease expense

 

 

9,926

 

 

 

8,742

 

Other, net

 

 

1,800

 

 

 

10

 

Changes in operating assets and liabilities:

 

 

 

 

Receivables

 

 

(2,191

)

 

 

(846

)

Inventories

 

 

(8,284

)

 

 

8,256

 

Contract assets

 

 

(8,168

)

 

 

11,194

 

Accounts payable

 

 

6,796

 

 

 

(1,902

)

Accrued compensation and benefits

 

 

(20,958

)

 

 

(7,015

)

Contract liabilities

 

 

11,499

 

 

 

7,635

 

Operating lease liability

 

 

(9,387

)

 

 

(9,214

)

Accrued income taxes

 

 

(6,498

)

 

 

(7,587

)

Other current assets and liabilities

 

 

(6,104

)

 

 

1,714

 

Net cash provided by operating activities

 

 

95,130

 

 

 

129,252

 

Investing Activities

 

 

 

 

Capital expenditures

 

 

(24,696

)

 

 

(26,956

)

Proceeds from sales of property, plant and equipment

 

 

744

 

 

 

247

 

Purchases of marketable securities

 

 

(2,394

)

 

 

(969

)

Sales/maturities of marketable securities

 

 

2,370

 

 

 

1,370

 

Acquisition of business, net of cash acquired

 

 

(233,125

)

 

 

—

 

Net cash used by investing activities

 

 

(257,101

)

 

 

(26,308

)

Financing Activities

 

 

 

 

Proceeds from revolving credit facilities

 

 

95,201

 

 

 

195,851

 

Repayment on revolving credit facilities

 

 

(115,201

)

 

 

(265,000

)

Proceeds from term loans

 

 

250,000

 

 

 

—

 

Repayment of term loans

 

 

(20,000

)

 

 

—

 

Payments of debt issuance costs

 

 

(3,798

)

 

 

—

 

Repurchase of common stock

 

 

(15,061

)

 

 

(11,821

)

Dividends paid

 

 

(16,238

)

 

 

(15,690

)

Other, net

 

 

(5,884

)

 

 

(3,781

)

Net cash provided (used) by financing activities

 

 

169,019

 

 

 

(100,441

)

Effect of exchange rates on cash

 

 

(409

)

 

 

(569

)

Increase in cash and cash equivalents

 

 

6,639

 

 

 

1,934

 

Cash and cash equivalents at beginning of period

 

 

37,216

 

 

 

21,473

 

Cash and cash equivalents at end of period

 

$

43,855

 

 

$

23,407

 

Apogee Enterprises, Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Earnings and Adjusted Diluted Earnings per Share

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(In thousands)

 

November 30, 2024

 

November 25, 2023

 

November 30, 2024

 

November 25, 2023

Net earnings

 

$

20,989

 

 

$

26,974

 

$

82,566

 

 

$

83,877

 

Acquisition-related costs (1)

 

 

 

 

 

 

 

Transaction

 

 

3,748

 

 

 

—

 

 

3,748

 

 

 

—

 

Integration

 

 

941

 

 

 

—

 

 

941

 

 

 

—

 

Backlog amortization

 

 

805

 

 

 

—

 

 

805

 

 

 

—

 

Inventory step-up

 

 

379

 

 

 

—

 

 

379

 

 

 

—

 

Total Acquisition-related costs

 

5,873

 

 

 

—

 

 

5,873

 

 

 

—

 

Restructuring charges (2)

 

912

 

 

 

—

 

 

3,213

 

 

 

—

 

NMTC settlement gain (3)

 

 

—

 

 

 

—

 

 

—

 

 

 

(4,687

)

Income tax impact on above adjustments (4)

 

 

(1,662

)

 

 

—

 

 

(2,226

)

 

 

1,148

 

Adjusted net earnings

 

$

26,112

 

 

$

26,974

 

$

89,426

 

 

$

80,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

November 30, 2024

 

November 25, 2023

 

November 30, 2024

 

November 25, 2023

Diluted earnings per share

 

$

0.96

 

 

$

1.23

 

$

3.76

 

 

$

3.80

 

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

Transaction

 

 

0.17

 

 

 

—

 

 

0.17

 

 

 

—

 

Integration

 

 

0.04

 

 

 

—

 

 

0.04

 

 

 

—

 

Backlog amortization

 

 

0.04

 

 

 

—

 

 

0.04

 

 

 

—

 

Inventory step-up

 

 

0.02

 

 

 

—

 

 

0.02

 

 

 

—

 

Total Acquisition-related costs

 

 

0.27

 

 

 

—

 

 

0.27

 

 

 

—

 

Restructuring charges (2)

 

0.04

 

 

 

—

 

 

0.15

 

 

 

—

 

NMTC settlement gain (3)

 

 

—

 

 

 

—

 

 

—

 

 

 

(0.21

)

Income tax impact on above adjustments (4)

 

 

(0.08

)

 

 

—

 

 

(0.10

)

 

 

0.05

 

Adjusted diluted earnings per share

 

$

1.19

 

 

$

1.23

 

$

4.08

 

 

$

3.64

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

21,917

 

 

 

22,013

 

 

21,937

 

 

 

22,093

 

(1)

 

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.
• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.
• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.
• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

 

Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025, and $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.

(3)

 

Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.

(4)

 

Income tax impact calculated using an estimated statutory tax rate of 24.5%, which reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred.

Apogee Enterprises, Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income (Loss) and Adjusted Operating Margin

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 30, 2024

(In thousands)

 

Architectural Framing Systems

 

Architectural Glass

 

Architectural Services

 

LSO

 

Corporate and Other

 

Consolidated

Operating income (loss)

 

$

12,710

 

 

$

10,118

 

 

$

9,730

 

 

$

4,842

 

 

$

(8,771

)

 

$

28,629

 

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,748

 

 

 

3,748

 

 

 

Integration

 

 

—

 

 

 

—

 

 

 

—

 

 

 

147

 

 

 

794

 

 

 

941

 

 

 

Backlog amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

805

 

 

 

—

 

 

 

805

 

 

 

Inventory step-up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

379

 

 

 

—

 

 

 

379

 

Total Acquisition-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,331

 

 

 

4,542

 

 

 

5,873

 

Restructuring charges (2)

 

 

842

 

 

 

—

 

 

 

(717

)

 

 

—

 

 

 

787

 

 

 

912

 

Adjusted operating income (loss)

 

$

13,552

 

 

$

10,118

 

 

$

9,013

 

 

$

6,173

 

 

$

(3,442

)

 

$

35,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

9.2

%

 

 

14.4

%

 

 

9.3

%

 

 

14.6

%

 

 

N/M

 

 

 

8.4

%

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

N/M

 

 

 

1.1

 

 

 

Integration

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.4

 

 

 

N/M

 

 

 

0.3

 

 

 

Backlog amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2.4

 

 

 

N/M

 

 

 

0.2

 

 

 

Inventory step-up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.1

 

 

 

N/M

 

 

 

0.1

 

Total Acquisition-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4.0

 

 

 

N/M

 

 

 

1.7

 

Restructuring charges (2)

 

 

0.6

 

 

 

—

 

 

 

(0.7

)

 

 

—

 

 

 

N/M

 

 

 

0.3

 

Adjusted operating margin

 

 

9.8

%

 

 

14.4

%

 

 

8.6

%

 

 

18.6

%

 

 

N/M

 

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended November 25, 2023

(In thousands)

 

Architectural Framing Systems

 

Architectural Glass

 

Architectural Services

 

LSO

 

Corporate and Other

 

Consolidated

Operating income (loss)

 

$

16,981

 

 

$

15,164

 

 

$

5,288

 

 

$

7,100

 

 

$

(6,886

)

 

$

37,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

12.2

%

 

 

16.7

%

 

 

5.6

%

 

 

27.3

%

 

 

N/M

 

 

 

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.
• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.
• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.
• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

 

Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025.

Apogee Enterprises, Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income (Loss) and Adjusted Operating Margin

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended November 30, 2024

(In thousands)

 

Architectural Framing Systems

 

Architectural Glass

 

Architectural Services

 

LSO

 

Corporate and Other

 

Consolidated

Operating income (loss)

 

$

48,187

 

 

$

48,277

 

 

$

21,483

 

 

$

13,481

 

 

$

(19,453

)

 

$

111,975

 

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,748

 

 

 

3,748

 

 

 

Integration

 

 

—

 

 

 

—

 

 

 

—

 

 

 

147

 

 

 

794

 

 

 

941

 

 

 

Backlog amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

805

 

 

 

—

 

 

 

805

 

 

 

Inventory step-up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

379

 

 

 

—

 

 

 

379

 

Total Acquisition-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,331

 

 

 

4,542

 

 

 

5,873

 

Restructuring charges (2)

 

 

2,755

 

 

 

—

 

 

 

(459

)

 

 

—

 

 

 

917

 

 

 

3,213

 

Adjusted operating income (loss)

 

$

50,942

 

 

$

48,277

 

 

$

21,024

 

 

$

14,812

 

 

$

(13,994

)

 

$

121,061

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

11.7

%

 

 

19.5

%

 

 

7.1

%

 

 

18.2

%

 

 

N/M

 

 

 

11.0

%

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

N/M

 

 

 

0.4

 

 

 

Integration

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.2

 

 

 

N/M

 

 

 

0.1

 

 

 

Backlog amortization

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.1

 

 

 

N/M

 

 

 

0.1

 

 

 

Inventory step-up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.5

 

 

 

N/M

 

 

 

—

 

Total Acquisition-related costs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.8

 

 

 

N/M

 

 

 

0.6

 

Restructuring charges (2)

 

 

0.7

 

 

 

—

 

 

 

(0.2

)

 

 

—

 

 

 

N/M

 

 

 

0.3

 

Adjusted operating margin

 

 

12.3

%

 

 

19.5

%

 

 

7.0

%

 

 

20.0

%

 

 

N/M

 

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended November 25, 2023

(In thousands)

 

Architectural Framing Systems

 

Architectural Glass

 

Architectural Services

 

LSO

 

Corporate and Other

 

Consolidated

Operating income (loss)

 

$

57,986

 

 

$

49,119

 

 

$

8,211

 

 

$

17,288

 

 

$

(20,637

)

 

$

111,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

12.5

%

 

 

17.4

%

 

 

3.0

%

 

 

24.0

%

 

 

N/M

 

 

 

10.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.
• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.
• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.
• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

 

Restructuring charges related to Project Fortify, including $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.

Apogee Enterprises, Inc.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

(Earnings before interest, taxes, depreciation and amortization)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(In thousands)

 

November 30, 2024

 

November 25, 2023

 

November 30, 2024

 

November 25, 2023

Net earnings

 

$

20,989

 

 

$

26,974

 

 

$

82,566

 

 

$

83,877

 

Income tax expense

 

 

6,656

 

 

 

8,329

 

 

 

27,268

 

 

 

26,092

 

Interest expense, net

 

 

1,044

 

 

 

1,454

 

 

 

2,634

 

 

 

5,720

 

Depreciation and amortization

 

 

11,134

 

 

 

10,524

 

 

 

30,798

 

 

 

31,185

 

EBITDA

 

$

39,823

 

 

$

47,281

 

 

$

143,266

 

 

$

146,874

 

Acquisition-related costs (1)

 

 

 

 

 

 

 

 

Transaction

 

 

3,748

 

 

 

—

 

 

 

3,748

 

 

 

—

 

Integration

 

 

941

 

 

 

—

 

 

 

941

 

 

 

—

 

Inventory step-up

 

 

379

 

 

 

—

 

 

 

379

 

 

 

—

 

Total Acquisition-related costs

 

 

5,068

 

 

 

—

 

 

 

5,068

 

 

 

—

 

Restructuring charges (2)

 

 

912

 

 

 

—

 

 

 

3,213

 

 

 

—

 

NMTC settlement gain (3)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,687

)

Adjusted EBITDA

 

$

45,803

 

 

$

47,281

 

 

$

151,547

 

 

$

142,187

 

 

 

 

 

 

 

 

 

 

EBITDA Margin

 

 

11.7

%

 

 

13.9

%

 

 

14.1

%

 

 

13.9

%

Adjusted EBITDA Margin

 

 

13.4

%

 

 

13.9

%

 

 

14.9

%

 

 

13.5

%

(1)

 

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.
• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.
• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

 

Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025, and $1.3 million of employee termination costs, $0.1 million of contract termination costs and, $1.8 million of other costs incurred in the first nine months of fiscal 2025.

(3)

 

Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.

Apogee Enterprises, Inc.

Fiscal 2025 Outlook

Reconciliation of Fiscal 2025 outlook of estimated

Diluted Earnings per Share to Adjusted Diluted Earnings per Share

(Unaudited)

 

 

 

 

 

 

 

Fiscal Year Ending March 1, 2025

 

 

Low Range

 

High Range

Diluted earnings per share

 

$

4.40

 

 

$

4.64

 

Acquisition-related costs (1)

 

 

 

Transaction

 

 

0.18

 

 

 

0.19

 

Integration

 

 

0.09

 

 

 

0.12

 

Backlog amortization

 

 

0.07

 

 

 

0.07

 

Inventory step-up

 

 

0.15

 

 

 

0.15

 

Total Acquisition-related costs

 

 

0.49

 

 

 

0.53

 

Restructuring charges (2)

 

0.17

 

 

 

0.21

 

Income tax impact on above adjustments per share

 

 

(0.16

)

 

 

(0.18

)

Adjusted diluted earnings per share

 

$

4.90

 

 

$

5.20

 

(1)

 

Acquisition-related costs include:

• Transaction costs related to the UW Solutions acquisition.
• Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.
• Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.
• Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

 

Restructuring charges related to Project Fortify.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250107425231/en/

Jeff Huebschen Vice President, Investor Relations & Communications 952.487.7538 ir@apog.com