Apogee Enterprises Reports Fiscal 2025 Fourth Quarter and Full Year Results

Fourth-quarter net sales of $346 million

Fourth-quarter diluted EPS of $0.11 and adjusted diluted EPS of $0.89

Full-year net sales of $1.36 billion

Full-year operating margin of 8.7%; full-year adjusted operating margin improves to 11.0%

Full-year diluted EPS of $3.89; full-year adjusted diluted EPS grows 4% to $4.97

UW Solutions acquisition delivers in-line with expectations

Provides initial outlook for fiscal 2026

Apogee Enterprises, Inc. reported its fiscal 2025 fourth-quarter and full-year results. The prior year fourth-quarter and full-year results included the impact of an additional week of operations compared to fiscal 2025.

Change in Segment Names

During the fourth quarter, the Company changed the names of two reporting segments, to better reflect their product focus and capabilities. The previously named Architectural Framing Systems Segment is now referred to as the Architectural Metals Segment. The previously named Large-Scale Optical Segment is now referred to as the Performance Surfaces Segment.

Ty R. Silberhorn, Chief Executive Officer stated, “I am proud of the results our team delivered in fiscal 2025. We expanded adjusted operating margin for the third consecutive year, delivered another year of adjusted ROIC above our targeted level, and achieved record adjusted diluted EPS of $4.97. Through executing our strategy, we’ve driven sustainable operating improvements, that will serve as the foundation for our continued success.”

Mr. Silberhorn continued, “Looking ahead to fiscal 2026, we anticipate current macroeconomic uncertainty to create headwinds in our core non-residential construction market as well as our specialty glass and acrylic markets. Against this backdrop, we’re focused on delivering near-term financial results, creating certainty where we are able during a challenging macroeconomic environment, while continuing to make investments in growth opportunities to further our transformation.”

Fourth-Quarter Consolidated Results

(Fourth Quarter Fiscal 2025 compared to Fourth Quarter Fiscal 2024)

• Net sales decreased 4.5% to $345.7 million. The prior year included an extra week of operations, which negatively impacted net sales by 7.9%. Net sales were also unfavorably impacted by lower volume, primarily in Architectural Metals and Architectural Glass. These items were partially offset by sales growth in Architectural Services and $23.2 million, or 6.4%, of inorganic sales contribution from the acquisition of UW Solutions.
• Gross margin declined 280 basis points to 21.6%, primarily due to $9.4 million of expense related to an arbitration award, the unfavorable sales leverage impact of lower volume, and an unfavorable product mix in Architectural Metals. These items were partially offset by a more favorable mix of projects in Architectural Services, and lower restructuring, short-term incentive, insurance-related, and quality expenses.
• Selling, general and administrative (SG&A) expenses as a percent of net sales increased 140 basis points to 19.8%, primarily due to a $7.6 million impairment charge in Architectural Metals, the unfavorable sales leverage impact of lower volume, as well as $3.1 million of acquisition-related expenses and higher amortization expense associated with the UW Solutions transaction. These items were partially offset by lower restructuring expense and lower long-term incentive costs.
• Operating income was $6.1 million, and operating margin decreased to 1.8%. Adjusted operating income was $28.7 million and adjusted operating margin decreased by 120 basis points to 8.3%. The lower adjusted operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, and a less favorable product mix, partially offset by a more favorable mix of projects in Architectural Services and lower incentive, insurance-related, and quality expenses.
• Net interest expense increased to $3.5 million, compared to $0.9 million, primarily due to increased debt as a result of the acquisition of UW Solutions.
• Other income was $0.1 million, compared to expense of $1.6 million. The prior year included the unfavorable impact of an investment market-valuation adjustment.
• Diluted earnings per share (EPS) were $0.11, compared to $0.71, and adjusted diluted EPS decreased to $0.89, compared to $1.14.

Full-Year Consolidated Results

(Fiscal 2025 compared to Fiscal 2024)

• Net sales declined 3.9% to $1.36 billion. The prior year included an extra week of operations, which negatively impacted net sales by 2.0%. Net sales were also unfavorably impacted by lower volume, primarily in Architectural Glass and Architectural Metals. These items were partially offset by net sales growth in Architectural Services, and $32.0 million, or 2.3%, of inorganic sales contribution from the acquisition of UW Solutions.
• Operating margin was 8.7%, compared to 9.4%. Adjusted operating margin increased 70 basis points to 11.0%, primarily driven by a more favorable mix of projects in Architectural Services, lower quality and insurance-related costs, and lower bad debt expense, partially offset by the unfavorable sales leverage impact of lower volume and higher lease costs.
• Diluted EPS was $3.89, compared to $4.51. Adjusted diluted EPS grew 4.2% to a record $4.97.

Fourth Quarter Segment Results

(Fourth Quarter Fiscal 2025 Compared to Fourth Quarter Fiscal 2024)

Architectural Metals

Net sales declined 19.4% to $112.1 million, driven by lower volume, a less favorable sales mix, and a 7.8% unfavorable impact from the additional week in the prior year. The segment had an operating loss of $5.7 million, which included a $7.6 million impairment charge and $1.3 million of restructuring charges. Adjusted operating income was $3.2 million, or 2.8% of net sales, compared to $12.8 million, or 9.2% of net sales. The lower adjusted operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, a less favorable product mix, and unfavorable productivity impacts from the launch of a more standardized product line across multiple facilities, partially offset by lower quality and short-term incentive costs.

Architectural Services

Net sales increased 10.9% to $117.9 million, primarily due to increased volume and a more favorable mix of projects, partially offset by an 8.4% unfavorable impact from the additional week in the prior year. Operating income improved to $8.6 million. Adjusted operating income increased to $8.5 million, or 7.2% of net sales, compared to $6.1 million, or 5.8% of net sales. The improved adjusted operating margin was primarily driven by a more favorable mix of projects, partially offset by higher short-term incentive compensation and lease expenses. Segment backlog⁵ at the end of the quarter was $720.3 million, compared to $742.2 million at the end of the third quarter.

Architectural Glass

Net sales declined 21.9% to $75.2 million, driven by lower volume, and a 7.4% unfavorable impact from the additional week in the prior year. Operating income was $11.0 million, or 14.6% of net sales, compared to $18.9 million, or 19.7% of net sales. The lower operating margin was primarily driven by the unfavorable sales leverage impact of lower volume, partially offset by lower quality costs.

Performance Surfaces

Net sales increased 76.7% to $47.9 million. This included a 0.5% organic business sales decline, an 8.3% unfavorable impact from the extra week in the prior year, and 85.4% of favorable inorganic contribution from the UW Solutions acquisition. Operating income was $6.1 million, or 12.8% of net sales, which included $3.2 million of acquisition-related costs. Adjusted operating income was $9.3 million, or 19.5% of net sales, compared to $6.9 million, or 25.6% of net sales. The lower adjusted operating margin was primarily driven by the dilutive impact of lower adjusted operating margin from UW Solutions, and the unfavorable sales leverage impact of lower organic volume, partially offset by improved productivity.

Corporate and Other

Corporate and other expense decreased to $13.8 million, compared to $14.5 million, primarily due to lower restructuring charges, lower long-term incentive compensation costs, and lower insurance-related expenses, partially offset by $9.4 million of expense related to an arbitration award.

Financial Condition

Net cash provided by operating activities in the fourth quarter was $30.0 million, compared to $74.9 million in the prior year period. For the full year, net cash provided by operating activities was $125.2 million, compared to $204.2 million last year, primarily reflecting increased cash used for working capital. Capital expenditures for the full year were $35.6 million, compared to $43.2 million last year.

In the fourth quarter, the Company returned $35.8 million of cash to shareholders, through $30.3 million of stock repurchases and $5.5 million of dividends. For the full year, the Company returned $67.1 million of cash to shareholders through share repurchases and dividends, up from $33.0 million in the prior year.

Quarter-end long-term debt increased to $285.0 million, bringing the Consolidated Leverage Ratio⁶ (as defined in the Company’s credit agreement) to 1.3x at the end of the quarter.

Subsequent Events

Arbitration Award

As a result of a March 2025 appellate court decision confirming a December 2022 arbitration award, the Company paid the arbitration award, including accrued post-judgment interest, in the amount of $24.7 million, on April 7, 2025. As a result of the decision, we recorded expense of $9.4 million, which represents the impact of the award amount net of existing reserves and estimated insurance proceeds. This impact was recorded in cost of goods sold in the fourth quarter of fiscal 2025.

Project Fortify

The Company completed the initial phase of Project Fortify during the fourth quarter of fiscal 2025, incurring total project pre-tax charges of $16.7 million, with estimated annualized cost savings of approximately $14 million. The Company is announcing a second phase of Project Fortify (referred to as “Project Fortify Phase 2” or “Phase 2”) to drive further cost efficiencies, primarily in the Architectural Services and Architectural Metals Segments. Phase 2 will further optimize our manufacturing footprint and align resources to enable a more effective operating model. The Company expects the actions of Phase 2 to incur approximately $24 million to $26 million of pre-tax charges, of which approximately $8 million are expected to be non-cash charges, and deliver estimated annualized pre-tax cost savings of approximately $13 million to $15 million. The Company expects the actions associated with Phase 2 to be substantially completed by the end of the fourth quarter of fiscal 2026.

Fiscal 2026 Outlook

Due to current macroeconomic and tariff-related uncertainty, the Company is providing a wider range of outlook metrics than historical practice. The outlook provided includes the estimated impacts of the prevailing international tariff frameworks in place as of the date of this release.

The Company expects net sales in the range of $1.37 billion to $1.43 billion. The Company expects diluted EPS in the range of $2.54 to $3.19 and adjusted diluted EPS in the range of $3.55 to $4.10⁷. This includes a current projected unfavorable EPS impact from tariffs of $0.45 to $0.55, which will mostly impact the first half of fiscal 2026, before mitigation efforts take full effect. The Company’s outlook assumes interest expense of $14.5 million to $15.5 million, an effective tax rate of approximately 24.5%, and capital expenditures between $35 million to $40 million.

The Company expects the UW Solutions business, that was acquired in November 2024, to contribute approximately $100 million of net sales with an adjusted EBITDA margin of approximately 20%.

Due to the impacts of moderating operating margins in Metals and Glass, increased interest expense, and tariff-related expenses concentrated in the first half of fiscal 2026, the Company expects more significant year-over-year declines in adjusted diluted EPS in the first and second quarters of fiscal 2026.

For full results click here.

About Apogee Enterprises

Apogee Enterprises, Inc. (Nasdaq: APOG) is a leading provider of architectural products and services for enclosing buildings, and high-performance glass and acrylic products used for preservation, energy conservation, and enhanced viewing. Headquartered in Minneapolis, MN, our portfolio of industry-leading products and services includes high-performance architectural glass, windows, curtainwall, storefront and entrance systems, integrated project management and installation services, as well as value-added glass and acrylic for custom picture framing and displays. For more information, visit www.apog.com.

Contact:

Jeff Huebschen – Vice President, Investor Relations & Communications – ir@apog.com – (952) 487-7538

Source: Apogee Enterprises, Inc.