Wed, Jul 2, 3:20 PM (11 days ago)
**Apogee Enterprises, Inc. (APOG) - Q1 Fiscal 2026 Summary** **Financial Health and Performance:** - **Revenue:** $346.6M (up 4.6% YoY), driven by $22.0M from UW Solutions acquisition, offset by lower volume in Architectural Glass and mix in Architectural Metals. - **Profit Margins:** Gross margin decreased to 21.7% from 29.8% YoY due to restructuring charges, mix, and higher aluminum costs in Architectural Metals, and higher tariff expense in Architectural Services. - **Operating Income:** Declined to $6.9M from $41.4M YoY, with operating margin decreasing 1,050 basis points to 2.0%. - **Net Loss:** $(2.7)M compared to $31.0M net earnings YoY, with an effective tax rate of 211.9% due to lower earnings before income tax. - **Cash Flow:** Net cash used in operating activities was $(19.8)M, compared to $5.5M provided in the prior year period, primarily due to lower net earnings and increased cash used for working capital, including a $24.7M payment for an arbitration award. **Segment Performance:** - **Architectural Metals:** Net sales declined 3.4% YoY due to less favorable mix, partially offset by increased volume. Adjusted EBITDA margin decreased to 7.3% from 17.9% YoY. - **Architectural Services:** Net sales increased 7.6% YoY due to increased volume. Adjusted EBITDA margin decreased to 5.7% from 6.6% YoY due to higher tariff expense. - **Architectural Glass:** Net sales declined 15.5% YoY due to lower end-market demand. Adjusted EBITDA margin decreased to 18.3% from 23.3% YoY. - **Performance Surfaces:** Net sales increased 99.3% YoY, including $22.0M from UW Solutions acquisition. Adjusted EBITDA margin decreased to 18.8% from 26.6% YoY. **Trends and Uncertainties:** - **Project Fortify Phase 2:** Announced on April 23, 2025, to drive further cost efficiencies, with expected pre-tax charges of $24M to $26M and annualized pre-tax cost savings of $13M to $15M. - **Acquisition of UW Solutions:** Completed on November 4, 2024, for $240.9M in cash, with the business activity included in the Large-Scale Optical Segment. - **Liquidity and Capital Resources:** The company relies on cash provided by operations for its material cash requirements, including working capital needs, capital expenditures, satisfaction of contractual commitments, and shareholder return through dividend payments and share repurchases. **Future Operations Impact:** - The company expects to complete Project Fortify Phase 2 by the end of the fourth quarter of fiscal 2026, with expected annualized pre-tax cost savings of $13M to $15M. - The company believes its sources of liquidity will be adequate to meet its short-term and long-term liquidity and capital expenditure needs, and it has the ability to obtain both short-term and long-term debt to meet its financing needs, including additional sources of debt to finance potential acquisitions, for the foreseeable future.