Apogee Enterprises, Inc. (NASDAQ: APOG) Q1 2026 Earnings | 6/27/2025

Apogee Enterprises Q1 2026: Exceeds Expectations, Raises Full-Year Outlook Despite Tariff Headwinds

Apogee Enterprises reported a stronger-than-expected first quarter for fiscal year 2026, demonstrating positive momentum from operational actions and a renewed focus on growth. The company raised its full-year revenue and earnings outlook, anticipating a strong second half driven by improvements in its Metals and Glass segments, and continued robust performance in Architectural Services. Apogee is also actively mitigating the impact of new tariffs.

Q1 FY26 Financial Highlights:

• Consolidated Net Sales: Increased 4.6% to $346.6 million, primarily driven by $22 million of inorganic sales from the UW Solutions acquisition, partially offset by lower volume in Glass and less favorable mix in Metals.

• Adjusted EBITDA Margin: Decreased to 9.9%, primarily due to less favorable mix and higher aluminum costs in Metals, and higher tariff expense in Services.

• Adjusted Diluted EPS: Declined to $0.56, primarily driven by lower adjusted EBITDA, higher interest expense, and a higher adjusted effective tax rate.

• Net Cash Used in Operating Activities: $19.8 million, compared to $5.5 million provided a year ago, mainly due to lower net earnings and increased working capital use, including a $13.7 million arbitration settlement.

• Balance Sheet: Remains strong with a consolidated leverage ratio of 1.6x, no near-term debt maturities, and significant capital available for deployment.

Segment Performance (Q1 FY26):

• Metals: Net sales declined 3.4% due to less favorable mix, though partially offset by higher volume. Adjusted EBITDA margin decreased to 7.3% due to mix, higher aluminum costs, and unfavorable productivity/sales leverage. (Saw solid sequential improvement from Q4 and expects continued sequential improvement in Q2).

• Services: Delivered its fifth consecutive quarter of year-over-year net sales growth, up 7.6% due to higher volume. Adjusted EBITDA margin decreased to 5.7%, primarily driven by higher tariff expense (excluding which, margin improved).

• Glass: Net sales declined and adjusted EBITDA margin moderated as expected due to reduced volume from lower end-market demand. (Revenue pipeline picking up, positioning for growth in Q3 and Q4).

• Performance Surfaces: Net sales increased driven by inorganic contribution from UW Solutions. Adjusted EBITDA margin declined to 18.8% due to the dilutive impact of UW Solutions' lower margin, unfavorable mix, and increased corporate allocation. (Expected to deliver strong inorganic and organic growth for the rest of FY26).

Key Strategic Initiatives & Outlook:

• Project Fortify Phase 2: Aggressive actions taken, expected to drive $13 to $15 million in annualized savings. Most savings are anticipated in Q2 and beyond, with minimal impact in Q1.

• Tariff Mitigation: Successfully executing mitigation plans. Updated estimated unfavorable EPS impact from tariffs reduced to 35 cents to 45 cents for the full year (from 45-55 cents previously), with most impact in the first half of the fiscal year. The goal is to substantially mitigate the impact in the second half. Pricing actions have been accepted by customers.

• Growth Momentum: Building positive momentum in Metals (sequential improvement), Glass (revenue pipeline picking up for H2 growth), and Performance Surfaces (strong organic and inorganic growth).

• M&A Pipeline: Continues to see solid opportunities that support strategy and would be accretive to the long-term financial profile, focusing on expanding reach through new offerings and geographies.

• Disciplined Cost Management: Continuing to drive productivity through AMS (Apogee Management System) and taking aggressive actions.

Raised Fiscal 2026 Outlook:

• Net Sales: Raised to $1.40 billion to $1.44 billion.

• Adjusted Diluted EPS: Raised to $3.80 to $4.20.

• Q2 Expectations: Sequential improvement compared to Q1 results.

• Second Half of Year: Expected to show year-over-year net sales and adjusted EPS growth.

• Adjusted Effective Tax Rate: Approximately 27.5%.

• Capital Expenditures: Between $35 million to $40 million.