Apogee Enterprises Q4 Earnings Call Highlights

Key Points

• Q4 results beat internal expectations: Net sales rose 1.6% to $351.4 million and adjusted diluted EPS was $0.92, with adjusted EBITDA margin improving to 12.1% driven by pricing/mix and Fortify Phase 2 cost savings.
• Segment mix was mixed—metals and glass faced volume and pricing pressure (metals sales down ~2%, glass sales down to ~$67M), while Services grew for the eighth consecutive quarter with a $694 million backlog and Performance Surfaces posted >13% sales growth; the UW Solutions acquisition contributed ~$65.3M for FY26 and was margin-accretive.
• Fiscal 2027 outlook is cautious: Guidance of $1.38B–$1.43B in net sales and adjusted EPS of $2.70–$3.25 reflects wide ranges due to macro uncertainty and input-cost headwinds—notably an ~87% year-over-year rise in aluminum costs—with management expecting modest improvement in the second half and planning $35M–$40M in capex.

Apogee Enterprises NASDAQ: APOG reported fiscal 2026 fourth-quarter results that management said came in ahead of internal expectations on both revenue and earnings, despite what Chief Executive Officer Don Nolan described as a “dynamic and challenging environment.” The company also issued fiscal 2027 guidance that reflects continued pressure in key end markets, elevated input costs, and a wider range of outcomes given macro uncertainty.

Fourth-quarter results beat internal expectations

Chief Financial Officer Mark Augdahl said fourth-quarter net sales rose 1.6% year over year to $351.4 million, “primarily reflecting favorable pricing in the metal segment that helped offset a portion of higher aluminum costs.” He added that favorable mix contributed to the increase, while lower overall volume partially offset the gains.

Adjusted EBITDA margin improved to 12.1% from 11.9% a year earlier. Augdahl attributed the margin improvement primarily to lower incentive compensation and risk-related insurance expenses, as well as productivity improvements. The company also benefited from cost savings related to Fortify Phase 2 actions that were “substantially completed during the quarter.” Those positives were partially offset by higher aluminum costs, the effect of lower volume, and higher health insurance costs.

Adjusted diluted EPS was $0.92, which Augdahl said was slightly ahead of expectations and up year over year, “primarily driven by lower amortization and interest expense.”

Segment performance: metals pressured, services backlog remains sizable

In the metals segment, net sales declined about 2% to $110 million, reflecting what Augdahl called “continued challenging market conditions.” Lower volume drove the decline, partially offset by favorable price and product mix. Even with the sales decline, adjusted EBITDA margin increased to 6.5% on Fortify Phase 2 cost savings and favorable mix, though higher aluminum costs and lower volume weighed on results.

The services segment posted its eighth consecutive quarter of year-over-year net sales growth, driven mainly by higher volume from project timing. Adjusted EBITDA margin fell to 7.5%, “mostly driven by lower price,” according to Augdahl, with higher volume and productivity improvements partially offsetting the pressure. Services backlog ended the quarter at $694 million, down about 4% versus the prior year, though Augdahl said the company is “well positioned entering the upcoming fiscal year.”

In glass, net sales declined to about $67 million due to lower volume and pricing amid “continued end market demand softness.” Adjusted EBITDA margin fell to 13.5% on lower volume and price and higher material and freight costs, partially offset by productivity improvements, lower incentive compensation, and warranty-related expenses.

Performance Surfaces net sales increased more than 13% on volume growth supported by “share gains in the retail and fine arts market channels,” Augdahl said. Adjusted EBITDA margin in the segment declined due to higher material and manufacturing costs, partially offset by leverage on higher volume.

Full-year fiscal 2026: acquisition contribution and cost actions offset softer demand

For the full year, net sales increased 3.2% to $1.4 billion, driven in part by $65.3 million of inorganic contribution from the UW Solutions acquisition, Augdahl said. The increase was partially offset by lower volume tied to softer demand in metals and glass.

Adjusted EBITDA margin declined to 11.9% for the year, primarily due to higher aluminum costs, the impact of lower volume, and rising health insurance expense. Augdahl said those headwinds were partially offset by lower incentive compensation, lower risk-related insurance expenses, and savings from Project Fortify Phase 2.

Nolan highlighted the UW Solutions integration as a key fiscal 2026 accomplishment. He said Performance Surfaces “delivered upon the first year of financial targets” for the acquisition, including $100 million in revenue and adjusted EBITDA margin of at least 20%. He added that the full Performance Surfaces segment produced “revenue of almost $200 million” and was margin accretive for the company.

Cash flow, capital allocation, and balance sheet

Apogee generated $55.8 million of net cash from operating activities in the fourth quarter, up from $30 million a year earlier. Augdahl attributed the improvement to higher net income and working capital improvements. Full-year operating cash flow was $122.5 million, which he said was similar year over year.

Capital expenditures totaled $27.3 million for the year, with management prioritizing investments aimed at operational efficiency and margin improvement. Apogee also returned capital to shareholders, repurchasing $15 million of stock during the quarter and returning $37.2 million during the year through dividends and share repurchases.

Augdahl said the company’s balance sheet remains strong, citing a consolidated leverage ratio of 1.3x, no near-term debt maturities, and “significant capital available for future deployment.”

Fiscal 2027 outlook: wider ranges amid pricing pressure and inflation

Looking ahead, Augdahl said market conditions are expected to remain “relatively unchanged, especially in the first half,” with continued competitive pricing and volume pressure in metals and glass, elevated long-term interest rates, and a “dynamic macroeconomic environment.” He cited external indicators such as the Architecture Billings Index and FMI as pointing to ongoing softness through the year.

Apogee’s fiscal 2027 guidance calls for net sales of $1.38 billion to $1.43 billion and adjusted diluted EPS of $2.70 to $3.25. Augdahl said the company widened its guidance ranges because “the pace and direction of global economic conditions continue to be in flux.”

Management outlined key assumptions embedded in the outlook:

• Headwinds: normalization of corporate incentive compensation, elevated aluminum and fuel cost inflation, and rising health insurance expense.
• Offsets: benefits from Fortify Phase 2 actions in metals and corporate, prior-year tariff costs that have been mitigated (a tailwind “mostly impacting the first half”), pricing actions expected to offset incremental inflation, and continued cost controls.

Augdahl said the company expects slightly more revenue and profit in the second half than the first, based on an expectation that macro factors improve through the year. He also guided to interest expense of about $10 million, an adjusted effective tax rate of 26% to 27%, and capital expenditures of $35 million to $40 million.

For the first quarter, Augdahl said Apogee expects net sales to be slightly lower year over year and adjusted EPS to be lower year over year, while operating cash flow is expected to start the year strong due to working capital discipline.

During Q&A, Augdahl said aluminum prices have been “very dynamic,” noting an “about 87% increase in aluminum costs over the past year” and “25% increases just since January.” He said the company is addressing those increases through pricing levers, including surcharges and standard pricing processes, though he acknowledged the cost is “certainly a drag on the year.”

On tariffs, Augdahl reiterated that fiscal 2026 included about a $9 million tariff impact related primarily to moving product across the Canada border, and he said those costs are expected to be a tailwind in fiscal 2027 after mitigation actions.

Nolan also discussed early efforts to use AI in manufacturing through the Apogee Management System, saying it is “early days” but that the company is already seeing some impact. He added Apogee is rolling out Microsoft Copilot across the company and is beginning to see productivity benefits, framing it as a long-term investment.

About Apogee Enterprises NASDAQ: APOG

Apogee Enterprises, Inc is a diversified manufacturer and distributor of value-added architectural products and services. The company specializes in the design, fabrication and installation of high-performance glass, framing systems, curtain walls, skylights and other building envelope solutions. Its operations span three primary platforms—Architectural Framing Systems, Architectural Glass and Architectural Services—enabling Apogee to deliver complete, integrated façade systems for new construction, renovation and retrofit projects.

Headquartered in Minneapolis, Minnesota, Apogee traces its roots to the mid-20th century and today serves commercial, institutional and residential markets across North America and Europe.

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