Apogee Enterprises Reports Fiscal 2025 Second Quarter Results

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(Moderate)

Rhea-AI Sentiment

(Positive)

Insights

Apogee Enterprises delivered a solid Q2 performance despite market headwinds. Net sales decreased 3.2% to $342.4 million, primarily due to lower volume. However, the company demonstrated improved profitability with adjusted operating margin increasing 110 basis points to 12.6% and adjusted diluted EPS growing 5.9% to $1.44.

Key highlights include:

Gross margin improvement of 140 basis points to 28.4%
Strong cash flow from operations, reaching $64.1 million year-to-date
Raised full-year EPS outlook, now expecting adjusted diluted EPS of $4.90 to $5.20
Solid backlog of $792.1 million in Architectural Services segment

The company's strategic initiatives, including Project Fortify, are yielding positive results in cost structure and profitability. The upcoming acquisition of UW Solutions, while not included in the current outlook, is expected to add $30 million in incremental sales but may slightly decrease adjusted EPS due to acquisition-related expenses.

Overall, Apogee's ability to improve margins and EPS despite revenue challenges demonstrates effective management and positions the company well for future growth.

Apogee's Q2 results reveal a company successfully navigating a challenging market environment. The 3.2% revenue decline indicates softening demand in certain segments, particularly in Architectural Framing Systems and Architectural Glass. However, the company's strategic focus on higher-margin products and operational efficiency is paying off.

The Architectural Services segment stands out with 11.3% revenue growth and significant margin improvement, showcasing the company's strength in project execution. The segment's robust backlog of $792.1 million provides good visibility for future revenues.

Apogee's raised full-year outlook, despite market headwinds, signals confidence in its business model and strategy. The planned acquisition of UW Solutions aligns with the company's growth initiatives, potentially opening new market opportunities.

Investors should note the company's strong cash flow generation and low leverage ratio of 0.1x, which provides financial flexibility for strategic investments and shareholder returns. The ongoing Project Fortify initiative, expected to yield $13-14 million in annual cost savings, further supports the company's margin expansion efforts.

10/04/2024 - 06:30 AM

Net sales decrease 3.2% to $342 million
Operating margin improves to 12.3%; adjusted operating margin improves by 110 bps to 12.6%
Diluted EPS of $1.40; adjusted diluted EPS increases 6% to $1.44
Year-to-date cash flow from operations improves to $64 million
Raising full-year EPS outlook

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

	Three Months Ended
(Unaudited, $ in thousands, except per share amounts)	August 31, 2024			August 26, 2023			% Change
Net Sales	$	342,440		$	353,675		(3.2)%
Operating income	$	41,965		$	40,553		3.5%
Operating margin		12.3	%		11.5	%
Diluted earnings per share	$	1.40		$	1.52		(7.9)%
Additional Non-GAAP Measures¹
Adjusted operating income	$	43,144		$	40,553		6.4%
Adjusted operating margin		12.6	%		11.5	%
Adjusted diluted earnings per share	$	1.44		$	1.36		5.9%
Adjusted EBITDA	$	53,122		$	51,145		3.9%
Adjusted EBITDA margin		15.5	%		14.5	%

Ty R. Silberhorn, Chief Executive Officer stated, “Our team achieved another strong quarter of profitability, delivering improved operating margins, adjusted EPS growth, and increased operating cash flow, despite volume pressure. This quarter’s results continue to demonstrate the sustainable improvements we’ve driven through executing our strategy. Our stronger operating foundation, improved cost structure, and increased mix of differentiated offerings are all contributing to our results.”

Mr. Silberhorn continued, “The momentum we’ve established in the business, combined with the recently announced acquisition of UW Solutions, position us for continued success as we move forward. We are excited to welcome their employees to our team and look forward to working with them to build a powerful new growth engine for our Company. We expect meaningful opportunities to utilize the capabilities of the combined business to help drive our long-term growth.”

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

Net sales decreased 3.2% to $342.4 million, primarily driven by lower volume, partially offset by improved pricing and mix.

Gross margin improved 140 basis points to 28.4%, primarily driven by improved pricing, a more favorable mix of projects in Architectural Services, favorable material costs, and lower insurance-related costs, partially offset by the unfavorable sales leverage impact of lower volume, higher compensation and benefit expense, and $0.9 million of restructuring costs associated with Project Fortify.

Selling, general and administrative (SG&A) expenses as a percent of net sales increased 70 basis points to 16.2%, primarily due to higher incentive compensation expense and the unfavorable sales leverage impact of lower volume.

Operating income increased to $42.0 million, and operating margin was 12.3%. Adjusted operating income grew 6.4% to $43.1 million and adjusted operating margin improved by 110 basis points to 12.6%. The higher adjusted operating margin was primarily driven by improved pricing, a more favorable mix of projects in Architectural Services, favorable material costs, and lower insurance-related costs, partially offset by the impact of higher incentive compensation expense and the unfavorable sales leverage impact of lower volume.

Interest expense was $1.1 million, compared to $2.2 million, primarily driven by lower average debt levels, partially offset by the impact of the write-off of unamortized financing fees related to the previous credit facility.

Diluted earnings per share (EPS) was $1.40, compared to $1.52. Adjusted diluted EPS grew 5.9% to $1.44, primarily driven by higher adjusted operating income and lower interest expense.

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

Architectural Framing Systems

Architectural Framing Systems net sales were $141.4 million, compared to $158.8 million, primarily reflecting reduced volume due to exiting certain lower-margin product lines as part of Project Fortify, and lower end-market demand. Operating income was $17.1 million, which included $0.9 million of restructuring charges related to Project Fortify. Adjusted operating income was $18.1 million, or 12.8% of net sales, compared to $21.1 million, or 13.3% of net sales. The lower adjusted operating margin was primarily driven by the unfavorable sales leverage impact of lower volume and a less favorable mix, partially offset by favorable material costs.

Architectural Glass

Architectural Glass net sales were $90.1 million, compared to $94.1 million, reflecting reduced volume due to lower end-market demand, partially offset by improved pricing and product mix. Operating income increased to $21.1 million, or 23.4% of net sales, compared to $17.4 million, or 18.5% of net sales. The 490 basis point improvement in operating margin was primarily driven by improved pricing and product mix, and lower operating costs, partially offset by the unfavorable sales leverage impact of lower volume.

Architectural Services

Architectural Services net sales grew 11.3% to $98.0 million, primarily due to a more favorable mix of projects and increased volume. Operating income improved to $6.1 million, or 6.3% of net sales, which included $0.3 million of restructuring charges related to Project Fortify. Adjusted operating income increased to $6.4 million, or 6.5% of net sales, compared to $3.5 million, or 4.0% of net sales. The 250 basis point improvement in adjusted operating margin was primarily driven by a more favorable mix of projects, partially offset by higher compensation-related expenses and higher lease expense. Segment backlog² at the end of the quarter was $792.1 million, compared to $866.9 million at the end of the first quarter.

Large-Scale Optical

Large-Scale Optical net sales were $19.8 million, compared to $23.6 million, primarily reflecting lower volume in the retail channel, partially offset by a more favorable mix. Operating income was $3.8 million, or 19.1% of net sales, compared to $4.7 million, or 19.7% of net sales. The 60 basis point decline in operating margin primarily reflects the unfavorable sales leverage impact of lower volume, partially offset by improved mix and cost savings.

Corporate and Other

Corporate and other expense was $6.2 million, compared to $6.1 million. The increase was primarily driven by higher compensation and benefit costs, partially offset by lower insurance-related expenses.

Financial Condition

Net cash provided by operating activities in the second quarter improved to $58.7 million, compared to $41.3 million in the prior-year period. Fiscal year to date, net cash provided by operating activities increased to $64.1 million, compared to $62.6 million last year, primarily driven by higher net earnings. Capital expenditures through the first half of the fiscal year were $15.7 million, compared to $15.1 million last year. Fiscal year to date, the Company has returned $25.9 million of cash to shareholders through share repurchases and dividend payments. Quarter-end long-term debt was $62.0 million, with a Consolidated Leverage Ratio³ (as per the Company’s credit agreement) of 0.1x.

Fiscal 2025 Outlook

The Company continues to expect a full-year net sales decline in the range of 4% to 7%. This range includes 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 is increasing its outlook for full-year diluted EPS to a range of $4.81 to $5.08 and adjusted diluted EPS to a range of $4.90 to $5.20⁴. The Company continues to expect 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.

Assuming closing of the UW Solutions acquisition on November 1, 2024, the Company expects incremental net sales of approximately $30 million and an expects a decrease in adjusted diluted EPS of approximately $0.10, primarily due to increased interest and amortization expense related to the acquisition. These impacts are not included in the updated 2025 outlook provided in this earnings release.

The Company continues to expect a total of $15 million to $16 million of pre-tax charges in connection with Project Fortify, leading to updated 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, with the plan to be substantially complete in the third quarter of fiscal 2025.

The Company continues to expect an effective tax rate of approximately 24.5%, and capital expenditures between $40 to $50 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 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.

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, adjusted effective tax rate, 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 a defined term as per the Company’s credit agreement and is calculated as Consolidated Funded Indebtedness minus Unrestricted Cash as per the Company's credit agreement at the end of the current period, divided by Consolidated EBITDA per the Company's credit agreement (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). 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 of acquisitions 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.

⁴ See reconciliation of Fiscal 2025 estimated adjusted diluted earnings per share to GAAP diluted earnings per share later in this press release.

Apogee Enterprises, Inc.
Consolidated Condensed Statements of Income
(Unaudited)

	Three Months Ended								Six Months Ended
(In thousands, except per share amounts)	August 31, 2024			August 26, 2023			% Change		August 31, 2024			August 26, 2023			% Change
Net sales	$	342,440		$	353,675		(3.2	)%	$	673,956		$	715,388		(5.8	)%
Cost of sales		245,119			258,304		(5.1	)%		477,780			527,031		(9.3	)%
Gross profit		97,321			95,371		2.0	%		196,176			188,357		4.2	%
Selling, general and administrative expenses		55,356			54,818		1.0	%		112,830			114,037		(1.1	)%
Operating income		41,965			40,553		3.5	%		83,346			74,320		12.1	%
Interest expense, net		1,140			2,230		(48.9	)%		1,590			4,266		(62.7	)%
Other income, net		290			4,900		(94.1	)%		433			4,612		(90.6	)%
Earnings before income taxes		41,115			43,223		(4.9	)%		82,189			74,666		10.1	%
Income tax expense		10,549			9,896		6.6	%		20,612			17,763		16.0	%
Net earnings	$	30,566		$	33,327		(8.3	)%	$	61,577		$	56,903		8.2	%

Basic earnings per share	$	1.40		$	1.54		(9.1	)%	$	2.83		$	2.61		8.4	%
Diluted earnings per share	$	1.40		$	1.52		(7.9	)%	$	2.80		$	2.57		8.9	%
Weighted average basic shares outstanding		21,762			21,708		0.2	%		21,793			21,813		(0.1	)%
Weighted average diluted shares outstanding		21,875			21,962		(0.4	)%		21,985			22,105		(0.5	)%
Cash dividends per common share	$	0.25		$	0.24		4.2	%	$	0.50		$	0.48		4.2	%

% of Sales
Gross margin		28.4	%		27.0	%				29.1	%		26.3	%
Selling, general and administrative expenses		16.2	%		15.5	%				16.7	%		15.9	%
Operating margin		12.3	%		11.5	%				12.4	%		10.4	%

Apogee Enterprises, Inc.
Business Segment Information
(Unaudited)
	Three Months Ended								Six Months Ended
(In thousands)	August 31, 2024			August 26, 2023			% Change		August 31, 2024			August 26, 2023			% Change
Segment net sales
Architectural Framing Systems	$	141,350		$	158,801		(11.0	)%	$	274,522		$	322,963		(15.0	)%
Architectural Glass		90,101			94,096		(4.2	)%		176,804			191,298		(7.6	)%
Architectural Services		98,018			88,064		11.3	%		197,045			177,482		11.0	%
Large-Scale Optical		19,832			23,645		(16.1	)%		41,036			46,101		(11.0	)%
Intersegment eliminations		(6,861	)		(10,931	)	(37.2	)%		(15,451	)		(22,456	)	(31.2	)%
Net sales	$	342,440		$	353,675		(3.2	)%	$	673,956		$	715,388		(5.8	)%
Segment operating income (loss)
Architectural Framing Systems	$	17,141		$	21,060		(18.6	)%	$	35,477		$	41,005		(13.5	)%
Architectural Glass		21,068			17,434		20.8	%		38,159			33,955		12.4	%
Architectural Services		6,130			3,519		74.2	%		11,753			2,923		302.1	%
Large-Scale Optical		3,793			4,663		(18.7	)%		8,639			10,188		(15.2	)%
Corporate and other		(6,167	)		(6,123	)	0.7	%		(10,682	)		(13,751	)	(22.3	)%
Operating income	$	41,965		$	40,553		3.5	%	$	83,346		$	74,320		12.1	%
Segment operating margin
Architectural Framing Systems		12.1	%		13.3	%				12.9	%		12.7	%
Architectural Glass		23.4	%		18.5	%				21.6	%		17.7	%
Architectural Services		6.3	%		4.0	%				6.0	%		1.6	%
Large-Scale Optical		19.1	%		19.7	%				21.1	%		22.1	%
Corporate and other		N/M			N/M					N/M			N/M
Operating margin		12.3	%		11.5	%				12.4	%		10.4	%
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)	August 31, 2024		March 2, 2024
Assets
Current assets
Cash and cash equivalents	$	51,024	$	37,216
Receivables, net		177,146		173,557
Inventories, net		79,591		69,240
Contract assets		49,285		49,502
Other current assets		36,742		29,124
Total current assets		393,788		358,639
Property, plant and equipment, net		240,627		244,216
Operating lease right-of-use assets		41,886		40,221
Goodwill		129,119		129,182
Intangible assets, net		64,547		66,114
Other non-current assets		47,125		45,692
Total assets	$	917,092	$	884,064
Liabilities and shareholders' equity
Current liabilities
Accounts payable		86,035		84,755
Accrued compensation and benefits		40,901		53,801
Contract liabilities		41,655		34,755
Operating lease liabilities		12,661		12,286
Other current liabilities		57,597		59,108
Total current liabilities		238,849		244,705
Long-term debt		62,000		62,000
Non-current operating lease liabilities		33,323		31,907
Non-current self-insurance reserves		32,055		30,552
Other non-current liabilities		44,443		43,875
Total shareholders’ equity		506,422		471,025
Total liabilities and shareholders’ equity	$	917,092	$	884,064

Apogee Enterprises, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
	Six Months Ended
(In thousands)	August 31, 2024			August 26, 2023
Operating Activities
Net earnings	$	61,577		$	56,903
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		19,664			20,661
Share-based compensation		5,642			4,483
Deferred income taxes		2,016			(4,281	)
Loss (gain) on disposal of assets		291			(62	)
Settlement of New Markets Tax Credit transaction		—			(4,687	)
Non-cash lease expense		5,844			6,153
Other, net		1,002			(1,121	)
Changes in operating assets and liabilities:
Receivables		(3,698	)		(8,238	)
Inventories		(10,509	)		5,841
Contract assets		238			8,992
Accounts payable		1,335			(3,529	)
Accrued compensation and benefits		(12,823	)		(17,567	)
Contract liabilities		6,987			4,244
Operating lease liability		(5,748	)		(6,608	)
Accrued income taxes		(224	)		4,292
Other current assets and liabilities		(7,462	)		(2,912	)
Net cash provided by operating activities		64,132			62,564
Investing Activities
Capital expenditures		(15,662	)		(15,018	)
Proceeds from sales of property, plant and equipment		608			143
Purchases of marketable securities		(2,246	)		(969	)
Sales/maturities of marketable securities		1,850			775
Net cash used by investing activities		(15,450	)		(15,069	)
Financing Activities
Proceeds from revolving credit facilities		95,201			174,853
Repayments on revolving credit facilities		(95,201	)		(199,000	)
Payments of debt issuance costs		(3,485	)		—
Repurchase of common stock		(15,061	)		(11,821	)
Dividends paid		(10,821	)		(10,467	)
Other, net		(5,266	)		(3,705	)
Net cash used by financing activities		(34,633	)		(50,140	)
Effect of exchange rates on cash		(241	)		(405	)
Increase (decrease) in cash and cash equivalents		13,808			(3,050	)
Cash and cash equivalents at beginning of period		37,216			21,473
Cash and cash equivalents at end of period	$	51,024		$	18,423

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Earnings and Adjusted Diluted Earnings per Share
(Unaudited)

	Three Months Ended						Six Months Ended
(In thousands)	August 31, 2024			August 26, 2023			August 31, 2024			August 26, 2023
Net earnings	$	30,566		$	33,327		$	61,577		$	56,903
Restructuring charges ⁽¹⁾		1,179			—			2,301			—
NMTC settlement gain ⁽²⁾		—			(4,687	)		—			(4,687	)
Income tax impact on above adjustments⁽³⁾		(289	)		1,148			(564	)		1,148
Adjusted net earnings	$	31,456		$	29,788		$	63,314		$	53,364


	Three Months Ended						Six Months Ended
	August 31, 2024			August 26, 2023			August 31, 2024			August 26, 2023
Diluted earnings per share	$	1.40		$	1.52		$	2.80		$	2.57
Restructuring charges ⁽¹⁾		0.05			—			0.10			—
NMTC settlement gain ⁽²⁾		—			(0.21	)		—			(0.21	)
Income tax impact on above adjustments⁽³⁾		(0.01	)		0.05			(0.03	)		0.05
Adjusted diluted earnings per share	$	1.44		$	1.36		$	2.88		$	2.41

Weighted average diluted shares outstanding		21,875			21,962			21,985			22,105

(1)	Restructuring charges related to Project Fortify, including $0.5 million of employee termination costs, $0.1 million of contract termination costs and $0.6 million of other costs incurred in the second quarter of fiscal 2025, and $0.9 million of employee termination costs, $0.1 million of contract termination costs and $1.3 million of other costs incurred in the first six months of fiscal 2025.
(2)	Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other income, net.
(3)	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 August 31, 2024
(In thousands)	Architectural Framing Systems			Architectural Glass			Architectural Services			LSO			Corporate and Other			Consolidated
Operating income (loss)	$	17,141		$	21,068		$	6,130		$	3,793		$	(6,167	)	$	41,965
Restructuring charges ⁽¹⁾		916			—			258			—			5			1,179
Adjusted operating income (loss)	$	18,057		$	21,068		$	6,388		$	3,793		$	(6,162	)	$	43,144

Operating margin		12.1	%		23.4	%		6.3	%		19.1	%		N/M			12.3	%
Restructuring charges ⁽¹⁾		0.6			—			0.3			—			N/M			0.3
Adjusted operating margin		12.8	%		23.4	%		6.5	%		19.1	%		N/M			12.6	%

	Three Months Ended August 26, 2023
(In thousands)	Architectural Framing Systems			Architectural Glass			Architectural Services			LSO			Corporate and Other			Consolidated
Operating income (loss)	$	21,060		$	17,434		$	3,519		$	4,663		$	(6,123	)	$	40,553

Operating margin		13.3	%		18.5	%		4.0	%		19.7	%		N/M			11.5	%

(1)	Restructuring charges related to Project Fortify, including $0.5 million of employee termination costs, $0.1 million of contract termination costs and $0.6 million of other costs incurred in the second quarter of fiscal 2025.

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income (Loss) and Adjusted Operating Margin
(Unaudited)

	Six Months Ended August 31, 2024
(In thousands)	Architectural Framing Systems			Architectural Glass			Architectural Services			LSO			Corporate and Other			Consolidated
Operating income (loss)	$	35,477		$	38,159		$	11,753		$	8,639		$	(10,682	)	$	83,346
Restructuring charges ⁽¹⁾		1,914			—			258			—			129			2,301
Adjusted operating income (loss)	$	37,391		$	38,159		$	12,011		$	8,639		$	(10,553	)	$	85,647

Operating margin		12.9	%		21.6	%		6.0	%		21.1	%		N/M			12.4	%
Restructuring charges ⁽¹⁾		0.7			—			0.1			—			N/M			0.3
Adjusted operating margin		13.6	%		21.6	%		6.1	%		21.1	%		N/M			12.7	%

	Six Months Ended August 26, 2023
(In thousands)	Architectural Framing Systems			Architectural Glass			Architectural Services			LSO			Corporate and Other			Consolidated
Operating income (loss)	$	41,005		$	33,955		$	2,923		$	10,188		$	(13,751	)	$	74,320

Operating margin		12.7	%		17.7	%		1.6	%		22.1	%		N/M			10.4	%

(1)	Restructuring charges related to Project Fortify, including $0.9 million of employee termination costs, $0.1 million of contract termination costs and $1.3 million of other costs incurred in the first six 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						Six Months Ended
(In thousands)	August 31, 2024			August 26, 2023			August 31, 2024			August 26, 2023
Net earnings	$	30,566		$	33,327		$	61,577		$	56,903
Income tax expense		10,549			9,896			20,612			17,763
Interest expense, net		1,140			2,230			1,590			4,266
Depreciation and amortization		9,688			10,379			19,664			20,661
EBITDA	$	51,943		$	55,832		$	103,443		$	99,593
Restructuring charges ⁽¹⁾		1,179			—			2,301			—
NMTC settlement gain ⁽²⁾		—			(4,687	)		—			(4,687	)
Adjusted EBITDA	$	53,122		$	51,145		$	105,744		$	94,906

EBITDA Margin		15.2	%		15.8	%		15.3	%		13.9	%
Adjusted EBITDA Margin		15.5	%		14.5	%		15.7	%		13.3	%

(1)	Restructuring charges related to Project Fortify, including $0.5 million of employee termination costs, $0.1 million of contract termination costs and $0.6 million of other costs incurred in the second quarter of fiscal 2025, and $0.9 million of employee termination costs, $0.1 million of contract termination costs and $1.3 million of other costs incurred in the first six months of fiscal 2025.
(2)	Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other 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	$	4.81		$	5.08
Restructuring charges ⁽¹⁾		0.12			0.16
Income tax impact on above adjustments per share		(0.03	)		(0.04	)
Adjusted diluted earnings per share	$	4.90		$	5.20

(1)	Restructuring charges related to Project Fortify.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241004303713/en/

Jeff Huebschen

Vice President, Investor Relations & Communications

952.487.7538

ir@apog.com

Source: Apogee Enterprises, Inc.

FAQ

What were Apogee Enterprises' (APOG) key financial results for Q2 fiscal 2025?

Apogee Enterprises reported net sales of $342 million (down 3.2%), operating margin of 12.3%, adjusted operating margin of 12.6% (up 110 bps), diluted EPS of $1.40, and adjusted diluted EPS of $1.44 (up 6%).

How did Apogee's (APOG) segments perform in Q2 fiscal 2025?

Architectural Framing Systems saw reduced volume, Architectural Glass improved operating margin to 23.4%, Architectural Services grew net sales by 11.3%, and Large-Scale Optical experienced lower volume in the retail channel.

What is Apogee Enterprises' (APOG) updated fiscal 2025 outlook?

Apogee raised its full-year EPS outlook, expecting diluted EPS of $4.81 to $5.08 and adjusted diluted EPS of $4.90 to $5.20. The company continues to expect a full-year net sales decline of 4% to 7%.

How much cash did Apogee (APOG) return to shareholders in the first half of fiscal 2025?

Apogee Enterprises returned $25.9 million of cash to shareholders through share repurchases and dividend payments in the first half of fiscal 2025.

Apogee Enterprises Reports Fiscal 2025 Second Quarter Results

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Apogee Enterprises Reports Fiscal 2025 Second Quarter Results

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