Apogee Enterprises Q3 Earnings Call Highlights

10 Jan 2026, 03:04 by Jessica Moore · The Cerbat Gem

Apogee Enterprises (NASDAQ:APOG) reported fiscal 2026 third-quarter results that reflected modest top-line growth, continued pressure in key end markets, and a greater emphasis on cost actions as the company looks toward fiscal 2027. On the call, new CEO Don Nolan highlighted operational initiatives and the one-year progress of the UW Solutions acquisition, while interim CFO Mark Augdahl detailed segment performance and updated full-year expectations.

Leadership changes and strategic continuity

Nolan opened the call by noting that CFO Matt Osberg informed the company he plans to leave Apogee to pursue another opportunity. Apogee appointed Chief Accounting Officer Mark Augdahl, a more than 25-year company veteran, as interim CFO while it begins a search for a permanent replacement.

In the Q&A, Nolan said Apogee’s strategy remains unchanged, emphasizing economic leadership in its target markets, portfolio management, and strengthening the core through efficiency and scalability. He said the board is looking for a CEO with “deep growth and operational excellence experience” as well as M&A integration capability, aligning with the company’s stated priorities.

Quarterly results: sales up modestly, margins pressured

For the fiscal third quarter, Apogee posted net sales of $348.6 million, an increase of 2.1% year over year. Augdahl said the gain was primarily driven by $18.4 million of inorganic sales from the UW Solutions acquisition along with favorable product mix, partially offset by lower volume, primarily in Metals.

Adjusted EBITDA margin decreased slightly to 13.2%. Augdahl attributed the year-over-year change mainly to lower volume and price and higher aluminum and health insurance costs, partly offset by lower incentive compensation and cost savings tied to Project Fortify Phase Two.

Adjusted diluted EPS was $1.02, which management said was in line with expectations but down year over year, primarily due to higher amortization and interest expense related to the UW Solutions acquisition.

Segment performance and backlog trends

Management described mixed operating conditions across segments, with competitive dynamics pressuring price and volume in Metals and Glass.

Metals: Net sales declined primarily due to lower volume, partially offset by favorable price and product mix. Adjusted EBITDA margin improved to 13.5%, driven by productivity gains including Fortify Phase Two savings, lower incentive compensation, and favorable price/mix, partially offset by lower volume.
Services: Apogee’s Services segment delivered its seventh consecutive quarter of year-over-year net sales growth, primarily due to increased volume. Adjusted EBITDA margin increased to 9.7%, mostly from lower incentive compensation expense, partially offset by unfavorable project mix. Backlog ended the quarter at $775 million, down slightly from Q2 but up more than 4% from the prior-year third quarter.
Glass: Net sales increased slightly to approximately $71 million, driven by higher volume and favorable mix, partially offset by lower price related to end-market demand softness. Adjusted EBITDA margin moderated from last year, primarily due to lower price and higher material costs, with partial offsets from higher volume, favorable mix, and lower incentive compensation.
Performance Services: Net sales increased due to the UW Solutions contribution and organic growth primarily from price. Adjusted EBITDA margin decreased, driven by the dilutive impact of UW Solutions’ lower adjusted EBITDA margin and unfavorable productivity, partially offset by favorable product mix and price.

Cash flow and balance sheet

Operating cash flow for the quarter was $29.3 million, down slightly from $31.0 million in the prior-year quarter. Year to date, cash from operating activities totaled $66.6 million compared to $95.1 million a year ago, which Augdahl attributed to lower operating cash flow in the first quarter.

Augdahl said Apogee’s balance sheet remains strong, citing a consolidated leverage ratio of 1.4x, no near-term debt maturities, and “significant capital available for future deployment.” Nolan also pointed to a strong balance sheet and healthy cash generation as providing flexibility for future M&A.

Updated outlook, tariff impact, and expanded Project Fortify actions

Apogee updated its outlook for fiscal 2026, with Augdahl saying the company now expects net sales of approximately $1.39 billion and adjusted diluted EPS of $3.40 to $3.50. The outlook includes an updated estimate of the EPS impact from tariffs of approximately $0.30. The company also assumes an adjusted effective tax rate of about 27% and capital expenditures of $25 million to $30 million.

Management described continued macro pressure, particularly in Metals and Glass, where competitive dynamics are weighing on pricing and volume. Augdahl highlighted aluminum inflation as a key factor, saying average aluminum prices in the third quarter rose about 13% from the second quarter and were up more than 50% from the third quarter of last year. In the Q&A, he added that aluminum prices continued to rise into December, and that the company also saw slightly declining orders in Glass compared to what it expected heading into the quarter.

Looking toward fiscal 2027, Augdahl said Apogee expects headwinds from the normalization of incentive compensation expense and higher health insurance costs. To offset part of those anticipated pressures, the company expanded the scope of Project Fortify Phase Two to include additional restructuring actions primarily in Metals and corporate. Based on the expanded scope, Apogee now expects:

Total pre-tax charges of approximately $28 million to $29 million
Estimated annual pre-tax cost savings of approximately $25 million to $26 million
Approximately $10 million of the savings benefit to be realized in fiscal 2027

Augdahl also said the company expects most of the fiscal 2026 tariff impact not to repeat, which would be a benefit to fiscal 2027. While early fiscal 2027 planning is still underway, management characterized the expanded Fortify actions as a proactive step to manage near-term headwinds and better position the company for growth opportunities as market conditions stabilize.

On M&A, Nolan said Apogee’s pipeline is “robust” and “very active,” and pointed to UW Solutions as a successful acquisition that has met or exceeded objectives one year in. He said UW Solutions is on track to deliver Apogee’s fiscal 2026 expectations of $100 million in net sales and approximately 20% adjusted EBITDA margin, while expanding substrate capabilities and coating technology and creating a platform for potential growth in fiscal 2027 and beyond.

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.