Apogee Enterprises, Inc. (APOG) - Q2 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended August 30, 2025 (Fiscal Q2 2026) and the six months ended August 30, 2025. Apogee Enterprises is a leading provider of architectural products and services for enclosing buildings and high-performance coating products. The company operates through four segments: Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces. The reporting period includes the full impact of the November 2024 acquisition of UW Solutions.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Sales | $358,194 | $342,440 | $704,816 | $673,956 |
| Gross Profit | $82,607 | $97,321 | $157,732 | $196,176 |
| Gross Margin % | 23.1% | 28.4% | 22.4% | 29.1% |
| Operating Income | $26,888 | $41,965 | $33,819 | $83,346 |
| Operating Margin % | 7.5% | 12.3% | 4.8% | 12.4% |
| Net Earnings | $23,649 | $30,566 | $20,962 | $61,577 |
| Diluted EPS | $1.10 | $1.40 | $0.97 | $2.80 |
| Adjusted EBITDA | $44,368 | $53,122 | $78,752 | $105,744 |
| Cash & Equivalents | $39,526 | $41,448 | $39,526 | $51,024 |
| Long-Term Debt | $270,000 | $285,000 | $270,000 | $285,000 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 4.6% year-over-year in both Q2 and YTD periods. Growth was driven by $24.9 million (Q2) and $46.9 million (YTD) in inorganic sales from the UW Solutions acquisition and higher volume in Architectural Services. This was partially offset by lower volume and price in Architectural Glass and unfavorable mix in Architectural Metals.
- Margin Compression: Gross margins declined significantly (23.1% vs. 28.4% in Q2) due to lower pricing, unfavorable product mix, and increased costs for materials, tariffs, and health insurance. Operating margins fell 480 basis points in Q2 to 7.5%.
- Restructuring Costs: The company incurred $3.1 million in restructuring charges in Q2 and $18.5 million YTD related to "Project Fortify Phase 2," aimed at optimizing the operating footprint and cost model.
- Interest Expense: Net interest expense rose to $4.1 million in Q2 (from $1.1 million) and $7.9 million YTD (from $1.6 million) due to higher debt levels associated with the UW Solutions acquisition.
- One-Time Items: Other income included a $4.6 million gain from the settlement of a New Markets Tax Credit (NMTC) transaction in Q2.
Guidance, Outlook, and Risks
- Project Fortify Phase 2: Announced in April 2025, this initiative expects to incur total pre-tax charges of $24 million to $26 million, with annualized pre-tax cost savings of $13 million to $15 million. Actions are expected to be substantially completed by the end of fiscal 2026.
- Liquidity: The company maintains a $700 million senior credit facility. As of August 30, 2025, $215 million was outstanding on the term loan and $55 million on the revolver, leaving $392.4 million available. The company is in compliance with all financial covenants.
- Backlog: Architectural Services segment backlog was approximately $792.3 million as of August 30, 2025, flat compared to the prior year.
- Risks: Key risks include ongoing exposure to construction project disputes, product liability claims (including a settled $24.7 million arbitration award paid in April 2025), and the impact of tariffs and material costs on margins.
Investor Verification Checklist
- Margin Recovery: Verify management's ability to offset tariff and material cost inflation through pricing power or efficiency gains to restore gross margins to historical levels.
- Restructuring Execution: Monitor the timing and magnitude of remaining "Project Fortify Phase 2" charges and the realization of projected $13-$15 million in annualized savings.
- UW Solutions Integration: Assess the long-term accretion of the UW Solutions acquisition, specifically its contribution to the Performance Surfaces segment's EBITDA margin.
- Architectural Glass Demand: Evaluate the sustainability of the 19.9% sales decline in the Architectural Glass segment and its impact on overall portfolio mix.
- Debt Servicing: Confirm the impact of rising interest rates on the floating-rate portion of the $270 million debt load and future cash flow availability.