Apogee Enterprises, Inc. — Form 10-Q Summary
Reporting period: Second quarter and first six months of fiscal 2027, ended August 29, 2026; comparisons are to the periods ended August 30, 2025. Apogee supplies architectural products and services and high-performance coated materials through Architectural Metals, Architectural Services, Architectural Glass, and Performance Surfaces.
Financial performance
| Metric | Three months | Six months |
|---|---|---|
| Net sales | $391.1 million, up 9.2% | $733.8 million, up 4.1% |
| Gross margin | 24.6%, versus 23.1% | 23.3%, versus 22.4% |
| Operating income / margin | $33.5 million / 8.6%; prior $26.9 million / 7.5% | $52.3 million / 7.1%; prior $33.8 million / 4.8% |
| Net earnings | $22.4 million; prior $23.6 million | $33.9 million; prior $21.0 million |
| Diluted EPS | $1.07; prior $1.10 | $1.61; prior $0.97 |
| Adjusted EBITDA (non-GAAP) | $49.5 million; prior $44.4 million | $81.7 million; prior $78.8 million |
| Adjusted EBITDA margin (non-GAAP) | 12.7%; prior 12.4% | 11.1%; prior 11.2% |
Quarterly sales growth reflected the Kalwall acquisition, price, and favorable mix, partly offset by lower volume. Management attributed improved gross margins to pricing, productivity and Fortify Phase 2 savings, favorable mix, and Kalwall, partly offset by higher material and manufacturing costs and lower volume. Six-month operating income improved substantially, while adjusted EBITDA margin was approximately flat.
Segments and material changes
- Architectural Metals: Second-quarter sales were $143.5 million, up 1.8%, and adjusted EBITDA was $22.1 million, up 6.2%. Six-month sales declined 1.3% to $266.0 million, while adjusted EBITDA rose 18.6% to $35.8 million.
- Architectural Services: Second-quarter sales rose 7.9% to $108.5 million and adjusted EBITDA rose 24.6% to $6.2 million. Six-month sales rose 8.1% to $223.7 million and adjusted EBITDA rose 11.7% to $12.4 million. Backlog was approximately $833.0 million, versus $792.3 million at the end of the comparable prior-year quarter.
- Architectural Glass: Second-quarter sales increased 21.1% to $87.4 million, including $16.4 million from Kalwall; adjusted EBITDA rose 11.5% to $13.0 million, but margin declined. Six-month adjusted EBITDA fell 24.7% to $18.9 million, with management citing pricing, lower volume, and higher manufacturing and freight costs.
- Performance Surfaces: Second-quarter sales rose 14.2% to $55.3 million and adjusted EBITDA rose 10.6% to $12.4 million. Six-month sales rose 9.9% to $99.6 million, while adjusted EBITDA slipped 1.0% to $19.0 million, reflecting higher material costs.
The prior-year comparisons included a $4.6 million New Markets Tax Credit gain and $18.5 million of first-half restructuring charges. No further Fortify Phase 2 activity occurred in the first six months of fiscal 2027. The prior-year gain and the current quarter’s higher effective tax rate (26.4%, versus 15.4%) help explain why quarterly net earnings fell despite higher operating income. For the six months, the effective tax rate was 26.8%, versus 30.9%.
Cash flow, debt, and liquidity
- Six-month operating cash flow was $43.3 million, versus $37.3 million. Investing cash outflow was $121.8 million, primarily reflecting the Kalwall acquisition; financing provided $74.9 million, mainly through credit-facility borrowings.
- Cash was $36.5 million at August 29, 2026. Capital expenditures were $17.8 million for the six months.
- Long-term debt was $335.5 million, up from $232.3 million at February 28, 2026. This included $206.5 million of term-loan borrowings and $129.0 million under the revolving facility. The weighted average borrowing rate, including swaps, was 4.45%.
- Available revolving borrowing capacity was $318.4 million after $2.6 million of letters of credit. The company reported compliance with its debt covenants and stated that liquidity should be adequate for short- and long-term needs.
- Dividends paid were $11.2 million ($0.54 per share); the company repurchased $16.1 million of shares in the first half.
Acquisitions, outlook, and risks
Apogee acquired Kalwall on July 1, 2026, for stated total consideration of $112.2 million, including estimated contingent consideration. The acquisition was funded with credit-facility borrowings and contributed $16.4 million of sales and $0.9 million of net earnings for approximately eight weeks. On September 18, 2026, after quarter-end, Apogee acquired Groglass for up to €62.5 million, including up to €10 million of contingent consideration; it will join Performance Surfaces. Purchase accounting for Groglass was not complete at filing.
The filing provides no quantified earnings or sales guidance. Management’s outlook statements are limited to its view that liquidity and borrowing capacity are adequate and that it expects to remain compliant with debt covenants over the next fiscal year. Risks include construction-project execution and contract-estimate variability, material costs and volume, floating-rate debt, acquisition integration, and ordinary-course litigation. Long-term contract estimates produced a net favorable catch-up adjustment to operating income of $1.5 million for the quarter and $0.9 million for the first half. Outstanding surety and performance bonds totaled $1.2 billion; the company reported no historical payments under bonds for its existing businesses. Management said current litigation is not expected to have a material adverse effect. The IRS is examining fiscal 2023 federal taxes.
Important facts for investors to verify
- How much of sales and earnings growth is attributable to pricing, volume, mix, productivity, and Kalwall, and whether the Glass segment’s first-half margin pressure persists.
- Integration results and final purchase accounting for Kalwall, plus funding, contingent consideration, and purchase accounting for post-quarter Groglass.
- Debt and interest-rate exposure after acquisition funding, available revolver capacity, and continued covenant compliance.
- Assumptions behind long-term contract estimates, backlog conversion, warranty/project contingencies, and the $1.2 billion of outstanding bonds.
- Whether management provides more specific forward guidance in subsequent filings; this 10-Q contains no quantified guidance.