APOG - Earnings call transcript Q3 2025 | Apogee Enterprises, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2025 Apogee Enterprises Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jeff Huebschen, Vice President, Investor Relations.

Jeff Huebschen

Josh. you, Thank and Quarter everyone, Apogee Fiscal Enterprises Good Call. welcome Third Earnings XXXX morning, to With Ty today Osberg, me are Chief and Executive Financial Matt Officer; Officer. Silberhorn, Apogee's Chief

to available in Investor remind there everyone I'd website. of the remarks, like are are Relations to slides these and accompany Apogee's that section today's

slide a this reference in nearest the GAAP are provided During will financial Definitions to certain this call, issued of reconciliation measures. earnings deck release and the non-GAAP morning. we these we measures and measures

like on also that may in our call information. today's I'd and about remind to our business results filings. reflect SEC results Apogee's information financial will everyone in These press statements. can factors release management's contain affect found that differ Actual currently and forward-looking materially. More expectations could based available be

that, with And to over turn call I'll you, Ty. the

Ty Silberhorn

Thanks end morning, I'll the highlights us Thank position our in hand what everyone. as details This Jeff. for to for discuss on well how on it the few more quarter, for our you, a quarter company the I'll Matt Then from working growth. we're morning, markets as touch joining outlook. to and seeing share are over Good today. we

in presentation. quarter construction. Page highlights demand start line Let's the with the X Revenue of quarter last despite nonresidential on soft seeing market from end our year, in with in was continued pressure

this expected, our softness framing As is segments. primarily glass and impacting

margins the we framing, their year. and moderate half to glass in saw declined volumes the compared As first of

is UW range. closing the notable within X% team encouraged was Services we integration in the we operating backlog. early plan, results executing our year-to-date executed The X% as continued and quarter acquisition are projects our and margin our deliver target Services highlight The is of margin X% the by to in Solutions. progress. adjusted to most sales positive now

after is shared how our value. to funding shareholder I'm to to drive the very the strong, remains capital Even continue their to very we leverage team positioned growth. capabilities they deploy balance and see sheet well coming to and about the together optimistic are opportunities drive acquisition,

We differentiated products our fit long-term be are to will accretive strategy actively evaluating profile. opportunities financial with our to our pipeline, cultivating add M&A that and

Now some market. construction the let comments about me offer nonresidential

new I indicators challenging. mentioned Billing As earlier, market Architectural XX-plus to remains months. as have the a Leading nonresidential pointed construction for such Index contracting

We softness in and framing over see have in awards more and with Architectural segment. our to this several past the recently, systems Glass continue quarters slowing

signal in weaker. improved mixed. I will commercial, ABI the office, may positive inflection X non-res multifamily housing across building like construction have which different been that note trend. point sectors rate has sensitive The months a and within Interest picture remains the lodging past types

to verticals verticals segments, our continued highest the like education, and the transportation growth. Across we've While our continue toward opportunities. architectural growth with mix see health to care shift

Notably, these institutional forecasts share the 'XX. largest calendar of are our in of projects, continuation trends industry including health care, Most for now a education call and backlog. government

with continued in X% for that market institutional rate growth in in from in shows declines which XXXX, example, forecast our now Slide the funding. and reflects X For benefit interest growth verticals government presentation sensitive overall also FMI's verticals

in to will our next construction view to of short year, half see in shallow. the We first industry. the outperform continue framing. the been secured will likely, Most fiscal and downturn the be our much that goal through in remains market, be the backlog take of what and Regardless of continue executing pressure has a we fiscal that overall our will primarily for to glass Services 'XX. happens

team business, meaningful can driving earnings deliver sustainable expansion much demonstrated a across improvements even several past our without and and margin growth the stronger we Over built has foundation, our years, that we market operating growth.

a as areas growth acquisitions providing also and are higher higher us and to further lever growth our executing enhance with margins. to We business exposure transform now

this long-term build forward, As to to foundation move drive intend profitable growth. we we on

this We sectors Within the growth will to continue segments, opportunities. to shift continuing diversify our sales higher means of mix, best market the with focusing towards rates. Architectural our on market

the Most importantly, adjacencies. expand of we UW market will solutions leverage capabilities attractive into further to

center positive which We in to are seeing warehouse momentum us significant to and addition flooring, new R&R industrial exposure gives in overall. distribution opportunities

acquisition continue our and for diversify accelerate further mix. to that business will look growth our We opportunities

execution have on this few of these These past We been our foundation at continue will to we and and to ensure a cost do focus over level. areas the the high perform productivity, focus maintaining while our years, on improvements management. we

plan marks the calendar 'XX 'XX. Fiscal of November we end X-year in of shared the

company earnings. We're As and you expand our revenue margin evolution additional still growth of profile. encouraged is to plan to our the continuing foundation, the for early year. the in the both our leverage working I process, team We but you see would a in on opportunities next while bigger position expect, but our new by details share The with strong driving emphasis to to future we build fiscal place strategy. operational growth in am new our will plan leadership

turn Matt. that, I'll over it to With

Matthew Osberg

on is Thanks, thoughts some Ty, outlook a start morning, shaping and the fiscal good I results up. for preliminary updated quarter with with before 'XX the everyone. and how of review I'll our finish

quarter, by mix third Adjusted $X.X of lease insurance-related points XX declined driven sales less million primarily offset the more included a driven by and in margin Adjusted volume the by $X.XX, in drivers adjusted approximately These product by primarily and X%, lower expense. driven operating projects income. favorable favorable down were a were inorganic lower X%, at continued compensation and basis of from incentive and offset double-digit services in basis, was mix operating for partially diluted volume, lower sales UW with million consolidated net declined EPS coming $XXX net by higher and unfavorable leverage lower an On costs. Solutions. partially results growth revenue glass, organic sales Starting services. from

to of to the sales compared decline in with and net fiscal reflecting framing less to a significantly X.X% X% for results. and framing half product declined primarily and a of the approximately Adjusted rate increased quarter segment $XXX volume the the operating declined compensation. mix, during the favorable million, and higher sales to reflecting along mix, framing costs moderated product margin freight less favorable year. Turning first

volume. expected, this in market as impacted quarter As sales glass net demand declined soft end

sales of to Services ago. Overall backlog nearly the fourth quarter $XXX As we quarter margin in levels year-over-year of million levels X.X%, over decline a and backlog quarter construction however, previously lower the adjusted reflects sensitive of margin. Services to in the coming discussed, were in sales rate, we've million contribution expansion declining this remain volume backlog; seen for the margin net double-digit growth, net The past the making than X sales with compared growing main rate glass in the $XXX at volume market. of quarter has this high continued operating in third quarters variable a margin and pricing. X changes straight improve Adjusted healthy last the quarter lower years operating ended to making overall year with trend its also delivered XX%. driver services. the at was straight X% softness

XX.X%, retail XX% Solutions. declined and the from we net sales grew margin dilutive Solutions. see Adjusted reflecting to from X% to Organic unfavorable as in declined lower sales sales in channel. impact $XX.X UW to operating primarily the from lower LSO volume to margin LSO legacy due leverage the continued million inorganic volumes UW business

offset Corporate partially UW and other lower by expenses Solutions was costs lower million included compensation increased million, to related $X.X acquisition. which insurance-related and This the to $X.X of expenses. costs incentive

the bringing sheet. to balance but Cash cash million. strong, flow in $XX year-to-date was total record Turning generated level. from operations the million to of We operations last cash our year's below and remained $XX from quarter,

During leverage delayed draw the million loan we the acquisition We to with executed ratio of pay we debt of a and expect the quarter, strengthening the position. Solutions. financial X.Xx to our term down coming consolidated quarters, fund in finished quarter further our UW $XXX

significant powder further us have on our ample capital capacity giving to facility, available continue deployment. credit dry for value-creating We

volume segments. 'XX. decline fourth quarter Also, sales incremental acquisition expect have primarily for impact This approximately of $XX the the a net the outlook sales incremental of Solutions our lower-than-expected to in comparative from impact quarter, the to year. fiscal as the We approximately the as of million X%. reminder, full fourth net now UW will the and by fiscal as well activity Moving glass framing in the XXrd of in week includes

performance continue We margin the approximately expect half adjusted of first will operating the XX%, to in driven full be the primarily margin year. strong year by consolidated

fourth We in decline of glass to pricing expect sequentially quarter, volume and framing. primarily to operating adjusted in pressure and impact margin the lower the due

now ranges target for margins LSO our includes teens diluted full the year. impact lower to glass. in their for range $X.XX will year and $X.XX, and dilution framing full expect We with adjusted in UW of than respective be the within operating at of the bottom full year will year expected expect fiscal glass the that We framing, fourth high this acquisition be and quarter approximately services finishing previously EPS to in of related Solutions the the volume $X.XX adjusted of

year of We now and expect million. $XX approximately of tax $XX effective XX.X% expect capital continue an to full million rate to expenditures

our Looking provide year and through call budgeting new an 'XX, on to currently working process fiscal for ahead April. the to expect outlook we are our fiscal in

to helpful it share some thought year. initial perspectives I However, next be on would

trends market the and and our potential impacts evaluate economic business. monitor to continuing are We on

described, forecasts for revised most have downward. released, as Ty current recent for market consistently growth of trends forecasts have calendar As 'XX However, been more call estimates been continuation

and the conditions several on backlog. glass longer-term significant construction. on in uncertainty Services Near-term on the segment administration that new more generally and due framing more the see have to would wide-ranging also market in nature the We for projects have with incoming market policy and of potential impact nonresidential segments the presidential changes the impact impacts less could

XX% expect Solutions sales an $XXX continue In margin EBITDA and million of adjusted diluted approximately LSO, to we to at approximately will be net that EPS. adjusted of accretive contribute will UW

growth adjacent an pursue we've volumes made. and see as investments We recover we markets, the leveraging in also organic as in retail capacity LSO channel for opportunity growth

be From based next operating we improvements performance an perspective, margin and our segments ranges adjusted strategy, margin target see for to we've a opportunity sustainable achieved on their within on focus executing adjusted all year. for continued X an operating

put 'XX pressure We EPS have, we to on growth. expect that income potential some fiscal however, identified headwinds operating

from XX% are expected within the the in to range segment's teens of XX% be fiscal fiscal in long-term high moderate margins to 'XX Glass 'XX. to

costs fiscal that have we insurance-related 'XX. lower lower in benefited costs incentive 'XX, to fiscal be short-term Additionally, expected from in headwinds and are

action as through well plans working as to offset headwinds. try for market prepare other currently to are potential these We items

we to the expect the challenged we strong 'XX, of Finally, results comparisons first in due to in fiscal posted half year-over-year of fiscal most first half the 'XX. the be

fiscal potential 'XX some facing headwinds, I'm are the Although business. excited our we about of

The future challenges balancing delivered results are third will on we solid through growth. managing focused strategic market investments and while quarter the enable current in that

Solutions turn and The investments Ty to is provide that, UW expected it continue for to to acquisition to inorganic look we organic remarks. over for opportunities and growth for some expanded strategy. With our additional accelerate back of I'll concluding

Ty Silberhorn

Thanks Matt.

to Let The with built mix and investments competitive the UW solid momentum our want position. strengthened we've we of me our operating business. close company we've with date recognizing year enable also a continuing and that's progress past future for puts our to thank done Solutions to work differentiated I foundation, cost increased acquisition as great structure, build our involved products in over team strategy. and growth. the the the more everyone services made made a We've by to that execute been

while shareholder our us healthy allowing support your sheet, strategy deploy and generate a ready further to questions. to done drive to significant value. With cash maintaining flow to We've that, continuing are we balance this and free capital take

Operator

Our first Sidoti Company. question Julio [Operator Romero from & Instructions] with comes

Julio Romero

a from little XQ. talk XQ holding sales and Can weakness in guide segment think sequential there. the and Happy with should a New mix end-market some because the glass How dollars glass maybe we the relative Year. we little be XQ to step bit modeling segment how then in are implies I secondly, price much down lower up the you're about seeing start bit and

Matthew Osberg

Yes. Good question, Julio.

we still So kind expect you're volume be what pressure to laid pressure be out pressure price now, in right I continue but do as to QX, holding we on will volume continues, in as glass pressure is price up, is under my under of especially to and volume. expectation think continue seeing of today. in more The QX is kind

depending is that how most In due price think but going some of coming about in framing to QX, a terms QX. in yes, rate I little ballpark is perspective, benchmark is to just down I we from say I'd pressure volume. it, a maybe probably how about around below, bit it's a of something things QX, run in and glass a glass. primarily be framing, of volumes the mean, above, there in I in QX think to But out. good little on think on and And maybe talked bit that's shake for

Julio Romero

Got it. very helpful. That's

thinking down the in a we in So I in be perspective fourth a guess be volume we greater should framing fair? quarter that from should Is glass. step about than

Matthew Osberg

Yes. is fiscal additional in -- And QX that's That's of the or thing I in week think too, fair. the has the other last got compare there, year.

more out I volume of to in parse kind specifically. there'll be glass. makes pressure it hard than that that that So AFS But think

Julio Romero

UW little the acquisition helpful. it. Got about talking Very a bit. And then

Can bit? printable other product that you then lines, Coatings, Engineered on and touch materials also mentioned flooring. some expand could? And on in positive the industrial little if you HD You a momentum X

Ty Silberhorn

This take Yes. is that one. I'll Ty.

didn't was recall, a is the less parts business, million sales. was that half of about construction that system not on exposure us interested to opened so lot than new us part in on project So revenue $XXX a plants, it we giving if door significant differentiated several a you in R&R basis, manufacturing which for per in really industrial giving and in build-out little a even than that flooring an entrance other for that product there. to have having like warehouse total much the portfolio, us all our business which of dollars -- us distribution We and sell but the business, thousand and really the for rely

specific in product I we guiding better we of to have weren't opportunity expected but growth. pipeline terms seen, those say, than we lines, So would what

it Solutions that, over the for very with with of seen it that is next do we overall, on that's the the they've softness side, margins. going revenue of business lift a when combine has positive to in we really UW years LSO, think and especially of strong couple So business also part and drive you retail the some think the

Julio Romero

M&A could one preliminary deploy more I gave. also 'XX here Very you really fiscal appreciate the guys is to 'XX plans then down helpful. talked If capital give to pipeline. Can I to I maybe also, could mentioned a think be continue you commentary plans bit? pretty a little robust there other in sneak fiscal would you the you talk commentary pay Any you helpful. And debt. about in to

Ty Silberhorn

Yes. current a Julio, so the here at we've today. deploy we're ending we X.Xx ratio, that so capacity still quarter got can

debt do M&A continue without we 'XX. Solutions As debt. a to pay We've that high we and interest have can But fiscal accelerator pipeline delever from foot similar are interest on capacity. out today deal you have in further expense capacity continue UW got we'll call to to will did our we an down the the sized perspective. costs there, faster we Obviously, to mentioned, less the

at continue #X that to deploying look as for capital. our so priority And we

investments. to down capital make kind Also, we're we'll at continue continue But those debt to those our not other of inorganic available, available those driving We and drive to to definitely internally investments. are organic some to growth looking us. while can organic as strategy deployment pay become we'll turn and

Julio Romero

on. pass context. Great it I'll

Operator

Thielman with Brent from comes question next Our D.A. Davidson.

Brent Thielman

quotes, other some with or demand sort aligning that terms any Ty, curious anything times Are of business company you there seeing those what -- the you by the in in in you the some of the within that Just some third a of business. of KPIs think, they one market. to But suggest about your out seeing areas what of better? underlying terms Are in forecasts of I alluded you're longer as business, that worse? of trends gives visibility. of third-party that on trends just Just the gives you're parties market? services the lead they terms sort forecasts kind of bookings Are in

Ty Silberhorn

let's say, how we little a would they'll a next backlog I as we're seeing up. 'XX Yes. bit look everything not going We're that in outperform to think else demonstrate we're certainly they, that's win They year. is that their and aligning. yet it's say And to for seeing that. bit. fiscal the year-over-year, the we of would market with as They're flat if see types. at guiding But Even probably core flight a of the kind We're shaping quality. little project

on have pressure It getting a as that. fewer a fewer As up, chasing margin some markets the more pieces the tightened put because looks on second people as of little pie. projects their even does -- there's they're and result of projects projects, looks

there say operating that to also So choppiness been pressure to There's of there, X% so they're back on expect held range. they ready seeing executing X% award, a yes and got overall, side looking again but and of with target is within choppiness. yes. bit into firm a like before the then productivity them to some on definitely X%, go they X% that they're a market, projects bit in they've little softness would we But an the getting be that that give they'll

Brent Thielman

mean, this to back kind your of range segment Yes. reverted the quarter. Glass target And I margins obviously,

I Does here You've is confidence expect all guess the to down. give allude you along to been do saying leverage of Matt, concern profile and happen. of should impact orders to just did the that that know operating you that. stay you market volume this weaker XXXX, target some with I that fiscal range. my seeing kind to you're new eventually within in

tough I gives in confidence that and just to the range in Glass really of could would what walk be you guess, pieces, the it was helpful. stay kind market, you if So through

Matthew Osberg

decline. But got, next the But is as the go like it as and can And the we've we type question, going mean back that well are projects terms to the of middle in going to of change a try we your in -- said, a moderating Brent. range way we've that high they're so glass their efficiency a is good market at this path be the that in into seeing to No, question the year, go of the you you significant Yes. did yes, looking that teens range up. it's we in for provide. even structural got pick target productivity and I and be we've to real business we value add that after made year.

got So we a that is got from where in ago XX% X we've line believe challenged for within top that even XX% that a structural was even that, change can a and line X year years that real floor XX% with it that we that headwinds. some be into year built top or business a range business in to

Ty Silberhorn

And Yes. echo I would that.

decline plus income EBIT If mean, you side the and the little on operating on I year-over-year, side. still revenues look more quarter, delivered at just the a in XX% than XX%

I just Matt what are said proof pressure for if points the products, We we high of seeing looking we're So do evidence value-add that there. think is expect that. within

perspective, really coming we're of, to only value seeing to trying or pressure really additional this So this some those to we're couple we volume in unit. can feel dollars. they're But X get trying started also -- from in X to adds of shape get project that see greenlighted have down and we the next that insulated that of hey, and a high Glass and quarter, wanted not they to quarters. but they bid see

to high X can only those the of in pay X value So adds maybe for we afford IGU. or

calendar XX% out, looking mix that, project that see to which think affects and then XX%. gives little with stay But we'll even up But a in turns, calendar course, standpoint, they're volume I second as comfortably out to that to we that starts a 'XX, again mix So as price bit. from of to how the that And turn in upside show here. half year starts to starts the it of yes. play if

Brent Thielman

for guess, just you I allocation. debt to understand to Julia's I paying pay side and of you're last other question to debt, a on extent down there. be focus some out what looking the integrate talking UW. capital might sort follow-on, Ty the to I'm want and acquisition you you kind one, Could prospects of on maybe pipeline about acquisition potential for give sure that just you is Maybe I still active. down us the a want mean flavor

Ty Silberhorn

I pipeline acquisition our active. very mean, Yes. is

is of folks bidders market lot up. the for to hoping rates that and waiting have to settle more of sidelines and heating interest think sat I also kind A processes. on

year us, from So on getting nonresi, we're kind up FMI build-outs, especially to a for seeing a will be activity be growth still warehouse of focus right, we healthy and let's think, and which if lift say, and plant That a pick for manufacturing that. are is that's it's still flat forecasted rates.

manufacturing So to we will to products fit focus we're it like there. technology from think with standpoint, to capabilities, got Solutions differentiated rates that add process continue also margin our businesses. UW within a then a tend of more rest higher we than looking about the Strategically, said, and we like has both bring to it our -- from

So be we'll opportunistic.

looking margins. wanted acquire our up help lift emphasis We lens a strategic with things We're continue are want open there's us spaces accretive as that growth there, well. we margin to going use too. to coupled will growth higher to that We But for to profile.

Operator

with Bretz next KCCA. comes John Our from question

Jon Braatz

administration about Is might any transition could kind the a you you it, slower maybe that what have of a market market the weaken maybe spoke of I transition. there rates higher little that, and bit? group that and end when concern industrial flooring Matt, market Ty, to there interest and some a sensitivity economy And the to think for you little guess bit the UW. speak about

Matthew Osberg

build-out, spec-ed we not where that, I in only existing robotics think it's but floor facilities, really flooring is in remember first have see driven we do this gets putting by component. it the floors on when some mezzanine

opportunity there address cost people with tight there's also facilities et of creates some cetera, frankly, about XX% where labor or their It's put to a robotics even an labor, that to challenges looking labor benefit issues. nice that, it's into are because R&R. So that the

a it's or build-out. relying an not retrofit new new facility. It's So warehouse of plant existing

wins to Amazon, if gives cetera, of to But that and picking could But new be I to investing to and that or spending business lift the growth We're Obviously, comps year. think couple see Walmarts them et of want huge to future across continue insulated gives facilities, consumer areas a relatively is into plus. that of few that to give big lot. business that get us in from Yes, up portfolio them like that add type going in other there can add a we that. tough a sold otherwise, sites a exposure. the continue the existing couple the look for that. build a at next years we that's years where they We're

Jon Braatz

is to big win. how Matt, a you win group? going a big mentioned the How needle is that move Okay. big -- for

Ty Silberhorn

business, It of Yes, think, little than of this won't smaller a of that We is a get again, less hundreds John, those projects, But I specifics. thousands. half into is lot UW Ty. Solutions.

every some robotics mezzanines accounts and we're XX have doing in could decide in where large facilities someone one. they However, -- putting we're

Services, We have see move a don't X most project to like into rely we'd you're And on like a to too, opportunity. But in right? of business we there's is really smaller needle of so dollar. win have that them. the for type now that been to glass huge Again, million-plus

Jon Braatz

us then regard? what update? And progress making in are secondly, you've investing in investments some give been in kind -- Can of you Good. Okay. markets. seeing LSO last, little And that Ty, you a adjacent

Ty Silberhorn

seeing we're say would good progress. I Yes.

So momentum probably soft kind getting of out building those some couple got in a putting getting more. be of of a in terms for little of has hiding attention side we'd business bit been overall projects like pipeline, we'll they've finish that getting that them, there. a because line. fiscal drowned of We've good that our lot opportunity that's retail and the the on positives. that But of 'XX. they're gains It's Obviously, across seen the

Matthew Osberg

a Yes. And is of one see that growth opportunities growth in of the in business as LSO we called lot fiscal out 'XX. -- things legacy organic well I

Operator

question [Operator Gowshi Instructions] next comes Our from with Research. Sri Singular

Gowshihan Sriharan

Yes.

potentially EPS with of are the factors the guidance, the range towards end could in upper what QX? that performance drive key Just that the

Matthew Osberg

Yes.

Matt. towards this Gowshi, the is all of pretty in that on people seeing that there be think thoughtful big we're tried than expected. range which year, volume just directing plays is to I We So the we out in pressure more bottom driver the obviously for and

million as think probably what QX, I towards so now bottom $XXX And at us seeing would million that we range. variable of that we're that look drives volume is our to the $XXX biggest put

Gowshihan Sriharan

Okay.

a target for $XXX you're I think you In terms like expecting? of a of the what synergies million contribution Any on UWS progress, can you give had update FY me little that? more 'XX. on color And

Matthew Osberg

Yes.

move the next we're started realize but synergy through already working And in where XX look say through or the I'd track do F at to do as -- year. here. it EPS EBITDA outlined on we we still we're we targets XX about 'XX, that million $XXX have be. adjusted million for we a margin contribution bringing trying to XX% projecting to that achieve we process months we're So be to at And expect the have from to accretive integration to UW some, we to business, expect next as that Solutions we're are in we've we going $X and

Gowshihan Sriharan

out missed any in for particular putting this, conditions the that might you're And market changes but number for of and Okay. have your terms I'm the an the update? framing architectural long-term I operating sorry, margins, on

Matthew Osberg

range be long-term this see for its XX% framing we And next well So for their them be 'XX. framing to to in the within year, as XX% range. fiscal to opportunity in year, we expect

Operator

now Silberhorn to like call to for Ty turn I remarks. back over closing would the any

Ty Silberhorn

of Thank your Have fiscal you we as to out update week. call look in you again forward for joining us April with today, 'XX. rest a close our and our providing great another we

Operator

you. Thank Thank your for you the This concludes conference. participation.

may now disconnect. You

Apogee Enterprises (APOG) 7 Jan 252025 Q3 Earnings call transcript