- Q3 Net Sales Growth Increased to $348.6M (+2.1% YoY), driven by UW Solutions acquisition and favorable product mix.
- Segment Performance Services segment grew for 7th consecutive quarter (9.7% EBITDA margin); Metals improved margin to 13.5% via cost savings.
- 2026 Outlook $1.39B net sales target and $3.40–$3.50 adjusted diluted EPS, with $0.30 EPS impact from tariffs.
- Project Fortify Expansion $28–29M pretax charges anticipated, offset by $25–26M annual cost savings post-implementation.
- High-Margin Growth UWS Solutions acquisition boosted Performance Surfaces sales and unlocked high-margin warehouse/manufacturing markets.
Segment Performance
The company's segments performed variably: Metals net sales declined due to lower volume, but adjusted EBITDA margin improved to 13.5% through cost savings and productivity gains. The Services segment delivered its seventh consecutive quarter of year-over-year net sales growth, driven by increased volume, with an adjusted EBITDA margin of 9.7%. Glass net sales increased slightly, while adjusted EBITDA margin moderated due to lower price and higher material costs. Performance surfaces net sales grew due to the UW Solutions acquisition, but adjusted EBITDA margin decreased.
Outlook and Strategy
Apogee Enterprises updated its outlook for fiscal 2026, expecting net sales of approximately $1.39 billion. The company is focused on becoming the economic leader in target markets, managing its portfolio, and pursuing accretive M&A opportunities. Don Nolan emphasized that there is no change in strategy, with a focus on operational excellence, cost savings, and driving profitable growth. As Don Nolan noted, the company has worked hard to maximize EBITDA dollar contribution while protecting premium margins, putting it in a stronger position than during the last downturn.
Valuation and Growth Prospects
With a P/E Ratio of 17.14 and EV/EBITDA of 6.69, the market appears to be pricing in moderate growth expectations. Analysts estimate next year's revenue growth at 0.9%. The company's robust pipeline for accretive M&A and its focus on moving faster with discipline could potentially drive growth. The addition of UWS Solutions has opened up new markets and products, enabling faster growth. The company's current compensation structure is expected to normalize in the future, potentially positively impacting future earnings.
Financial Health
The company's financial health appears stable, with a Net Debt / EBITDA ratio of 1.88 and a ROIC of 5.03%. The Dividend Yield is 3.24%, indicating a relatively attractive return for income investors. The company's focus on operational excellence and cost savings is expected to drive profitable growth, with Project Fortify expansion and other "quicker turn wins" being key priorities in the near term.