APOGEE ENTERPRISES INC

For the period ended Jan 7, 2025. Filed Jan 7, 2025.

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Jan 7, 2025 · Filed Jan 7, 2025

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EX-99.1 · Contact

Contact

Jeff Huebschen

Vice President, Investor Relations & Communications

952.487.7538

ir@apog.com

Apogee Enterprises, Inc.
Consolidated Condensed Statements of Income
(Unaudited)
Three Months Ended · Nine Months Ended
(In thousands, except per share amounts) · November 30, 2024 · November 25, 2023 · % Change · November 30, 2024 · November 25, 2023 · % Change
Net sales	$341,344		$339,714	0.5%	$1,015,300	$1,055,102	(3.8)%
Cost of sales	252,195		249,409	1.1%	729,975	776,440	(6.0)%
Gross profit	89,149		90,305	(1.3)%	285,325	278,662	2.4%
Selling, general and administrative expenses	60,520		52,658	14.9%	173,350	166,695	4.0%
Operating income	28,629		37,647	(24.0)%	111,975	111,967	—%
Interest expense, net	1,044		1,454	(28.2)%	2,634	5,720	(54.0)%
Other (income) expense, net	(60)		890	(106.7)%	(493)	(3,722)	(86.8)%
Earnings before income taxes	27,645		35,303	(21.7)%	109,834	109,969	(0.1)%
Income tax expense	6,656		8,329	(20.1)%	27,268	26,092	4.5%
Net earnings	$20,989		$26,974	(22.2)%	$82,566	$83,877	(1.6)%
Basic earnings per share	$0.96		$1.24	(22.6)%	$3.79	$3.83	(1.0)%
Diluted earnings per share	$0.96		$1.23	(22.0)%	$3.76	$3.80	(1.1)%
Weighted average basic shares outstanding	21,782		21,819	(0.2)%	21,789	21,889	(0.5)%
Weighted average diluted shares outstanding	21,917		22,013	(0.4)%	21,937	22,093	(0.7)%
Cash dividends per common share	$0.25		$0.24	4.2%	$0.75	$0.72	4.2%
% of Sales
Gross margin	26.1%	26.6%		28.1%	26.4%
Selling, general and administrative expenses	17.7%	15.5%		17.1%	15.8%
Operating margin	8.4%	11.1%		11.0%	10.6%

Apogee Enterprises, Inc.
Business Segment Information
(Unaudited)
Three Months Ended · Nine Months Ended
(In thousands) · November 30, 2024 · November 25, 2023 · % Change · November 30, 2024 · November 25, 2023 · % Change
Segment net sales
Architectural Framing Systems	$138,039		$139,585	(1.1)%	$412,561	$462,548	(10.8)%
Architectural Glass	70,236		90,964	(22.8)%	247,040	282,262	(12.5)%
Architectural Services	104,921		94,662	10.8%	301,966	272,144	11.0%
Large-Scale Optical	33,196		26,009	27.6%	74,232	72,110	2.9%
Intersegment eliminations	(5,048)		(11,506)	(56.1)%	(20,499)	(33,962)	(39.6)%
Net sales	$341,344		$339,714	0.5%	$1,015,300	$1,055,102	(3.8)%
Segment operating income (loss)
Architectural Framing Systems	$12,710		$16,981	(25.2)%	$48,187	$57,986	(16.9)%
Architectural Glass	10,118		15,164	(33.3)%	48,277	49,119	(1.7)%
Architectural Services	9,730		5,288	84.0%	21,483	8,211	161.6%
Large-Scale Optical	4,842		7,100	(31.8)%	13,481	17,288	(22.0)%
Corporate and other	(8,771)		(6,886)	27.4%	(19,453)	(20,637)	(5.7)%
Operating income	$28,629		$37,647	(24.0)%	$111,975	$111,967	—%
Segment operating margin
Architectural Framing Systems	9.2%	12.2%		11.7%	12.5%
Architectural Glass	14.4%	16.7%		19.5%	17.4%
Architectural Services	9.3%	5.6%		7.1%	3.0%
Large-Scale Optical	14.6%	27.3%		18.2%	24.0%
Corporate and other	N/M	N/M		N/M	N/M
Operating margin	8.4%	11.1%		11.0%	10.6%
N/M - Indicates calculation is not meaningful

Segment net sales is defined as net sales for a certain segment and includes revenue related to intersegment transactions.

Net sales intersegment eliminations are reported separately to exclude these sales from our consolidated total.

Segment operating income is equal to net sales, less cost of goods sold, SG&A, and any asset impairment charges associated with the segment.

Segment operating income includes operating income related to intersegment sales transactions and excludes certain corporate costs that are not allocated at a segment level. We report these unallocated corporate costs separately in Corporate and Other.

Operating income does not include any other income or expense, interest expense or a provision for income taxes.

Apogee Enterprises, Inc.
Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands)	November 30, 2024	March 2, 2024
Assets
Current assets
Cash and cash equivalents	$43,855	$37,216
Receivables, net	187,799	173,557
Inventories, net	97,003	69,240
Contract assets	57,545	49,502
Other current assets	45,119	29,124
Total current assets	431,321	358,639
Property, plant and equipment, net	269,063	244,216
Operating lease right-of-use assets	63,663	40,221
Goodwill	234,814	129,182
Intangible assets, net	140,390	66,114
Other non-current assets	41,269	45,692
Total assets	$1,180,520	$884,064
Liabilities and shareholders' equity
Current liabilities
Accounts payable	96,372	84,755
Accrued compensation and benefits	39,432	53,801
Contract liabilities	46,165	34,755
Operating lease liabilities	14,958	12,286
Other current liabilities	66,982	59,108
Total current liabilities	263,909	244,705
Long-term debt	272,000	62,000
Non-current operating lease liabilities	54,188	31,907
Non-current self-insurance reserves	33,303	30,552
Other non-current liabilities	35,051	43,875
Total shareholders’ equity	522,069	471,025
Total liabilities and shareholders’ equity	$1,180,520	$884,064

Apogee Enterprises, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
	Nine Months Ended
(In thousands)	November 30, 2024	November 25, 2023
Operating Activities
Net earnings	$82,566	$83,877
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	30,798	31,185
Share-based compensation	8,067	6,644
Deferred income taxes	5,109	1,296
Loss (gain) on disposal of assets	159	(50)
Settlement of New Markets Tax Credit transaction	—	(4,687)
Non-cash lease expense	9,926	8,742
Other, net	1,800	10
Changes in operating assets and liabilities:
Receivables	(2,191)	(846)
Inventories	(8,284)	8,256
Contract assets	(8,168)	11,194
Accounts payable	6,796	(1,902)
Accrued compensation and benefits	(20,958)	(7,015)
Contract liabilities	11,499	7,635
Operating lease liability	(9,387)	(9,214)
Accrued income taxes	(6,498)	(7,587)
Other current assets and liabilities	(6,104)	1,714
Net cash provided by operating activities	95,130	129,252
Investing Activities
Capital expenditures	(24,696)	(26,956)
Proceeds from sales of property, plant and equipment	744	247
Purchases of marketable securities	(2,394)	(969)
Sales/maturities of marketable securities	2,370	1,370
Acquisition of business, net of cash acquired	(233,125)	—
Net cash used by investing activities	(257,101)	(26,308)
Financing Activities
Proceeds from revolving credit facilities	95,201	195,851
Repayment on revolving credit facilities	(115,201)	(265,000)
Proceeds from term loans	250,000	—
Repayment of term loans	(20,000)	—
Payments of debt issuance costs	(3,798)	—
Repurchase of common stock	(15,061)	(11,821)
Dividends paid	(16,238)	(15,690)
Other, net	(5,884)	(3,781)
Net cash provided (used) by financing activities	169,019	(100,441)
Effect of exchange rates on cash	(409)	(569)
Increase in cash and cash equivalents	6,639	1,934
Cash and cash equivalents at beginning of period	37,216	21,473
Cash and cash equivalents at end of period	$43,855	$23,407

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Earnings and Adjusted Diluted Earnings per Share
(Unaudited)
	Three Months Ended		Nine Months Ended
(In thousands)	November 30, 2024	November 25, 2023	November 30, 2024	November 25, 2023
Net earnings	$20,989	$26,974	$82,566	$83,877
Acquisition-related costs (1)
Transaction	3,748	—	3,748	—
Integration	941	—	941	—
Backlog amortization	805	—	805	—
Inventory step-up	379	—	379	—
Total Acquisition-related costs	5,873	—	5,873	—
Restructuring charges (2)	912	—	3,213	—
NMTC settlement gain (3)	—	—	—	(4,687)
Income tax impact on above adjustments (4)	(1,662)	—	(2,226)	1,148
Adjusted net earnings	$26,112	$26,974	$89,426	$80,338
	Three Months Ended		Nine Months Ended
	November 30, 2024	November 25, 2023	November 30, 2024	November 25, 2023
Diluted earnings per share	$0.96	$1.23	$3.76	$3.80
Acquisition-related costs (1)
Transaction	0.17	—	0.17	—
Integration	0.04	—	0.04	—
Backlog amortization	0.04	—	0.04	—
Inventory step-up	0.02	—	0.02	—
Total Acquisition-related costs	0.27	—	0.27	—
Restructuring charges (2)	0.04	—	0.15	—
NMTC settlement gain (3)	—	—	—	(0.21)
Income tax impact on above adjustments (4)	(0.08)	—	(0.10)	0.05
Adjusted diluted earnings per share	$1.19	$1.23	$4.08	$3.64
Weighted average diluted shares outstanding	21,917	22,013	21,937	22,093

(1)	Acquisition-related costs include:•Transaction costs related to the UW Solutions acquisition.•Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.•Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.•Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.
(2)	Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025, and $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.
(3)	Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.
(4)	Income tax impact calculated using an estimated statutory tax rate of 24.5%, which reflects the estimated blended statutory tax rate for the jurisdictions in which the charge or income occurred.

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income (Loss) and Adjusted Operating Margin
(Unaudited)
(In thousands) · Architectural Framing Systems · Architectural Glass · Architectural Services · LSO · Corporate and Other · Consolidated
Operating income (loss)		$12,710			$10,118		$9,730			$4,842		$(8,771)			$28,629
Acquisition-related costs (1)
	Transaction		—			—		—			—		3,748			3,748
	Integration		—			—		—			147		794			941
	Backlog amortization		—			—		—			805		—			805
	Inventory step-up		—			—		—			379		—			379
Total Acquisition-related costs		—			—		—			1,331		4,542			5,873
Restructuring charges (2)		842			—		(717)			—		787			912
Adjusted operating income (loss)		$13,552			$10,118		$9,013			$6,173		$(3,442)			$35,414
Operating margin		9.2%			14.4%		9.3%			14.6%		N/M		8.4%
Acquisition-related costs (1)
	Transaction		—			—		—			—		N/M		1.1
	Integration		—			—		—			0.4		N/M		0.3
	Backlog amortization		—			—		—			2.4		N/M		0.2
	Inventory step-up		—			—		—			1.1		N/M		0.1
Total Acquisition-related costs		—			—		—			4.0		N/M		1.7
Restructuring charges (2)		0.6			—		(0.7)			—		N/M		0.3
Adjusted operating margin		9.8%			14.4%		8.6%			18.6%		N/M		10.4%
(In thousands)		Architectural Framing Systems		Architectural Glass		Architectural Services	LSO		Corporate and Other		Consolidated
Operating income (loss)		$16,981			$15,164		$5,288			$7,100		$(6,886)			$37,647
Operating margin		12.2%			16.7%		5.6%			27.3%		N/M		11.1%
(1)	Acquisition-related costs include:•Transaction costs related to the UW Solutions acquisition.•Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.•Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.•Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.
(2)	Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025.

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted Operating Income (Loss) and Adjusted Operating Margin
(Unaudited)
(In thousands) · Architectural Framing Systems · Architectural Glass · Architectural Services · LSO · Corporate and Other · Consolidated
Operating income (loss)		$48,187			$48,277		$21,483			$13,481		$(19,453)			$111,975
Acquisition-related costs (1)
	Transaction		—			—		—			—		3,748			3,748
	Integration		—			—		—			147		794			941
	Backlog amortization		—			—		—			805		—			805
	Inventory step-up		—			—		—			379		—			379
Total Acquisition-related costs		—			—		—			1,331		4,542			5,873
Restructuring charges (2)		2,755			—		(459)			—		917			3,213
Adjusted operating income (loss)		$50,942			$48,277		$21,024			$14,812		$(13,994)			$121,061
Operating margin		11.7%			19.5%		7.1%			18.2%		N/M		11.0%
Acquisition-related costs (1)
	Transaction		—			—		—			—		N/M		0.4
	Integration		—			—		—			0.2		N/M		0.1
	Backlog amortization		—			—		—			1.1		N/M		0.1
	Inventory step-up		—			—		—			0.5		N/M		—
Total Acquisition-related costs		—			—		—			1.8		N/M		0.6
Restructuring charges (2)		0.7			—		(0.2)			—		N/M		0.3
Adjusted operating margin		12.3%			19.5%		7.0%			20.0%		N/M		11.9%
(In thousands)		Architectural Framing Systems		Architectural Glass		Architectural Services	LSO		Corporate and Other		Consolidated
Operating income (loss)		$57,986			$49,119		$8,211			$17,288		$(20,637)			$111,967
Operating margin		12.5%			17.4%		3.0%			24.0%		N/M		10.6%
(1)	Acquisition-related costs include:•Transaction costs related to the UW Solutions acquisition.•Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.•Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.•Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.
(2)	Restructuring charges related to Project Fortify, including $1.3 million of employee termination costs, $0.1 million of contract termination costs and $1.8 million of other costs incurred in the first nine months of fiscal 2025.

Apogee Enterprises, Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin(Earnings before interest, taxes, depreciation and amortization)
(Unaudited)
	Three Months Ended		Nine Months Ended
(In thousands)	November 30, 2024	November 25, 2023	November 30, 2024	November 25, 2023
Net earnings	$20,989	$26,974	$82,566	$83,877
Income tax expense	6,656	8,329	27,268	26,092
Interest expense, net	1,044	1,454	2,634	5,720
Depreciation and amortization	11,134	10,524	30,798	31,185
EBITDA	$39,823	$47,281	$143,266	$146,874
Acquisition-related costs (1)
Transaction	3,748	—	3,748	—
Integration	941	—	941	—
Inventory step-up	379	—	379	—
Total Acquisition-related costs	5,068	—	5,068	—
Restructuring charges (2)	912	—	3,213	—
NMTC settlement gain (3)	—	—	—	(4,687)
Adjusted EBITDA	$45,803	$47,281	$151,547	$142,187
EBITDA Margin	11.7%	13.9%	14.1%	13.9%
Adjusted EBITDA Margin	13.4%	13.9%	14.9%	13.5%

(1)	Acquisition-related costs include:•Transaction costs related to the UW Solutions acquisition.•Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.•Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.
(2)	Restructuring charges related to Project Fortify, including $0.4 million of employee termination costs and $0.5 million of other costs incurred in the third quarter of fiscal 2025, and $1.3 million of employee termination costs, $0.1 million of contract termination costs and, $1.8 million of other costs incurred in the first nine months of fiscal 2025.
(3)	Realization of a New Market Tax Credit (NMTC) benefit during the second quarter of fiscal 2024, which was recorded in other expense (income), net.

Apogee Enterprises, Inc.
Fiscal 2025 Outlook
Reconciliation of Fiscal 2025 outlook of estimated Diluted Earnings per Share to Adjusted Diluted Earnings per Share
(Unaudited)
	Low Range	High Range
Diluted earnings per share	$4.40	$4.64
Acquisition-related costs (1)
Transaction	0.18	0.19
Integration	0.09	0.12
Backlog amortization	0.07	0.07
Inventory step-up	0.15	0.15
Total Acquisition-related costs	0.49	0.53
Restructuring charges (2)	0.17	0.21
Income tax impact on above adjustments per share	(0.16)	(0.18)
Adjusted diluted earnings per share	$4.90	$5.20

(1)

Acquisition-related costs include:•Transaction costs related to the UW Solutions acquisition.•Integration costs related to one-time expenses incurred to integrate the UW Solutions acquisition.•Backlog amortization is related to the value attributed to contracting the backlog purchased in the UW Solutions acquisition. These costs will be amortized in SG&A over the period that the contracted backlog is shipped.•Inventory step-up is related to the incremental cost to value inventory acquired as part of the UW Solutions acquisition at fair value. These costs will be expensed to cost of goods sold over the period the inventory is sold.

(2)

Restructuring charges related to Project Fortify.

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