Apogee Enterprises (APOG) 27 Jun 242025 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q1 2025 Apogee Enterprises Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

to Huebschen, conference Relations. Vice like speaker to now Jeff today, President would hand over the your I of Investor

Relations you, in Financial Earnings slides remarks. everyone, of Fiscal morning, Chief there Executive section are Josh. are to Matt Apogee's the to Thank Enterprises Osberg, These remind and Apogee that Chief Ty and Silberhorn, today's XXXX like website. With are to Call. welcome Quarter Investor accompany Officer; available me Officer. I'd today Apogee's First Good everyone

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

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

everyone. fiscal morning, team growth. the with for Good our through to had EPS today. We we've and operational strategic business continuing significant progress on achieved year, build the our margin achieved and to expansion start initiatives. joining a good across operating We drove Thanks our us execution adjusted

continuing we quarter provide a outlook. discuss position will and are how I'll few company Today, to updated on for quarter, highlights our the the Then comment the from on details Matt growth. and

due Framing away Glass margins strong less this strategic we their Framing cost productivity delivered the Both quarter. in and both the both serve, revenue products. revenue, to adjusted some lower-margin markets segments partly Glass operating our part of saw management This Architectural with and in to gains. due improved shift and profitability. continued As lower due expected, we and and deceleration in Even lower volume was end to partly good from differentiated Systems

improvement. Architectural Services compared double-digit our was These also sales growth the a margin meaningful in to history. profit company's adjusted significant positives first enabled expansion XX-year achieve contributor and last XX.X%, year's highest of quarter. our Services delivered year-over-year to us operating to margin

maximizing ranges. quarter, EPS focused new When embarked company our above remain XX%. the in segment we expect had first We on we result, to direction, that XX% we we And first to We fiscal on increase full be 'XX. could and year. our operating for 'XX that margins adjusted outlook in target profit able strong strategic deliver were were within dollars able operating With on our increasing in the to to are by margin confidence our earnings proud this XX%. margins fiscal achieve above income improve we

quarter Our markets improvements segments demonstrates toward through of operating progress the Each serve. performance the in sustainable becoming our X we've has economic leader this achieved an strategy. executing they our made

term, actions share more build competitive cost with offerings our this, markets. more this us product developed and an relentless effort allowing operational gain of mix established Our generator structure, goal for be growth. further to to execution a markets. differentiated and each to margin and is target a we've on for continued Project long more top on To to increased us productivity, our in of structure a deliver service cost better focus in positioning value of our customers, achieve the improving value we've profitable progress, and our of recent some our that much allow business to Fortify and capture The

and continued helped us the our It in our to Apogee shift positions integrate management We've AMS, support improvements. also we development the improvements improving We've Management System, or of that business. are more both have actions drive synergy building capabilities for profitability and decentralized our shareholders. foundation strides which meaningful to had strengthening talent made also better and And capabilities. across is customers that we us our this strategic a well our leadership achieving. growth delivering the future center-led the value core laid significant from great operating for has company. model, success productivity acquisitions foundation cost functional These The achieve

to the a as fiscal markets, picture of mixed Looking our on ahead to year, shown Slide continue end for see the rest we X.

the to We including will in and/or office commercial. slowdown expect pressure Architectural point Architectural some likely construction and Declines headwinds in our Index volumes This pricing market a verticals, continued segments. Billing in construction in activity.

we side, infrastructure growth projects On significant government supported and institutional by continued anticipate positive the in funding.

the company on macro of environment, team is long-term the results, Regardless delivering positioning growth. our focused for while

we control, managing prudently productivity what working with continuing our managing costs. can We mindset, are gains and to a growth drive

markets. also in meaningful combination of brands, core is and a company relationships provides to The customer offerings gain share advantage. differentiated positioned our Our deep competitive leading

growth. expect Services. architectural and this to making and the and enable will year fiscal add in Framing be accelerate expansion large-scale capacity LSO allow to also further We're segments geographic investing to expansion capabilities This both attractive also in expand adjacencies. optical, in completed our are to We market to investments includes our into which we

we evaluating our to let accretive over work that, to turn me With that pipeline, be opportunities would complement our strategy financial Matt. our it acquisition Finally, performance. continue to and

year everyone. our with of I outlook. Thanks, update Ty, our discussion morning, good first a then and will quarter results on and an begin fiscal provide

although we of the ahead expectations. quarter, were growth For our EPS we deliver posted pleased sales, to net in a decline first

the and quarter call, the levels quarter X% lower our decline to Fortify. conference primarily we anticipated in factors sales contributed driven of end by Framing Glass. and discussed the first we an to actions net As in in as due of softness result in fourth consolidated a These Project markets sales

to services, by favorable to insurance-related expense. mix lower $X.XX, driven bad and Adjusted diluted projects income and lower adjusted improved sales, and interest costs, operating productivity more higher adjusted gains material operating XX.X%, points lower favorable by costs, primarily Despite EPS XX% XXX expense. lower of grew basis a debt margin driven

the volume. points the to certain framing declined shift primarily by offset XXX lower-margin XX%, XX.X% volumes favorable results. Turning our for primarily of Project net gains Fortify. costs, as lower segment to productivity increased strategic mix, expense, lower products driven basis operating debt of part away due and to from sales Framing and Adjusted bad favorable which lower impact sales margin material

basis primarily gains driven improving primarily Glass and pricing. volume. due Net by to lower sales margin exceed by continued points improved XX% XX.X%, productivity XXX Glass operating to to in our declined expectations,

million. $XXX quarter is was due $X.X sectors. ended net X% wins for and backlog a normal of mix Services Services returning sales last This and reflects XX% at growth and Operating quarter in Services quarter of compared recreation favorable first set grew This the diverse same quarter to third a levels higher XX%, education quarter. above consecutive profitability to volume. more healthcare, year's the operating year. of backlog and to increased than is last the project million, more loss the the last primarily projects in income

XX.X%, were savings channel, came lower mix. offset in sales declined the down other at in primarily our cost year's more improved partially favorable partially offset from million, a $X.X net and $X.X lower by in points first reflecting due X%, retail and margin last costs. down by mix. quarter, impact to expenses volume, million Corporate due XXX LSO lower of to to Operating primarily volume basis insurance-related

last cash to million, working capital. and million driven in flow Turning sheet. by $X.X the from Cash primarily operations balance first in an used increase year's was quarter, from cash $XX.X down for

our flow other of due As annual to the year of reminder, incentive the a payments. lowest first timing is the quarter and quarter cash typically

expenditures. and Our primary million of cash for of million repurchases share were quarter in $XX.X $X.X uses capital the

with balance and sheet adjusted low strong debt remains the net finished very a in Our trailing leverage X.Xx position of maturities. EBITDA. XX-month We near-term quarter a ratio with no very

outlook Moving year. fiscal to for the our full

we related X%. points net fiscal of decline actions decline XX-week point pricing, X 'XX We percentage softening continue X to to in includes put percentage Ty expect and expect related X% to particularly Also, reverting to decline range of Fortify. discussed, market on pressure and Glass. to a and the volume of approximately demand sales This Framing year as to end to to Project continue approximately

as declines expect a Glass execute We in sales to offset pipeline strong headwinds our adjacency flat growth. channel new by backlog Framing offset be in retail as services in partially approximately and growth LSO projects we with sales channel of in

strong quarter. consolidated improve by margin operating now adjusted performance driven 'XX, full We fiscal margin compared primarily to expect the the first in year to

lower of Glass. pricing volumes decline sequentially Framing expect we year, margins However, in will primarily to throughout the remainder fiscal adjusted due pressure and the operating and

within adjusted we XX% At continue margin target compared fiscal operating to and framing the improve segment be range to to the XX%. level, of expect to 'XX

We will end to sequentially declining operating but the expect to of the to the continue fiscal the year. Glass top 'XX, with of margins compared towards target moderate XX% throughout be range margin XX% rest

expect will X% the throughout range. We margins year, fiscal continue Services the target X% to sequentially to moving improve to closer

we capacity expect will to LSO begin assets above range. expand the adjacencies XX% to capital operating remain into depreciate the target our will decline margin continue but as new We expansion, for and

for expenses million of to the expect quarter fiscal $X the Finally, corporate other and we be approximately year. rest per

for outlook to diluted adjusted first a our $X.XX $X, EPS increasing to quarter of reflecting are primarily performance. We stronger-than-expected our range

reversion year will approximately $X.XX. diluted a EPS anticipate a to the reminder, we by XX-week adjusted As reduce

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

full changes years the to We operations flow as fiscal capital that also normalizes. lower the from continue X 'XX past to impacted expect cash compared year working

continues of long-term to the improve opportunities while our across proud are improved costs for the productivity business, how we company on right and conclusion, to reduce steps acting to team position taking the In growth. execute

our to With it our to to balance through executing opportunities enables our continue back invest and concluding cash over that, build turn to Ty stronger We I'll healthy in us foundation seek shareholders. return remarks. and business, actively acquisition accretive some sheet strategy, for a

Matt. Thanks,

again Let me wrap quarter. through of delivering recognizing environments continue another for navigating proud team to solid market our improved up how by they're challenging I'm once profitability.

quarter margin EPS growth. results position adjusted company expansion operating for adjusted year and Our of this the another

take value. on are your to focused we results delivering with priority shareholder are questions. We to working ready near-term that, drive long-term With our

[Operator question Thielman comes Instructions] Brent from with Davidson. D.A. Our first

on Great degree we this talk the think you go-to-market in what quarter. Maybe just to your or about uplift made conditions the strategy, maybe market by start just influenced you there? some you've could maybe of start that's quarter, just backlog changes in could services, to just Ty, by

out opportunities there think that from that X an some terms the really leadership we our which that That to to project, like we which Sure. was we I a market talked seeing office thing you, I still mean the single great pick softness construction a there purposeful of include out for West, aren't see backlog in efforts is think office investment have. But Class pipeline. some team's team speaks also in big, not opportunities to positive highlight thoughtful, efforts are they been up new diversify. continue did A would there that the Well, perspective, to has as growth services a diversification we've there's before, And perspective. From overall doesn't projects tell space, well.

year a believe as why them of this kind taking really and actually potential share for markets putting a margin. we well. which they, we they growth in the think So we little the to show that a as building they effort, that share through that, are and sets it of Southwest believe on up is but they backlog Southeast, points That result growth bit pressure nice may of their they're from a from of of Midwest gain some that is year, traditional some next West, -- and

margin to and and giving improvement, that improvement back will capture to continue, up margin showing they volume. a climb range, they bit X% still they're but of that into So expect that X% margin are target little we

start, more -- Matt, yes, profitability have of a that that that range, confidence what with X% you segment, then, a kind maybe that pressure got more nice segment. the sounds of hitting maybe X% but competitive better with in I'm to in just to and said, you like it that with kind Ty, the business Ty, in little rebound point, taking Okay. you've business that in

of talk to relative could margin for expect your to profile you kind this just maybe the what year So range? you to target

said, to you're strong right Obviously, margin forward. start our did slightly Yes, first I as reading the sequentially we improve significantly. think think in really a them quarter, expect we And it Brent. expectations, but we the we year. They to ahead there, improved were of they move as

them on, it looking some pipeline this of last that really excited came we'd great and execute is primarily 'XX. the for on. year most And first improve be of the to about the as goes backlog that year quarter from them. projects We they've talked building do built, able now we've so to year We about, expect looking continue into we're fiscal at at as to

pipeline a 'XX in build that for as strong to fiscal well. trying So business

it. Got

in of still should Glass profitability. one, that, that -- last the that evidence margins is of can't see Just sort by terms levels and there in strength in something orders Is sufficient surprised lower there business these your sustain?

pressure see demand -- pricing moderate We're volumes pricing, be we throughout market is don't trying titrate and year. getting putting pushed want this right, on as we it is the will what we one to the pressure where I it's is primarily, lot end to a think Brent, Yes, our of down. And but softening do see volumes.

that's expected. say QX moderate the XX% was going But And on we've think closer the margins range There think of year, end was of the that at sequentially top as do XX% I ahead than the there we going was, to rest and pressure better of for our rest that pricing expectations some that, we the so to quarters that's to got I'd be for we in push the consecutively segment what of year. think, to had get, -- at we continue year. margin pricing going is to in the look to down what looking

track we activity, mean I bid Yes. Brent.

volumes." look they're So to in one slightly some bid lower X move do on on where as some they and that's some game quoting well of activity for staring bid are up it's is more than see pick of requests to stay do as And at amount we we're business. margin at to activity at going it's even the of that ahead. lower -- that the levels see "Hey, to price where be having we and margin says, what hard months can volume, levels as out projects, things the But the the that if we

comes from with question Romero Sidoti next Company. Our Julio &

Ty, all to Matt on appreciate color start the there. and Jeff. Maybe the guidance, gave you

glass. on the to year-over-year, the how consolidated full to the some be adjusted and from operating You on decline speak mentioned to and sequential maybe Framing level Can you basis? year just margin now expect at at consolidated you up level here but margins Framing a maybe sequentially also you expect trend

Yes.

pressure of of it I And as think push Framing same of glass. we that's We margins a softening end the well, expect prepared markets, going lot my in mean, I we is decline was as well. see to some margins the end pricing it's the story sequentially more year. on as down through go remarks to

margin Framing perspective. say I'd story a a for So and Glass it's similar from

this Framing quarter realized of perspective stay cost much to just Any or impressive. either on a kind And quantify Fortify margin quarter that you savings really how Project this it. Got in a perspective? to way on dollar Framing were on to the related margins

I Yes. from we're say the that expect in are. didn't quantify with taking We to it what we our line actions get We it. would there. outlined was the expectations savings

quarter, the with through moved But how taken still the first seeing we've savings it's in line ones through, fourth have in or our actions. seeing the the the quite expectations. I'd are are the savings either early with flow We with line we aren't we in quarter in We say that done actions. all and the for

could from update just kind a if framing growth the you and last it. helpful. that then of that some geographical stands one Got speak specifically perspective? where maybe business to and plans progress for on me And maybe is Really for a to growing

Yes. Julio, that I'll one. take this is Ty.

that. growing Rockies, inroads and for some our and is -- data. would further up business has I say their at Services we investing to continue get there's in team say make with on the a some and result We industry. I are segment to learned really we're west feet projects collect the additional and as within I of they to activity those our look mean, And and at process that market of street support may on side, Framing they've there. On west of Texas been that, point, picking would that's some made still foremost, the this some still So is They're facility as people an very fragmented along in Rockies good to expansion the of that as been lessons with furthest actually investments facilities us the plant first going have journey. kind in what have our west

of points? have good product bringing the are intel can to really on that if price confidence of we what the solid on intel give of been looking quote So the out operation. price market are at offer? some at and are operation the then of and is and mix level out what to at of those parts we Even and our some configurations what us right good point those the or market. right want our us Missouri for to this in lower we product What So to kind initially, give points how sales margin Texas supply coverage hiring

or year to beyond help help some help as X that, potential geographically to grow on about as the next stages us continue decisions quarters. us early next make infill the make couple So look decisions the it We'll they they're That investments them will opportunities at acquisition really on over in to will that Rockies. but intel at well organic some organic inorganic. of accelerate help that based well collect over as

Braatz KCCA. from with Our next comes question Jon

maybe, your you think forward? little that I that Matt, material material mentioned Does Framing have How lower you margins that do see Architectural improved of Glass? in is And there because costs a Matt, lower benefit the going Ty, from commentary any legs? bit in cost. some

a say material I but is overly I updated forecast some would say favorability I would that's From today. favorability see material, our perspective, some a that say there do it's wouldn't gave there. outlook perspective, from into think I we so. Glass the I baked cost less and

I big of think a don't I out. there's there. kind of come expectations as think that's more our benefit

Okay.

Okay. your where at maybe versus call, you were the bit of would little point view characterize months it X you Ty, market or has were last at a a ago? thinking X weakened from what environment -- this how little you ago the months worsened bit

profit I data I second we think X would think getting ago. thought that you, see Look, from half dollars mean we're Jon, we we points validates we some to a And months maximize perspective. in I what if further softness volume again, the thought pointed, put you to those grow pressure a you profit in pricing can of even might to dollars. some as can still yourself hang a as on position some that part the -- position profit find of most find that to way dollars so your or on

into still margin and as little bit that future we volume would even to a data the our and now some we to I'd business, glass able in margin I had of perspective fourth what down. strength. visibility that surprise And from as margin awards, margin So we a said, we're pull continued I were dramatically. and terms get us quarter third starting quarter at bit, they which, that keep decline. you where drop overdeliver look at in for thinking now were. little data relatively were and a But saw margins their look getting of kind revenue they kind we're of is up see will it points hasn't the of it changed say Matt ballpark say they picking levels, a to mean we and can dollars pressure from affirm

Okay.

top you're benefit [ we into might expand know we of working to some say, When -- trying I the to might let's in been to of these that LSO. lastly, hit When then some see have line. actions some And begin markets of the -- see ]? adjacency Okay.

actually they semiconductor now. substrate sell We're They've a of We're into actually bit facilities, the electrostatic. an come -- yes. It's that build-out. through can some some of of room seeing that manufacturing acrylic-based clean launched

mean now product they're end revenue So same actually we're through. online, in the capacity to flow coming in of place think some they aggressively It's they've initially, we that have opportunities going through knowing the of be the put consumer launches been thing. chasing the some -- seeing We year. the I market. Could wins softness the in -- going those small calendar additional kind there's just through to to noisy. be do but

as that of I Framing these mean perform, softening you with it's page a applications the in a that's technical for from then income we 'XX. legs some we top but teens is Framing it as be how could look happening the of we what's perspective. good margins. at see now movement how an much But to their gives And of at kind it we're which don't right very likely So the our is business, year business, margin there see expect turn kind business and little erosion. they're technical at us with looking you spend, glass and the still those of replacing core would to -- operating line of really substrate they're consumer still acrylic bit some fiscal

Chris Research. from Singular Instructions] with Sakai comes Our next [Operator question

I'm Can optical, in large-scale -- expansion updates your -- about about talk your any for geographic there? B.J. talk you you can in

those differentiation because products in and products, have they to Well, ship the they are actually large-scale optical products of able their globally. the

Most in business the have is U.S. they business of Asia. still Europe. business in have in predominantly the So They

heavy a of America the that they're really U.S. new with North going focus I a emphasis. it's a applications think these -- some after,

any this geographic just we a are given point set So support additional facilities in broader well price don't with products capacity that invest really they and of growth. and the at their that need to up to the see performance

I know Matt. a is Ty this had comment too. Chris, And

or for growth I LSO, a investing about just expansion So Ty more capabilities. more is that we would code focused comment then that had made was is the from capacity expansion something production which geographical investments perspective. a to Framing or made have say, to And being the typically projects production some be west and there capability win that them Services we've to able by I'd more manufacturing And them sales farther say, in which more have customer we're closer able on, Rockies spaces. mentioned, contact about getting away are of closer

And to Okay. going? the markets you've then some How of serve. That's trend helpful. that mentioned you flight that quality the in is still

I seeing think in segment. are that definitely Services we our

So that that's we're behind they right good year. next into they've year. their seeing that now, part of got go momentum And share this as gain

Within parts Framing service of key, even as going our the in still business times to the are lead other market our softens. business, and be

share more business. the in holding can better we or that strengthen that there, we So in our gaining terms on of I are capabilities think the

of high they going that kind the do work and down the here a just of give team all will the perspective, rest softness. -- our on which the premium of bit -- price and a we pricing back some do so for margin, And commodity glass little with of into we've kind assumptions I built they kind of But for value-added a having what having affect features projections and the that mode of then a of year. little emphasis without looking unit X our or each volume X features lot to put chasing it's our and the on insulated business. be IGU or They're a at The instead mean, trade-off to of facilities. more big Glass Glass way offering, on volume X, customer from that's maybe with go commodity X that is this leaves in or

say, point. you it's when look it, across at holding would I So this overall, up

Okay.

And expenditures good. you do then shaping can of the year? talk up? see that you about Sounds rest the How for capital

Yes.

the a consistent $XX those range we've spending expected expect in be of million. million with within line $XX We year. the in to quarter, what that in with pretty to done prior we We're the first

in, I with that we're expectations. seeing So our come in line say, would

turn now remarks. would Silberhorn closing like I you. to over CEO, to Thank for call the Ty back

catching one Well, And to everyone Xth of be a our for us investor conferences. quarter let a We some happy at great, of next everyone, and look or upcoming today. up your maybe the of a with everyone of July. to thanks, great day. me joining wish first Have safe forward rest

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

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