APOG

Image source: The Motley Fool. Tuesday, Oct. 6, 2026 - Chief Executive Officer - Donald A. Nolan - Chief Financial Officer - Mark Richard Augdahl - Vice President, Investor Relations and Communications - Jeremy Steffan Operator: Good day, and thank you for standing by. Welcome to Apogee Enterprises Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star-11 again. As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to Jeremy Steffan, Vice President, Investor Relations and Communications to begin. Jeremy, please go ahead. Jeremy Steffan: Thank you. Good morning, and welcome to Apogee Enterprises Fiscal 27 Second Quarter Earnings Call. On the call today are Donald A. Nolan, Apogee's Chief Executive Officer, and Mark Ogdahl, our chief financial officer. During this call, the team will reference certain non GAAP financial measures. Definitions of these measures and a reconciliation to the nearest GAAP measures are provided in the earnings release and slide deck. are available in the Investor Relations section of our website. As a reminder, today's call will contain forward looking statements. These reflect management's expectations based on currently available information. Actual results may differ materially from those expressed today. More information about factors that could affect Apogee's business and financial results can be found in our press release, and in the company's SEC filings. With that, I will turn the call over to Don. Donald A. Nolan: Thanks, Jeremy, and good morning, everyone. We appreciate you joining us today. I am pleased to report strong second quarter results that exceeded our expectations and continued the momentum we established in the first quarter. Revenue was $391 million up more than 9% and adjusted EPS was $1.17. Reflecting disciplined execution across the business. We benefited from swift pricing actions, productivity improvements and the favorable contribution from our recent acquisition of Kalwall. Based on our stronger than expected first half performance, we are raising our fiscal 2027 outlook for both net sales and adjusted diluted earnings per share. Across our segments, we continue to make meaningful progress on pricing disciplines, productivity, and operating improvements demonstrating our ability to execute effectively despite evolving macroeconomic conditions. We are advancing our strategic priorities through the acquisitions of Kalwall and GrowGlass, expanding our differentiated product offerings and technical capabilities while increasing our exposure to attractive end markets. We are also building on the successful integration of UW Solutions and the first year performance as Apogee delivered on our deal model targets. This proven execution strengthens our confidence in successfully integrating these businesses and achieving their first year financial objectives. In metals, revenue and profitability improved year over year as pricing actions, productivity initiatives, and Fortify Phase 2 cost savings continued to gain traction. Also continued to enhance operational execution through improvements in quality, on-time delivery, and customer engagement. Services delivered their tenth consecutive quarter of top line growth while increasing their backlog again this fiscal year. Strong award activity resulting in continued backlog expansion demonstrates our ability to consistently win new business. and support our confidence In the segment's long-term growth potential. Performance services delivered another strong quarter of revenue growth, reflecting continued demand for our differentiated products and reflects positively in our strategic initiative to acquire businesses that have a greater growth profile. As material inflation increased, we maintain pricing discipline and realized the benefits of pricing actions implemented earlier this year. We will continue to actively manage pricing to preserve margins and offset inflationary pressures. Legacy glass business, while market conditions remain challenging, we made meaningful progress during the quarter against the action plan we outlined previously. Have advanced several commercial initiatives aimed at increasing demand implemented productivity improvements across our operations and remain disciplined on costs. While we still have work to do and the broader market remains pressured, we are encouraged by the progress achieved to date and believe the actions underway are helping position the business for improved performance and stronger profitability over time. Across the company, we are seeing the benefits of the actions we have taken over the last year reflected in our results. Market conditions remain mixed. Our focus on pricing, productivity, operational execution, and disciplined cost management continues to strengthen the business and supports our confidence in the increased outlook we announced today. In September, we announced our second acquisition of the fiscal year as we continue our growth strategy while maintaining a disciplined approach to capital allocation. With Grow Glass, we are adding a highly differentiated business with leading technology strong customer relationships, and compelling growth opportunities. The acquisition supports our strategy of investing in higher-value product and capabilities that improve the quality and durability of our portfolio. And we are excited about the opportunities ahead as we welcome the GrowGlass team to Apogee. As part of performance services, GrowGlass will expand our technical capabilities and further increase our exposure to attractive, higher-value end markets. This will strengthen our presence in Europe while supporting broader global opportunities. We believe the business will enhance our profitability profile and accelerate value creation over time. As we begin integrating GrowGlass, our focus will be on disciplined execution and delivering the strategic and financial benefits that supported our investment thesis. Turning to Kalwall. I continue to be pleased with our progress following the acquisition. As discussed last quarter, our focus has been on preserving the strengths that made Kalwall successful while thoughtfully integrating the business into Apogee. Integration activities across finance, human resources, sales and marketing, and other key functions are progressing as planned and collaboration between Kalwall and Apogee teams has been very strong. Importantly, our confidence in the strategic and financial rationale remains high. Kalwall continues to perform in line with our expectations, and we remain on track to achieve the first 12-month financial targets. We Continue to see the opportunities to leverage Kalwall's differentiated daylighting solution and specification driven business model while expanding relationships with architects, designers, and glazing contractors across the broader Apogee portfolio. Overall, I am encouraged by the progress we are making across the organization. Strong execution, continued advancement of our strategic priorities, and disciplined capital allocation are strengthening Apogee's growth and profitability profile and positioning us well to create long term shareholder value. With that, I will turn the call over to Mark to provide additional detail on our financial results and outlook. Mark Richard Augdahl: Thanks, Donald, and good morning, everyone. Let me begin with a review of our second quarter performance and then discuss our updated outlook for the remainder of fiscal 27. Which reflects our strong first half performance and confidence in the business. Beginning with our consolidated results, net sales increased 9.2% to $391.1 million. The improvement was primarily driven by inorganic growth from the Kalwall acquisition favorable pricing across most segments and positive mix. This was partially offset by lower volume in metals and glass as challenging market conditions persisted during the quarter. Adjusted EBITDA margin increased to 12.7% from 12.4% a year ago. Driven by favorable pricing, productivity improvements, Fortify Phase 2 cost savings, and the accretive impact of the Kalwall acquisition, Those were partially offset by higher material and manufacturing costs and the impacts from lower volume. Adjusted diluted EPS improved over 19% to $1.17. Exceeding our own expectations and reflecting improved operating performance across the business along with lower interest expense. Turning to our segment results. Metals net sales increased 1.8% to approximately $144 million. Largely due to favorable pricing, partially offset by lower volume. Adjusted EBITDA margin expanded to 15.4%. Driven by favorable pricing, increased productivity, cost savings from Fortify Phase 2 and favorable mix. Partially offsetting these benefits were higher aluminum costs and lower volume. The services segment delivered its tenth consecutive quarter of net sales growth. Improving by almost 8% primarily driven by volume. Adjusted EBITDA margin increased to 5.8% due to project mix and higher volume. Backlog ended the quarter at $833 million up 5% year over year and 13% sequentially. Reflecting continued success with project awards in a highly competitive environment. Glass net sales increased over 21% to $87.4 million primarily driven by a $16.4 million contribution from the Kalwall acquisition and favorable mix. That was partially offset by lower volume and pricing as end market demand softness persisted. Adjusted EBITDA margin declined to 14.9% but greatly improved sequentially from 8.7% in the first quarter. The year over year change was due to lower pricing, higher manufacturing, and freight costs, and lower volume. Partially offset by the accretive contribution of the Kalwall acquisition and favorable mix. As Don mentioned, we are pleased with the progress of the Kalwall integration and the business continues to perform in line with our acquisition expectations. We remain on track to deliver the first 12-month financial targets of approximately $85 million in revenue and a 15% adjusted EBITDA margin. Turning to Performance Surfaces, the segment delivered another strong quarter with net sales increasing by over 14% to approximately $55 million driven by higher volume and favorable pricing. Adjusted EBITDA margin decreased to 22.5% due to higher material costs, partially offset by pricing and higher volume. Looking at cash flow on the balance sheet. Year to date net cash provided by operating activities was $43.3 million compared to $37.3 million a year ago. In the second quarter, we repurchased $6.4 million of stock and returned $5.5 million to shareholders through dividends. Our balance sheet at the end of the quarter was strong, with consolidated leverage ratio of 1.7 times no near term debt maturities, and significant capital available for the GrowGlass acquisition and other future deployments. Before turning to the outlook, I would like to briefly comment on our recent acquisition of GrowGlass. We are excited about the opportunities this acquisition creates for Apogee. Adding highly differentiated technology, broadening our reach into attractive end markets and further expanding the capabilities of our Performance Surfaces segment. Based on our current expectations, we anticipate approximately $30 million in revenue and a 25% adjusted EBITDA margin in the first 12-months. We believe GrowGlass is a highly complementary addition that will enhance our long term growth and profitability profile for both Performance Surfaces and Apogee as a whole. Turning to our outlook. We are raising our fiscal 2027 net sales and adjusted diluted EPS guidance. These revised expectations reflect our strong first half performance continued execution across the business, the anticipated contributions from Kalwall and GrowGlass, and current market conditions. We now expect net sales between $1.46 billion and $1.5 billion and adjusted diluted EPS in the range of $3.00 to $3.40. Kalwall and GrowGlass are expected to contribute meaningful to revenue growth, While their impact on adjusted diluted EPS is expected to be modest in fiscal 2027. We anticipate both businesses will further strengthen Apogee's strong cash flow generation profile this year and beyond. Additionally, we now expect interest expense of approximately $15 million. And adjusted effective tax rate of approximately 26% with capital expenditures between $35 million and $40 million. Looking ahead to the second half, we expect both net sales and adjusted diluted EPS to be relatively balanced across the third and fourth quarters. Overall, we are pleased with our first half performance. And the progress we continue to make across the business. The momentum we have built, together with the continued execution of our strategic priorities, reinforces our confidence in the increased fiscal 27 outlook we are providing today. We will now open the call to questions. Operator, please go ahead. Operator: Thank you. As a reminder, to ask a question, To withdraw your question, simply press star-11 again. Please standby while we compile the Q and A roster. Our first question is from the line of Julio Romero with Sidoti and Company. Your line is now open. Julio Romero: Brent. Thanks. Hey. Good morning, Donald, Mark, and Jeremy. Donald A. Nolan: Morning. Mark Richard Augdahl: Morning. Julio Romero: To start maybe on the glass segment, held up a little better than we expected. The organic sales declined to a much lesser degree than the previous 2 quarters. Can you speak to how that segment is performing? Some of that related to the new segment president that I believe you installed a couple of months ago. How much is into related to improving mix or any other segment initiatives there? Donald A. Nolan: Yeah. Sure. Yes. The conditions have not changed quite frankly in the marketplace. We continue to see soft conditions out there and, you know, there is fewer jobs at lower volumes, to chase. So and we are also seeing some delay in projects, but, you know, I would attribute this to significantly improved execution. That the end of Q1, we talked a little bit about an action plan that we put in place. Well, as a result of that, we are seeing increased order rates, enhanced operational productivity, and certainly strengthened cost management. And all of those contributed to the improved performance in the segment. I mean, do not get me wrong. We have some work to do yet, but making progress. Happy with that progress. Julio Romero: Excellent. Very helpful there. And on the metal segment, can you help us think about the split between structural price increases and the surcharges you have implemented to date? And then how much of the--or does the updated adjusted guidance range embed any giveback as some of those surcharges unwind? Mark Richard Augdahl: Julio, I will start off. So first of all, within the metal segment, the impact of surcharges is probably a little bit less. What we typically do from a pricing perspective is as aluminum prices go up, we build those actually into our pricing structure. not as surcharges. So it is built into the overall price. I would tell you that, you know, metals performed well in the quarter. We were really pleased with their operational performance. And then if you kind of look at it from a year over year perspective, certainly, the impact of project Fortify Phase 2 has had a significant impact on its overall on the overall cost structure. Donald A. Nolan: Yeah. I mean, just to emphasize, Julio, look. Very happy with the pricing actions that they took. Contributed significantly in the quarter. Productivity improvement, though, was also a big part of the story and as Mark mentioned, Fortify Phase 2 cost actions The other thing we think we had as a result of the pricing actions, we think we pulled ahead some of the volume. So, you know, that is also a contributor. Julio Romero: Brent. that is helpful there. And then last 1 for me before I pass it on is, you know, just thinking about where you are on the leverage here, a little bit above I think, your historical 1.5 times target, and you have been active with the portfolio here. You have repurchased some shares I believe, $16 million year to date. Just help us think about how you rank capital allocation priorities and does the M&A pipeline remain active here? Mark Richard Augdahl: Yeah. A couple of points there, Julio. I will start off. You know, first and foremost, we feel we feel really confident about where we are at from a leverage perspective. I do not think there is any issues there. We might be a little bit higher, but, obviously, that came with a couple of acquisitions in the quarter. We are confident in the amount of cash that we are going to be able to derive over the remainder of the year. So to the extent that to the extent that we do not identify another acquisition, we feel like that is going to be coming down throughout the remainder of the year. To the M&A point, you know, our pipeline remains active and we believe there is still a very full funnel to do any kind of acquisition. But obviously, we are going to be very selective at this point. If the right if the right acquisition comes around at the right price, you know, we will have to consider executing on that. But as of right now, we are really focused on delivering our results and delivering that cash flow. Julio Romero: Excellent. I will turn it over. Thanks very much. Operator: Thank you. Our next question comes from the line of Gaurav with Singlet Research. Your line is now open. Analyst: Hi. Can you hear me? Donald A. Nolan: Yes. Hi. Mark Richard Augdahl: Morning. Analyst: Hi. This is Gaurav. I am here for Gowshi. First question on the surface segment. So just trying to understand the margin trajectory here. Are you are you seeing the margins recover as you increase prices or as input costs get passed through or are customers sort of pushing back? [Crosstalk] Understood. I got it. Thank you. Operator: And I am showing no further questions in the queue at this time. I will now turn the call back over to Mr. Nolan for any closing comments. Donald A. Nolan: Thank you, everybody. In closing, I continue to be encouraged by the progress we are making across the business. Our strong first half performance reflects the dedication of our employees' commitment to our customers and the operational excellence that drives our success every day. Delivering strong results in the current environment while continuing to strengthen our business, disciplined capital allocation, and strategic investments. The progress we have made this year, including the acquisitions of Kalwall and GrowGlass, and the continued execution of our strategic priorities, reinforces our confidence in the path ahead and our ability to create sustainable long term value for shareholders. Thank you for your continued interest and support. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Before you buy stock in Apogee Enterprises, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apogee Enterprises wasn't one of them. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Apogee (APOG) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

- Second-quarter net sales increased 9.2% to $391.1 million - Second-quarter diluted EPS of $1.07 and adjusted diluted EPS of $1.17 - Advanced strategic priorities through the acquisitions of Kalwall and Groglass - Company raises fiscal 2027 adjusted diluted EPS guidance range to $3.00-$3.40 from $2.70-$3.25 MINNEAPOLIS, October 06, 2026--(BUSINESS WIRE)--Apogee Enterprises, Inc. (Nasdaq: APOG), a leading provider of architectural building products and services, as well as high-performance coated materials used in a variety of applications, today reported its results for the second quarter of fiscal 2027, ended August 29, 2026. The Company reported the following selected financial results: | | Three Months Ended | | (Unaudited, $ in thousands, except per share amounts) | | August 29, 2026 | | August 30, 2025 | | % Change Net sales | | $ | 391,135 | | | $ | 358,194 | | | 9.2 | % Operating income | | $ | 33,486 | | | $ | 26,888 | | | 24.5 | % Operating margin | | | 8.6 | % | | | 7.5 | % | | Net earnings | | $ | 22,380 | | | $ | 23,649 | | | (5.4 | )% Diluted earnings per share | | $ | 1.07 | | | $ | 1.10 | | | (2.7 | )% Non-GAAP Measures1 | | | | | | Adjusted EBITDA | | $ | 49,538 | | | $ | 44,368 | | | 11.7 | % Adjusted EBITDA margin | | | 12.7 | % | | | 12.4 | % | | Adjusted diluted earnings per share | | $ | 1.17 | | | $ | 0.98 | | | 19.4 | % (1) | | Earnings before interest, taxes, depreciation and amortization (EBITDA), EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted earnings per share (EPS) are non-GAAP financial measures. See Use of Non-GAAP Financial Measures and reconciliations to the most directly comparable GAAP measures later in this press release. "We are pleased with the second-quarter results which exceeded our expectations, driven by strong execution across the business. The benefits of disciplined pricing, productivity initiatives, and ongoing operational improvements helped offset a mixed demand environment," said Don Nolan, Executive Chair and Chief Executive Officer. "The momentum we established in the first half of the year, combined with our confidence in the business, supports our decision to raise full-year guidance. We also advanced our strategic priorities through the acquisitions of Kalwall and Groglass. Early performance at Kalwall has been encouraging, and we believe the addition of Groglass will further strengthen our portfolio through differentiated capabilities and increased exposure to attractive end markets that support long-term value creation." Second Quarter Consolidated Results (Second Quarter Fiscal 2027 compared to Second Quarter Fiscal 2026) - Net sales increased 9.2% to $391.1 million, driven by a $16.4 million contribution from the Kalwall acquisition, price, and favorable mix, partially offset by lower volume. - Gross margin rose 150 basis points to 24.6%, primarily due to price, productivity improvements, including the net benefit from Project Fortify 2, and the accretive impact of the Kalwall acquisition, partially offset by higher material and manufacturing costs and impacts from lower volume. - Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 40 basis points to 16.0%, primarily due to higher incentive compensation expense, partially offset by cost savings from Fortify Phase 2. - Operating income increased to $33.5 million from $26.9 million, and operating margin increased 110 basis points to 8.6%. - Adjusted EBITDA increased to $49.5 million, compared to $44.4 million, and adjusted EBITDA margin increased to 12.7%, compared to 12.4%. - Other income decreased to $0.5 million from $5.1 million, primarily due to a nonrecurring New Markets Tax Credit. - Interest expense decreased to $3.6 million, compared to $4.1 million, primarily due to lower average debt balance. - Diluted earnings per share (EPS) were $1.07, compared to $1.10, and adjusted diluted EPS increased to $1.17, compared to $0.98. Second Quarter Segment Results (Second Quarter Fiscal 2027 Compared to Second Quarter Fiscal 2026) Architectural Metals Net sales increased 1.8% to $143.5 million, driven by favorable price, partially offset by lower volume. Adjusted EBITDA was $22.1 million, or 15.4% of net sales, compared to $20.8 million, or 14.8% of net sales. The higher adjusted EBITDA margin was primarily driven by price, improved productivity and cost savings from Fortify Phase 2, and favorable mix, partially offset by the net impact from higher aluminum costs and lower volume. Architectural Services Net sales increased 7.9% to $108.5 million, primarily due to increased volume. Adjusted EBITDA was $6.2 million, or 5.8% of net sales, compared to $5.0 million, or 5.0% of net sales. The increase in adjusted EBITDA margin was primarily driven by project mix and higher volume. Segment backlog1 at the end of the quarter was $833.0 million compared to $792.3 million at the end of fiscal year 2026. Architectural Glass Net sales increased 21.1% to $87.4 million, driven by a $16.4 million contribution from the Kalwall acquisition and favorable mix, partially offset by lower volume and price. Adjusted EBITDA was $13.0 million, or 14.9% of net sales, compared to $11.6 million, or 16.1% of net sales. The decrease in adjusted EBITDA margin was primarily driven by price, higher manufacturing and freight costs, and lower volume, partially offset by the accretive contribution of the Kalwall acquisition and favorable mix. Performance Surfaces Net sales increased 14.2% to $55.3 million due to higher volume and price. Adjusted EBITDA was $12.4 million, or 22.5% of net sales compared to $11.2 million, or 23.2% of net sales. The decrease in adjusted EBITDA margin was primarily driven by the impact of higher material costs, partially offset by price and increased volume. Corporate and Other Corporate and other adjusted EBITDA was an expense of $4.2 million, compared to $4.3 million in the prior year. The improvement was primarily due to the benefits from cost savings related to Fortify Phase 2 and lower health insurance costs, partially offset by higher incentive compensation expense. Financial Condition Fiscal year-to-date, net cash provided by operating activities was $43.3 million, compared to $37.3 million in the prior year period. Fiscal year-to-date, the Company returned $27.3 million of cash to shareholders, through $16.1 million of share repurchases and $11.2 million of dividends. Quarter-end long-term debt increased to $335.5 million, bringing the Consolidated Leverage Ratio2 (as defined in the Company's credit agreement) to 1.7x at the end of the quarter. ________________________ 1 Backlog is a non-GAAP financial measure. See Use of Non-GAAP Financial Measures later in this press release for more information. 2 Consolidated Leverage Ratio is a non-GAAP financial measure. See Use of Non-GAAP Financial Measures later in this press release for more information. Fiscal 2027 Outlook Reflecting stronger-than-expected first-half performance, the anticipated contributions from Kalwall and Groglass, and current macroeconomic conditions, the Company is raising its fiscal 2027 outlook. The Company now expects net sales in the range of $1.46 billion to $1.50 billion, compared with its previous range of $1.38 billion to $1.43 billion, and adjusted diluted EPS in the range of $3.00 to $3.40, compared with its previous range of $2.70 to $3.25. The Company's outlook also assumes interest expense of approximately $15 million, an adjusted effective tax rate of approximately 26%, and capital expenditures between $35 million and $40 million. Conference Call Information The Company will host a conference call today at 8:00 a.m. Central Time to discuss this earnings release. This call will be webcast and is available in the Investor Relations section of the Company's website, along with presentation slides, at https://www.apog.com/events-and-presentations. A replay and transcript of the webcast will be available on the Company's website following the conference call. About Apogee Enterprises Apogee Enterprises, Inc. (Nasdaq: APOG) is a leading provider of architectural building products and services, as well as high-performance coated materials used in a variety of applications. Headquartered in Minneapolis, MN, our portfolio of industry-leading products and services includes architectural glass, windows, curtainwall, storefront and entrance systems, integrated project management and installation services, and high-performance coatings that provide protection, innovative design, and enhanced performance. For more information, visit www.apog.com. Use of Non-GAAP Financial Measures Management uses non-GAAP measures to evaluate the Company's historical and prospective financial performance, measure operational profitability on a consistent basis, as a factor in determining executive compensation, and to provide enhanced transparency to the investment community. Non-GAAP measures should be viewed in addition to, and not as a substitute for, the reported financial results of the Company prepared in accordance with GAAP. Other companies may calculate these measures differently, limiting the usefulness of the measures for comparison with other companies. This release and other financial communications may contain the following non-GAAP measures: - Adjusted net earnings and adjusted diluted EPS are used by the Company to provide meaningful supplemental information about its operating performance by excluding amounts that the Company does not consider to be part of core operating results, to enhance comparability of results from period to period. The Company is unable to provide a quantitative reconciliation of its forward-looking adjusted diluted EPS guidance to the most directly comparable GAAP measure without unreasonable effort because it cannot reliably predict the timing and magnitude of certain items, including acquisition-related costs, integration costs, restructuring-related items, and other discrete items that could materially affect GAAP results. - Adjusted EBITDA represents adjusted net earnings before interest, taxes, depreciation, and amortization. The Company uses adjusted EBITDA and adjusted EBITDA margin to assess segment performance and make decisions about the allocation of operating and capital resources by analyzing recent results, trends, and variances of each segment in relation to forecasts and historical performance. - Consolidated Leverage Ratio is calculated as Consolidated Funded Indebtedness minus Unrestricted Cash at the end of the current period, divided by Consolidated EBITDA. All capitalized and undefined terms used in this bullet and not otherwise defined herein are defined in the Company's credit agreement dated July 19, 2024, which is included as an exhibit to the Company's most recent Annual Report on form 10-K. The Company is unable to present a quantitative reconciliation of forward-looking expected Consolidated Leverage Ratio to its most directly comparable forward-looking GAAP financial measure without unreasonable effort because management cannot reliably predict all the necessary components of that GAAP measure. In addition, the Company believes such reconciliation could imply a degree of precision that would be confusing or misleading to investors. - Backlog is defined as the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which is expected to be recognized as revenue. Backlog is an operating measure used by management to assess future potential sales revenue. It is most meaningful for the Architectural Services segment, due to the longer-term nature of their projects. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. Backlog should not be used as the sole indicator of future revenue because the Company has a substantial number of projects with short lead times that book-and-bill within the same reporting period that are not included in backlog. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The words "may," "believe," "expect," "anticipate," "intend," "estimate," "forecast," "project," "should," "will," "continue," and similar expressions are intended to identify "forward-looking statements". These statements reflect Apogee management's expectations or beliefs as of the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the results, performance, financial condition, prospects and opportunities of the Company, including the following: (A) North American and global economic conditions, including the cyclical nature of the North American and Latin American non-residential construction industries, which may adversely affect demand for the Company's products and services; (B) U.S. and global instability and uncertainty arising from events outside of our control; (C) actions of new and existing competitors; (D) departure of key personnel and ability to source sufficient labor; (E) product performance, reliability and quality issues; (F) project management and installation issues that could affect the profitability of individual contracts; (G) financial and operating results that could differ from market expectations; (H) self-insurance risk related to a material product liability or other events for which the Company is liable; (I) maintaining our information technology systems and potential cybersecurity threats; (J) cost of regulatory compliance, including environmental regulations; (K) supply chain disruptions, including fluctuations in the availability and cost of materials used in our products and the impact of trade policies and regulations, including existing and potential future tariffs; (L) the ability to complete announced acquisitions on expected terms and timing; the successful integration and future operating performance of acquired businesses; and the ability to achieve anticipated benefits, including cost synergies, within expected timeframes; (M) our ability to successfully manage and implement our enterprise strategy; (N) our ability to maintain effective internal controls over financial reporting; (O) our judgments regarding accounting for tax positions and resolution of tax disputes; (P) the impacts of cost inflation and interest rates; and (Q) the impact of changes in capital and credit markets on our liquidity and cost of capital. These factors are not exhaustive. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements may emerge from time to time, and it is not possible for the Company to predict all such factors or assess the impact of each factor, or any combination of factors, on the Company's business. More information concerning these and other risks is included in the Company's Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission. Apogee Enterprises, Inc. Consolidated Statements of Income (Unaudited) | | | | | | | | | | | | | | Three Months Ended | | | | Six Months Ended | | (In thousands, except per share amounts) | | August 29, 2026 | | August 30, 2025 | | % Change | | August 29, 2026 | | August 30, 2025 | | % Change Net sales | | $ | 391,135 | | | $ | 358,194 | | | 9.2 | % | | $ | 733,820 | | | $ | 704,816 | | | 4.1 | % Cost of sales | | | 294,970 | | | | 275,587 | | | 7.0 | % | | | 562,624 | | | | 547,084 | | | 2.8 | % Gross profit | | | 96,165 | | | | 82,607 | | | 16.4 | % | | | 171,196 | | | | 157,732 | | | 8.5 | % Selling, general and administrative expenses | | | 62,679 | | | | 55,719 | | | 12.5 | % | | | 118,870 | | | | 123,913 | | | (4.1 | )% Operating income | | | 33,486 | | | | 26,888 | | | 24.5 | % | | | 52,326 | | | | 33,819 | | | 54.7 | % Interest expense, net | | | 3,554 | | | | 4,075 | | | (12.8 | )% | | | 6,388 | | | | 7,921 | | | (19.4 | )% Other income, net | | | 485 | | | | 5,140 | | | (90.6 | )% | | | 412 | | | | 4,458 | | | (90.8 | )% Earnings before income taxes | | | 30,417 | | | | 27,953 | | | 8.8 | % | | | 46,350 | | | | 30,356 | | | 52.7 | % Income tax expense | | | 8,037 | | | | 4,304 | | | 86.7 | % | | | 12,433 | | | | 9,394 | | | 32.4 | % Net earnings | | $ | 22,380 | | | $ | 23,649 | | | (5.4 | )% | | $ | 33,917 | | | $ | 20,962 | | | 61.8 | % | | | | | | | | | | | | Basic earnings per share | | $ | 1.08 | | | $ | 1.10 | | | (1.8 | )% | | $ | 1.62 | | | $ | 0.98 | | | 65.3 | % Diluted earnings per share | | $ | 1.07 | | | $ | 1.10 | | | (2.7 | )% | | $ | 1.61 | | | $ | 0.97 | | | 66.0 | % Weighted average basic shares outstanding | | | 20,722 | | | | 21,408 | | | (3.2 | )% | | | 20,884 | | | | 21,373 | | | (2.3 | )% Weighted average diluted shares outstanding | | | 20,901 | | | | 21,590 | | | (3.2 | )% | | | 21,014 | | | | 21,562 | | | (2.5 | )% Cash dividends per common share | | $ | 0.27 | | | $ | 0.26 | | | 3.8 | % | | $ | 0.54 | | | $ | 0.52 | | | 3.8 | % | | | | | | | | | | | | % of Sales | | | | | | | | | | | | Gross margin | | | 24.6 | % | | | 23.1 | % | | | | | 23.3 | % | | | 22.4 | % | | Selling, general and administrative expenses | | | 16.0 | % | | | 15.6 | % | | | | | 16.2 | % | | | 17.6 | % | | Operating margin | | | 8.6 | % | | | 7.5 | % | | | | | 7.1 | % | | | 4.8 | % | | Apogee Enterprises, Inc. Consolidated Condensed Balance Sheets (Unaudited) (In thousands) | | August 29, 2026 | | February 28, 2026 Assets | | | | Current assets | | | | Cash and cash equivalents | | $ | 36,529 | | $ | 39,523 Receivables, net | | | 206,327 | | | 198,516 Inventories, net | | | 116,760 | | | 98,059 Contract assets | | | 68,806 | | | 59,512 Other current assets | | | 43,888 | | | 43,823 Total current assets | | | 472,310 | | | 439,433 Property, plant and equipment, net | | | 277,349 | | | 255,032 Operating lease right-of-use assets | | | 42,534 | | | 48,736 Goodwill | | | 255,499 | | | 236,744 Intangible assets, net | | | 154,383 | | | 111,261 Other non-current assets | | | 42,029 | | | 31,139 Total assets | | $ | 1,244,104 | | $ | 1,122,345 Liabilities and shareholders' equity | | | | Current liabilities | | | | Accounts payable | | $ | 89,423 | | $ | 105,478 Accrued compensation and benefits | | | 45,506 | | | 39,667 Contract liabilities | | | 59,343 | | | 60,903 Operating lease liabilities | | | 14,618 | | | 14,729 Other current liabilities | | | 55,749 | | | 46,079 Total current liabilities | | | 264,639 | | | 266,856 Long-term debt | | | 335,545 | | | 232,279 Non-current operating lease liabilities | | | 32,351 | | | 39,375 Non-current self-insurance reserves | | | 26,866 | | | 24,914 Other non-current liabilities | | | 61,369 | | | 47,127 Total shareholders' equity | | | 523,334 | | | 511,794 Total liabilities and shareholders' equity | | $ | 1,244,104 | | $ | 1,122,345 Apogee Enterprises, Inc. Consolidated Statement of Cash Flows (Unaudited) | | Six Months Ended | | August 29, 2026 | | August 30, 2025 (In thousands) | | Operating Activities | | | | Net earnings | | $ | 33,917 | | | $ | 20,962 | Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | Depreciation and amortization | | | 26,569 | | | | 24,943 | Share-based compensation | | | 4,927 | | ...

- Interested in Apogee Enterprises, Inc.? Here are five stocks we like better. - Apogee exceeded expectations in fiscal Q2 2027: Sales rose 9.2% year over year to $391.1 million, adjusted EPS increased more than 19% to $1.17, and adjusted EBITDA margin expanded to 12.7%. - The company raised its full-year outlook, now projecting $1.46 billion-$1.50 billion in sales and adjusted EPS of $3.00-$3.40, supported by pricing, productivity improvements, cost savings and acquisitions. - Acquisitions and operating execution remain central to growth: Kalwall is tracking toward its first-year targets, while Groglass is expected to add about $30 million in revenue; Apogee ended the quarter with a 1.7x leverage ratio and continued cash-generation capacity. - Apogee Falls On Earnings And Improved Financial Condition Apogee Enterprises (NASDAQ:APOG) reported fiscal 2027 second-quarter results that exceeded its expectations, supported by pricing actions, productivity gains, cost savings and contributions from its Kalwall acquisition. The company raised its full-year sales and adjusted earnings outlook as management cited continued execution across its operating segments despite mixed market conditions. Second-quarter net sales rose 9.2% year over year to $391.1 million, while adjusted diluted earnings per share increased more than 19% to $1.17. Adjusted EBITDA margin expanded to 12.7% from 12.4% in the prior-year period. → McDonald's Is Undergoing a Massive New Growth Strategy. Can It Win Back Consumers? Chief Executive Officer Don Nolan said the results reflected "disciplined execution across the business," including swift pricing actions, productivity improvements and Kalwall's contribution. He said Apogee continues to focus on pricing, operational execution and cost management as market conditions vary by segment. Based on its stronger-than-expected first-half performance, Apogee increased its fiscal 2027 guidance. The company now expects: - Net sales of $1.46 billion to $1.50 billion. - Adjusted diluted EPS of $3.00 to $3.40. - Interest expense of about $15 million. - An adjusted effective tax rate of about 26%. - Capital expenditures of $35 million to $40 million. → MGM Resorts Stock Sinks After Diller Deal Collapse: Overreaction or Warning? Chief Financial Officer Mark Augdahl said the revised outlook reflects first-half results, ongoing operating execution, anticipated contributions from Kalwall and Groglass, and current market conditions. Apogee expects net sales and adjusted EPS to be relatively balanced between the third and fourth quarters. Kalwall and Groglass are expected to make meaningful contributions to revenue growth, although Augdahl said their effect on adjusted diluted EPS during fiscal 2027 is expected to be modest. Both businesses are expected to support Apogee's cash flow generation profile. → Could Nike's Brutal Sell-Off Finally Be Running Out of Steam? Architectural Metals sales increased 1.8% to about $144 million. Favorable pricing was partly offset by lower volume. Adjusted EBITDA margin improved to 15.4%, aided by price, productivity, favorable mix and savings from the company's Fortify Phase Two initiative. Higher aluminum costs and lower volume partly offset those benefits. During the question-and-answer session, Nolan said the Metals segment benefited from pricing actions, productivity improvement and Fortify Phase Two cost actions. He also said the company believes pricing initiatives pulled some volume forward. Services posted its 10th consecutive quarter of sales growth, with revenue increasing nearly 8%, primarily because of volume. The segment's adjusted EBITDA margin rose to 5.8% due to higher volume and project mix. Services backlog ended the quarter at $833 million, up 5% from a year earlier and 13% sequentially, reflecting continued project awards in what management described as a highly competitive environment. Glass sales rose more than 21% to $87.4 million. The Kalwall acquisition contributed $16.4 million in sales, while favorable mix also supported growth. Those gains were partly offset by lower volume and pricing as end-market demand remained soft. Adjusted EBITDA margin was 14.9%, down year over year but significantly improved from 8.7% in the first quarter. Nolan said Glass market conditions remain challenging, with fewer jobs available and some project delays. However, he attributed the segment's improved performance to an action plan that has increased order rates, enhanced operating productivity and strengthened cost management. Performance Surfaces sales increased more than 14% to approximately $55 million, driven by higher volume and favorable pricing. Its adjusted EBITDA margin declined to 22.5% as material costs increased, partly offset by price and volume. Apogee said Kalwall continues to perform in line with its acquisition expectations. The company remains on track to achieve its first 12-month targets for Kalwall of approximately $85 million in revenue and a 15% adjusted EBITDA margin. Nolan said integration activities across finance, human resources, sales, marketing and other functions are proceeding as planned. He said Apogee is seeking to preserve Kalwall's existing strengths while expanding relationships with architects, designers and glazing contractors across the broader portfolio. The company also recently announced its acquisition of Groglass, which will become part of the Performance Surfaces segment. Augdahl said Apogee expects Groglass to generate about $30 million in revenue and a 25% adjusted EBITDA margin during its first 12 months under Apogee ownership. Nolan said Groglass adds differentiated technology, customer relationships and exposure to higher-value end markets, while expanding Apogee's technical capabilities and presence in Europe. Management said its focus will be on disciplined integration and delivering the strategic and financial benefits underlying the acquisition. Year-to-date net cash provided by operating activities was $43.3 million, compared with $37.3 million a year earlier. During the second quarter, Apogee repurchased $6.4 million of stock and paid $5.5 million in dividends. The company ended the quarter with a consolidated leverage ratio of 1.7 times, no near-term debt maturities and available capital for the Groglass acquisition and future uses. Augdahl said management is comfortable with its leverage position, noting that it increased following the company's acquisitions. Apogee's acquisition pipeline remains active, according to Augdahl, though he said the company will remain selective and would consider another deal only if it finds the right acquisition at the right price. In the meantime, management said it remains focused on delivering results and generating cash flow. Apogee Enterprises, Inc is a manufacturer of architectural products and high-performance glass and coating solutions. The company serves the commercial construction, architectural, aerospace, defense, medical, electronics and other specialized markets through operations primarily in North America, with products and services sold to customers in additional international markets. Apogee's Architectural Framing Systems segment produces aluminum framing systems, curtainwall, storefront, windows and related components used in commercial and institutional buildings. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Apogee Enterprises Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Apogee Enterprises (APOG) came out with quarterly earnings of $1.17 per share, beating the Zacks Consensus Estimate of $0.59 per share. This compares to earnings of $0.98 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +98.31%. A quarter ago, it was expected that this glass products company would post earnings of $0.43 per share when it actually produced earnings of $0.57, delivering a surprise of +32.56%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Apogee Enterprises, which belongs to the Zacks Glass Products industry, posted revenues of $391.14 million for the quarter ended August 2026, surpassing the Zacks Consensus Estimate by 7.87%. This compares to year-ago revenues of $358.19 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Apogee Enterprises shares have lost about 2.1% since the beginning of the year versus the S&P 500's gain of 13.6%. While Apogee Enterprises has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Apogee Enterprises was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.83 on $376.64 million in revenues for the coming quarter and $2.96 on $1.46 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Glass Products is currently in the top 46% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, O-I Glass (OI), is yet to report results for the quarter ended September 2026. This glass container manufacturer is expected to post quarterly earnings of $0.03 per share in its upcoming report, which represents a year-over-year change of -93.8%. The consensus EPS estimate for the quarter has been revised 25% lower over the last 30 days to the current level. O-I Glass' revenues are expected to be $1.52 billion, down 7.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apogee Enterprises, Inc. (APOG) : Free Stock Analysis Report O-I Glass, Inc. (OI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Performance was driven by swift pricing actions and productivity improvements that offset inflationary pressures in materials and manufacturing. - The company is actively pivoting toward higher-value, differentiated product offerings through the acquisitions of Kalwall and GrowGlass to improve portfolio durability. - Metals segment growth resulted from disciplined pricing and the realization of cost savings from the Fortify Phase 2 initiative. - Services segment achieved its tenth consecutive quarter of growth, supported by a robust project award environment and a 13% sequential increase in backlog. - Management attributed the sequential recovery in the Glass segment to an internal action plan focused on enhanced operational productivity and strengthened cost management. - Strategic positioning is shifting toward increasing exposure to attractive end markets and expanding technical capabilities, particularly in Europe and global markets. - Fiscal 2027 guidance was raised based on strong first-half momentum and anticipated contributions from recent acquisitions. - Management expects net sales and adjusted EPS to be relatively balanced across the third and fourth quarters of the fiscal year. - The outlook assumes continued pricing discipline to preserve margins against potential material cost volatility, particularly in aluminum. - Integration efforts for GrowGlass will focus on leveraging its 25% adjusted EBITDA margin profile to enhance consolidated profitability. - Capital allocation will prioritize debt reduction and cash flow generation, though management remains open to selective, high-quality M&A opportunities. - The Kalwall acquisition is performing in line with expectations, on track to deliver approximately $85 million in revenue in its first 12 months. - The GrowGlass acquisition adds highly differentiated technology and is expected to contribute $30 million in revenue during its first year. - Persistent softness in end-market demand continues to pressure volumes in the legacy Glass and Metals segments. - Consolidated leverage increased to 1.7 times following recent M&A activity, slightly above the historical 1.5 times target. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management attributed the improvement to a specific action plan implemented at the end of Q1, which led to increased order rates and better cost management. - While market conditions remain soft with fewer jobs to chase, improved execution and productivity are offsetting volume headwinds. - Management clarified that aluminum cost increases are built directly into the base pricing structure rather than applied as temporary surcharges. - Strong performance in the quarter was also aided by volume pull-ahead resulting from these pricing actions and Fortify Phase 2 cost savings. - The company expects leverage to trend downward through the remainder of the year as they focus on cash flow generation. - The M&A funnel remains full, but management emphasized they will be highly selective, prioritizing integration of current assets unless a compelling right-priced opportunity arises.

This article first appeared on GuruFocus. - Net Sales: Increased 9.2% to $391.1 million, driven by inorganic growth from Kalwall, favorable price and positive mix, partly offset by lower Metals and Glass volume. - Adjusted EBITDA Margin: Rose to 12.7% from 12.4% a year ago on favorable price, productivity, Fortify Phase 2 savings and Kalwall accretion. - Adjusted Diluted EPS: Improved over 19% to $1.17, exceeding expectations, aided by lower interest expense. - Metals Net Sales: Up 1.8% to approximately $144 million on favorable price, partly offset by lower volume. - Metals Adjusted EBITDA Margin: Expanded to 15.4% on price, productivity, Fortify Phase 2 savings and mix, partly offset by higher aluminum costs and lower volume. - Services Net Sales: Grew almost 8%, the 10th consecutive quarter of growth, primarily on volume. - Services Adjusted EBITDA Margin: Increased to 5.8% on project mix and higher volume. - Services Backlog: Ended the quarter at $833 million, up 5% year-over-year and 13% sequentially. - Glass Net Sales: Increased over 21% to $87.4 million, including a $16.4 million Kalwall contribution and favorable mix, partly offset by lower volume and price. - Glass Adjusted EBITDA Margin: Declined to 14.9% year-over-year but improved sequentially from 8.7% in Q1. - Performance Surfaces Net Sales: Increased over 14% to approximately $55 million on higher volume and favorable price. - Performance Surfaces Adjusted EBITDA Margin: Decreased to 22.5% on higher material costs, partly offset by price and higher volume. - Operating Cash Flow: Year-to-date net cash provided by operating activities was $43.3 million versus $37.3 million a year ago. - Capital Returns: Repurchased $6.4 million of stock and paid $5.5 million in dividends in the second quarter. - Leverage Ratio: Consolidated leverage ratio of 1.7 times, with no near-term debt maturities. - Kalwall First 12-Month Targets: On track for approximately $85 million in revenue and a 15% adjusted EBITDA margin. - Groglass First 12-Month Expectations: Approximately $30 million in revenue and a 25% adjusted EBITDA margin. - Fiscal 2027 Net Sales Guidance: Raised to a range of $1.46 billion to $1.5 billion. - Fiscal 2027 Adjusted Diluted EPS Guidance: Raised to a range of $3.00 to $3.40. - Interest Expense Guidance: Approximately $15 million. - Adjusted Effective Tax Rate Guidance: Approximately 26%. - Capital Expenditures Guidance: Between $35 million and $40 million. - Is APOG fairly valued? Test your thesis with our free DCF calculator. Release Date: October 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Apogee Enterprises Inc (NASDAQ:APOG) reported Q2 revenue of $391 million, up over 9% year-over-year, exceeding expectations. - Adjusted EPS rose 19% to $1.17, driven by pricing actions, productivity improvements, and the accretive Kalwall acquisition. - The company raised its fiscal 2027 outlook for both net sales and adjusted diluted EPS, reflecting strong first-half performance. - The Services segment delivered its 10th consecutive quarter of top-line growth, with backlog increasing 5% year-over-year and 13% sequentially. - The acquisitions of Kalwall and Groglass are progressing well, expanding Apogee Enterprises Inc (NASDAQ:APOG)'s differentiated product offerings and exposure to higher-growth end markets. - Apogee Enterprises Inc (NASDAQ:APOG) continues to face challenging market conditions, with lower volume in the Metals and Glass segments due to soft end-market demand. - The Glass segment experienced lower price and volume, and its adjusted EBITDA margin declined year-over-year to 14.9%. - Higher material and manufacturing costs, including increased aluminum costs, partially offset the benefits of pricing and productivity actions. - The Performance Surfaces segment saw a margin decrease to 22.5% due to higher material costs, despite revenue growth. - The company's leverage ratio stands at 1.7 times, slightly above its historical target of 1.5 times, though it expects to reduce it through cash flow. Q: On the Glass segment, organic sales declined to a much lesser degree than the previous two quarters. Can you speak to how that segment is performing and how much is related to improving mix or other segment initiatives?A: CEO Donald Nolan attributed the improved performance to significantly better execution rather than a change in market conditions, which remain soft with fewer jobs, lower volumes and project delays. He noted that the action plan outlined at the end of Q1 has driven increased order rates, enhanced operational productivity and strengthened cost management, though he acknowledged there is still work to do. Q: On the Metals segment, can you help us think about the split between structural price increases and surcharges, and does the updated guidance embed any giveback as surcharges unwind?A: CFO Mark Augdahl explained that surcharges have a relatively small impact in Metals because aluminum price increases are typically built directly into the pricing structure rather than surcharges. He said Metals performed well in the quarter, with Project Fortify 2 significantly benefiting the overall cost structure. CEO Donald Nolan added that pricing actions contributed significantly, productivity improvement was a big part of the story, and the company believes it pulled ahead some volume as a result of the pricing actions. Q: With leverage a bit above your historical 1.5 times target and $16 million of shares repurchased year-to-date, how do you rank capital allocation priorities, and does the M&A pipeline remain active?A: CFO Mark Augdahl said the company feels confident about its leverage position despite it being slightly elevated due to two acquisitions in the quarter, and expects leverage to come down through the remainder of the year absent another acquisition. He noted the M&A pipeline remains active with a full funnel, but the company will be very selective and is currently focused on delivering results and cash flow. Q: In the Performance Surfaces segment, are you seeing margins recover as you pass on input costs, or are customers pushing back on price increases?A: CEO Donald Nolan said the company has been implementing pricing for a couple of quarters and is doing what is needed to recover margins, but described it as a balance. He noted that in Metals, for instance, margin recovery is driven by a combination of productivity, cost reduction and pricing rather than pricing alone. Q: What drove the strong second-quarter results, and what is the updated fiscal 2027 outlook?A: CEO Donald Nolan reported revenue of $391 million, up more than 9%, and adjusted EPS of $1.17, exceeding expectations on swift pricing actions, productivity improvements and the Kalwall acquisition. Based on the stronger-than-expected first half, the company raised fiscal 2027 guidance to net sales of $1.46 billion to $1.5 billion and adjusted diluted EPS of $3 to $3.40. Q: How is the Kalwall acquisition performing, and are you on track to meet the first 12-month financial targets?A: CEO Donald Nolan said integration activities across finance, human resources, sales and marketing are progressing as planned, with strong collaboration between Kalwall and Apogee teams. Kalwall continues to perform in line with expectations, and the company remains on track to achieve first 12-month targets of approximately $85 million in revenue and a 15% adjusted EBITDA margin. Q: What are the details and financial expectations for the Groglass acquisition?A: CEO Donald Nolan said Groglass adds highly differentiated technology, strong customer relationships and growth opportunities, expanding Apogee's technical capabilities and exposure to higher-value end markets while strengthening its presence in Europe. CFO Mark Augdahl said the company anticipates approximately $30 million in revenue and a 25% adjusted EBITDA margin in the first 12 months. Q: How did the Metals segment perform in the second quarter?A: CFO Mark Augdahl reported Metals net sales increased 1.8% to approximately $144 million on favorable price, partially offset by lower volume. Adjusted EBITDA margin expanded to 15.4%, driven by favorable price, increased productivity, Fortify Phase 2 cost savings and favorable mix, partially offset by higher aluminum costs and lower volume. Q: How did the Services segment perform, and what is the status of backlog?A: CFO Mark Augdahl said Services delivered its 10th consecutive quarter of net sales growth, improving almost 8% primarily on volume, with adjusted EBITDA margin rising to 5.8% on project mix and higher volume. Backlog ended the quarter at $833 million, up 5% year-over-year and 13% sequentially, reflecting continued success with project awards in a highly competitive environment. Q: How did the Glass and Performance Surfaces segments perform in the second quarter?A: CFO Mark Augdahl reported Glass net sales increased over 21% to $87.4 million, driven by a $16.4 million contribution from Kalwall and favorable mix, partially offset by lower volume and price. Glass adjusted EBITDA margin declined to 14.9% year-over-year but improved sequentially from 8.7% in Q1. Performance Surfaces net sales rose over 14% to approximately $55 million on higher volume and favorable price, while adjusted EBITDA margin decreased to 22.5% on higher material costs. Q: What is the company's cash flow, balance sheet and capital return position?A: CFO Mark Augdahl said year-to-date net cash provided by operating activities was $43.3 million versus $37.3 million a year ago. In the second quarter, the company repurchased $6.4 million of stock and returned $5.5 million through dividends. The balance sheet remains strong with a consolidated leverage ratio of 1.7 times, no near-term debt maturities and significant capital available for the Groglass acquisition and future deployments. Q: What are the key assumptions behind the updated fiscal 2027 guidance?A: CFO Mark Augdahl said Kalwall and Groglass are expected to contribute meaningfully to revenue growth, though their impact on adjusted diluted EPS is expected to be modest in fiscal 2027. The company now expects interest expense of approximately $15 million, an adjusted effective tax rate of approximately 26% and capital expenditures between $35 million and $40 million. Net sales and adjusted diluted EPS are expected to be relatively balanced across the third and fourth quarters. For the complete transcript of the earnings call, please refer to the full earnings call transcript.