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- **Performance Surfaces Outperform**: +18.6% organic growth, flooring products leading with automation adoption in distribution centers.
- **Updated Guidance Lowered**: FY26 net sales $1.39B-$1.42B, EPS $3.60-$3.90, reflecting higher aluminum costs and Glass price pressures.
- **Segment Risks**: Metals EBITDA margin expected to decline in Q3, Glass volume constrained by competitive pricing.
- **Cash Flow Strength**: Q2 operating cash flow $57.1M, balance sheet leverage 1.5x with no near-term debt maturities.
- **Strategic Initiatives**: Tariff mitigation (Project Fortify 2), M&A pipeline expansion, and AMS productivity improvements.

**【CEO Summary Section】**
- **Q2 Performance Highlights**: Net sales grew 4.6% to $358.2M, driven by strong organic and inorganic growth in Performance Surfaces (+18.6%), and sequential backlog growth in Architectural Services (+$100M). Metals and Glass faced headwinds from tariffs and price/volume trade-offs.
- **Segment Updates**:
  - **Performance Surfaces**: UW Solutions acquisition contributed $24.9M, with flooring products outperforming due to automation adoption in distribution centers.
  - **Architectural Services**: 2.5% sales growth and 16% sequential backlog increase to $792M, driven by Northeast market recovery and West Coast expansion.
  - **Glass**: Margins normalized within long-term range, but competitive pressure limited volume growth.
  - **Metals**: Sequential improvement in EBITDA but volume faltered due to 25% tariff pass-through.
- **Updated Outlook**: FY26 net sales guidance lowered to $1.39B-$1.42B, adjusted EPS to $3.60-$3.90, reflecting higher aluminum costs and Glass price pressures.
- **Strategic Initiatives**: Tariff mitigation (Project Fortify 2), M&A pipeline expansion, and AMS productivity improvements.

**【CFO Financial Commentary】**
- **Q2 Financials**: Adjusted EBITDA margin 12.4%, down due to unfavorable mix and higher costs. Adjusted EPS $0.98, impacted by tariffs ($0.35-$0.45 drag).
- **Segment Margins**:
  - **Metals**: 14.8% EBITDA margin, pressured by 20% Q2 aluminum cost increase.
  - **Services**: 5% EBITDA margin, benefiting from project mix improvements.
  - **Glass**: Margins normalized after elevated Q2'25 levels.
  - **Performance Surfaces**: 18.6% organic growth driving 12.4% EBITDA margin.
- **Cash Flow**: Q2 operating cash flow $57.1M, strong despite lower Q1 results. Balance sheet leverage 1.5x, no near-term debt maturities.
- **Tax Impact**: One Big Beautiful Bill Act provides $0.10-$0.15 EPS benefit in FY26, with 27% effective tax rate guidance.

**【Q&A Highlights】**
- **Performance Surfaces Growth**: Organic growth driven by retail channel recovery and cross-selling with UW Solutions. Flooring products (AGV mezzanines) outperforming in e-commerce and Europe.
- **Glass Segment Risks**: Competitive price pressure limiting volume growth, but EBITDA margin expected to remain mid-teens vs. mid-single digits in prior downturn.
- **Metals Challenges**: 20% Q2 aluminum cost increase, longer-lead products absorbing higher costs. Q3 EBITDA margin expected to decline.
- **Backlog Visibility**: Services backlog up 16% sequentially, with Northeast recovery and West Coast expansion.
- **Tariff Mitigation**: Project Fortify 2 actions to offset $0.35-$0.45 EPS tariff impact.
- **Tax Rate Modeling**: 27% FY26 rate, with Q3 near 27% and slight dip in Q4.
- **Surfaces Sensitivity**: Retail channel slowdown potential in Q4/Q1, but targeting upper-middle-income consumers with less inventory risk.

Apogee Enterprises, Inc. (APOG) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

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Cost of Financing Services

Other Cost

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Operating Expenses

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APOG

APOG fundamentals

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