Apogee Enterprises (APOG) Q1 2027: Earnings Surge Despite Sales Decline — Positive Outlook

Apogee Enterprises, Inc. (Nasdaq: APOG) reported its first-quarter results for fiscal 2027, revealing a mixed performance. The company experienced a 1.1% decline in net sales, totaling $342.7 million, compared to $346.6 million in the same quarter last year. However, the quarter marked a significant turnaround in profitability, with net earnings of $11.5 million, a stark contrast to a net loss of $2.7 million in Q1 2026, representing a 529.1% increase year-over-year.

This quarter's results are a positive development for shareholders, primarily due to the substantial recovery in net earnings and a notable improvement in operational efficiency. The company has effectively navigated challenges in the market, showcasing resilience and strategic execution.

Key Financial Metrics

• Net Sales: $342.7 million (down 1.1% YoY from $346.6 million)
• Net Earnings: $11.5 million (compared to a loss of $2.7 million YoY)
• Diluted EPS: $0.54 (up from a loss of $0.13 YoY)
• Adjusted Diluted EPS: $0.57 (up 1.8% from $0.56 YoY)
• Operating Income: $18.8 million (up 171.8% from $6.9 million YoY)
• Adjusted EBITDA: $32.1 million (down 6.6% from $34.4 million YoY)
• Operating Margin: 5.5% (up 350 basis points from 2.0% YoY)
• Gross Margin: 21.9% (up 20 basis points from 21.7% YoY)

Operational Highlights

• The company reported a 20 basis point increase in gross margin, attributed to improved pricing and productivity gains from Project Fortify Phase 2, despite facing higher material and freight costs.
• Selling, general, and administrative (SG&A) expenses decreased as a percentage of net sales to 16.4%, down 330 basis points from the previous year, reflecting effective cost management.
• The company generated $7.4 million in cash from operating activities, a significant improvement from $19.8 million used in the prior year.

Shareholder Returns and Guidance

Apogee returned $15.3 million to shareholders through $9.7 million in share repurchases and $5.6 million in dividends. The company reaffirmed its fiscal 2027 guidance, expecting net sales between $1.38 billion and $1.43 billion and adjusted diluted EPS in the range of $2.70 to $3.25. Following the anticipated closing of the Kalwall acquisition in early July, the company expects to adjust its sales outlook to between $1.43 billion and $1.48 billion.

Forward-Looking Catalysts

Investors should closely monitor the integration of the Kalwall acquisition, which is expected to enhance Apogee's growth trajectory by expanding its differentiated product offerings. Additionally, the company’s ability to maintain operational efficiency and manage costs in a challenging economic environment will be crucial for sustaining profitability in the upcoming quarters.

In summary, while Apogee faced a slight decline in sales, the significant recovery in earnings and operational improvements present a favorable outlook for shareholders. The strategic focus on acquisitions and cost management will be key drivers of future performance.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share amounts)

Note: All amounts in the following tables are in thousands.

	Three Months Ended May 30, 2026	May 31, 2025	% Change
Net sales	342,684	346,622	-1.1 %
Cost of sales	267,654	271,497	-1.4 %
Gross profit	75,030	75,125	-0.1 %
Selling, general and administrative expenses	56,191	68,194	-17.6 %
Operating income	18,839	6,931	171.8 %
Interest expense	2,834	3,846	-26.3 %
Other expense, net	73	682	-89.3 %
Earnings before income taxes	15,932	2,403	563.0 %
Income tax expense	4,397	5,091	-13.6 %
Net earnings (loss)	11,535	-2,688	529.1 %
Basic earnings (loss) per share	0.55	-0.13	523.1 %
Diluted earnings (loss) per share	0.54	-0.13	515.4 %
Weighted average basic shares outstanding	21,045	21,338	-1.4 %
Weighted average diluted shares outstanding	21,312	21,338	-0.1 %
Cash dividends per common share	0.27	0.26	3.8 %
% of Sales
Gross margin	21.9 %	21.7 %
Selling, general and administrative expenses	16.4 %	19.7 %
Operating margin	5.5 %	2.0 %

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

Assets	May 30, 2026	February 28, 2026
Cash and cash equivalents	26,434	39,523
Receivables, net	192,204	198,516
Inventories, net	101,803	98,059
Contract assets	59,344	59,512
Other current assets	50,619	43,823
Total current assets	430,404	439,433
Property, plant and equipment, net	247,763	255,032
Operating lease right-of-use assets	45,633	48,736
Goodwill	236,647	236,744
Intangible assets, net	108,592	111,261
Other non-current assets	32,420	31,139
Total assets	1,101,459	1,122,345

Liabilities and shareholders' equity
Current liabilities
Accounts payable	86,166	105,478
Accrued compensation and benefits	30,435	39,667
Contract liabilities	68,265	60,903
Operating lease liabilities	14,737	14,729
Other current liabilities	45,002	46,079
Total current liabilities	244,605	266,856
Long-term debt	237,411	232,279
Non-current operating lease liabilities	35,780	39,375
Non-current self-insurance reserves	26,439	24,914
Other non-current liabilities	45,205	47,127
Total shareholders’ equity	512,019	511,794
Total liabilities and shareholders’ equity	1,101,459	1,122,345

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