APOG — FY2026 Annual Financial Report Analysis

Overview

Apogee Enterprises makes and installs the outside skin of commercial buildings: aluminum window and curtainwall frames (Architectural Metals), facade installation for large projects (Architectural Services, sold as Harmon), coated architectural glass (Architectural Glass), and specialty coated materials for things like picture framing and displays (Performance Surfaces). In fiscal 2026, which ended February 28, 2026, sales rose 3.2% to $1.40 billion. That growth came from buying a company, not from the existing business. The UW Solutions acquisition, completed in November 2024, added $65.3 million of sales. Without it, sales fell 1.6%, because demand weakened in glass and aluminum framing. Profit fell much faster than sales. Diluted earnings per share (EPS, profit divided by the number of shares) dropped 35% to $2.52, as higher aluminum costs, lower volumes, restructuring charges and roughly double the interest bill all hit at once.

At a glance

• Organic sales −1.6%: without the acquired business, Apogee sold less than a year earlier. All of the $43.7 million headline sales gain came from UW Solutions.
• Adjusted EBITDA margin 11.9% vs 14.2%: profit before interest, tax, depreciation, amortization and one-off items fell to $167.3 million from $192.7 million. Every segment's margin shrank.
• Operating cash flow $122.5 million, 2.3x net income: cash generation held up far better than reported profit. That paid down $52.7 million of debt while the company still returned $37.2 million to shareholders.

Key figures

Operating margin is the share of sales left after running the business, before interest and tax. Backlog is the value of signed facade contracts not yet turned into revenue.

Segment performance: one growth engine, three squeezed businesses

• Architectural Glass caused the biggest damage. Sales fell 12.0% "primarily driven by lower volume and price due to lower end-market demand." Adjusted EBITDA fell from $71.7 million to $45.7 million, down $26.0 million, which is more than the whole company's $25.4 million drop. A glass coating plant has high fixed costs, so lower volume and lower prices together hit profit hard. The decline also sped up late in the year: fourth-quarter Glass margin was 13.5%, against 18.8% a year earlier.
• Architectural Metals was hurt by aluminum. Volume fell, and the 10-K attributes the margin decline mainly to "inflation, including higher aluminum costs." Price increases and Project Fortify savings (Fortify is the company's cost-cutting program) recovered only part of it. Segment adjusted EBITDA fell $16.5 million to $54.1 million.
• Architectural Services grew without making more money. Volume rose and sales climbed 4.6%, yet adjusted EBITDA fell to $30.9 million from $33.5 million. The company cites "unfavorable project mix, lower price, and direct tariff expenses." This segment also carried $15.4 million of the year's restructuring charges.
• Performance Surfaces was the only segment to grow profit. Adjusted EBITDA rose to $41.6 million from $30.9 million, almost entirely because UW Solutions was included for a full year. Management says the acquired business hit its first-year targets of $100 million revenue and at least a 20% adjusted EBITDA margin. Even so, the segment margin slipped to 21.0% from 25.3%: UW Solutions earns lower margins than the legacy business, and manufacturing costs rose.

What the headline numbers hide

• Adjusted EPS leaves out a recurring kind of cost. The $0.95 per share gap between GAAP EPS ($2.52) and adjusted EPS ($3.47) is mostly $27.4 million of Project Fortify Phase 2 restructuring charges ($1.28 per share before tax). $11.5 million of those charges were non-cash asset write-downs. Apogee also excluded Fortify Phase 1 charges of $12.4 million in fiscal 2024 and $4.3 million in fiscal 2025, and it extended Phase 2 in January 2026. When a company has restructuring charges three years in a row, they look less like one-offs and more like a cost of running the business. The other adjustments were $3.0 million of CEO transition costs and $2.1 million of acquisition costs.
• A one-time gain went the other way. GAAP earnings include a $6.7 million gain from settling a New Markets Tax Credit transaction, which shows up as "other income." That added about $0.31 per share before tax, and management removes it from adjusted EPS. Without that gain, GAAP pre-tax profit would have been about $70.7 million rather than $77.5 million.
• Below the operating line, interest and tax both rose. Net interest expense more than doubled to $14.0 million from $6.2 million because of the debt taken on for UW Solutions. The effective tax rate rose to 30.1% from 24.4%, which the company attributes to "tax expense on discrete items" (one-off tax charges). Buybacks helped only slightly: diluted share count fell 1.7%.
• Cash conversion was strong, but working capital helped it. Operating cash flow of $122.5 million was 2.3 times net income. Free cash flow (operating cash flow minus $27.3 million of capital spending) came to about $95 million. Some of that strength is timing. Contract liabilities, which are mostly customer billings received ahead of the work in Services, rose $25.6 million, and contract assets fell $12.6 million. Those swings tend to reverse as projects move along. Receivables grew 7.0% to $198.5 million, faster than 3.2% sales growth. That is worth watching, though not alarming on its own.
• The fourth quarter looks better than it was. Q4 GAAP EPS jumped to $0.78 from $0.11, mainly because the prior-year quarter carried a $9.4 million arbitration award charge and a $7.6 million Metals intangible-asset write-down. Adjusted Q4 EPS rose only 3.4% to $0.92 from $0.89.
• Backlog is shrinking. Architectural Services backlog ended the year at $693.8 million, down from $720.3 million a year earlier and $774.7 million at the end of the third quarter. That is less signed work to carry into fiscal 2027. One reconciliation point: the company's Q1 FY2027 release gives the FY2026 year-end backlog as $682.9 million, not the 10-K's $693.8 million, and the release doesn't explain the difference.

Takeaway: Apogee's fiscal 2026 sales growth was bought, not earned. Organic sales fell 1.6%, and every segment's margin shrank. Glass alone accounted for more than the company's entire $25 million drop in adjusted EBITDA. Strong cash flow and lower debt (leverage ratio 1.3x) leave room to keep buying growth, as it did in fiscal 2027 with Kalwall and GroGlass, but the core glass and aluminum framing businesses have not yet stopped shrinking.

Outlook

For fiscal 2027 (ending around February 2027), management guided to net sales of $1.38–1.43 billion, roughly flat on fiscal 2026's $1.40 billion. It guided to adjusted diluted EPS of $2.70–3.25, which is 6% to 22% below fiscal 2026's $3.47; the midpoint implies a decline of about 14%. The guidance assumes interest expense of about $10 million, down from $14.0 million, and capital spending of $35–40 million, up from $27.3 million. So even with lower interest costs and the full roughly $26 million annual savings from Project Fortify, management expects operating profit to fall again.

What has happened since: in June, Q1 FY2027 adjusted EPS came in at $0.57 against $0.56 a year earlier, and management reaffirmed the guidance. Glass weakened further, with Q1 margin of 8.7% against 18.3%, while Services backlog rebuilt to $734.5 million. Apogee closed the Kalwall acquisition in July, which management said would lift fiscal 2027 sales guidance to $1.43–1.48 billion and interest expense to about $14 million, without materially changing the EPS range. In September it closed GroGlass, a Latvian maker of anti-reflective glass coatings, for up to about $71.8 million including possible future earn-out payments.

Our read: The guidance looks reasonable rather than cautious. Lower interest costs and Fortify savings are fairly predictable, but Architectural Glass has not found a bottom, and aluminum and tariff costs are still listed as headwinds. Things to watch in the Q2 FY2027 report: whether Glass margin recovers from Q1's 8.7%; whether the rebuilt Services backlog comes with better margins than fiscal 2026's 7.0%; and whether restructuring charges finally stop appearing in the adjusted-EPS reconciliation.