Apogee's CEO Expects To Mitigate Tariffs Later This Year, Lifts Forecast

Apogee Enterprises Inc. APOG shares traded higher Thursday after the company reported better-than-expected first-quarter fiscal 2025 results.

Revenue rose 4.6% year over year to $346.62 million, topping the consensus estimate of $325.48 million. Growth was driven by $22 million in sales from the UW Solutions acquisition, partly offset by lower volume and a less favorable mix.

Adjusted earnings per share came in at 56 cents, beating the Street estimate of 47 cents.

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Gross margin declined to 21.7% from 29.8%, impacted by $6.9 million in restructuring charges, higher aluminum costs, unfavorable product mix, and increased tariff expenses.

SG&A expenses rose to 19.7% of sales, up 240 basis points, due to $8.4 million in restructuring charges and higher amortization from the UW Solutions deal.

Operating income fell to $6.9 million, impacted by $15.3 million in restructuring costs, unfavorable mix, higher aluminum and tariff expenses, and increased amortization.

Adjusted EBITDA declined to $34.4 million, with margin down to 9.9%, driven by mix shifts, higher aluminum and tariff costs, and lower incentive expense.

Net cash used in operations totaled $19.8 million, down from $5.5 million provided a year ago, due to lower earnings and a $13.7 million arbitration payment.

The company paid $5.5 million in dividends, and its long-term debt rose to $311 million, raising the leverage ratio to 1.6x. As of May 31, Apogee held $32.83 million in cash and cash equivalents.

Apogee began Phase 2 of Project Fortify in the first quarter to improve efficiency in its Architectural Services and Metals segments. The company expects $24 million to $26 million in pre-tax charges and annual savings of $13 million to $15 million. It recorded $15.3 million in costs this quarter and plans to complete the effort by the fourth quarter of fiscal 2026.

Ty R. Silberhorn, Apogee’s CEO, commented, “Although tariffs adversely impacted our first quarter results, we continue to execute our mitigation plans and barring any material change to tariff policies, we expect to be able to substantially mitigate the impact of tariffs on the second half of the fiscal year.”

Apogee raised its full-year 2025 net sales forecast to $1.40 billion to $1.44 billion, up from $1.37 billion to $1.43 billion versus the consensus of $1.388 billion.

Diluted EPS is now expected between $2.59 and $3.12, compared with the prior range of $2.54 to $3.19. Adjusted diluted EPS is projected at $3.80 to $4.20, up from $3.55 to $4.10 versus the consensus of $3.74.

The outlook includes a negative EPS impact of $0.35 to $0.45 from tariffs, mainly affecting the first half.

Apogee expects an effective tax rate of 33% and an adjusted rate of about 27.5%. Capital expenditures remain projected at $35 million to $40 million.

Price Action: APOG shares are trading higher by 13.4% to $45.00 premarket at last check Friday.

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