Apogee Enterprises (NASDAQ: $APOG), which recently hit a new milestone when the stock soared to a new all-time high of $70.64, released its second quarter fiscal 2025 results on Friday before markets opened. The architectural products and services company beats estimates, sending the stock higher.
Apogee Enterprises Beats Estimates In Q2 Results
The company reported revenue of $342 million in Q2, a 3.2% decline year over year but above estimates of $335.29 million. It reported an adjusted EPS of $1.44, a 6% YoY increase, beating estimates of $1.18 per share. The company has now beaten estimates 50% of the time in the past four quarters.
Apogee Enterprises reported that the second quarter gross margin was 28.4%, a 140 basis points increase from the previous year. Meanwhile, SG&A expenses increased by 70 basis points to 16.2%, while the adjusted operating income increased by 6.4% to $43.1 million. The company ended the quarter with an adjusted operating margin of 12.6%, a 120 basis points improvement year over year.
Segment Performance
Architectural Framing Systems
The segment saw revenue fall 10.96% to $141.4 as the company exited various low-margin product lines like Project Fortify and reduced demand from the lower end of the market. It reported an adjusted operating income of $18.1 million or 12.8% of net sales, compared to $21.1 million, or 13.3% of net sales the previous year.
Architectural Glass
The segment experienced a 4.25% decline to $90.1 million, driven by reduced volumes due to reduced demand from the lower end of the market. It reported an operating income of $21.1 million, or 23.4% of net sales, compared to $17.4 million, or 18.5% of net sales. Reduced operating costs, better pricing, and product mix drove the operating margin improvement of 490 basis points.
Architectural Services
The segment saw an 11.3% improvement in net sales to $98 million, driven by increased volumes and projects. Its adjusted operating income was $6.4 million, or 6.5% of net sales, compared to $3.5 million, or 4% of net sales the previous year.
Large-Scale Optical
Revenue in the segment declined 16.1% year over year to $19.8 million, driven by lower volume in the retail channel. It reported an operating income of $3.8 million, or 19.1% of net sales, compared to $4.7 million, or 19.7% of net sales the previous year.
The company reported $6.2 million in corporate and other expenses, compared to $6.1 million the previous year. This increase was driven by increased compensation and benefit costs.
Apogee Enterprises Raises Fiscal 2025 Outlook
For fiscal 2025, Apogee Enterprises expects revenue of $1.36 billion to $1.32 billion, a 4% to 7% decline year over year, in line with estimates of $1.34 billion at the midpoint. It raised its full-year adjusted EPS to $4.90 to $5.204 from the previous forecast of $4.65 to $5.00. The new EPS forecast is above estimates of $4.75 at the midpoint.
Dividend Payout
The Apogee Enterprises board declared a cash dividend of $0.25 per share on October 3, 2024, payable to shareholders of record at the close of business on October 22, 2024.
Apogee Enterprises Announces UW Solutions Acquisition
On September 25, 2024, Apogee Enterprises announced it had acquired UW Solutions for $240 million in cash. The deal is expected to bolster Apogee Enterprises’ position in the specialty coatings and materials market. It is also expected to contribute around $100 million in revenue in fiscal 2026 with an adjusted EBITDA margin of 20%.
Apogee Enterprises (APOG) Market Performance
APOG shares hit a new all-time high of $70.64 on September 27, 2024. Since the start of the year, the stock has gained 28.1%, while in the past 12 months, it has gained 50.73%. Over the past month, APOG shares have risen 6.9% compared to the 3.1% gain of the S&P 500 in the same period. Following the release of its Q2 fiscal 2025 results, the stock was up 7.79% to $73.76 per share in pre-market trading.
Analysts give Apogee Enterprises a cautiously optimistic moderate buy rating. The targets include a high of $95 and a low of $81. Their average price target of $88 represents a 28.60% upside based on Thursday’s closing price of $68.43.
Is Apogee Enterprises A Good Investment?
APOG shares last closing price was a 3.13% discount on the all-time high price of $70.64. During the pre-market trading, the stock was above its previous ATH, and it is likely to retain those gains once the market opens.
While it expects revenue to decline at the end of fiscal 2025, it is still likely to outperform estimates. Its recent acquisition of UW Solutions could boost revenue in 2026, making it a potentially great addition to your portfolio on a long-term basis.
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