Architectural Services Company Apogee Smashes Q2 Expectations, Hikes FY25 EPS Outlook Despite Revenue Dip

Apogee Enterprises, Inc. APOG shares are trading higher after the company reported second-quarter sales of $342.4 million, beating the consensus estimate of $335.3 million.

Revenue fell 3.2% due to lower volume. Gross margin improved by 140 basis points Y/Y to 28.4%, led by better pricing, a favorable project mix in Architectural Services, lower material costs, and reduced insurance expenses.

Adjusted operating income increased 6.4% Y/Y to $43.1 million, while the operating margin improved by 110 basis points to 12.6%.

Adjusted EBITDA for the quarter increased 3.9% Y/Y to $53.1 million with an adjusted EBITDA margin of 15.5%.

Adjusted EPS rose 5.9% Y/Y to $1.44, beating the consensus of $1.23.

Apogee held $51.0 million in cash and cash equivalents as of August 31.

Dividend: The Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on November 6 to shareholders of record as of October 22.

Year-to-date, the company has returned $25.9 million to shareholders through share repurchases and dividend payments.

Outlook: Apogee raised the FY25 adjusted EPS outlook to $4.90 – $5.20 (vs. consensus of $4.82) from $4.65 – $5.00 earlier.

Apogee reiterated its outlook for FY25 net sales decline of 4% to 7%.

The company continues to expect a total of $15 million to $16 million of pre-tax charges in connection with Project Fortify, leading to annualized cost savings of $13 million to $14 million in the year. 

It continues to expect to achieve 60% of these savings in FY25 and the rest in FY26. Apogee anticipates capital expenditures of $40 million – $50 million in FY25.

Ty R. Silberhorn, Chief Executive Officer, said, “The momentum we’ve established in the business, combined with the recently announced acquisition of UW Solutions, position us for continued success as we move forward.”

Investors can gain exposure to the stock via ProShares Russell 2000 Dividend Growers ETF SMDV.

Price Action: APOG shares are up 9.601% at $75.00 premarket at the last check Friday.

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