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• Net Sales: $341 million, including $8.8 million from UW Solutions.

• Organic Net Sales Decline: Approximately 2%, driven by lower volume in glass.

• Adjusted Operating Margin: Declined 70 basis points.

• Adjusted Diluted EPS: $1.19, down 3%.

• Framing Net Sales: Declined approximately 1% to $138 million.

• Framing Adjusted Operating Margin: 9.8%.

• Services Net Sales Growth: 11%.

• Services Adjusted Operating Margin: 8.6%.

• Services Backlog: $742 million, down from $792 million last quarter.

• LSO Sales Growth: 28% to $33.2 million.

• LSO Adjusted Operating Margin: 18.6%.

• Cash from Operations: $31 million for the quarter, $95 million year-to-date.

• Consolidated Leverage Ratio: 1.3 times.

• Full Year Net Sales Outlook: Expected to decline by approximately 5%.

• Full Year Adjusted Operating Margin Outlook: Approximately 11%.

• Full Year Adjusted Diluted EPS Outlook: At the bottom of the range of $4.90 to $5.20.

• Effective Tax Rate: Approximately 24.5%.

• Full Year Capital Expenditures: $40 million to $45 million.

• Warning! GuruFocus has detected 5 Warning Signs with AIR.

Release Date: January 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Apogee Enterprises Inc (NASDAQ:APOG) closed the acquisition of UW Solutions, which is expected to drive growth and provide exposure to higher growth areas and higher margins.

• The company's balance sheet remains strong even after funding the acquisition, allowing for continued capital deployment to drive shareholder value.

• Services segment delivered its third straight quarter of double-digit net sales growth, with an adjusted operating margin of 8.6%.

• Apogee Enterprises Inc (NASDAQ:APOG) is actively cultivating its M&A pipeline, evaluating opportunities to add differentiated products that fit with its strategy.

• The company has built a stronger operating foundation, driving sustainable improvements and demonstrating the ability to deliver margin expansion and earnings growth even without meaningful market growth.

Negative Points

• Revenue was in line with last year, but there is continued pressure from soft end market demand in nonresidential construction, impacting the framing and glass segments.

• Adjusted operating margin declined by 70 basis points due to unfavorable sales leverage from lower volume, a less favorable product mix, and higher incentive compensation and lease expense.

• Net sales in the glass segment declined due to soft end market demand impacting volume, with expectations of continued pressure in the fourth quarter.

• The services backlog declined by 4% compared to a year ago, reflecting softness in the overall construction market.

• The company expects full-year net sales to decline by approximately 5%, with lower-than-expected volume in the fourth quarter, primarily in the framing and glass segments.