Apogee Enterprises, Inc. (Nasdaq: APOG), headquartered in Minneapolis, MN, specializes in architectural building products and services, including high-performance coated materials for various applications. The company reported its fiscal third-quarter earnings for 2025, revealing a stable condition but with signs of pressure due to soft demand in the nonresidential construction market.

For the third quarter ended November 30, 2024, Apogee’s net sales increased slightly by 0.5% year-over-year, totaling $341 million. The revenue included $8.8 million from the recent acquisition of UW Solutions. The organic sales, however, faced an approximate 2% decline primarily influenced by lower performance in the glass segment, which directly impacted their financial metrics.

The adjusted operating income for the quarter was $35.4 million, with an adjusted operating margin of 10.4%, down by 70 basis points from the previous year’s quarter. Adjusted diluted earnings per share (EPS) decreased by 3.3% to $1.19, compared to $1.23 last year, mainly due to lower adjusted operating income.

In the segment performance, Architectural Framing Systems net sales slightly decreased by 1.1% to $138 million, with the adjusted operating margin at 9.8%, compared to 12.2% a year earlier, reflecting a less favorable product mix. Conversely, the Architectural Services segment saw a 10.8% growth in net sales, reaching $104.9 million, with operating income improving significantly. In contrast, the Architectural Glass segment faced a decline of 22.8% in sales, totaling $70 million, significantly impacting their operating income which was recorded at $10.1 million, yielding an operating margin of 14.4%.

Looking at cash flow, Apogee generated $31 million from operations for the quarter, bringing the year-to-date total to $95 million, which is lower than last year’s record figures. The company maintained a leverage ratio of 1.3x at quarter-end and executed a $250 million delayed draw term loan to fund the acquisition.

For the fiscal year guidance, Apogee now anticipates a decline in net sales of approximately 5%, incorporating about $30 million in net sales from the UW Solutions acquisition. The company expects adjusted diluted EPS to be at the lower end of its guidance range of $4.90 to $5.20, with a projected effective tax rate of approximately 24.5%. Capital expenditures are forecasted to amount to $40 million to $45 million for the year.

Overall, Apogee Enterprises is navigating a challenging market environment, particularly within its glass segment, while simultaneously integrating the UW Solutions acquisition to potentially leverage new growth avenues. However, operational pressures are prompting the company to provide conservative guidance for its upcoming fiscal quarters.