Executive Summary

Q2 FY2026 net sales were $358.2M (+4.6% YoY) and adjusted EPS was $0.98; both were above consensus, while GAAP EPS was $1.10 due to a $4.6M New Market Tax Credit gain . Consensus: EPS $0.84, revenue $350.9M; EBITDA also beat (company adjusted EBITDA $44.4M vs consensus $36.7M). Values retrieved from S&P Global.*
Guidance updated: net sales trimmed to $1.39–$1.42B and adjusted EPS lowered to $3.60–$3.90; diluted EPS range raised to $2.79–$3.19; tax rate reduced to ~27%; capex unchanged at $35–$40M . Prior quarter (Q1) guidance was $1.40–$1.44B and adjusted EPS $3.80–$4.20 .
Segment performance mixed: Performance Surfaces +144% YoY (inorganic +$24.9M plus 18.6% organic), Services +2.5%, Metals -0.3%, Glass -19.9%; Services backlog rose to $792.3M from $682.9M in Q1 .
Key drivers: aluminum cost inflation (~+20% QoQ) and competitive pricing pressure in Glass; tariff impacts remain a headwind (full-year EPS impact $0.35–$0.45), partially mitigated by pricing actions and Project Fortify Phase 2 cost savings .
Potential stock reaction catalysts: backlog strength in Services, sustained momentum in Performance Surfaces (distribution regained and flooring demand tied to automation), and lowered adjusted EPS guidance offset by improved diluted EPS guidance and lower tax rate .

What Went Well and What Went Wrong

What Went Well

Performance Surfaces delivered strong growth: net sales $48.4M (+144% YoY) with adjusted EBITDA margin 23.2%; inorganic contribution $24.9M from UW Solutions plus 18.6% organic growth . “We continue to see upside for that business long term” .
Architectural Services grew sales to $100.5M (+2.5% YoY) and increased backlog sequentially to $792.3M (16% growth), driven notably by Northeast wins and Western expansion efforts .
Cash generation was strong: Q2 operating cash flow of $57.1M; consolidated leverage reduced to 1.5x; long-term debt decreased to $270M . “Cash flow in the quarter was an area of strength” .

What Went Wrong

Gross margin compressed to 23.1% (from 28.4%), and adjusted EBITDA margin fell to 12.4% (from 15.5%), driven by lower price/volume, unfavorable mix, and higher material/tariff/health insurance costs .
Architectural Glass weakness: net sales down to $72.2M (-19.9% YoY); adjusted EBITDA fell to $11.6M (from $24.1M) as competitive pricing pressured volumes and margins .
Metals margin pressure: adjusted EBITDA margin dropped to 14.8% (from 15.7% YoY), with a less favorable mix and elevated aluminum and tariff costs; volume softened as price increases took effect .

Financial Results

Metric	Q4 FY2025	Q1 FY2026	Q2 FY2026
Revenue ($USD Millions)	$345.7	$346.6	$358.2
Diluted EPS ($USD)	$0.11	$(0.13)	$1.10
Adjusted Diluted EPS ($USD)	$0.89	$0.56	$0.98
Gross Margin %	21.6%	21.7%	23.1%
Adjusted EBITDA ($USD Millions)	$41.1	$34.4	$44.4
Adjusted EBITDA Margin %	11.9%	9.9%	12.4%

Segment breakdown:

Segment	Q2 FY2025 Net Sales ($M)	Q2 FY2026 Net Sales ($M)	Q2 FY2025 Adj. EBITDA ($M)	Q2 FY2026 Adj. EBITDA ($M)
Architectural Metals	$141.4	$140.9	$22.2	$20.8
Architectural Services	$98.0	$100.5	$7.3	$5.0
Architectural Glass	$90.1	$72.2	$24.1	$11.6
Performance Surfaces	$19.8	$48.4	$4.6	$11.2
Corporate & Other (Adj. EBITDA)	$(5.2)	$(4.3)	$(5.2)	$(4.3)

KPIs:

KPI	Q1 FY2026	Q2 FY2026
Services Backlog ($USD Millions)	$682.9	$792.3
Net Cash from Operating Activities ($USD Millions)	$(19.8)	$57.1
Long-term Debt ($USD Millions)	$311.0	$270.0
Consolidated Leverage Ratio (x)	1.6x	1.5x
Dividend per Share ($USD)	$0.26	$0.26
Cash & Equivalents ($USD Millions)	$32.8	$39.5

Q2 vs Estimates:

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	350.9*	358.2	+$7.3M
Primary EPS ($USD)	0.84*	0.98	+$0.14
EBITDA ($USD Millions)	36.7*	44.4	+$7.7M

Values retrieved from S&P Global. Company reports adjusted EBITDA; consensus definitions may differ.*

Guidance Changes

Metric	Period	Previous Guidance (Q1 FY2026)	Current Guidance (Q2 FY2026)	Change
Net Sales	FY2026	$1.40–$1.44B	$1.39–$1.42B	Lowered
Diluted EPS	FY2026	$2.59–$3.12	$2.79–$3.19	Raised (range shifted up)
Adjusted Diluted EPS	FY2026	$3.80–$4.20	$3.60–$3.90	Lowered
EPS Impact from Tariffs	FY2026	$(0.35)–$(0.45)	$(0.35)–$(0.45)	Maintained
Effective Tax Rate	FY2026	~33% (adj ~27.5%)	~27%	Lowered
Capital Expenditures	FY2026	$35–$40M	$35–$40M	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2025)	Previous Mentions (Q1 FY2026)	Current Period (Q2 FY2026)	Trend
Tariffs & aluminum costs	Initial FY2026 outlook included tariff headwinds; arbitration award expense impacted Q4 margins	Tariffs adversely impacted Q1; mitigation plans underway	Aluminum costs rose ~20% QoQ; tariff-driven price increases impacted Metals volumes; full-year EPS impact $(0.35)–$(0.45)	Deteriorating cost backdrop
Glass competitive dynamics	Lower volume/mix; operating margin decline	Glass volumes/prices pressured; margin strategy to protect premium	Competitive pricing persists; targeting mid-teens EBITDA margins while protecting premium price floor	Mixed (margin resilient, top line pressured)
Metals pricing/volume	Q4 launch of standardized product line created productivity headwinds; margin down	Less favorable mix and higher aluminum costs; adj. EBITDA margin 7.3%	Price increases reduced volumes; longer lead time products to absorb higher costs; margin erosion expected in Q3	Deteriorating near term
Services backlog/regions	Backlog $720.3M at Q4; improved mix	Backlog fell to $682.9M; tariff costs headwind	Backlog up to $792.3M; wins in Northeast and Western U.S. expansion	Improving
Performance Surfaces (UW Solutions, retail & flooring)	Acquisition in-line; contributes ~$100M FY26 est.	$22M inorganic sales; adj. EBITDA 18.8% despite mix	Inorganic +$24.9M; 18.6% organic growth; retail shelf space regained; flooring outperforms with automation/AGVs; European pull from global e-commerce	Improving
Cost actions (Project Fortify Phase 2)	Phase 2 announced; $24–$26M charges, $13–$15M annualized savings	Incurred $15.3M charges in Q1; savings plan continues	Incurred $3.1M charges in Q2; actions largely complete by Q4 FY26	On track
Tax/regulatory	—	—	“One Big Beautiful Bill Act” expected to provide cash tax benefit, limited impact to rate	Supportive cash timing

Management Commentary

CEO: “We are updating our outlook… lowering expectations for glass volume and price… seeing higher aluminum costs that will put more pressure on pricing and volume in Metals… we remain positioned to drive year-over-year net sales and adjusted EPS growth in the second half” .
CFO: “Adjusted EBITDA margin decreased to 12.4%… primarily driven by lower price and volume, unfavorable mix, and higher material, tariff, and health insurance costs… backlog for services sequentially grew 16% to $792 million” .
CEO on Performance Surfaces: “Retail shelf space [has] regained… flooring side outperform[s]… pull into Europe based on a large global e-commerce retailer” .
Leadership context: Construction Specialties appointed a former Apogee segment president as CEO in early September, indicative of leadership transitions across the industry .

Q&A Highlights

Performance Surfaces growth drivers: regained retail distribution, cross-selling with UW Solutions, and strong flooring demand tied to warehouse automation and AGVs; potential expansion into Europe via a global e-commerce customer .
Services backlog: largest sequential growth from Northeast wins; Western U.S. sales presence supporting share gains despite a soft market .
Glass margins outlook: management aims to sustain mid-teens EBITDA margins by protecting premium pricing floors even amid competitive bids; willing to forgo volume to preserve margin structure .
Metals outlook: ~20% QoQ increase in aluminum costs; price actions are constrained by competitive dynamics and lead times; margin expected to step back in Q3 as higher costs are absorbed .
Tax rate modeling: full-year ~27% with Q3 near that level and a modest dip in Q4; new legislation provides cash benefit timing .

Estimates Context

Q2 FY2026 results exceeded Wall Street consensus: adjusted EPS $0.98 vs $0.84; revenue $358.2M vs $350.9M; adjusted EBITDA $44.4M vs $36.7M. Values retrieved from S&P Global.*
Only ~3 estimates contributed to EPS and revenue, indicating a relatively thin coverage universe; revisions likely to reflect lower second-half expectations for Glass and Metals balanced by Services and Surfaces momentum. Values retrieved from S&P Global.*

Key Takeaways for Investors

Q2 was a quality beat: revenue, EPS, and EBITDA above consensus driven by Surfaces and Services, but margin pressures (aluminum, tariffs, health insurance) remain prominent; expect Metals margin erosion in Q3 before sequential recovery in Q4 .
Guidance reset reduces adjusted EPS and net sales ranges while lowering tax rate; diluted EPS raised—watch for mix of GAAP vs non-GAAP influences (e.g., NMTC gains) .
Services backlog growth to $792.3M is a key support for second-half visibility; regional traction in the Northeast and Western U.S. should underpin execution .
Performance Surfaces continues to be the structural growth engine (distribution regained, automation demand, European expansion opportunity); margins remain best-in-class .
Glass strategy prioritizes margin preservation over volume; expect mid-teens EBITDA but softer revenue absent pricing relief—monitor competitive intensity and bid win rates .
Tariffs and aluminum costs are the principal macro headwinds; Project Fortify Phase 2 cost savings and pricing actions are key mitigants—track Q3 cost absorption in Metals .
Near-term trading: catalysts include Q3 print (Metals margin trough), backlog conversion pace, and Surfaces growth updates; medium-term thesis centers on portfolio resiliency, continued cost productivity, and disciplined M&A optionality supported by leverage at 1.5x .

Notes: All document-based figures and statements are cited. Consensus figures denoted with asterisk are from S&P Global and may reflect differing definitions vs company-reported non-GAAP metrics.*

APOGEE ENTERPRISES, INC. (APOG)·Q2 2026 Earnings Summary