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Apogee Enterprises (APOG) is trading sharply higher after delivering 1Q26 earnings that exceeded expectations, while also raising its FY26 EPS and revenue expectations. Management’s confidence in a stronger second half of the year, driven by operational momentum and strategic initiatives, fueled the positive market reaction. The recent $242 mln acquisition of UW Solutions, completed in November 2024, played a pivotal role in the upside, contributing $22.0 mln in inorganic revenue to Q1 sales and bolstering the Performance Surfaces segment, while also supporting the company’s raised FY26 guidance.

• Despite the strong topline performance, with net sales rising 4.6% yr/yr to $346.6 mln, tariffs posed a significant headwind, particularly impacting the Architectural Services segment, where adjusted EBITDA margin contracted sharply to 9.9% from 15.9% in the prior-year quarter. The company estimates tariffs will reduce FY26 EPS by $0.35–$0.45, with the brunt felt in the first half.
• To counter this, APOG is executing mitigation strategies, including optimizing supply chain logistics to source materials from less tariff-impacted regions, renegotiating supplier contracts to reduce costs, and passing select cost increases to customers where feasible. Management expects these actions to substantially offset tariff impacts in the second half, reflecting proactive cost management and pricing discipline.
• The Performance Surfaces segment emerged as a standout, with net sales soaring 99.3% to $42.3 mln from $21.2 mln in the year-ago quarter, driven primarily by the UW Solutions acquisition’s $22.0 mln contribution. This acquisition expanded APOG’s Large-Scale Optical segment into high-performance coated substrates, creating a scalable growth platform. However, the integration of UW Solutions diluted the segment’s adjusted EBITDA margin to 18.8% from 23.3%, reflecting higher interest and amortization expenses and operational integration costs.
• In contrast, the Architectural Metals and Architectural Glass segments faced yr/yr revenue declines. Architectural Glass saw a 15.5% sales drop due to reduced end-market demand, particularly in commercial construction, where economic uncertainty and higher interest rates have curtailed project activity. Architectural Metals, despite higher volumes, experienced a less favorable product mix, with lower-margin projects weighing on net sales. These headwinds reflect broader market challenges, including cost inflation and cautious customer spending, though Architectural Metals showed sequential improvement, suggesting potential stabilization if demand trends recover.

APOG's’ Q1 results and raised FY26 guidance underscore the transformative impact of the UW Solutions acquisition, which has fortified the Performance Surfaces segment and diversified revenue streams. The company’s proactive tariff mitigation efforts, including supply chain optimization and strategic pricing, position it to navigate near-term challenges and deliver a stronger second half, supporting a bullish outlook for FY26.