Q2 2025 Apogee Enterprises Inc Earnings Call

October 4, 2024

Good day, and thank you for standing by walking through the Q2 2025 Apogee Enterprises earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Please be advised today's conference is being recorded I would now like to turn the call over to your speaker today, Jeff Fisher and Vice President of Investor Relations. Please go ahead.

Jeff Fisher: Thank you Kevin Good morning, everyone and welcome to Apogee Enterprises fiscal 2025 second quarter earnings call with me today are tie silver Horn, Apogees, Chief Executive Officer, and Matt Osborne Chief Financial Officer.

Speaker Change: I'd like to remind everyone that there are slides to accompany today's remarks. These are available in the Investor Relations section of Apogees website.

Speaker Change: During this call we will reference certain non-GAAP financial measures.

Matt Osborne: Definitions of these measures and a reconciliation to the nearest GAAP measures are provided in the earnings release and slide deck, we issued this morning.

Matt Osborne: I'd also like to remind everyone that our call will contain forward looking statements. These reflect management's expectations based on currently available information.

Speaker Change: Actual results may differ materially more information about factors that could affect apogees business and financial results can be found in today's press release and in our SEC filings.

Speaker Change: And with that I will turn the call over to Utah. Thanks, Jeff. Good morning, everyone I'm very excited to share the highlights from another solid quarter and provide further insights into our recently announced acquisition of UW solutions.

Speaker Change: Then hand, it over to Matt to provide more details on the quarter and our outlook.

Speaker Change: Let's start with the quarter highlights on page five of our presentation as.

Speaker Change: As we expected revenue decline compared to last year.

Speaker Change: Similar to the first quarter. This was partly due to our strategic shift away from less differentiated lower margin product lines.

Speaker Change: And a reflection of the continued softness in some of the end markets that we serve particularly nonresidential construction.

Speaker Change: Even with the lower volume.

Speaker Change: Our team continued to drive strong adjusted operating margin expansion and delivered adjusted EPS growth.

Speaker Change: Adjusted operating margin was 12, 6%, our second consecutive quarter with margins above 12%.

Speaker Change: And we had exceptionally strong cash flow from operations in the quarter.

Ty Silberhorn: and another solid quarter and provide further insights into our recently announced acquisition of UW Solutions.

I would further insights into our recently announced acquisition of UW solutions, I'll, then hand, it over to Matt to provide more details on the quarter and our outlook.

As Youll see on page seven of our presentation results in the quarter were once again led by outperformance from architectural glass.

Ty Silberhorn: I'll then hand it over to Matt to provide more details on the quarter and our outlook. Let's start with a quarter highlights on page five of our presentation. As we expected, revenue declined compared to last year. Similar to the first quarter, this was partly due to our strategic shift away from less differentiated, lower margin product and a reflection of the continued softness in some of the end markets that we serve, particularly non-residential construction. Even with the lower volume, our team continued to drive strong, adjusted operating margin expansion and delivered adjusted EPS growth. Adjusted operating margin was 12.6%; our second consecutive quarter with margins above 12%, and we had exceptionally strong cash flow from operations in the quarter.

Matt: Let's start with the quarter highlights on page five of our presentation.

Speaker Change: The glass team continues to exceed our expectations due to strong pricing and mix despite pressure on volume.

As we expected revenue decline compared to last year.

Matt: Similar to the first quarter. This was partly due to our strategic shift away from less differentiated lower margin product lines and a reflection of the continued softness in some of the end markets that we serve particularly nonresidential construction.

Speaker Change: Architectural services was also a meaningful contributor to our year over year profit gains.

Speaker Change: Services delivered double digit sales growth and achieve their sixth consecutive quarter of sequential adjusted operating margin expansion moving closer to the 7% to 9% target range.

Matt: Even with the lower volume our team continued to drive strong adjusted operating margin expansion and delivered adjusted EPS growth.

Speaker Change: Framing systems and large scale optical both continued to deliver solid profitability, despite lower sales volume.

Matt: Adjusted operating margin was 12, 6%, our second consecutive quarter with margins above 12%.

Speaker Change: And importantly, both segments made progress on key strategic initiatives.

Speaker Change: Framing systems made further progress executing project fortify keeping us on track to deliver our cost savings targets.

And we had exceptionally strong cash flow from operations in the quarter.

Ty Silberhorn: As you'll see on page seven of our presentation, results in the quarter were once again led by out performance from architectural glass. The glass team continues to exceed our expectations due to strong pricing and mix, despite pressure on volume. Architectural services was also a meaningful contributor to our year-over-year profit gains. Services delivered double-digit sales growth and achieved their sixth consecutive quarter of sequential adjusted operating margin expansion, moving closer to the seven to 9% target range. Framing systems and large scale optical both continued to deliver solid profitability despite lower sales volume. And importantly, both segments made progress on key strategic initiatives.

Matt: As you'll see on page seven of our presentation results in the quarter were once again led by outperformance from architectural glass.

Speaker Change: They also continued to improve their service levels, while positioning the business to outgrow the market.

The glass team continues to exceed our expectations due to strong pricing and mix despite pressure on volume.

Speaker Change: And Lso, we made continued progress on our capacity expansion project, which we expect to come online during the second half of the fiscal year.

Matt: Architectural services was also a meaningful contributor to our year over year profit gains services delivered double digit sales growth and achieve their sixth consecutive quarter of sequential adjusted operating margin expansion moving closer to the 7% to 9% <unk>.

Speaker Change: Given the strong earnings results in the second quarter, we are increasing our adjusted EPS outlook for the full year as shown on page nine to a range of $4 90 to $5 20.

Speaker Change: Our results continue to demonstrate the sustainable operating improvements we've achieved through the execution of our three pillar strategy.

Matt: <unk> range.

Matt: Framing systems and large scale optical both continued to deliver solid profitability, despite lower sales volume.

Speaker Change: Following on the heels of this solid quarter, we were excited to announce our agreement to acquire UW solutions.

Matt: And importantly, both segments made progress on key strategic initiatives.

Which we highlight starting on page 11 of our presentation.

Ty Silberhorn: Framing systems made further progress executing Project Fortify, keeping us on track to deliver our cost savings targets. They also continued to improve their service levels while positioning the business to outgrow the market. In LSO, we made continued progress on our capacity expansion project, which we expect to come online during the second half of the fiscal year. Given the strong earnings results in the second quarter, we are increasing our adjusted EPS outlook for the full year, as shown on page nine, to a range of $4.90 to $5.20. Our results continue to demonstrate the sustainable operating improvements we've achieved through the execution of our three-pillar strategy.

Matt: Framing systems made further progress executing project fortify keeping us on track to deliver our cost savings targets.

Speaker Change: Before I get into the specifics of the transaction I'd like to recognize the team at apogee that has been directly involved in this process and to bring it across the finish line.

Matt: They also continued to improve their service levels, while positioning the business to outgrow the market.

Speaker Change: UW solutions is a strong strategic fit for apogee and this deal is an example of the focus patience and diligence of our M&A process and the supporting teams.

Matt: And Lso, we made continued progress on our capacity expansion project, which we expect to come online during the second half of the fiscal year.

Given the strong earnings results in the second quarter, we are increasing our adjusted EPS outlook for the full year as shown on page nine to a range of $4 90 to $5 20.

Speaker Change: This is a business we identified some time ago as a potential fit with our strategy.

Speaker Change: Our team worked directly with the seller heartwood partners to find a win win path that will benefit everyone involved most importantly, UWS employees and their customers.

Matt: Our results continue to demonstrate the sustainable operating improvements we've achieved through the execution of our three pillar strategy.

Speaker Change: This deal checks all the boxes, we are looking for in an ideal acquisition.

Ty Silberhorn: Following on the heels of the solid quarter, we were excited to announce our agreement to acquire UW Solutions, which we highlight starting on page 11 of our presentation. Before I get into the specifics of the transaction, I'd like to recognize the team at Apogee that has been directly involved in this process and to bring it across the finish line. UW Solutions is a strong strategic fit for Apogee, and this deal is an example of the focus, patience, and diligence of our M&A process and the supporting team. This is a business we identified some time ago as a potential fit with our strategy.

Matt: Following on the heels of this solid quarter, we were excited to announce our agreement to acquire UW solutions, which we highlight starting on page 11 of our presentation.

Speaker Change: It brings differentiated solutions with leading positions in attractive markets.

Speaker Change: It complements our portfolio, while expanding and diversifying our growth opportunities.

Before I get into the specifics of the transaction I'd like to recognize the team at apogee that has been directly involved in this process and to bring it across the finish line.

Speaker Change: And it is a strong performing business that will be accretive to our long term financial profile.

Speaker Change: UW solutions operates around three product lines, HD printable materials, which has many similarities to our lso segment.

Matt: UW solutions is a strong strategic fit for apogee and this deal is an example of the focus patience and diligence of our M&A process and the supporting teams.

Speaker Change: Applies high performance coatings to create premium products for the graphic arts market.

Speaker Change: Industrial flooring, which applies high performance coatings to engineered wood used primarily in warehouses distribution centers and industrial facilities.

Matt: This is a business we identified some time ago as a potential fit with our strategy.

Ty Silberhorn: Our team worked directly with the seller, Hartwood Partners, to find a win-win path that will benefit everyone involved, most importantly, UW's employees and their customers. This deal checks all the boxes we are looking for in an ideal acquisition. It brings differentiated solutions with leading positions in attractive markets. It complements our portfolio while expanding and diversifying our growth opportunities. And it is a strong, performing business that will be a credo to our long-term financial profile. UW Solutions operates around 3 product lines: HD printable materials, which has many similarities to our LSL segment, applies high-performance coatings to create premium products for the graphic arts market.

Matt: Our team worked directly with the seller heartwood partners to find a win win path that will benefit everyone involved most importantly, uw's employees and their customers.

Speaker Change: And engineered coatings, which formulates and produces a variety of high performance coatings that are used internally as well as sold to third party customers for other applications.

Matt: This deal checks all the boxes, we are looking for in an ideal acquisition.

Speaker Change: This acquisition is very well aligned with our strategy to create peak value.

Matt: It brings differentiated solutions with leading positions in attractive markets.

Speaker Change: UW solutions as an economic leader in their target markets, they bring differentiated capabilities well established brands.

Matt: It complements our portfolio, while expanding and diversifying our growth opportunities.

Matt: And it is a strong performing business that will be accretive to our long term financial profile.

Speaker Change: And leading market positions.

Speaker Change: They also have an impressive record of execution and profitability with strong EBITDA margins.

UW solutions operates around three product lines, HD printable materials, which has many similarities to our lso segment applies high performance coatings to create premium products for the graphic arts market.

Speaker Change: Adding UW solutions will complement our current portfolio and expand our offerings into new segments.

Speaker Change: The resin deck brand expands our offerings for nonresidential construction, providing a meaningful entry into manufacturing warehousing and distribution projects with significant exposure to R&R versus new construction.

Ty Silberhorn: Industrial flooring, which applies high-performance coatings to engineered wood used primarily in warehouses, distribution centers, and industrial facilities. And engineered coatings, which formulates and produces a variety of high-performance coatings that are used internally, as well as to third-party customers for other applications. This acquisition is very well aligned with our strategy to create peak value. UW Solutions is an economic leader in their target markets. They bring differentiated capabilities, well-established brands, and leading market positions. They also have an impressive record of execution and profitability, with strong EBITDA margins. Adding UW Solutions will complement our current portfolio and expand our offerings into new segments.

Matt: Industrial flooring, which applies high performance coatings to engineered wood used primarily in warehouses distribution centers and industrial facilities.

Matt: In engineered coatings, which formulates and produces a variety of high performance coatings that are used internally as well as sold to third party customers for other applications.

Speaker Change: The HD printable materials business accelerates, our efforts to grow and diversify <unk> core business.

Speaker Change: And RTC coatings brings an R&D capability to drive new product development and enable expansion into new applications and markets.

Speaker Change: This acquisition is very well aligned with our strategy to create peak value.

Speaker Change: UW solutions as an economic leader in their target markets, they bring differentiated capabilities, well established brands and leading market positions.

Speaker Change: Importantly, the deal will leverage <unk> core capabilities to drive value through the integration.

Speaker Change: We will enable cost synergies by leveraging areas like HR procurement.

Speaker Change: They also have an impressive record of execution and profitability with strong EBITDA margins.

Speaker Change: And finance.

Speaker Change: And we will deploy the apogee management system to further enhance the manufacturing operations.

Speaker Change: Adding UW solutions will complement our current portfolio and expand our offerings into new segments.

Speaker Change: As shown on page 17 of our presentation UW solutions brings unique capabilities and process technology that are a strong complement to what we do in our <unk> segment.

Ty Silberhorn: The Residentec brand expands our offerings for non-residential construction, providing a meaningful entry into manufacturing, warehousing, and distribution projects with significant exposure to R&R versus new construction. The HD printable materials business accelerates our efforts to grow and diversify LSO's core business. In RDC coatings, brings an R&D capability to drive new product development and enable expansion into new applications and markets. Importantly, the deal will leverage Apigee's core capabilities to drive value through the integration. We will enable cost synergies by leveraging areas like HR, procurement, IT, and finance, and we will deploy the Apigee management system to further enhance the manufacturing operations.

Speaker Change: Both businesses have expertise in developing and applying high performance coatings to a variety of substrates.

Speaker Change: The HD printable materials business accelerates, our efforts to grow and diversify <unk> core business.

Speaker Change: <unk> current capabilities that are centered around deposition and roll coating for glass and acrylic substrates.

EW solutions will add complementary capabilities, and Roque holding curtain coding and spray coating used on metals wood plastic and other substrates.

Speaker Change: And RTC coatings brings an R&D capability to drive new product development and enable expansion into new applications and markets.

Together these businesses will offer a broad range of manufacturing process capabilities that can provide a wide variety of coding types.

Speaker Change: Importantly, the deal will leverage <unk> core capabilities to drive value through the integration.

Speaker Change: We will enable cost synergies by leveraging areas like HR procurement.

Speaker Change: And high performance substrates for a diverse set of market applications.

And finance.

Speaker Change: We plan to fully integrate the business into our Lso segment.

Speaker Change: And we will deploy the apogee management system to further enhance the manufacturing operations.

Speaker Change: The combined strength of these businesses will create a powerful new engine for growth.

Ty Silberhorn: As shown on page 17 of our presentation, UW Solutions brings unique capabilities and process technology that are a strong complement to what we do in our LSO segment. Both businesses have expertise in developing and applying high performance coatings to a variety of substrates. LSO's current capabilities that are centered around deposition and roll coating for glass and acrylic substance. EW Solutions, Wyatt Complimentary Capabilities, Enroll Colting, Curtain Coating, and Spray Coating used on metals, wood, plastic, and other substrates. Together, these businesses will offer a broad range of manufacturing process capabilities that can provide a wide variety of coding types and high-performance substrates for a diverse set of market applications.

Speaker Change: As shown on page 17 of our presentation UW solutions brings unique capabilities and process technology that are a strong complement to what we do in our <unk> segment.

Speaker Change: We will bring together a portfolio of leading brands that will serve a diverse set of customers and applications.

Speaker Change: The deal will also provide cross selling opportunities and will accelerate growth drivers in both businesses.

Speaker Change: Both businesses have expertise in developing and applying high performance coatings to a variety of substrates.

Speaker Change: And as I described earlier, we will leverage the apogee management system, and our back office capabilities to drive meaningful cost synergies.

Speaker Change: <unk> current capabilities that are centered around deposition and roll coding for glass and acrylic substrates.

Speaker Change: We expect the acquisition to close sometime in our fiscal third quarter, and we plan to move quickly to execute a rigorous and comprehensive integration plan.

Speaker Change: UW solutions, why add complementary capabilities, and Roque holding curtain coding and spray coating used on metals wood plastic and other substrates.

This is a great business that strongly complements our strategy.

Together these businesses will offer a broad range of manufacturing process capabilities that can provide a wide variety of coding types and high performance substrates for a diverse set of market applications.

We are excited for the opportunity to welcome UW solutions employees to apogee and look forward to working together to build a powerful new growth engine for the company.

Ty Silberhorn: We plan to fully integrate the business into our LSO segment. The combined strength of these businesses will create a powerful new engine for growth. We will bring together a portfolio of leading brands that will serve a diverse set of customers and applications. The deal will also provide cross-selling opportunities, and will accelerate growth drivers in both businesses. And as I described earlier, we will leverage the Apogee management system in our back-office capabilities to drive meaningful cost energies.

We plan to fully integrate the business into our Lso segment.

Speaker Change: With that I will turn it over to Matt's comment about the quarter, our outlook and the acquisition.

The combined strength of these businesses will create a powerful new engine for growth.

Speaker Change: Thanks, Jay and good morning, everyone.

We will bring together a portfolio of leading brands that will serve a diverse set of customers and applications.

Matt Osborne: Before I begin with the discussion of our second quarter results and outlook I want to say how excited I am about the acquisition of <unk> solutions.

Speaker Change: The deal will also provide cross selling opportunities and will accelerate growth drivers in both businesses.

Speaker Change: I want to reiterate <unk> comments on the strategic benefits of this deal and the opportunities for growth that it creates.

Speaker Change: This transaction also demonstrates our ability to deploy capital for assets with accretive financials that build on the momentum that we've created in our existing business.

And as I described earlier, we will leverage the apogee management system, and our back office capabilities to drive meaningful cost synergies.

Ty Silberhorn: We expect the acquisition to close sometime in our fiscal third quarter, and we plan to move quickly to execute a rigorous and comprehensive integration plan. This is a great business that strongly compliments our strategy. We are excited for the opportunity to welcome UW-Solutions employees to Apogee and look forward to working together to build a powerful new growth engine for the company.

Speaker Change: We expect the acquisition to close sometime in our fiscal third quarter, and we plan to move quickly to execute a rigorous and comprehensive integration plan.

Speaker Change: I will provide more information on the acquisition towards the end of my comments.

Speaker Change: Starting with our second quarter results net sales were down 3% year over year, but improved sequentially compared to a decline of 8% in the first quarter.

Speaker Change: This is a great business that strongly complements our strategy.

Speaker Change: The sales decline in the quarter was primarily driven by lower volumes in framing glass and lso.

Speaker Change: We are excited for the opportunity to welcome Uw's solutions employees to apogee and look forward to working together to build a powerful new growth engine for the company.

Speaker Change: Similar to the first quarter. The volume decline was primarily driven by our strategic decision to exit some lower margin product lines and framing as part of project fortify and by softness in parts of our end markets.

Matt Osberg: With that, I will turn it over to Matt to comment about the quarter, our outlook, and the acquisition. Thanks, Ty. Good morning, everyone.

Speaker Change: With that I will turn it over to Matt's comment about the quarter, our outlook and the acquisition.

Matt: Thanks, Jay and good morning, everyone.

Matt Osberg: Before I begin with a discussion of our second quarter result and outlook, I want to say how excited I am about the acquisition of UW-Solutions. I want to reiterate Ty's comments on the strategic benefits of this deal and the opportunities for growth that it creates. This transaction also demonstrates our ability to deploy capital for assets with a creative financials that build on the momentum that we have created in our existing business. I will provide more information on the acquisition toward the end of my comments.

Speaker Change: The lower volumes were partially offset by improved pricing and product mix in glass and favorable project mix and services.

Matt: Before I begin with a discussion of our second quarter results and outlook I want to say how excited I am about the acquisition of <unk> solutions.

I want to reiterate <unk> comments on the strategic benefits of this deal and the opportunities for growth that it creates.

Speaker Change: Despite lower sales, we delivered another strong quarter of profitability.

Speaker Change: Adjusted operating margin improved 110 basis points to 12, 6% driven by improved pricing and mix favorable material costs and lower insurance related costs.

Matt: This transaction also demonstrates our ability to deploy capital for assets with accretive financials that build on the momentum that we've created in our existing business.

Matt: I will provide more information on the acquisition towards the end of my comments.

Speaker Change: Adjusted diluted EPS grew 6% to $1 44.

Matt Osberg: Starting with our second quarter results, net sales were down 3% year-over-year but improved sequentially compared to a decline of 8% in the first quarter. The sales decline in the quarter was primarily driven by lower volumes in framing, glass, and LSO. Similar to the first quarter, the volume decline was primarily driven by our strategic decision to exit some lower margin product lines in framing as part of Project Fortify and by softness in parts of our end markets. The lower volumes were partially offset by improved pricing and product mix and glass and favorable project mix in services.

Speaker Change: Starting with our second quarter results net sales were down 3% year over year, but improved sequentially compared to a decline of 8% in the first quarter.

Speaker Change: Which equaled the record adjusted EPS, we reported in the first quarter.

Adjusted diluted EPS growth was primarily driven by higher adjusted operating income.

Speaker Change: The sales decline in the quarter was primarily driven by lower volumes in framing glass and lso.

Speaker Change: Along with lower interest expense.

Turning to the segment results.

Speaker Change: Framing net sales declined 11%, primarily due to lower volume related to our strategic shift away from certain lower margin product lines as part of project fortify.

However, framing sales did improve sequentially compared to the first quarter.

Speaker Change: The lower volumes were partially offset by improved pricing and product mix in glass and favorable project mix and services.

Speaker Change: Despite the lower volume framing continued to sustain adjusted operating margin within its 10% to 15% target range as the unfavorable leverage impact of lower volume and a less favorable mix were partially offset by favorable material costs.

Matt Osberg: Despite lower sales, we delivered another strong quarter of profitability. Adjusted operating margin improved 110 basis points to 12.6%, driven by improved pricing and mix, favorable material costs, and lower insurance-related costs. Adjusted diluted EPS grew 6% to $1.44, which equaled the record adjusted EPS reported in the first quarter. Adjusted diluted EPS growth was primarily driven by higher adjusted operating income, along with lower insurance. of interest expense.

Speaker Change: Despite lower sales, we delivered another strong quarter of profitability.

Speaker Change: Adjusted operating margin improved 110 basis points to 12, 6% driven by improved pricing and mix favorable material costs and lower insurance related costs.

Speaker Change: Net sales in glass declined 4%, primarily due to lower volume driven by softening end market demand.

Speaker Change: This was partially offset by strong pricing and mix.

Speaker Change: Adjusted diluted EPS grew 6% to $1 44.

Speaker Change: Once again glass operating margin exceeded our expectations, improving by 490 basis basis points to a record 23, 4%.

Speaker Change: Which equaled the record adjusted EPS, we reported in the first quarter.

Speaker Change: Adjusted diluted EPS growth was primarily driven by higher adjusted operating income.

Speaker Change: This margin over performance was primarily driven by stronger than expected pricing and mix.

Speaker Change: With lower interest expense.

Matt Osberg: Turning to the segment results, framing net sales declined 11%, primarily due to lower volume related to our strategic shift away from certain lower-margin product lines as part of Project Fortify. However, framing sales did improve sequentially compared to the first quarter. Despite the lower volume, framing continued to sustain adjusted operating margins within its 10-15% target range, as the unfavorable leverage impact of lower volume and a less favorable mix were partially offset by favorable material costs.

Turning to the segment results.

Speaker Change: Moving to services.

Framing net sales declined 11%, primarily due to lower volume related to our strategic shift away from certain lower margin product lines as part of project fortify.

Speaker Change: Net sales grew 11% primarily due to a more favorable mix of projects and increased volume.

Speaker Change: Adjusted operating margin improved 250 basis points to six 5%, making this the sixth consecutive quarter of sequential margin expansion for services.

Speaker Change: However, framing sales did improve sequentially compared to the first quarter.

Despite the lower volume framing continued to sustain adjusted operating margin within its 10% to 15% target range as the unfavorable leverage impact of lower volume and a less favorable mix were partially offset by favorable material costs.

Services backlog ended the quarter at $792 million.

Speaker Change: Down from $867 million last quarter.

Speaker Change: Although backlog declined in the quarter. The overall trend remains positive with backlog up 17% compared to a year ago as prior to this quarter services had experienced three consecutive quarters of sequential backlog growth.

Matt Osberg: Net sales in glass declined 4%, primarily due to lower volume driven by softening end market demand. This was partially offset by strong pricing in mix. Once again, glass operating margin exceeded our expectations, improving by 490 basis points to a record 23.4%. This margin overperformance was primarily driven by stronger than expected pricing and mix.

Speaker Change: Net sales in glass declined 4%, primarily due to lower volume driven by softening end market demand.

Speaker Change: This was partially offset by strong pricing and mix.

Speaker Change: Once again glass operating margin exceeded our expectations, improving by 490 basis basis points to a record 23, 4%.

Speaker Change: <unk> sales declined 16%, primarily due to lower volume in our retail channel, partially offset by a more favorable mix the.

This margin over performance was primarily driven by stronger than expected pricing and mix.

Speaker Change: The volume decline was primarily driven by the impact of lower distribution at one of our retail channel customers.

Matt Osberg: Moving to services, net sales grew 11%, primarily due to a more favorable mix of projects and increased volume. Adjusted operating margin improved 250 basis points to 6.5%, making this the sixth consecutive quarter of sequential margin expansion for services. Services backlogs ended the quarter at $792 million, down from $867 million last quarter. Although backlogs declined in the quarter, the overall trend remains positive, with backlog up 17% compared to a year ago, as prior to this quarter, services had experienced three consecutive quarters of sequential backlog growth.

Speaker Change: Moving to services.

Speaker Change: Operating margin declined 60 basis points to 19, 1%, reflecting the impact of lower volume, partially offset by improved mix and cost savings.

Speaker Change: Net sales grew 11% primarily due to a more favorable mix of projects and increased volume.

Speaker Change: Adjusted operating margin improved 250 basis points to six 5%, making this the sixth consecutive quarter of sequential margin expansion for services.

Speaker Change: Corporate and other expenses were flat compared to the prior year with higher compensation and benefit cost offset by lower insurance related expenses.

Speaker Change: Services backlog ended the quarter at $792 million down from $867 million last quarter.

Speaker Change: Turning to cash flow and the balance sheet cash from operations in the quarter was very strong at $59 million.

Speaker Change: Up 42% compared to last year's second quarter.

Speaker Change: This brings our year to date cash from operations to $64 million, which is in line with the strong cash flow we generated in the first half of the prior year.

Speaker Change: Our balance sheet remains in a very strong position with low debt and no near term maturities. Additionally.

Matt Osberg: LSO sales declined 16%, primarily due to lower volume in our retail channel, partially offset by a more favorable mix. The volume decline was primarily driven by the impact of lower distribution at one of our retail channel customers. Operating margin declined 60 basis points to 19.1%, reflecting the impact of lower volume, partially offset by improved mix and cost savings.

Speaker Change: <unk> sales declined 16%, primarily due to lower volume in our retail channel, partially offset by a more favorable mix the.

Speaker Change: Additionally, during the quarter, we refinanced our credit facility, the new credit facility significantly expanded our borrowing capacity at favorable terms.

Speaker Change: The volume decline was primarily driven by the impact of lower distribution at one of our retail channel customers.

Speaker Change: The new facility provides up to $700 million of capacity through a $450 million revolving credit facility and a $250 million delayed draw term loan.

Speaker Change: Operating margin declined 60 basis points to 19, 1%, reflecting the impact of lower volume, partially offset by improved mix and cost savings.

Matt Osberg: Corporate and other expenses were flat compared to the prior year, with higher compensation and benefit costs offset by lower insurance-related expenses.

Speaker Change: The increase in this facility gives us additional committed capacity to support our growth strategy.

Speaker Change: Corporate and other expenses were flat compared to the prior year with higher compensation and benefit costs offset by lower insurance related expenses.

Speaker Change: We expect to utilize the $250 million delayed draw term loan as well as cash on hand to finance our acquisition of UW solutions.

Speaker Change: Turning to cash flow and the balance sheet cash from operations in the quarter was very strong at $59 million.

Speaker Change: Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4% to 7%.

Up 42% compared to last year's second quarter.

Speaker Change: This brings our year to date cash from operations to $64 million, which is in line with the strong cash flow we generated in the first half of the prior year.

Speaker Change: This range continues to include approximately two percentage points of decline related to fiscal 'twenty five reverting to a 52 week year and approximately one percentage point of decline related to the actions of project fortify to eliminate certain lower margin product and service offerings.

Speaker Change: Our balance sheet remains in a very strong position with low debt and no near term maturities. Additionally, during the quarter, we refinanced our credit facility the new credit facility significantly expanded our borrowing capacity at favorable terms.

Matt Osberg: Additionally, during the quarter, we refinanced our credit facility. The new credit facility significantly expanded our borrowing capacity at favorable terms. The new facility provides up to $700 million of capacity through a $450 million revolving credit facility and a $250 million delayed draw term. The increase in this facility gives us additional committed capacity to support our growth strategy. We expect to utilize the $250 million delayed draw term loan as well as cash on hand to finance our acquisition of UW Solutions.

Speaker Change: We expect sales declines in framing glass and lso to be partially offset by growth in services as we execute a strong pipeline of projects in our backlog.

Speaker Change: The new facility provides up to $700 million of capacity through a $450 million revolving credit facility and a $250 million delayed draw term loan.

Speaker Change: We now expect full year consolidated adjusted operating margin will improve to approximately 11%.

Speaker Change: The increase in this facility gives us additional committed capacity to support our growth strategy.

Speaker Change: Primarily driven by the strong margin performance in the first half of the year.

Speaker Change: We continue to expect adjusted operating margin to decline sequentially in the second half of the year, primarily due to lower volume and pricing pressure in glass.

Speaker Change: We expect to utilize the $250 million delayed draw term loan as well as cash on hand to finance our acquisition of UW solutions.

Speaker Change: As I mentioned glass operating margin exceeded our expectations in the first half of the year, primarily driven by stronger than expected pricing and mix.

Matt Osberg: Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4% to 7%. This range continues to include approximately two percentage points of decline related to fiscal 25 reverting to a 52-week year and approximately one percentage point of decline related to the actions of Project Fortify to eliminate certain lower-margin product and service offerings. We expect sales declines in framing, glass, and LSO to be partially offset by growth and services as we execute a strong pipeline of projects in our backlog. We now expect full-year consolidated adjusted operating margin will improve to approximately 11%.

Speaker Change: Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4% to 7%.

Speaker Change: Due to the high variable contribution margin in our glass business operating margin is highly sensitive to changes in assumptions of price and mix.

Speaker Change: Our forecasts are based on price and mixed data in our pipeline as well as assumptions on when will work will flow through production.

Speaker Change: During the first half of the fiscal year, we saw workflow with favorable pricing and mix, which drove the margin improvement.

Speaker Change: We expect sales declines in framing glass and lso to be partially offset by growth in services as we execute our strong pipeline of projects in our backlog.

Speaker Change: Based on current visibility into our pipeline and end market trends, we expect glass margins will moderate in the second half moving into the top half of the 10% to 15% target range with full year operating margin in the high teens.

Speaker Change: We now expect full year consolidated adjusted operating margin will improve to approximately 11%.

Matt Osberg: Primarily driven by the strong margin performance in the first half of the year. We continue to expect adjusted operating margin to decline sequentially in the second half of the year, primarily due to lower volume and pricing pressure in glass. As I mentioned, glass operating margin exceeded our expectations in the first half of the year, primarily driven by stronger-than-expected pricing and mix. Due to the high variable contribution margin in our glass business, operating margin is highly sensitive to changes in assumptions of price and mix. Our forecasts are based on price and mix data in our pipeline as well as assumptions on when work will flow through production.

Primarily driven by the strong margin performance in the first half of the year.

Speaker Change: Yeah.

Speaker Change: We continue to expect adjusted operating margin to decline sequentially in the second half of the year, primarily due to lower volume and pricing pressure and glass.

Speaker Change: We continue to expect full year framing adjusted operating margin to improve compared to fiscal 'twenty, four and be within the target range of 10% to 15%.

Speaker Change: For services, we continue to expect sequential adjusted operating margin improvement in the second half with full year adjusted operating margin approaching the 7% to 9% target range.

Speaker Change: As I mentioned glass operating margin exceeded our expectations in the first half of the year, primarily driven by stronger than expected pricing and mix.

Due to the high variable contribution margin in our glass business operating margin is highly sensitive to changes in assumptions of price and mix.

Speaker Change: We continue to expect <unk> operating margin will decline compared to last year, primarily due to lower volume.

Speaker Change: Our forecasts are based on price and mix data in our pipeline as well as assumptions on when will work will flow through production.

Finally, we expect corporate and other expenses to be approximately $8 million per quarter in the second half of the year.

Matt Osberg: During the first half of the fiscal year, we saw work flow with favorable pricing and mix, which drove the margin improvement. Based on current visibility into our pipeline and end market trends, we expect glass margins will moderate in the second half, moving into the top half of the 10 to 15% target range with full-year operating margin in the high teens. We continue to expect full-year framing adjusted operating margin to improve compared to fiscal 24 and be within the target range of 10 to 15%. For services, we continue to expect sequential adjusted operating margin improvement in the second half, with full-year adjusted operating margin approaching the 7 to 9% target range.

Speaker Change: During the first half of the fiscal year, we saw workflow with favorable pricing and mix, which drove the margin improvement.

Speaker Change: We are increasing our full year outlook for adjusted diluted EPS to a range of $4 90 to $5 20.

Reflecting our stronger than expected second quarter performance.

Speaker Change: As a reminder, we anticipate the reversion to a 52 week year will reduce adjusted diluted EPS by approximately 20% 20.

Speaker Change: We continue to expect an effective tax rate of approximately 24, 5% and full year capital expenditures of $40 million to $50 million.

Speaker Change: We continue to expect full year framing adjusted operating margin to improve compared to fiscal 'twenty, four and be within the target range of 10% to 15%.

Speaker Change: We expect another strong year for cash flow with cash from operations higher than our historical averages, but below last year's record level.

For services, we continue to expect sequential adjusted operating margin improvement in the second half with full year adjusted operating margin approaching the 7% to 9% target range.

Let me wrap up with some additional comments about the acquisition of UW solutions.

Matt Osberg: We continue to expect LSO operating margin will decline compared to last year, primarily due to lower volume.

Speaker Change: We continue to expect <unk> operating margin will decline compared to last year, primarily due to lower volume.

Speaker Change: We are very excited to acquire a growth business and expect that the transaction will be accretive to our long term financial profile, including revenue growth rate and adjusted EBITDA margin.

Matt Osberg: Finally, we expect corporate and other expenses to be approximately $8 million per quarter in the second half of the year.

Speaker Change: Finally, we expect corporate and other expenses to be approximately $8 million per quarter in the second half of the year.

Speaker Change: We expect to achieve $5 million in annual run rate synergies by the end of fiscal 'twenty seven.

Matt Osberg: We are increasing our full-year outlook for adjusted diluted EPS to a range of $4.90 to $5.20, reflecting our stronger than expected second quarter performance. As a reminder, we anticipate the reversion to a 52-week year will reduce adjusted diluted EPS by approximately 20%. We continue to expect an effective tax rate of approximately 24.5% and full-year capital expenditures of $40 to $50 million.

Speaker Change: We are increasing our full year outlook for adjusted diluted EPS to a range of $4 90 to $5 20.

Speaker Change: Including these synergies and net of the $27 million tax step up benefit the purchase price remain represents approximately eight five times fiscal 'twenty six estimated adjusted EBITDA.

Speaker Change: Reflecting our stronger than expected second quarter performance.

Speaker Change: As a reminder, we anticipate the reversion to a 52 week year will reduce adjusted diluted EPS by approximately 20% in 'twenty.

Speaker Change: We expect to finance the transaction with cash on hand, and borrowings under our current credit facility.

Speaker Change: We continue to expect an effective tax rate of approximately 24, 5% and full year capital expenditures of $40 million to $50 million.

Speaker Change: At the close of the transaction, we expect our consolidated leverage ratio as defined in our credit agreement will be approximately one five times.

Matt Osberg: We expect another strong year for cash flow, with cash from operations higher than our historical averages but below last year's record level.

Speaker Change: We expect another strong year for cash flow with cash from operations higher than our historical averages, but below last year's record level.

Speaker Change: This leverage ratio still provides further capacity for us to continue to deploy capital for growth.

Matt Osberg: Let me wrap up with some additional comments about the acquisition of UW Solutions. We are very excited to acquire a growth business and expect that the transaction will be accretive to our long-term financial profile, including revenue growth rate and adjusted EBITDA margin. We expect to achieve $5 million in annual run rate synergies by the end of fiscal 27. Including these synergies in net of the $27 million tax step-up benefit, the purchase price remaining represents approximately 8.5 times fiscal 26 estimated adjusted EBITDA. We expect to finance the transaction with cash on hand and borrowings under our current credit facility.

Speaker Change: Let me wrap up with some additional comments about the acquisition of UW solutions.

Speaker Change: In fiscal 'twenty six we expect the acquisition to contribute approximately $100 million in revenue at an adjusted EBITDA margin of approximately 20%.

Speaker Change: And to be accretive to our adjusted diluted EPS.

Speaker Change: For fiscal 'twenty five assuming the acquisition closes on November one we expect approximately $30 million of incremental net sales and we expect adjusted diluted EPS will be reduced by approximately 10.

Speaker Change: We expect to achieve $5 million in annual run rate synergies by the end of fiscal 2007.

Speaker Change: Due to increased interest costs and amortization expense.

Speaker Change: These potential fiscal 'twenty five impacts are not included in the outlook we provided today.

Speaker Change: We expect to finance the transaction with cash on hand, and borrowings under our current credit facility at.

Matt Osberg: At the close of the transaction, we expect our consolidated leverage ratio, as defined in our credit agreement, will be approximately 1.5 times. This leverage ratio still provides further capacity for us to continue to deploy capital for growth. In fiscal 26, we expect the acquisition to contribute approximately $100 million in revenue at an adjusted EBITDA margin of approximately 20% and to be accretive to our adjusted diluted EPS. For fiscal 25, assuming the acquisition closes on November 1st, we expect approximately $30 million of incremental net sales, and we expect adjusted diluted EPS will be reduced by approximately $0.10 due to increased interest cost and amortization expense.

Speaker Change: In.

Speaker Change: At the close of the transaction, we expect our consolidated leverage ratio as defined in our credit agreement will be approximately one five times.

Speaker Change: <unk>. This is a very exciting time for apogee.

Speaker Change: Our team continued to execute at a high level in the first half of the year delivering strong earnings results and positioning the company for improved long term growth.

Speaker Change: This leverage ratio still provides further capacity for us to continue to deploy capital for growth.

Speaker Change: Our healthy financial position and expanded credit facility provided us the opportunity to make an accretive acquisition, while also investing in the business and returning cash to shareholders.

Speaker Change: In fiscal 'twenty six we expect the acquisition to contribute approximately $100 million in revenue at an adjusted EBITDA margin of approximately 20% and to be accretive to our adjusted diluted EPS.

Speaker Change: And we are positioned to acquire a business that we expect will create new growth opportunities for us in the future.

Speaker Change: We believe these outcomes are the result of tremendous efforts by the entire apogee team to execute our strategy and we intend to build on this momentum in the future.

Speaker Change: With that I'll turn it back over to Ty for some concluding remarks, thanks, Matt to wrap up our team delivered another strong quarter. We are continuing to build positive momentum as we execute our strategy achieving significant margin expansion and adjusted earnings growth. Despite some softness in our end markets.

Speaker Change: Due to increased interest costs and amortization expense.

Matt Osberg: These potential fiscal 25 impacts are not included in the outlook we provided today.

Speaker Change: These potential fiscal 'twenty five impacts are not included in the outlook we provided today.

Matt Osberg: In conclusion, this is a very exciting time for Apogee. Our team continue to execute at a high level in the first half of the year, delivering strong earnings results and positioning the company for improved long-term growth. Our healthy financial position and expanded credit facility provided us the opportunity to make an accretive acquisition while also investing in the business and returning cash to shareholders. And we are positioned to acquire a business that we expect will create new growth opportunities for us in the future. We believe these outcomes are the result of tremendous efforts by the entire Apogee team to execute our strategy, and we intend to build on this momentum in the future.

In conclusion. This is a very exciting time for apogee our team continued to execute at a high level in the first half of the year delivering strong earnings results and positioning the company for improved long term growth.

Speaker Change: We can do so given the stronger operating foundation, we built over the past three years.

The acquisition of UW solutions is an important milestone for our company as we point to both organic and inorganic growth positioning the company for continued success as we move ahead.

Speaker Change: With that we're ready to take your questions.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Speaker Change: And we are positioned to acquire a business that we expect will create new growth opportunities for us in the future.

Speaker Change: We believe these outcomes are the result of tremendous efforts by the entire apogee team to execute our strategy and we intend to build on this momentum in the future.

Speaker Change: Okay.

Ty Silberhorn: With that, I'll turn it back over to Tie for some concluding remarks. Thanks, Matt. To wrap up, our team delivered another strong quarter. We are continuing to build positive momentum as we execute our strategy, achieving significant margin expansion and adjusted earnings growth despite some softness in our end markets. We can do so given the stronger operating foundation we've built over the past three years. The acquisition of UW Solutions is an important milestone for our company as we point to both organic and interdantic growth, positioning the company for continued success as we move ahead.

Our first question comes from Brent Thielman with D. A Davidson your line is open.

Brent Thielman: Hey, Thanks, good morning, Congrats on the transaction.

Speaker Change: Good morning, Brian Thank you.

Speaker Change: Yes, maybe just to start on that.

Speaker Change: Yeah, Hi, I was curious just on me.

Ty: We can do so given the stronger operating foundation, we built over the past three years. The acquisition of UW solutions is an important milestone for our company as we point to both organic and inorganic growth positioning the company for continued success as we move ahead with that.

Speaker Change: The cross selling opportunities.

Speaker Change: What you see there and how quickly do you.

Speaker Change: Thank you can you can leverage that.

Speaker Change: Yes, we look at the HD printable materials.

Speaker Change: I'd say the good news is there is not a significant customer overlap we actually saw that as a positive there are commonalities.

Operator: With that, we are ready to take your questions. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered or were to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster.

Speaker Change: We are ready to take your questions. Thank.

Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Speaker Change: In the market, particularly in that HD printable materials side of the UW solutions business.

Speaker Change: So as we dug into that both our team within lso in the UW solutions team see some really nice opportunities when we actually already had some outreach from customers with respect to that so that's a complementary offering to what we already provide into that custom framing and museum art business.

Speaker Change: Okay.

Brent Thielman: Our first question comes from Brent Thielman with the A. Davidson. Your line is open. Thanks. Good morning. Congrats on the transaction. Good morning, Brent. Thank you.

Speaker Change: Our first question comes from Brent Thielman with D. A Davidson your line is open.

Brent Thielman: Hey, Thanks, good morning, Congrats on the transaction.

Speaker Change: So that's where I think we see the biggest opportunities.

Good morning, Brian Thank you.

Speaker Change: The flooring side of the business, which goes to market under the resin deck brand and has really recognized as a leader.

Ty Silberhorn: Yeah, maybe just to start on that, Ty, I was curious just on the cross-selling opportunities. Maybe what you see there and help quickly, do you think you can leverage that? Yeah, if we look at the HD printable materials, I would say the good news is there is not a significant customer overlap. We actually saw that as a positive. There are commonalities in the market, particularly in that HD printable material side of the UW Solutions business. So, as we dug into that, both our team with NLSO and the UW Solutions team see some really nice opportunities, and we've actually already had some outreach from customers with respect to that.

Speaker Change: Yes, maybe just to start on that.

Speaker Change: Hi, I was curious just on me.

Speaker Change: In that industrial flooring, where you're going to put robotics automated solutions into those distribution centers manufacturing facilities.

Speaker Change: The cross selling opportunities, maybe what you see there and how quickly.

Speaker Change: Do you think you can you can leverage that.

Speaker Change: It is a different go to market. So I think we're being cautious in terms of how much crossover we see in some of our building products channels, but we do see opportunity to continue to build on the momentum within that business, where they've built a strong partnership with some of those robotics companies.

Speaker Change: Yes, if we look at the HD printable materials that I would say the good news is there is not a significant customer overlap we actually saw that as a positive there are commonalities.

Speaker Change: In the market, particularly in that HD printable materials side of the UW solutions business. So as we dug into that both our team within lso in the EW solutions team see some really nice opportunities when we actually already had some outreach from customers with respect to that so that's a complementary offering.

Speaker Change: And have some good inroads.

Speaker Change: Some of the larger.

Speaker Change: Retailers as well as online.

Speaker Change: And brick and mortar retailers in the market to drive that business growth.

Speaker Change: Okay.

Okay, Alright appreciate that tie and then.

Ty Silberhorn: So that's a complimentary offering to what we already provide into that custom framing in museum art business. So that's where I think we see the biggest opportunities. The flooring side of the business, which goes to market under the framework, you're going to put robotics automated solutions into those distribution centers, manufacturing facilities. It is a different go to market. So I think we're being cautious in terms of how much crossover we see in some of our building products channels. But we do see opportunity to continue to build on the momentum within that business where they built a strong partnership with some of those of the larger retailers, as well as online and brick-and-mortar retailers in the market to drive that business grow.

Speaker Change: And to what we already provide into that custom framing and museum of art business.

Speaker Change: Just because a lot of these areas are new I'm wondering if maybe you could.

Speaker Change: Speak to some of the categories that you bring UW brings to the company more so just around from kind of the market share.

Speaker Change: So that's where I think we see the biggest opportunities.

Speaker Change: Flooring side of the business, which goes to market under the resin deck brand and has really recognized as a leader in that industrial flooring, where youre going to put robotics automated solutions into those distribution centers manufacturing facilities.

Speaker Change: These different businesses have.

Speaker Change: And would it be fair for us to think that these might be areas, you're going to look to consolidate further.

Speaker Change: Well I would say is as you look at the business from.

It is a different go to market. So I think we are being cautious in terms of how much crossover we see in some of our building products channels, but we do see opportunity to continue to build on the momentum within that business, where they've built a strong partnership with some of those robotics companies.

Speaker Change: And overall market percentage theirs, we won't talk about shares in general but.

Speaker Change: They are very focused on premium parts of the market both with book in that HD printable materials, which they go to market under the chroma Lux and unit sub brands and then very much. So again in the on the resin side as well very focused on premium parts of the market. So as we look at those both of those markets are actually significantly large but then.

Speaker Change: And have some good inroads with some of the larger.

Speaker Change: Retailers as well as online.

Speaker Change: And brick and mortar retailers in the market to drive that business growth.

Speaker Change: As you get into kind of an addressable or core market focus they become smaller as we drive that that focus to be able to sell differentiated solutions.

Operator: Okay, I appreciate that, Ty.

Speaker Change: Okay, Alright appreciate that tie and then.

Ty Silberhorn: And then I'm just because a lot of these areas are new. I'm wondering if maybe you could speak to some of the categories that UW brings to the company, more so just around from kind of the market share that these different businesses have. And, you know, would it be fair for us to think that these might be areas you're going to look to consolidate further? Well, I'd say as you look at the business from an overall market percentage, there's, we won't talk about shares in general, but they are very focused on premium parts of the market, both with the, in that H.D.

Speaker Change: Just because a lot of these areas are new I'm wondering if maybe you could.

Speaker Change: As we look at our M&A pipeline I think we've talked about still being focused on where we can add additional differentiated products in their portfolio.

Speaker Change: Speak to some of the categories that <unk> brings to the company more so just around from kind of the market share.

Speaker Change: Not just building materials products, although that that is a core driver since that is the bulk of where our business sets.

Speaker Change: These different businesses have and would it be fair for us to think that these might be areas youre going to look to consolidate further.

Speaker Change: But we also continue to look at things that can continue to build out the capabilities, we have within the lso segment. So both areas.

Speaker Change: Well I would say is as you look at the business from.

Speaker Change: And overall market percentage, there's we won't talk about shares in general but.

Speaker Change: We will remain a focus for us in our M&A work.

Speaker Change: They are very focused on premium parts of the market, both with book and that HD printable materials, which they go to market under the chroma Lux and unit sub brands and then very much. So again in the on the resin side as well very focused on premium parts of the market. So as we look at those both of those markets are actually significantly large but then.

Speaker Change: Yeah.

Speaker Change: Okay. Okay.

Speaker Change: Just one on the core business I mean architectural glass.

Ty Silberhorn: printable materials, which they go to market under the Chroma Lux and Unit sub brands. And then very much so again on the resident side as well, very focused on premium parts of the market. So as we look at those, both of those markets are actually significantly large, but then as you get into kind of an addressable or core market focus, you know, they become smaller as we drive that focus to be able to sell differentiated solutions. You know, as we look at our M&A pipeline, I think we've talked about still being focused on where we can add additional differentiated products into a portfolio, not just building materials products, although that is a core driver since that is the bulk of where our business sets. But we also continue to look at things that can continue to build out the capabilities we have within the LSO segment.

Speaker Change:

Speaker Change: Continues to be extraordinary contributions here from a profitability perspective, now that caught your comments about the expectations into the second half of the fiscal year, maybe just if you could talk around what the inbound orders.

Speaker Change: As you get into kind of an addressable or core market focus they become smaller as we drive that that focus to be able to sell differentiated solutions.

Speaker Change: You inform you in.

Speaker Change: As you are starting to see maybe some normalization or pressure on pricing are you seeing any indication that maybe that.

Speaker Change: <unk> off at this point.

Speaker Change: As we look at our M&A pipeline I think we've talked about still being focused on where we can add additional differentiated products in their portfolio.

Speaker Change: Yeah Brent.

Speaker Change: Yes, I mean look I love being wrong in the right way and I have been wrong, a few times on glasses, but they think fully in the right way.

Speaker Change: Not just building materials products, although that is our.

Speaker Change: As I tried to call out really just to give people some.

Speaker Change: Core driver since that is the bulk of where our business sets, but we also continue to look at things that can continue to build out the capabilities. We have within the lso segment. So both areas.

Speaker Change: Some insights into that business, it's such a high variable contribution margin that you know as you look at what's in our pipeline and how that work will flow. It can really have a significant impact.

Ty Silberhorn: So both areas will remain a focus for us in our M&A work. Okay.

Speaker Change: We will remain a focus for us in our M&A work.

Speaker Change: The good news for US is we've seen an extended holdup of price and mix, that's really buoyed that those margin rates over the past couple of quarters. So as we look into the pipeline that we see now which as you know which had limited right. We've got some insights, but we can still see the rest of the year.

Speaker Change: Okay, Okay and.

Brent Thielman: And maybe just one on the core business. I mean, architectural glass just continues to be extraordinary contributions here from a profitability perspective. Now to cut your comments about to the expectations into the second half of the fiscal year. Maybe just you could talk around with the end down daughters. Tell you and inform you and you know, as you are starting to see maybe some normalization or pressure on pricing or else to see any ending expectations that maybe that's leveling off at this point. Yeah, Brent. So yeah, I mean, look, I love being wrong in the right way, and I've been wrong a few times on glass, but they think fully in the right way.

Speaker Change: And maybe just one on the core business I mean architectural glass.

Speaker Change: It continues to be extraordinary contributions here from a profitability perspective, not a cut your comments about the expectations into the second half of the fiscal year, maybe just if you could talk around what the inbound orders.

There's always variability on what work flows through that pipeline and there is variability on the pricing and mix in that pipeline to so as some of that is the expectation of what work will flow in and at what margin that can have big.

Speaker Change: Tell you inform you and.

Speaker Change: As you are starting to see maybe some normalization or pressure on pricing are you also seeing any indications that maybe that's.

Speaker Change: Leveling off at this point.

Speaker Change: Big changes, but we do see a more a more uniform profile in terms of lower price and lower margin mix in that pipeline than what we've seen in the first half of the year. So that's why the outlook for the second half of the year is much lower than the <unk>.

Brent Thielman: Yes, Brent.

Brent Thielman: Yes, I mean look I love being wrong in the right way and I have been wrong, a few times on glasses, but they think fully in the right way.

Ty Silberhorn: You know, it's as I tried to call out really just to give people some insights into, you know, that business is such a high variable contribution margin that, you know, as you look at what's in our pipeline and how that work will flow. It can really have a significant impact and, you know, for the good news for us as we've seen an extended hold up of price and mix that's really, you know, buoyed that those margin rates over the past couple of quarters. So, as we look into the pipeline that we see now, which, you know, which is limited, right?

Brent Thielman: As I tried to call out really just to give people some.

Brent Thielman: Some insights into that business, it's such a high variable contribution margin that you know as you look at what's in our pipeline and how that work will flow. It can really have a significant impact.

Speaker Change: Half of the year and like I said, we've got some visibility in there, but definitely not the rest of the year or so.

Speaker Change: We do expect that to moderate like I said.

Brent Thielman: The good news for US is we've seen an extended holdup of price and mix, that's really buoyed that those margin rates over the past couple of quarters. So as we look into the pipeline that we see now.

Speaker Change: Upper half of that 10% to 15% margin rate for the back half of the year and ending somewhere in the high teens base.

Speaker Change: Based on what we can see today.

Speaker Change: Okay, Alright, very good I'll pass it on congrats again on the transaction in the quarter.

Speaker Change: Is limited right, we've got some insights, but we can still see the rest of the year.

Brent Thielman: We've got some insights, but we can't still see the rest of the year. There's always variability on what work flows through that pipeline, and there's variability on the pricing and mix in that pipeline too. So as some of that, you know, as the expectation of what work will flow the end and what margin that can have big, big changes, but we do see a more, a more uniform profile in terms of lower price and lower margin mix in that pipeline. And then what we've seen in the first half of the year, so, you know, that's why the outlook for the second half of the year is, you know, much lower than the first half of the year.

Speaker Change: There's always variability on what work flows through that pipeline and there is variability on the pricing and mix in that pipeline to so there's some of that is the expectation of what work will Florida in and at what margin that can have big big changes, but we do see a more a more uniform.

Speaker Change: Thanks, Brent Thanks, Brian.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Julio Romero with Sidoti <unk> Company. Your line is open.

Speaker Change: Thanks, Hey, good morning time, Matt and Jeff Congrats again on the UW solutions steel.

Speaker Change: Norm profile in terms of lower price and lower margin mix in that pipeline than what we've seen in the first half of the year. So that's why the outlook for the second half of the year is much lower than the first half of the year and like I said, we've got some visibility in there, but definitely not the rest of the year.

Julio Romero: Thanks, Julio Thank you.

Speaker Change: Hey, I was hoping maybe.

Speaker Change: Also staying on the deal a little bit just if you could give us a sense of kind of the historical.

Speaker Change: Growth rate I know you said in the press release that it was accretive to.

Operator: And, you know, like I said, we've got some visibility in there, but definitely not the rest of the year. So we do expect that to moderate, like I said, you know, in that upper half of that 10 to 15% margin rate for the back half of the year and ending somewhere in the high teens based on what we can see today. Okay, all right, very good. I'll pass it on. Congrats again on the transaction in the quarter. Thanks, Brian. One moment for our next question.

Speaker Change: Legacy apogee, but just if you could give us maybe better granularity into maybe the historical growth rate at dws had in the years prior.

Speaker Change: So.

Speaker Change: We do expect that to moderate like I said in that upper half of that 10% to 15% margin rate for the back half of the year and ending somewhere in the high teens.

Speaker Change: Well I think the key driver to that business over the last couple of years has been the industrial flooring segment.

Speaker Change: Just to give you a rough idea, we don't really want to break out the details, but that's about half call. It approximately half of their revenue base. So that has seen some strong growth.

Based on what we can see today.

Speaker Change: Okay, Alright, very good I'll pass it on congrats again on the transaction in the quarter.

Thanks, Brent Thanks, Brent.

Speaker Change: Over the last few years, certainly had some significant growth as you came out of Covid are going into Covid and all the online increase.

Speaker Change: One moment for our next question.

Okay.

Julio Romero: Our next question comes from Julio Romero with Sedotti and Company. Your line is open. Thanks. Hey, good morning. Time out and Jeff. Congrats again on the UW solution, steel. Thanks, Julio. Thank you.

Speaker Change: Our next question comes from Julio Romero with Sidoti <unk> Company. Your line is open.

Speaker Change: But then they have been able to kind of build upon that and then continue to have some very strong growth.

Julio Romero: Thanks, Hey, good morning, Tom and Jeff Congrats again on the UW solutions steel.

Speaker Change: Approaching double digit so we look at that part of the business. We see good momentum in that business going forward little lower growth rates in the rest of the business and I would look at the coatings as being mostly internally consume they do sell to a third party for different applications.

Tom: Thanks, Julio Thank you.

Ty Silberhorn: Hey, I was hoping, you know, maybe also staying on the deal a little bit, just if you could give us a sense of kind of the historical growth rate. I know you said on the press release that it was a creative to legacy, but just give it if you could give us maybe better granularity into maybe the historical growth rate that UW has had in the years prior. Well, I think the key driver to that business over the last couple of years has been the industrial flooring segment. And just to give you a rough idea, we don't really want to break out the details, but that's about half; call it approximately half of their revenue base.

Speaker Change: Hey, I was hoping maybe.

Speaker Change: Also staying on the deal a little bit just if you could give us a sense of kind of the historical.

Speaker Change: Growth rate I know you said in the press release that it was accretive to.

Speaker Change: Our legacy apogee, but just if you could give us maybe a better granularity into maybe the historical growth rate UWS had in years prior.

Speaker Change: So they have had some growth there, but most of that coatings business.

Speaker Change: Is consumed internally, so theyre doing formulations.

Speaker Change: Well I think the key driver to that business over the last couple of years has been the industrial flooring segment.

Speaker Change: That are then used on the other products that UW solutions produces in the flooring in the HD printable materials.

Speaker Change: And just to give you a rough idea, we don't really want to break out the details, but that's about half call. It approximately half of their revenue base.

Speaker Change: Yeah, the only thing I'd add Julio.

Speaker Change: This is a tide pointed out in his comments. This is a better together acquisition right. We talked about the additional capacity that we've got coming online in <unk>. So the R&D.

Matt Osberg: So that has seen some strong growth over the last few years. Certainly had some significant growth that came out of COVID or going into COVID, and all the online increase, but then they've been able to kind of build upon that and then continue to have some very strong growth, you know, approaching double digit. So we look at that part of the business; we see good momentum in that business going forward. Little lower growth rates in the rest of the business, and I would look at the coatings as being mostly internally consumed. They do sell to third party for different applications.

That has seen some strong growth over the last few years certainly had some significant growth as we came out of COVID-19 are going into Covid and all the online increase.

Capabilities that come with this kind of acquisition in the.

Speaker Change: Some market crossover, but some new markets. So I think that there is an opportunity to even improve on what <unk> been able to do with the better together solution here in lso.

Speaker Change: But then they have been able to kind of build upon that and then continue to have some very strong growth.

Speaker Change: Yeah.

Speaker Change: Got it that's really helpful. I appreciate that guys.

Speaker Change: That flooring business does seem pretty interesting.

Speaker Change: Just given the exposure to some good secular growth themes like onshoring ecommerce.

Speaker Change: Et cetera.

Matt Osberg: And so they have had some growth there, but most of that coatings business is consumed internally. So they're doing formulations that are then used on the other products that UW Solutions produces in the flooring and the HD printable materials. Yeah, no, it's the only thing I'd add, Julio. You know, this is the ties pointed out in his comments. This is a better together acquisition, right? We talked about the additional capacity that we've got coming online in LSO, the R&D capabilities that come with this kind of acquisition and the, you know, the some market crossover, but some new markets.

Speaker Change: Can you, maybe just talk about that that piece a little bit more.

Speaker Change: Will they have had some growth there, but most of that coatings business.

How does the product offering is a bit differentiated and then secondly.

Speaker Change: Is consumed internally so theyre doing formulations that are then used on the other products that UW solutions produces in the flooring in the HD printable materials.

Speaker Change: Can you maybe speak to how the go to market strategy.

Speaker Change: Sales strategy, I guess, there's a little bit different than.

Speaker Change: Yeah, no. It's the only thing I'd add Julio.

Speaker Change: And your legacy business.

Sure I mean, I'll start and Matt can add additional comments, if I missed some things, but if you look at that business. It really differentiates itself on the coding that supplied to the woods substrate. So it is an engineered wood product.

Julio Romero: This is a tight pointed out in his comments. This is a better together acquisition right. We've talked about the additional capacity that we've got coming online in lso.

Julio Romero: D capabilities that come with this kind of acquisition in the.

Speaker Change: That is procured.

Speaker Change: Some market crossover, but some new market. So I think that there is an opportunity to even improve on what <unk> been able to do with a better together solution here and lso.

Julio Romero: So I think that there is an opportunity to, you know, even improve on what they've been able to do with a better together solution here in LSO. Got it. That's, that's really helpful. I appreciate that, guys. And, you know, that, that flooring business does seem pretty interesting. Just given the exposure to some good secular growth themes, like on showering e-commerce, etc.

Speaker Change: From.

Speaker Change: A third party supplier, but then UW solutions has created and then applies its own proprietary coating on the engineered wood product to create not only a very durable surface, but also a service that has.

Speaker Change: Got it that's really helpful. I appreciate that guys.

Thats flooring business does seem pretty interesting.

Speaker Change: Very smooth and consistent thickness properties that becomes very important when you start to run different robots and automated equipment over that flooring. So the smoother flatter that surfaces the easier it is for that.

Speaker Change: Just given the exposure to some good secular growth themes like Onshoring E Commerce.

Speaker Change: Et cetera.

Ty Silberhorn: Can you maybe just talk about that piece a little bit more, how the product offering is a bit differentiated. And then secondly, can you maybe speak to how the go-to-market strategy or the sales strategy, I guess, is a little bit different than your legacy business? Sure. I mean, I'll start in Mac and can add additional comments if I miss some things. But if you look at that business, it really differentiates itself on the coding that's applied to the wood substrate. So it is an engineered wood product. You know, that is procured from a third-party supplier.

Speaker Change: Can you, maybe just talk about that piece a little bit more.

How does the product offering is differentiated and then secondly.

Speaker Change: Robot to move around on that flooring and it simplifies some of the software that has to be developed to make that automate those automated robots effective.

Can you maybe speak to how the go to market strategy or the sales strategy I guess, there's a little bit different than.

Speaker Change: And your legacy business.

Speaker Change: The other piece is it's basically think of it is sold in panels that makes it easy to install its most of the business or a large portion of the business goes into mezzanine flooring. So think of a distribution center that wants to add a mezzanine to at basically create more inventory capacity, which has been a big drag.

Speaker Change: Sure I mean, I'll start and Matt can add additional comments, if I missed some things, but if you look at that business. It really differentiates itself on the coding that supplied to the woods substrates. So it is an engineered wood product.

Matt: That is procured.

Matt: A third party supplier, but then UW solutions has created and then applies its own proprietary coating on the engineered wood product to create not only a very durable surface, but also a service that has.

Speaker Change: Or even in some of the micro fulfillment centers that have popped up over the last few years.

Ty Silberhorn: But then UW Solutions has created and then applies its own proprietary coding on the engineered wood product to create not only a very durable surface, but also a service that has very smooth and consistent thickness properties. That becomes very important when you start to run different robots and automated equipment over that flooring. So the smoother, flatter that surface is, the easier it is for that robot to move around on that flooring. And it simplifies some of the software that has to be developed to make those automated robots effective. The other piece is it's basically think of it as sold in panels.

Speaker Change: But because it's also a panel in some cases.

Speaker Change: Some of the.

Speaker Change: Customers have chosen to put metal strips and between those panels, which also can act as a way to charge the robots as they work across the floor. So there's some additional productivity and efficiencies.

Matt: Very smooth and consistent thickness properties that becomes very important when you start to run different robots and automated equipment over that flooring. So the smoother flatter that surfaces the easier it is for that.

Speaker Change: That solution brings to those customers the different go to market is really around.

Speaker Change: I would say, both the channel and who's driving the selection process. So UW has really work to create some strong partnerships with some of the robotics companies. So they're actually when they are selling their robotic equipment. They are actually calling out for resin deck to be specified as the <unk>.

Matt: Robot to move around on that flooring and it simplifies some of the software that has to be developed to make that automate those automated robots effective.

Matt: The other piece is it's basically think of it is sold in panels that makes it easy to install its most of the business or a large portion of the business goes into mezzanine flooring. So think of a distribution center that wants to add a mezzanine to at basically create more inventory capacity, which has been a big driver.

Ty Silberhorn: That makes it easy to install. It's most of the business, or a large portion of the business, goes into mezzanine flooring. So think of a distribution center that wants to add a mezzanine to basically create more inventory capacity, which has been a big driver, even in some of the micro fulfillment centers that have popped up over the last few years. But because it's also a panel, in some cases, some of the customers have chosen to put metal strips in between those panels, which also can act as a way to charge the robots as they work across the floor.

Speaker Change: <unk> solution to be put in place now they also do sell straight out to other system integrators and even through some some contractors that are just putting up.

Speaker Change: Either replacing flooring or putting in mezzanine flooring and.

Matt: Even in some of the micro fulfillment centers that have popped up over the last few years.

Speaker Change: And we think there is an opportunity there to maybe tap into some of our relationships on the building products side, but it is a it is a different go to market. We haven't really had a focus as we've talked about before we do we know we sell some entrants systems and punch out commercial windows into say, a new manufacturing plant our distribution center, but.

Matt: But because it's also a panel in some cases.

Matt: Some of the.

Customers have chosen to put metal strips in between those panels, which also can act as a way to charge the robots as they work across the floor. So there's some additional productivity and efficiencies.

Ty Silberhorn: So there's some additional productivity and efficiencies that that solution brings to those customers. The different go to market is really around, I would say, both the channel and who's driving the selection process. So UW has really worked to create some strong partnerships with some of the robotics companies. So they're actually, when they're selling their robotic equipment, they're actually calling out for resident deck to be specified as the flooring solution to be put in place. Now they also do sell straight out to other system integrators and even through some contractors that are just putting in either replacing flooring or putting in mezzanine flooring.

Speaker Change: That solution brings to those customers the different go to market is really around I would say, both the channel and who's driving the selection process.

Speaker Change: That's such a small dollar sale for us it's not a it's not a focus area. So this brings more attention.

Speaker Change: For our teams to look at manufacturing distribution centers warehouses and potentially even data centers. There is some work to do on the flooring in terms of fire rating, but datacenters provides a long term opportunity as well.

Speaker Change: UW has really worked to create some strong partnerships with some of the robotics companies. So they're actually when they are selling their robotic equipment, they're actually calling out for resin deck to be specified as the flooring solution to be put in place now they also do sell.

Speaker Change: Alright cool business.

Speaker Change: Just to dig into it a little bit more and then.

Maybe just last one for me is just.

Speaker Change: Project fortify can you just.

Straight out to other system integrators, and even through some some contractors that are just putting.

Speaker Change: Make it easy for us and let us know how much how much restructuring is left.

Speaker Change: For the next two quarters.

Speaker Change: Yeah, so from a comment two things from charges perspective.

Speaker Change: Either replacing flooring or putting in mezzanine flooring.

Ty Silberhorn: And we think there's an opportunity there to maybe tap into some of our relationships on the building product side, but it is a different go to market. We haven't really had a focus, as we've talked about before. We do, we know we sell some entrance systems and punch out commercial windows into some new manufacturing plan or distribution center, but that's such a small dollar sale for us. It's not a; it's not a focus area. So this brings some more attention for our teams to look at manufacturing, distribution centers, warehouses, and potentially even data centers. There's some work to do on the flooring terms of fire rating, but data centers provide a long term opportunity.

And we think there is an opportunity there to maybe tap into some of our relationships on the building products side, but it is a it is a different go to market. We haven't really had a focus as we've talked about before we do we know we sell some entrants systems and punch out commercial windows into say new.

Speaker Change: Look I think we've got it.

Speaker Change: <unk> to date charges of about $14 7 million and we range that between 15% and $60 million in 15 and $16 million. So not much more I would say coming in Q3, and then from a savings perspective, we raised our range. We were previously added 12 to 14 annual operating or annual run rate.

Speaker Change: <unk> plan, our distribution center, but that's such a small dollar sale for us it's not a it's not a focus area. So this brings more attention.

Speaker Change: We moved that range of 13% to 14, so were seeing ourselves coming in a little bit towards that high end of that range on savings and still on track, we said, we'd deliver 60% of that in fiscal 'twenty five the rest in 26. So I think it's still panning out to be on that kind of a cadence so.

Julio Romero: as well. Very cool business.

Speaker Change: Alright, cool business, well be interested to dig into it a little bit more and then maybe.

Speaker Change: No I'd say on track a little bit favorable from our perspective, and how we're executing project fortify.

Julio Romero: I'll be interested to dig into it a little bit more.

Matt Osberg: And then maybe just last one for me is just on project four to five. Can you just make it easy for us to let us know how much restructuring is left for the next two quarters? Yeah, so from a comment, two things: from a charges perspective, you know, we're lucky. I think we've got a project to date charges of about 14.7 million. And we range that between 15 and 16 million. So not much more I would say coming into three. And then, from a savings perspective, we raised our range. We were previously at a 12 to 14 annual operating or annual run rate.

Speaker Change: Maybe just last one for me is just.

Speaker Change: On project fortify can you just.

Speaker Change: Excellent I'll pass it on thanks very much.

Speaker Change: Make it easy for us and let us know how much how much restructuring is left.

Thanks, Julio Thanks Julio.

Speaker Change: For the next few quarters.

Speaker Change: For our next question.

Speaker Change: Yes, so from a comment two things from a charges perspective.

Speaker Change: Our next question comes from John <unk> with CCA.

Speaker Change: Look I think we've got a <unk>.

Speaker Change: Your line is open.

Project to date charges of about $14 7 million and we range that between 15% and $60 million in 15, and 16 million. So not much more I would say coming in Q3, and then from a savings perspective.

Speaker Change: Good morning, everyone.

John Tighe: Good morning, John John Tighe going back.

John Tighe: W.

Speaker Change: Would it be fair to say that most of their coatings are proprietary or custom solutions.

Speaker Change: We raised our range. We were previously added 12% to 14 annual operating our annual run rate, we moved that range of 13% to 14, so were seeing ourselves coming in a little bit towards that high end of that range on savings and still on track, we said, we'd deliver 60% of that in fiscal 'twenty five the rest in <unk>.

Speaker Change: Yeah, I would look at.

Matt Osberg: We moved that range for 13 to 14. So we're seeing ourselves coming in a little bit towards that high end of that range on savings. And we deliver 60% of that, and fiscal 25 the rest in 26. So I think it's still panning out to be on that kind of a cadence. So you know, I'd say on track a little bit favorable from our perspective and how we're executing project four to five. Excellent. I'll pass it on. Thanks very much. Thanks, Julio. One moment for our next question.

Speaker Change: Let me characterize it this way John So RTC coatings.

Speaker Change: Has some meaningful R&D capacity deep coatings expertise.

Speaker Change: You're talking even some phds in that operation. So they have worked to create new molecules, but find the right blend of different materials that they can put together that not only maximizes the performance.

Speaker Change: Six so I think it's still panning out to be on that kind of a cadence so.

Speaker Change: Say on track a little bit favorable from our perspective, and how we're executing project fortify.

Speaker Change: Excellent I'll pass it on thanks very much thanks.

Speaker Change: Of the coating itself, but then working directly with UW solutions.

Julio Romero: Thanks, Julio Thanks Julio.

Speaker Change: Next question.

Speaker Change: Process manufacturing engineering team to really maximize both the quality of the coding through the manufacturing process.

John Pratch: Our next question comes from John Pratch with KCC. Your line is open. Good morning, everyone. We're in John. Hi. Going back to UW.

Speaker Change: Our next question comes from John perhaps.

Your line is open.

Speaker Change: As well as the performance and also help drive higher throughput and yield so it's a great combination from that standpoint.

John: Good morning, everyone.

John: Morning, John John.

Speaker Change: Going back to U W.

Ty Silberhorn: Would it be fair to say that most of their coatings are proprietary or custom solutions? Yeah, I would look at, you know, let me characterize it this way, John. So RDC coatings has some meaningful R&D capacity, deep coatings expertise. You're talking even some PhDs in that operation. So they have worked to not create new molecules, but find the right blends of different materials that they can put together. That not only maximizes the performance of the coating itself, but then working directly with UW solutions, the process manufacturing engineering team to really maximize both the quality of the coating through the manufacturing process.

The business historically has operated mostly on it.

John: Would it be fair to say that.

Most of the coatings are proprietary or custom solutions.

Speaker Change: Think of it as on a trade secret model so.

There they really are careful about disclosing anything specific on the recipe of the coatings or even the specificity of how the coatings are blended together.

John: Yeah, I would look at.

Speaker Change: Let me characterize it this way John So RTC coatings.

Has some meaningful R&D capacity deep coatings expertise.

Speaker Change: And then the same goes for the manufacturing process that they are very careful about.

Speaker Change: Youre talking even some phds in that operation. So they have worked to create new molecules, but find the right blend of different materials that they can put together that not only maximizes the performance.

Speaker Change: Disclosing the different steps, they do and the process to really get down.

Speaker Change: The best coding possible that gives them the durability and the quality of that performance.

Speaker Change: So there are there.

Speaker Change: Enjoy higher margins obviously.

Speaker Change: Of the coding itself, but then working directly with UW solutions.

Speaker Change: Some type of maybe commodity type of co.

Speaker Change: Coating.

Speaker Change: Absolutely for sure yeah, Okay. Okay. Okay.

Speaker Change: Process manufacturing engineering team to really maximize both the quality of the coding through the manufacturing process.

Speaker Change: The.

Speaker Change: And again, John I would I would point. This is what I had said earlier, they do sell coatings externally.

Ty Silberhorn: As well as the performance and also help drive higher throughput and yield. So it's a great combination from that standpoint. The business historically is operated mostly on it. Think of it as on a trade secret model. So there, they really are careful about disclosing anything specific on the recipe of the coatings or even the specificity of how the coatings are blended together. And then the same goes for the manufacturing process, but they're very careful about disclosing the different steps they do in the process to really get down the best coating possible that gives them the durability and the quality of that performance.

Speaker Change: As well as the performance and also help drive higher throughput and yield so it's a great combination from that standpoint.

Speaker Change: Our RTC coatings was a standalone business and heartwood had worked to acquire and bring that into the fold because.

Speaker Change: The business historically has operated mostly on it.

Speaker Change: Think of it as on a trade secret model so.

Speaker Change #100: Significant volume for them was coming through UW solutions.

Speaker Change: There they really are careful about disclosing anything specific on the recipe of the coatings or even the specificity of how the coatings are blended together and then the same goes for the manufacturing process that they are very careful about.

Speaker Change #101: But the majority of what the work they do is consumed internally now okay. Okay do you anticipate or was there any.

Speaker Change #101: When you look at the performance of UW, where they are capital constrained at all.

Speaker Change #102: Oh is there a constraint to their growth.

Speaker Change: Disclosing the different steps, they do and the process to really get down.

Speaker Change #102: Are there growth in that maybe with your balance sheet balance sheet you can.

Speaker Change: The best coding possible that gives them the durability and the quality of that performance.

Speaker Change #102: Advance that a little bit further.

Ty Silberhorn: So they're, they enjoy higher margins than obviously some type of maybe commodity type of coating. Absolutely for sure. Yeah, okay, okay. And again, Jan, I would point to what I had said earlier; they do sell coatings externally. Our RDC coatings was a standalone business and the heartward had worked to acquire and bring that into the fold because the significant volume for them was coming through UW Solutions, but the majority of what the work they do is consumed internally now.

Speaker Change #103: Well I think the good news is Hartford partners, a private equity firm that had acquired them was really focused on positioning that business for long term growth. So they've made some significant capital investments. So they saw the double digit growth being driven in that flooring business and you know in the last 18 months they had done a significant.

Speaker Change: So there.

Speaker Change: Enjoy higher margins obviously.

Speaker Change: Some parts of them, maybe commodity type of co.

Speaker Change: Coating.

Speaker Change: Absolutely for sure yeah, Okay. Okay. Okay.

Speaker Change: The.

Speaker Change: And again, John I would I would point to what I had said earlier, they do sell coatings externally.

Speaker Change #104: Capacity expansion, so we actually have a lot of runway.

Speaker Change: Our RTC coatings was a standalone business and heartwood had worked to acquire and bring that into the fold because.

Speaker Change #104: To grow that business.

Speaker Change #104: Okay.

Speaker Change #104: And maybe.

Speaker Change #104: Going back to a previous question.

The significant volume for them was coming through UW solutions.

Speaker Change #104: Can you talk a little bit about <unk>.

Speaker Change #104: <unk> of UW across the cycle and obviously there are some things that have happened over the past couple of years.

Speaker Change: But the majority of what the work they do is consumed internally now okay. Okay do you anticipate or was there any.

John Pratch: Do you anticipate, or was there any, when you look at the performance of UW, were they capital constrained at all? Was there a constraint to their growth, and that maybe with your balance sheet, you can advance that a little bit further? Well, I think the good news is, you know, Hartwood Partners, the private equity firm that had acquired them, was really focused on positioning that business for long-term growth. So, they've made some significant capital investments. So, they saw the double-digit growth being driven in that flooring business. And, you know, in the last 18 months, they had done a significant capacity expansion.

Speaker Change #104: You may have.

Speaker Change: When you look at the performance of.

Speaker Change #104: Move the needle a little bit.

Speaker Change: UW, where the capital constrained at all.

Speaker Change #104: Maybe more so than than is typical but can you is there any can you talk a little bit about oh I can spend across the cycle, how you see the the revenues and the profitability.

Speaker Change: Was there a constraint to their growth.

Speaker Change: The growth in that maybe with your balance sheet balance sheet you can.

Speaker Change: Advance that a little bit further.

Well I think the good news is Hartford partners, a private equity firm that had acquired them was really focused on positioning that business for long term growth. So they've made some significant capital investments. So they saw the double digit growth being driven in that flooring business and in the last 18 months they had done a significant.

Speaker Change #104: Yes.

Speaker Change #104: If you were to look at those financials clearly in 2000 22021, there was a healthy bump.

Speaker Change #105: As you know everything went to online and there was a need to quickly build out additional capacity in distribution centers. So they certainly enjoyed a very healthy jump in kind of drove the need to put additional capacity in or have the wherewithal to know that that was going to be a need going forward that.

<unk> capacity expansion, so we actually have a lot of runway.

Ty Silberhorn: So, we actually have a lot of runway to grow that business. OK, OK.

Speaker Change: To grow that business.

Speaker Change: Okay. Okay.

John Pratch: And maybe going back to a previous question, can you talk a little bit about the performance of UW across the cycle? And obviously, there are some things that have happened over the past couple of years that may have moved the needle a little bit, maybe more so than it's typical. But, is there any, can you talk a little bit about, like I said, across the cycle, how you see the revenues and the profitability? Yeah, if you were to look at those financials clearly in 2020-2021, there was a healthy bump as, you know, everything went to online.

Speaker Change #105: That of course settled back down, but then kind of with with that big bump year behind them. They were able to start to get that business back onto a double digit growth rate. It is significant.

Speaker Change: And maybe.

Speaker Change: Going back to a previous question.

Speaker Change: Can you talk a little bit about the performance of <unk>.

Speaker Change: <unk> across the cycle and obviously there are some things that have happened over the.

Speaker Change #106: Again, we're not going to share the percentages from a market competitive standpoint, but it has significant exposure to R&R. So they are not relying on new manufacturing, our new distribution centers to be built certainly provide opportunities and they certainly have sold into new construction.

Speaker Change: Past couple of years.

Speaker Change: So.

You may have.

Speaker Change: Move the needle a little bit.

Speaker Change: Maybe more so than is typical but can you is there any can you talk a little bit about.

Speaker Change: I spent across the cycle, how you see the the revenues and the profitability.

Speaker Change #107: But we like the fact that when we look at the stuff that they have sold over the last three years. It is the majority of it has gone too.

Yes.

If you were to look at those financials clearly in 2000 22021, there was a healthy bump.

Speaker Change #108: R&R, so somewhat in older existing distribution center or manufacturing facility that they they want to put mezzanine flooring or theyre moving to robotics, and they want to put that flooring and to simplify the robotic solution.

Speaker Change: As you know everything went to online and there was a need to quickly build out additional capacity in distribution centers. So they certainly enjoyed a very healthy jump in kind of drove the need to put additional capacity in or have the wherewithal to know that that was going to be a need going forward.

Ty Silberhorn: And there was a need to quickly build out additional capacity and distribution centers. So, they certainly enjoyed a very healthy jump and kind of drove the need to put additional capacity in or have the wherewithal to know that that was going to be a need going forward. You know, that, of course, settled back down. But then, you know, kind of with that, you know, big bumpier behind them, they were able to start to get that business back onto a double-digit growth rate. It is significant. You know, again, we're not going to share the percentages from a market competitive standpoint, but it is significant exposure to R&R.

Speaker Change #108: Okay, Alright, thank you very much I appreciate it.

Speaker Change #109: Thanks, John Thanks, John.

Speaker Change #109: One moment for our next question.

Speaker Change: That of course settled back down, but then kind of with that big bump year behind them. They were able to start to get that business back onto a double digit growth rate. It is significant.

Speaker Change #109: Yeah.

Speaker Change #109: Our next question comes from Josh Shanker with singular research your line is open.

Josh Shanker: Good morning, guys can you hear me.

Josh Shanker: Yeah, So Ken good morning.

Speaker Change: Again, we're not going to share the percentages from a market competitive standpoint, but it has significant exposure to R&R. So they are not relying on new manufacturing, our new distribution centers to be built those certainly provide opportunities and they certainly have sold into new construction.

Speaker Change #111: Congratulations on the acquisition.

Speaker Change #112: Just a question on the 100 million.

Ty Silberhorn: So, they are not relying on new manufacturing or new distribution centers to be built. Those certainly provide opportunities, and they certainly have sold into new construction. But we like the fact that when we look at the stuff that they have sold over the last three years, it is the majority of it has gone to R&R. So, someone in an older existing distribution center or manufacturing facility that they want to put mezzanine flooring in, or they're moving to robotics and they want to put that flooring in to simplify the robotic solution. Okay. All right, Ty. Thank you very much.

Speaker Change #113: Forecast for 2026 on the UWS solutions.

Speaker Change #113: Thus this projection primarily reflect the existing product offerings or does it include.

But we like the fact that when we look at the stuff that they have sold over the last three years. It is the majority of it has gone to R&R. So somewhat in older existing distribution center or manufacturing facility that they they want to put mezzanine flooring or theyre moving to robotics, and they want to put that flooring and to simplify.

Speaker Change #114: The potential.

Speaker Change #114: Potential revenue from new products cross selling if you could just give us some color on that.

Speaker Change #115: Yeah. So yeah, I think the $100 million, that's what we can see today with the current product offerings. You know obviously, we want to we're still in a stage, where we're learning more and more about that business and what we can do and we've done a lot of diligence obviously through the acquisition process. So the $100 million is what we can see.

Speaker Change: The robotics solution.

Speaker Change: Okay, Alright, thank you very much I appreciate it.

Ty Silberhorn: Appreciate it. Thanks, John. One moment for our next question.

John: Thanks, John Thanks, John.

Speaker Change #115: It's something that we can do with the business. Today. We are of course is going to get into that business and look for further opportunities, but it takes time to develop new products, new relationships cross selling opportunities and while we'll pursue them.

Speaker Change: For our next question.

Gossie Schuharan: Our next question comes from Gossie Schuharan with Singular Research; your light is open. Good morning, guys. Can you hear me? Yes, I can. Good morning. Congratulations on the acquisition. Just a question on the 100 million forecast for 2026 on the UW Solutions. Does this projection primarily reflect the existing product offerings, or does it include the product potential revenue from new products, cross selling? If you could just give us some color on that. Yeah, so yeah, I think the $100 million, you know, that's what we can see, you know, today with the current product offerings, you know, obviously.

Jonathan <unk>: Our next question comes from Jonathan <unk> with singular research your line is open.

Jonathan <unk>: Good morning, guys can you hear me.

Speaker Change #116: I would say there's not much of those built into the fiscal 'twenty six number.

Jonathan <unk>: Yes, so Ken good morning.

Jonathan <unk>: Good morning, congratulations on the acquisition.

Speaker Change #116: Okay.

Speaker Change #117: And on the Capex guidance for $40 million to $50 million does that include any kind of additional capex for UW that.

Jonathan <unk>:

Speaker Change: Just a question on the 100 million.

Speaker Change: Forecast for 2026 on the UW solutions.

Speaker Change: This projection primarily reflect the existing product offerings or doesn't include.

Speaker Change #117: Additional on top of that.

No it doesn't but I wouldn't expect that to be very material as Todd said I think they are coming into.

Speaker Change: The.

Speaker Change: Potential revenue from new products cross selling if you could just give us some color on that.

Speaker Change #118: To this acquisition in a good state you know, we'll continue to look at their capex needs as we roll into fiscal 'twenty, six but I wouldn't expect our capex for this spend for this year to be.

Speaker Change: Yeah. So yeah, I think the $100 million, that's what we can see today with the current product offerings.

Matt Osberg: Obviously, we want to; we're still in a stage where we're learning more and more about that business and what we can do, and we've done a lot of diligence out through the acquisition process. So the 100 million is, you know, what we can see is something that we can do with the business today.

Speaker Change: Obviously, we want to we're still in a stage, where we're learning more and more about that business and what we can do and we've done a lot of diligence obviously through the acquisition process. So the $100 million is what we can see is something that we can do with the business. Today. We are of course going to get into that business and look for further opportunities, but it takes time to develop new.

Speaker Change #119: Impacted materially by by acquisition.

Speaker Change #119: Okay.

Speaker Change #120: Do you have any color on the kind of capex that will be required to fully leverage the UW acquisition beyond 'twenty.

Matt Osberg: We're, of course, going to get into that business and look for further opportunities, but, you know, it takes time to develop new products, new relationships, cross-selling opportunities, and while we're pursuing them, you know, I would say there's not much of those built into the fiscal 26 number. Okay, and the CapEx guidance for $40 to $15 million for this, does that include any kind of additional CapEx for UW, or is that additional on top of that? No, it doesn't, but I wouldn't expect that to be very material. As Ty said, I think they're coming into, you know, to this acquisition in a good state.

Speaker Change #121: I think that's something we can get into as we start looking into fiscal 'twenty six as we look at we have to balance those investments against the other priorities in our business and and just make sure. We're striking the right returns on our investment so something as we as we get into fiscal 'twenty six we'll be looking at yeah, I would just add what I said earlier.

Products, new relationships cross selling opportunities and while we'll pursue them.

Speaker Change: I would say there's not much of those built into the fiscal 'twenty six number.

Speaker Change: Okay.

Speaker Change: And the Capex guidance for $40 million to $50 million does that include any kind of additional capex for UW.

Speaker Change #122: Hardwood partners had made a significant investment in coating capacity and you know that was our question going in double digit growth in flooring, what's capacity look like and the good news is brand new coder, that's been running for over a year with really great yields and productivity and plenty of runway.

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Speaker Change: Additional on top of that.

Speaker Change: No it doesn't but I wouldn't expect that to be very immaterial as Todd said I think they're coming into.

Speaker Change #121: To add volume.

Speaker Change: To this acquisition in a good state we'll continue to look at their capex needs as we roll into fiscal 'twenty, six but I wouldn't expect our capex for this spend for this year to be.

Speaker Change #121: Okay.

Matt Osberg: You know, we'll continue to look at their CapEx needs as we roll into fiscal 26, but I wouldn't expect. Our CapEx for this spent for this year to be impacted materially by the acquisition.

Speaker Change #123: And I think you've mentioned that the 30 million.

Speaker Change #124: Not reflected in your sales forecast or is that because you're still forecasting.

Speaker Change #125: Decline of 47% is that youre seeing extra softness in the market or is that just not included in the sales forecast.

Impacted materially by by acquisition.

Speaker Change: Okay.

Ty Silberhorn: And you have any color on the kind of CapEx that will be required to fully leverage the UW acquisition beyond 25? I think that's something we can get into as we start looking into fiscal 26. You know, as we look at, you know, we have to balance those investments against the other priorities in our business and just make sure we're striking the right, you know, returns on our agenda. So something as we, as we get into fiscal 26, we'll be looking at. Yeah, I would just add what I said earlier: the Heartwood Partners had made a significant investment in coding capacity.

Do you have any color on the kind of capex that will be required to fully leverage the UW acquisition beyond 'twenty five.

Speaker Change #126: So the sales forecast that we gave does not include any fiscal 'twenty five impact for the UW solutions acquisition, just because at this point, it's not closed right and we have to think about that to get close and the timing of it but I wanted to provide kind of an order of.

I think that's something we can get into as we start looking into fiscal 'twenty six as we look at we have to balance those investments against the other priorities in our business and and just make sure. We're striking the right returns on our investments so something as we as we get into fiscal 'twenty six we'll be looking at yes, I would just add what I said earlier the.

Magnus steward of what might happen if that acquisition was to close on November 21, so that from an EPS or revenue perspective. Our current guidance does not include any fiscal 'twenty five impact from UW solutions acquisition.

Speaker Change: Hardwood partners had made a significant investment in coating capacity and you know that was our question going in double digit growth on flooring, what's capacity look like and the good news is brand new coder, that's been running for over a year with really great yields and productivity and plenty of runway to to add volume.

Ty Silberhorn: And, you know, that was our question going in. Double digit growth on flooring. What's capacity to look like in the good news is brand new coder that's been running for over a year with really great yields and productivity and plenty of runway to add volume.

Speaker Change #126: Okay.

Speaker Change #127: And just one last question on you know I know last call you I think you've mentioned that to be venturing beyond the west of the Rockies.

Ty Silberhorn: Okay, and I think you mentioned that the 30 million is not reflected in your sales forecast, or is that because you're still focusing on the client 4 to 7%? Is that you're seeing extra softness in the market, or is that just not included in the sales forecast. So the sales forecast that we gave does not include any fiscal 25 impact for the UW Solutions acquisition, just because at this point, it's not closed right and we have to think about that, get close in the timing of it. But I wanted to provide kind of an order of magnitude of what might happen if that acquisition was to close on November 21.

Okay.

Speaker Change #127: The backlog.

Speaker Change #127: Reflect.

Speaker Change: I think you've mentioned that the $30 million.

Speaker Change #128: How much of the backlog is reflecting that.

Speaker Change: Is not reflected in your sales forecast or is that because you're still forecasting decline.

Speaker Change #128: The transition to opt in to the west of the properties.

A decline of 47% is that youre seeing extra softness in the market or is that just not included in the sales forecast.

Speaker Change #129: Yeah, I would say, it's promising we're seeing a lot more activity west of the Rockies, We obviously don't break out.

Speaker Change #129: Our backlog into that amount of detail, but I would say the team is making progress and we're seeing a lot more activity in the west side of the U S, particularly for services.

Speaker Change: So the sales forecast that we gave does not include any fiscal 'twenty five impact for the UW solutions acquisition, just because at this point, it's not closed right and we have to think about that to get close and the timing of it but I wanted to provide kind of an order of.

Speaker Change #130: They've won some stuff out there they have some nice projects that are in queue waiting to get green lighted to move them into their backlog that would boost there.

Speaker Change: Magnitude of what might happen if that acquisition was to close on November 21, so that from an EPS or revenue perspective. Our current guidance does not include any fiscal 'twenty five impact from UW solutions acquisition.

Speaker Change #130: Revenue for west of the Rockies as well.

Matt Osberg: So that from an EPS or revenue perspective, our current guidance does not include any fiscal 25 impact from UW Solutions acquisition.

Speaker Change #130: Yeah.

Speaker Change #130: Okay. Thanks, that's it for me thank you.

Speaker Change #130: Alright, thank you.

Speaker Change #131: And I'm not showing any further questions at this time I'd like to turn the call back over to Todd for any closing remarks.

Ty Silberhorn: Okay, and just one last question on, you know, a new last call. You think you've mentioned that to be venturing beyond west of the Rockies? That does the backlog. Reflect. How much of the backlog is reflecting that transition out into the west of the process? Yeah, I would say it's promising. You know, we're seeing a lot more activity west of the Rockies. We doubt if you don't break out, you know, our backlog into that amount of detail, but I would say the teams are making progress, and we're seeing a lot more activity in the west side of the US.

Okay.

Speaker Change: And just one last question on you know on your last.

Grateful great. Thank you very much for joining us today and I look forward to providing another update in January have a great weekend.

Speaker Change: Last call you I think you've mentioned that to be venturing beyond west of the Rockies.

Speaker Change: Backlog.

Todd: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: Reflect a how.

Speaker Change: How much of the backlog is reflecting that.

Speaker Change: The transition to opt into the west of the Rockies.

Speaker Change: Yeah, I would say, it's promising we're seeing a lot more activity west of the Rockies, We obviously don't break out.

Speaker Change: Our backlog into that amount of detail, but I would say the team is making progress and we're seeing a lot more activity in the west side of the U S, particularly for services.

Ty Silberhorn: Yeah, particularly for services that, you know, they've won some stuff out there. They have some nice projects. They're in queue that they're waiting to get green lighted to move them into their backlog. That would boost their revenue for West of the Rockies as well.

Speaker Change: They've won some stuff out there they have some nice projects that are in queue, if they're waiting to get green lighted to move them into their backlog that would boost there.

Revenue for west of the Rockies as well.

Speaker Change: Right.

Gossie Schuharan: Okay, that's it for me. Thank you.

Speaker Change: Okay. Thanks, that's it from me thank you.

Speaker Change: Alright, thank you.

Operator: I'm not showing any further questions at this time.

Speaker Change: And im not showing any further questions at this time I'd like to now turn the call back over to Todd for any closing remarks.

Ty Silberhorn: I'd like to turn the call back over to Ty for any closing remarks. All right. Well, great. Thank you very much for joining us today.

Alright, great.

Todd: Thank you very much for joining us today and I look forward to providing another update in January have a great weekend.

Ty Silberhorn: And I look forward to providing another update in January. Have a great weekend.

Operator: Ladies and gentlemen, thus concludes today's presentation. You may now disconnect and have a wonderful day. Thank you very much. Thank you.

Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Operator: Good day, and thank you for standing by. Welcome to the Q2 2025 Apogee Enterprises earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your questions, please press star 1-1 again. Please be advised today's conference is being recorded.

Speaker Change: Good day and thank you for standing by welcome to the Q2 2025 Apogee Enterprises earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session I'll need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Speaker Change: Please be advised today's conference is being recorded I would now like to turn the call over to your speaker today, Jeff Fisher and Vice President of Investor Relations. Please go ahead.

Jeff Huebschen: I would like to turn the call over to your speaker today. Jeff Hishin, Vice-President of Investor Relations, please come in. Thank you, Kevin. Good morning, everyone, and welcome to Apogee Enterprises' fiscal 2025 second quarter earnings call.

Jeff Fisher: Thank you Kevin Good morning, everyone and welcome to Apogee Enterprises fiscal 2025 second quarter earnings call with me today are <unk> Silver Horn, Apogees, Chief Executive Officer, and Matt Osborne Chief Financial Officer.

Jeff Huebschen: Wish me today our title Silverhorn Apogee's Chief Executive Officer and Matt Osberg Chief Financial Officer. I'd like to remind everyone that there are slides to accompany today's remarks. These are available in the Investor Relations section of Apogee's website. During this call, we will reference certain non-GAAP financial measures. Definitions of these measures and a reconciliation to the nearest gap measures are provided in the earnings release and slide deck we issued this morning. I'd also like to remind everyone that our call will contain forward-looking statements. These reflect management expectations based on currently available information. Actual results made different materially.

Speaker Change: I'd like to remind everyone that there are slides to accompany today's remarks. These are available in the Investor Relations section of Apogees website. During this call we will reference certain non-GAAP financial measures definitions of these measures and a reconciliation to the nearest GAAP measures are provided in the earnings release.

Speaker Change: And slide deck, we issued this morning.

Speaker Change: I'd also like to remind everyone that our call will contain forward looking statements reflect management's expectations based on currently available information.

Speaker Change: Actual results may differ materially more information about factors that could affect the apogees business and financial results can be found in today's press release and in our SEC filings.

Jeff Huebschen: More information about factors that could affect Apogee's business and financial results can be found in today's press release and in our SEC filings.

Ty Silberhorn: And with that, I will turn the call over to you guys. Thanks, Jeff. Good morning, everyone. I'm very excited to share the highlights from another solid quarter and provide further insights into our recently announced acquisition of UW Solutions. I'll then hand it over to Matt to provide more details on the quarter and our outlook.

Utah: And with that I will turn the call over to Utah. Thanks, Jeff. Good morning, everyone. I am very excited to share the highlights from another solid quarter and provide further insights into our recently announced acquisition of UW solutions.

Utah: Then hand, it over to Matt to provide more details on the quarter and our outlook.

Ty Silberhorn: Let's start with the quarter highlights on page 5 of our presentation. As we expected, revenue declined compared to last year. Similar to the first quarter, this was partly due to our strategic shift away from less differentiated, lower-margin product lines and a reflection of the continued softness in some of the end markets that we serve, particularly non-residential construction. Even with the lower volume, our team continued to drive strong, adjusted operating margin expansion and delivered adjusted EPS growth. Adjusted operating margin was 12.6%. Our second consecutive quarter with margins above 12%. and we had exceptionally strong cash flow from operations in the quarter.

Matt: Let's start with the quarter highlights on page five of our presentation.

Matt: As we expected revenue decline compared to last year.

Matt: Similar to the first quarter. This was partly due to our strategic shift away from less differentiated lower margin product lines.

Matt: And a reflection of the continued softness in some of the end markets that we serve particularly nonresidential construction.

Matt: Even with the lower volume our team continued to drive strong adjusted operating margin expansion and delivered adjusted EPS growth.

Matt: Adjusted operating margin was 12, 6%, our second consecutive quarter with margins above 12%.

Matt: And we had exceptionally strong cash flow from operations in the quarter.

Ty Silberhorn: As you'll see on page seven of our presentation, results in the quarter were once again led by outperformance from architectural glass. The glass team continues to exceed our expectations due to strong pricing and mix, despite pressure on volume. Services delivered double-digit sales growth and achieved their sixth consecutive quarter of sequential adjusted operating margin expansion, moving closer to the seven to nine percent target range. Framing systems in large scale optical both continued to deliver solid profitability despite lower sales volume. And importantly, both segments made progress on key strategic initiatives. Framing systems made further progress executing Project Fortify, keeping us on track to deliver our cost savings targets.

Matt: As Youll see on page seven of our presentation results in the quarter were once again led by outperformance from architectural glass.

Matt: The glass team continues to exceed our expectations due to strong pricing and mix despite pressure on volume.

Matt: Architectural services was also a meaningful contributor to our year over year profit gains.

Matt: Services delivered double digit sales growth and achieve their sixth consecutive quarter of sequential adjusted operating margin expansion moving closer to the 7% to 9% target range.

Matt: Framing systems and large scale optical both continued to deliver solid profitability, despite lower sales volume.

Matt: And importantly, both segments made progress on key strategic initiatives.

Matt: Framing systems made further progress executing project fortify keeping us on track to deliver our cost savings targets.

Ty Silberhorn: They also continue to improve their service levels while positioning the business to outgrow the market. In LSO, we made continued progress on our capacity expansion project, which we expect to come online during the second half of the fiscal year.

We also continued to improve their service levels, while positioning the business to outgrow the market.

Matt: And Lso, we made continued progress on our capacity expansion project, which we expect to come online during the second half of the fiscal year.

Ty Silberhorn: Given the strong earnings results in the second quarter, we are increasing our adjusted EPS outlook for the full year, as shown on page nine, to a range of $4.90 to $5.20. Our results continue to demonstrate the sustainable operating improvements we've achieved through the execution of our three-pillar strategy.

Matt: Given the strong earnings results in the second quarter, we are increasing our adjusted EPS outlook for the full year as shown on page nine to a range of $4 90 to $5 20.

Matt: Our results continue to demonstrate the sustainable operating improvements we have achieved through the execution of our three pillar strategy.

Ty Silberhorn: Following on the heels of this solid quarter, we were excited to announce our agreement to acquire UW Solutions, which we highlight starting on page 11 of our presentation. Before I get into the specifics of the transaction, I'd like to recognize the team at Apigee that has been directly involved in this process and to bring it across the finish line. UW Solutions is a strong strategic fit for Apigee, and this deal is an example of the focus, patience, and diligence of our M&A process and the supporting teams. This is a business we identified some time ago as a potential fit with our strategy.

Matt: Following on the heels of the solid quarter, we were excited to announce our agreement to acquire UW solutions, which we highlights starting on page 11 of our presentation.

Speaker Change: Before I get into the specifics of the transaction I would like to recognize the team at apogee that has been directly involved in this process and to bring it across the finish line.

Speaker Change: UW solutions is a strong strategic fit for apogee and this deal is an example of the focus patience and diligence of our M&A process and the supporting teams.

Speaker Change: This is a business we identified some time ago as a potential fit with our strategy.

Ty Silberhorn: Our team worked directly with the seller, Hartwood Partners, to find a win-win path that will benefit everyone involved, most importantly, UW's employees and their customers. This deal checks all the boxes we are looking for in an ideal acquisition. It brings differentiated solutions with leading positions in attractive markets. It complements our portfolio while expanding and diversifying our growth opportunities. And it is a strong performing business that will be accretive to our long-term financial profile. UW Solutions operates around three product lines, HD printable materials, which has many similarities to our LSL segment, applies high performance coatings to create premium products for the graphic arts market.

Our team worked directly with the seller heartwood partners to find a win win path that will benefit everyone involved most importantly, UWS employees and their customers.

Speaker Change: This deal checks all the boxes, we are looking for in an ideal acquisition.

Speaker Change: It brings differentiated solutions with leading positions in attractive markets.

It complements our portfolio, while expanding and diversifying our growth opportunities.

Speaker Change: And it is a strong performing business that will be accretive to our long term financial profile.

Speaker Change: UW solutions operates around three product lines.

Speaker Change: <unk> printable materials, which has many similarities to our lso segment applies high performance coatings to create premium products for the graphic arts market.

Ty Silberhorn: Industrial Flooring, which applies high performance coatings to engineered wood used primarily in warehouses, distribution centers, and industrial facilities, and engineered coatings, which formulates and produces a variety of high performance coatings that are used internally as well as so to third party customers for other applications. This acquisition is very well aligned with our strategy to create peak value. UW Solutions is an economic leader in their target markets. They bring differentiated capabilities, well-established brands, and leading market positions. They also have an impressive record of execution and profitability, with strong EBITDA margins. Adding UW Solutions will complement our current portfolio and expand our offerings into new segments.

Speaker Change: Industrial flooring, which applies high performance coatings to engineered wood used primarily in warehouses distribution centers and industrial facilities.

Speaker Change: And engineered coatings, which formulates and produces a variety of high performance coatings that are used internally as well as so to third party customers for other applications.

Speaker Change: This acquisition is very well aligned with our strategy to create peak value.

Speaker Change: UW solutions as an economic leader in their target markets, they bring differentiated capabilities, well established brands and leading market positions.

Speaker Change: They also have an impressive record of execution and profitability with strong EBITDA margins.

Speaker Change: Adding UW solutions will complement our current portfolio and expand our offerings into new segments.

Ty Silberhorn: The Residentec brand expands our offerings for non-residential construction, providing a meaningful entry into manufacturing, warehousing, and distribution projects with significant exposure to R&R versus new construction. The HD printable materials business accelerates our efforts to grow and diversify LSO's core business. In RDC, coatings brings an R&D capability to drive new product development and enable expansion into new applications and markets. Importantly, the deal will leverage Apogee's core capabilities to drive value through the integration. We will enable cost synergies by leveraging areas like HR, procurement, IT, and finance. And we will deploy the Apogee Management System to further enhance the manufacturing operations.

The resin deck brand expands our offerings for nonresidential construction, providing a meaningful entry into manufacturing warehousing and distribution projects with significant exposure to R&R versus new construction.

The HD printable materials business accelerates, our efforts to grow and diversify <unk> core business.

Speaker Change: In RTC coatings brings an R&D capability to drive new product development and enable expansion into new applications and markets.

Speaker Change: Importantly, the deal will leverage apogees core capabilities to drive value through the integration.

Speaker Change: We will enable cost synergies by leveraging areas like HR procurement.

Speaker Change: And finance.

Speaker Change: And we will deploy the apogee management system to further enhance the manufacturing operations.

Ty Silberhorn: As shown on page 17 of our presentation, UW Solutions brings unique capabilities and process technology that are a strong complement to what we do in our LSO segment. Both businesses have expertise in developing and applying high performance coatings to a variety of substrates. LSOs current capabilities that are centered around deposition and roll coating from glass and acrylic substrates. UW Solutions will add complementary capabilities in roll coating, curtain coating, and spray coating used on metals, wood, plastic, and other substrates. Together, these businesses will offer a broad range of manufacturing process capabilities that can provide a wide variety of coating types and high-performance substrates for a diverse set of market applications.

Speaker Change: As shown on page 17 of our presentation UW solutions brings unique capabilities and process technology that are a strong complement to what we do in our <unk> segment.

Speaker Change: Both businesses have expertise in developing and applying high performance coatings to a variety of substrates.

Speaker Change: <unk> current capabilities that are centered around deposition and ROE coding for glass and acrylic substrates.

UW solutions, wired complementary capabilities, and Roque holding curtain coding and spray coating used on metals wood plastic and other substrates.

Speaker Change: Together these businesses will offer a broad range of manufacturing process capabilities that can provide a wide variety of coding types.

Speaker Change: In high performance substrates for a diverse set of market applications.

Ty Silberhorn: We plan to fully integrate the business into our LSOs segment. The combined strength of these businesses will create a powerful new engine for growth. We will bring together a portfolio of leading brands that will serve a diverse set of customers and applications. The deal will also provide cross-selling opportunities and accelerate growth drivers in both businesses. And as I described earlier, we will leverage the Apogee management system in our back office capabilities to drive meaningful costs.

Speaker Change: We plan to fully integrate the business into our Lso segment.

Speaker Change: The combined strength of these businesses will create a powerful new engine for growth.

Speaker Change: We will bring together a portfolio of leading brands that will serve a diverse set of customers and applications.

Speaker Change: The deal will also provide cross selling opportunities and will accelerate growth drivers in both businesses.

Speaker Change: And as I described earlier, we will leverage the apogee management system, and our back office capabilities to drive meaningful cost synergies.

Ty Silberhorn: We expect the acquisition to close sometime in our fiscal third quarter, and we plan to move quickly to execute a rigorous and comprehensive integration plan. This is a great business that strongly complements our strategy. We are excited for the opportunity to welcome UW Solutions employees to Apogee and look forward to working together to build a powerful new growth engine for the company.

Speaker Change: We expect the acquisition to close sometime in our fiscal third quarter, and we plan to move quickly to execute a rigorous and comprehensive integration plan.

This is a great business that strongly complements our strategy we're.

Speaker Change: We're excited for the opportunity to welcome UW solutions employees to apogee and look forward to working together to build a powerful new growth engine for the company.

Matt Osberg: With that, I will turn it over to Matt to comment about the quarter, our outlook, and the acquisition. Thanks, Sai.

Speaker Change: With that I will turn it over to Matt's comment about the quarter, our outlook and the acquisition.

Matt Osberg: Good morning, everyone. Before I begin with a discussion of our second quarter results and outlook, I want to say how excited I am about the acquisition of UW Solutions. I want to reiterate Ties comments on the strategic benefits of this deal and the opportunities for growth that it creates. This transaction also demonstrates our ability to deploy capital for assets with accretive financials that build on the momentum that we have created in our existing business. I will provide more information on the acquisition toward the end of my comments. Starting with our second quarter results, net sales were down 3% year over year but improved sequentially compared to a decline of 8% in the first quarter.

Matt: Thanks, Jay and good morning, everyone.

Matt: Before I begin with a discussion of our second quarter results and outlook I want to say how excited I am about the acquisition of UW solutions.

Speaker Change: I want to reiterate <unk> comments on the strategic benefits of this deal and the opportunities for growth that it creates.

Speaker Change: This transaction also demonstrates our ability to deploy capital for assets with accretive financials that build on the momentum that we've created in our existing business.

I will provide more information on the acquisition towards the end of my comments.

Speaker Change: Starting with our second quarter results net sales were down 3% year over year, but improved sequentially compared to a decline of 8% in the first quarter.

Matt Osberg: The sales decline in the quarter was primarily driven by lower volumes in framing, glass, and LSO. Similar to the first quarter, the volume decline was primarily driven by our strategic decision to exit some lower margin product lines in framing as part of Project Fortify and by softness in parts of our end markets. The lower volumes were partially offset by improved pricing and product mix and glass and favorable project mix in services. Despite lower sales, we delivered another strong quarter of profitability. Adjusted operating margin improved 110 basis points to 12.6%, driven by improved pricing and mix, favorable material costs, and lower insurance-related costs.

The sales decline in the quarter was primarily driven by lower volumes in framing glass and lso.

Speaker Change: The lower volumes were partially offset by improved pricing and product mix in glass and favorable project mix and services.

Speaker Change: Despite lower sales, we delivered another strong quarter of profitability adjusted operating margin improved 110 basis points to 12, 6% driven by improved pricing and mix favorable material costs and lower insurance related costs.

Matt Osberg: Adjusted diluted EPS grew 6% to $1.44, which equals the record adjusted EPS reported in the first quarter. Adjusted diluted EPS growth was primarily driven by higher adjusted operating income, along with lower interest expense. Turning to the segment results, framing net sales declined 11%, primarily due to lower volume related to our strategic shift away from certain lower margin product lines as part of Project Fortify. However, framing sales did improve sequentially compared to the first quarter. Despite the lower volume, framing continued to sustain adjusted operating margins within its 10 to 15% target range, as the unfavorable leverage impact of lower volume and a less favorable mix were partially offset by favorable material costs.

Speaker Change: Adjusted diluted EPS grew 6% to $1 44.

Speaker Change: Which equaled the record adjusted EPS, we reported in the first quarter.

Speaker Change: Adjusted diluted EPS growth was primarily driven by higher adjusted operating income along with lower interest expense.

Speaker Change: Turning to the segment results.

Speaker Change: Framing net sales declined 11%, primarily due to lower volume related to our strategic shift away from certain lower margin product lines as part of project fortify.

Speaker Change: However, framing sales did improve sequentially compared to the first quarter.

Matt Osberg: Net sales in glass declined 4%, primarily due to lower volume driven by softening end market demand. This was partially offset by strong pricing and mix. Once again, glass operating margin exceeded our expectation, improving by 490 basis points to a record 23.4%. This margin overperformance was primarily driven by stronger-than-expected pricing and mix. Moving to services, net sales grew 11%, primarily due to a more favorable mix of projects and increased volume. Adjusted operating margin improved 250 basis points to 6.5%, making this the sixth consecutive quarter of sequential margin expansion for services. Services backlogs ended the quarter at $792 million, down from $867 million last quarter.

Net sales in glass declined 4%, primarily due to lower volume driven by softening end market demand.

Speaker Change: This was partially offset by strong pricing and mix.

Speaker Change: Once again glass operating margin exceeded our expectations, improving by 490 basis basis points to a record 23, 4%.

Speaker Change: This margin over performance was primarily driven by stronger than expected pricing and mix.

Moving to services.

Net sales grew 11% primarily due to a more favorable mix of projects and increased volume.

Speaker Change: Adjusted operating margin improved 250 basis points to six 5%, making this the sixth consecutive quarter of sequential margin expansion for services.

Speaker Change: Services backlog ended the quarter at $792 million.

Speaker Change: Down from $867 million last quarter.

Matt Osberg: Although backlog declined in the quarter, the overall trend remains positive, with backlog up 17% compared to a year ago, as prior to this quarter, services had experienced three consecutive quarters of sequential backlog growth. LSO sales declined 16%, primarily due to lower volume in our retail channel, partially offset by a more favorable mix. The volume decline was primarily driven by the impact of lower distribution at one of our retail channel customers. Operating margin declined 60 basis points to 19.1%, reflecting the impact of lower volume, partially offset by improved mix and cost savings. Corporate and other expenses were flat compared to the prior year, with higher compensation and benefit costs offset by lower insurance-related expenses.

Speaker Change: <unk> sales declined 16%, primarily due to lower volume in our retail channel, partially offset by a more favorable mix.

Speaker Change: The volume decline was primarily driven by the impact of lower distribution at one of our retail channel customers.

Speaker Change: Operating margin declined 60 basis points to 19, 1%, reflecting the impact of lower volume, partially offset by improved mix and cost savings.

Speaker Change: Corporate and other expenses were flat compared to the prior year with higher compensation and benefit cost offset by lower insurance related expenses.

Matt Osberg: Turning to cash flow in the balance sheet, cash from operations in the quarter was very strong at $59 million, up 42% compared to last year's second quarter. This brings our year-to-date cash from operations to $64 million, which is in line with the strong cash flow we generated in the first half of the prior year. Our balance sheet remains in a very strong position with low debt and no near term maturities. Additionally, during the quarter, we refinanced our debt facility. The new credit facility significantly expanded our borrowing capacity at favorable terms. The new facility provides up to $700 million of capacity through a $450 million revolving credit facility and a $250 million delayed draw term loan.

Speaker Change: Turning to cash flow and the balance sheet cash from operations in the quarter was very strong at $59 million up 42% compared to last year's second quarter.

Speaker Change: This brings our year to date cash from operations to $64 million, which is in line with the strong cash flow we generated in the first half of the prior year.

The new facility provides up to $700 million of capacity through a $450 million revolving credit facility and a $250 million delayed draw term loan.

Matt Osberg: The increase in this facility gives us additional committed capacity to support our growth strategy. We expect to utilize the $250 million delayed draw term loan, as well as cash on hand to finance our acquisition of UW solutions. Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4% to 7%. This range continues to include approximately two percentage points of decline related to fiscal 25 reverting to a 52-week year and approximately one percentage point of decline related to the actions of Project Fortify to eliminate certain lower-margin product and service offerings.

Speaker Change: The increase in this facility gives us additional committed capacity to support our growth strategy.

Speaker Change: We expect to utilize the $250 million delayed draw term loan as well as cash on hand to finance our acquisition of UW solutions.

Moving to our outlook for the full fiscal year, we continue to expect net sales to decline 4% to 7%.

Matt Osberg: We expect sales declines in framing, glass, and LSO to be partially offset by growth in services as we execute a strong pipeline of projects in our backlog. We now expect full-year consolidated adjusted operating margin will improve to approximately 11%, primarily driven by the strong margin performance in the first half of the year. We continue to expect adjusted operating margin to decline sequentially in the second half of the year, primarily due to lower volume and pricing pressure in glass. As I mentioned, glass operating margin exceeded our expectations in the first half of the year. However, primarily driven by stronger than expected pricing and mix.

Speaker Change: We expect sales declines in framing glass and lso to be partially offset by growth in services as we execute our strong pipeline of projects in our backlog.

Speaker Change: We now expect full year consolidated adjusted operating margin will improve to approximately 11%.

Speaker Change: Primarily driven by the strong margin performance in the first half of the year.

Speaker Change: We continue to expect adjusted operating margin to decline sequentially in the second half of the year, primarily due to lower volume and pricing pressure in glass.

Speaker Change: As I mentioned glass operating margin exceeded our expectations in the first half of the year, primarily driven by stronger than expected pricing and mix.

Matt Osberg: Due to the high variable contribution margin in our glass business, operating margin is highly sensitive to changes in assumptions of price and mix. Our forecasts are based on price and mix data in our pipeline, as well as assumptions on when work will flow through production. During the first half of the fiscal year, we saw workflow with favorable pricing and mix, which drove the margin improvement. Based on current visibility into our pipeline and end market trends, we expect glass margins will moderate in the second half, moving into the top half of the 10 to the 15% target range, with full year operating margin in the high teens.

Speaker Change: Due to the high variable contribution margin in our glass business operating margin is highly sensitive to changes in assumptions of price and mix.

Speaker Change: Our forecasts are based on price and mixed data in our pipeline as well as assumptions on when will work will flow through production.

Speaker Change: During the first half of the fiscal year, we saw workflow with favorable pricing and mix, which drove the margin improvement.

Matt Osberg: We continue to expect full year framing adjusted operating margin to improve compared to fiscal 24 and be within the target range of 10 to 15%. For services, we continue to expect sequential adjusted operating margin improvement in the second half, with full year adjusted operating margin approaching the 7 to 9% target range. We continue to expect LSO operating margin will decline compared to last year, primarily due to lower volume. Finally, we expect corporate and other expenses to be approximately $8 million per quarter in the second half of the year.

Speaker Change: We continue to expect full year framing adjusted operating margin to improve compared to fiscal 'twenty, four and D. Within the target range of 10% to 15%.

Speaker Change: We continue to expect <unk> operating margin will decline compared to last year, primarily due to lower volume.

Speaker Change: Finally, we expect corporate and other expenses to be approximately $8 million per quarter in the second half of the year.

Matt Osberg: We are increasing our full year outlook for adjusted diluted EPS to a range of $4.90 to $5.20, reflecting our stronger than expected second quarter performance. As a reminder, we anticipate the reversion to a 52-week year will reduce adjusted diluted EPS by approximately 20%. We continue to expect an effective tax rate of approximately 24.5% and full-year capital expenditures of $40 to $50 million. We expect another strong year for cash flow, with cash from operations higher than our historical averages but below last year's record level.

Speaker Change: We are increasing our full year outlook for adjusted diluted EPS to a range of $4 90 to $5 20.

Speaker Change: Reflecting our stronger than expected second quarter performance.

Speaker Change: As a reminder, we anticipate the reversion to a 52 week year will reduce adjusted diluted EPS by approximately 20% 20.

We continue to expect an effective tax rate of approximately 24, 5% and full year capital expenditures of $40 million to $50 million.

Speaker Change: We expect another strong year for cash flow with cash from operations higher than our historical averages, but below last year's record level.

Matt Osberg: Let me wrap up with some additional comments about the acquisition of UW Solutions. We are very excited to acquire a growth business and expect that the transaction will be accretive to our long-term financial profile, including revenue growth rate and adjusted EBITDA margin. We expect to achieve $5 million in annual run rate synergies by the end of fiscal 27, including these synergies in net of the $27 million tax step-up benefit. The purchase price remaining represents approximately 8.5 times fiscal 26 estimated adjusted EBITDA. We expect to finance the transaction with cash on hand and borrowings under our current credit facility.

Speaker Change: Let me wrap up with some additional comments about the acquisition of UW solutions.

Speaker Change: We expect to achieve $5 million in annual run rate synergies by the end of fiscal 2007.

Speaker Change: We expect to finance the transaction with cash on hand, and borrowings under our current credit facility at.

Matt Osberg: At the close of the transaction, we expect our consolidated leverage ratio, as defined in our credit agreement, will be approximately 1.5 times. This leverage ratio still provides further capacity for us to continue to deploy capital for growth. In fiscal 26, we expect the acquisition to contribute approximately $100 million in revenue at an adjusted EBITDA margin of approximately 20% and to be accretive to our adjusted diluted EPS. For fiscal 25, assuming the acquisition closes on November 1st, we expect approximately $30 million of incremental net sales, and we expect adjusted diluted EPS will be reduced by approximately 10 cents due to increased interest cost and amortization expense.

Speaker Change: At the close of the transaction, we expect our consolidated leverage ratio as defined in our credit agreement will be approximately one five times.

Speaker Change: This leverage ratio still provides further capacity for us to continue to deploy capital for growth.

In fiscal 'twenty six we expect the acquisition to contribute approximately $100 million in revenue at an adjusted EBITDA margin of approximately 20% and to be accretive to our adjusted diluted EPS.

Speaker Change: Due to increased interest costs and amortization expense.

Matt Osberg: These potential fiscal 25 impacts are not included in the outlook we provided today.

Speaker Change: These potential fiscal 'twenty five impacts are not included in the outlook we provided today.

Matt Osberg: In conclusion, this is a very exciting time for Apogee. Our team continued to execute at a high level in the first half of the year, delivering strong earnings results and positioning the company for improved long-term growth. Our healthy financial position and expanded credit facility provided us the opportunity to make an accretive acquisition while also investing in the business and returning cash to shareholders. And we are positioned to acquire a business that we expect will create new growth opportunities for us in the future. We believe these outcomes are the result of tremendous efforts by the entire Apogee team to execute our strategy, and we intend to build on this momentum in the future.

Speaker Change: In conclusion. This is a very exciting time for apogee our team continued to execute at a high level in the first half of the year delivering strong earnings results and positioning the company for improved long term growth.

Speaker Change: And we are positioned to acquire a business that we expect will create new growth opportunities for us in the future.

Speaker Change: We believe these outcomes are the result of tremendous efforts by the entire apogee team to execute our strategy and we intend to build on this momentum in the future.

Ty Silberhorn: With that, I'll turn it back over to Ty for some concluding remarks. Thanks, Matt. To wrap up, our team delivered another strong quarter. We are continuing to build positive momentum as we execute our strategy, achieving significant margin expansion and adjusted earnings growth despite some softness in our end markets. We can do so given the stronger operating foundation we've built over the past three years. The acquisition of UW Solutions is an important milestone for our company as we point to both organic and interdantic growth, positioning the company for continued success as we move ahead.

Operator: With that, we are ready to take your questions. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered or were asked to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster.

Speaker Change: That we are ready to take your questions.

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or wish to move yourself from the queue. Please press star one again.

Speaker Change #100: I'll pause for a moment, while we compile the Q&A roster.

Speaker Change #100: Okay.

Brent Thielman: Our first question comes from Brent. Tell me with the A-Davidson. Your line is open. Thank you. Good morning. Congrats on the transaction. Good morning, Brent. Thank you.

Speaker Change #100: Okay.

Speaker Change #101: Our first question comes from Brent Thielman with D. A Davidson your line is open.

Brent Thielman: Hi, Thanks, good morning, Congrats on the transaction.

Brent Thielman: Good morning, Brian Thank you.

Brent Thielman: Yeah, maybe just to start on that, you know, Ty, I was curious just on the cross-selling opportunities. Maybe what you see there and help quickly, do you think you can leverage that? Yeah, we look at the HD printable materials. I would say the good news is there is not a significant customer overlap. We actually saw that as a positive. There are commonalities in the market, particularly in that HD printable material side of the UW Solutions business. So, as we dug into that, both our team within LSO and the UW Solutions team see some really nice opportunities, and we've actually already had some outreach from customers with respect to that.

Yes, maybe just to start on that.

Speaker Change #102: Hi, I was curious just on the.

Speaker Change #103: The cross selling opportunities, maybe what you see there and how quickly do you think you can you can leverage that.

Yes, we look at the HD printable materials I would say the good news is there is not as significant customer overlap, we actually saw that as a positive there are commonalities.

Speaker Change #103: In the market, particularly in that HD printable materials side of the UW solutions business.

Speaker Change #103: So as we dug into that both our team within lso in the EW solutions team see some really nice opportunities when we actually already had some outreach from customers with respect to that so that's a complementary offering to what we already provide into that custom framing and museum of art business.

Ty Silberhorn: So that's a complimentary offering to what we already provide into that custom framing and museum art business. So that's where I think we see the biggest opportunities.

Speaker Change #103: So that's where I think we see the biggest opportunities.

Ty Silberhorn: The flooring side of the business, which goes to market under the Resendek brand, is really recognized as a leader in that industrial flooring where you're going to put robotics automated solutions into those distribution centers, manufacturing facilities. It is a different go to market. So I think we're being cautious in terms of how much crossover we see in some of our building products channels, but we do see opportunity to continue to build on the momentum within that business where they built a strong partnership with some of those robotics companies and have some good inroads with some of the larger retailers as well as online and brick-and-mortar retailers in the market to drive that business growth.

Speaker Change #103: The flooring side of the business, which goes to market under the resin deck brand and has really recognized as a leader.

Speaker Change #103: In that industrial flooring, where youre going to put robotics or automated solutions into those distribution centers manufacturing facilities.

Speaker Change #103: Got.

Speaker Change #104: It is a different go to market. So I think we're being cautious in terms of how much crossover we see in some of our building products channels, but we do see opportunity to continue to build on the momentum within that business, where they've built a strong partnership with some of those robotics companies and have some <unk>.

Speaker Change #103: Good inroads.

With some of the larger.

Retailers as well as online and.

And brick and mortar retailers in the market to drive that business growth.

Operator: Okay, I appreciate that tie.

Speaker Change #105: Okay, Alright appreciate that tie and then.

Ty Silberhorn: And then I want you to know just because a lot of these areas are new, I'm wondering if maybe you could speak to some of the categories that UW brings to the company more so just around from kind of the market share that these different businesses have. And you know, would it be fair for us to think that these might be areas you're going to look to consolidate further. Well, I'd say as you look at the business from an overall market percentage, there's we won't talk about shares in general, but they are very focused on premium parts of the market, both with the in that AC printable materials, which they go to market under the Chroma Lux and Unit sub brands, and then very much so again on the resident side as well, very focused on premium parts of the market.

Speaker Change #106: Yes, just because a lot of these areas are new I'm wondering if maybe you could.

Speaker Change #107: Some of the categories that <unk> brings to the company more so just around from kind of the market share.

Speaker Change #108: These different businesses have.

Speaker Change #109: And would it be fair for us to think that these might be areas youre going to look to consolidate further.

Well I would say is as you look at the business from.

Speaker Change #110: And overall market percentage theirs, we won't talk about shares in general but.

Speaker Change #110: They are very focused on premium parts of the market both with the in.

Speaker Change #110: And that HD printable materials, which they go to market under the chroma Lux and unit sub brands and then very much. So again in the on the resin side as well very focused on premium parts of the market. So as we look at those both of those markets are actually significantly large, but then as you get into kind of an addressable or core market focus.

Ty Silberhorn: So as we look at those, both of those markets are actually significantly large, but then as you get into kind of an addressable or core market focus, you know, they become smaller as we drive that focus to be able to sell differentiated solutions. You know, as we look at our M&A pipeline, I think we've talked about still being focused on where we can add additional differentiated products in their portfolio, not just building materials products. Although that is a, you know, core driver since that is the bulk of where our business sets, but we also continue to look at things that can continue to build out the capabilities we have within the LSO segment.

They become smaller as we drive that that focus to be able to sell differentiated solutions.

Speaker Change #110: As we look at our M&A pipeline I think we've talked about still being focused on where we can add additional differentiated products into our portfolio.

Speaker Change #110: Not just building materials products, although that that is our.

Core drivers since that is the bulk of where our business sets, but we also continue to look at things that can continue to build out the capabilities. We have within the <unk> segment. So both areas.

Ty Silberhorn: So both areas will remain a focus for us in our M&A work.

We will remain a focus for us in our M&A work.

Brent Thielman: Okay, okay, maybe just one on the core business. I mean architectural glass just continues to extraordinary contributions here from a profitability perspective. Natty Kite, your comments about the expectations into the second half of the fiscal year. Maybe just you could talk around with the end bound orders. Tell you and inform you and you know as you are starting to see maybe some normalization or pressure on pricing or else it's seen any indications that maybe that's leveling off at this point. Yeah, Brent, so yeah, I mean, look, I I love being wrong in the right way, and I've been wrong a few times on glass, but they think fully in the right way.

Speaker Change #111: Okay, Okay, and maybe just one on the core business I mean architectural glass.

Speaker Change #112: It continues to be extraordinary contributions here from a profitability perspective, Matt I caught your comments about the expectations into the second half of the fiscal year, maybe just if you could talk around what the inbound orders.

Speaker Change #112: <unk> and <unk>.

Speaker Change #113: <unk> and <unk>.

Speaker Change #115: As you are starting to see maybe some normalization or pressure on pricing are you seeing any indications that maybe that's.

Matt: Leveling off at this point.

Brent Thielman: Yes, Brent.

Yes, I mean look I love being wrong in the right way and I have been wrong few times on glasses, but they think fully in the right way.

Ty Silberhorn: You know it's as I tried to call out, really just to give people some insights into, you know, that business. It's such a high variable contribution margin that you know as you look at what's in our pipeline and how that work will flow it can really have a significant impact. And you know for the good news for us is we've seen an extended hold up of price and mix that's really, you know, believe that those margin rates over the past couple of quarters. So as we look into the pipeline that we see now, which you know, which is limited, right, we've got some insights, but we can't still see the rest of the year.

Brent Thielman: As I tried to call out really just to give people. Some some insights into that business. It's such a high variable contribution margin that you know as you look at what's in our pipeline and how that work will flow. It can really have a significant impact in the.

Ty Silberhorn: There's always variability on what work flows through that pipeline, and there's variability on the pricing and mix in that pipeline too. So as some of that you know as expectation of what work will flow the end and at what margin that can have big big changes, but we do see a more a more uniform profile in terms of lower price and lower margin mix in that pipeline than what we've seen in that pipeline. We've seen that in the first half of the year, so you know that's why the outlook for the second half of the year is you know much lower than the first half of the year. And you know, like I said, we've got some visibility in there, but definitely not the rest of the year, so.

A more uniform profile in terms of lower price and lower margin mix in that pipeline than what we've seen in the first half of the year. So that's why the outlook for the second half of the year is much lower than the first half of the year and like I said, we've got some visibility in there.

Brent Thielman: But definitely not the rest of the year so.

Brent Thielman: We do expect that to moderate, like I said, you know, in that upper half of that 10 to 15% margin rate for the back half of the year and ending somewhere in the high teens based on what we can see today. Okay, all right, very good. I'll pass it on. Congrats again on the transaction in the quarter. Thanks, Brian.

Brent Thielman: We do expect that to moderate like I said in that upper half of that 10% to 15% margin rate for the back half of the year and ending somewhere in the high teens.

Brent Thielman: Based on what we can see today.

Speaker Change #116: Okay, Alright, very good I'll pass it on and congrats again on the transaction in the quarter.

Brian: Thanks, Brian Thanks, Brian.

Operator: One moment for our next question.

One moment for our next question.

Okay.

Julio Romero: Our next question comes from Julio Romero with Siddodeon Company; your line is open. Thanks. Hey, good morning time, Matt and Jeff. Congrats again on the UW solution steel. Thanks Julio thank you. Hey, I was hoping you know maybe also staying on the deal a little bit just if you could give us a sense of kind of the historical growth rate. I know you said on the press release that it was a creative to legacy Apogee, but just give, if you could, maybe better granularity into maybe the historical growth rate that UW has had in the years prior.

Speaker Change #118: Our next question comes from Julio Romero with Sidoti <unk> Company. Your line is open.

Julio Romero: Thanks, Hey, good morning time, Matt and Jeff Congrats again on the UW solutions steel.

Speaker Change #119: Thanks, Julio Thank you.

Speaker Change #120: Hey, I was hoping maybe.

Speaker Change #121: Also staying on the deal a little bit just if you could give us a sense of kind of the historical.

Growth rate I know you said in the press release that it was accretive to.

So to legacy apogee, but just if you could give us maybe better granularity into maybe the historical growth rate that gws had in the years prior.

Julio Romero: Well, I think the key driver to that business over the last couple of years has been the industrial flooring segment. And just to give you a rough idea, we don't really want to break out the details, but that's about half, call it approximately half, of their revenue base. So that has seen some strong growth over the last few years. There's certainly had some significant growth as it came out of covid or you know going into covid and all the online increase. But then they've been able to kind of build upon that and then continue to have some very strong growth, you know, approaching double digit. So we look at that part of the business.

Speaker Change #122: Well I think the key driver to that business over the last couple of years has been the industrial flooring segment and.

Speaker Change #123: And just to give you a rough idea, we don't really want to break out the details, but thats about half call. It approximately half of their revenue base. So that has seen some strong growth.

Speaker Change #122: Over the last few years.

Certainly had some significant growth as we came out of Covid are going into Covid and all the online increase.

Speaker Change #122: But then they have been able to kind of build upon that and then continue to have some very strong growth.

Speaker Change #122: Approaching double digit so we look at that part of the business. We see good momentum in that business going forward little lower growth rates in the rest of the business and I would look at the coatings as being mostly internally consumed they do sell to third party for different applications.

Matt Osberg: We see good momentum in that business going forward, little lower growth rates in the rest of the business, and I would look at the coatings as being mostly internally consumed. They do sell to third party for different applications until they have had some growth there, but most of that coatings business is consumed internally. So they're doing formulations that are then used on the other products that UW Solutions produces in the flooring and the HD printable material. Yeah, I know it's the only thing I'd add, Julio. You know, this is a tie pointed out in his comments.

So they have had some growth there, but most of that coatings business is.

Speaker Change #122: Is consumed internally so theyre doing formulations that are then used on the other products that UW solutions produces in the flooring in the HD printable materials.

Speaker Change #122: Yes, no. It's the only thing I'd add Julio.

Speaker Change #124: This is this is a tide pointed out in his comments. This is a better together acquisition right. We talked about the additional capacity that we've got coming online in lso.

Matt Osberg: This is a better together acquisition, right? We talked about the additional capacity that we've got coming online in LSO, the R&D capabilities that come with this kind of acquisition and the, you know, the some market crossover, but some new markets. So I think that there is an opportunity to, you know, even improve on what they've been able to do with a better together solution here in LSO. Got it, that's really helpful. I appreciate that, guys. And, you know, that that flooring business does seem pretty interesting. Just given the exposure to some good secular growth themes like on showering e-commerce, et cetera.

Speaker Change #124: R&D capabilities that come with this kind of acquisition in the <unk>.

Speaker Change #124: Some market crossover, but some new market. So I think that there is an opportunity to even improve on what <unk> been able to do with the better together solution here and lso.

Speaker Change #125: Got it that's really helpful. I appreciate that guys and that flooring business does seem pretty interesting.

Speaker Change #126: Just given the exposure to some good secular growth themes like Onshoring E Commerce.

Speaker Change #127: Et cetera.

Ty Silberhorn: Can you maybe just talk about that piece a little bit more, how the product offering is a bit differentiated? And then secondly, can you maybe speak to how the go to market? Or the sales strategy, I guess, is a little bit different than your legacy business? Sure. I mean, I'll start, and Matt can add additional comments if I miss some things. But if you look at that business, it really differentiates itself on the coding that's applied to the wood substrate. So it is an engineered wood product. You know, that is procured from a third-party supplier.

Can you, maybe just talk about that piece a little bit more.

Speaker Change #128: How does the product offering is differentiated and then secondly.

Speaker Change #128: Can you maybe speak to how the go to market strategy for.

Speaker Change #128: The sales strategy I guess, there's a little bit different than.

Speaker Change #128: And your legacy business.

Matt: That is procured.

Speaker Change #128: <unk>.

Ty Silberhorn: But then UW Solutions has created and then applies its own proprietary coding on that engineered wood product to create not only a very durable surface, but also a service that has very smooth and consistent thickness properties. That becomes very important when you start to run different robots and automated equipment over that flooring. So the smoother, flatter that surface is, the easier it is for that robot to move around on that flooring. And it simplifies some of the software that has to be developed to make those automated robots effective. The other piece is it's basically think of it as sold in panels.

Very smooth and consistent thickness properties that becomes very important when you start to run different robots and automated equipment over that flooring. So the smoother flatter that surfaces the easier it is for that.

Matt: Robot to move around on that flooring and it simplifies some of the software that has to be developed to make that automate those automated robots effective.

The other piece is it's basically think of it is sold in panels that makes it easy to install its most of the business or a large portion of the business goes into mezzanine flooring. So think of a distribution center that wants to add a mezzanine to at basically create more inventory capacity, which has been a big driver.

Matt: Even in some of the micro fulfillment centers that have popped up over the last few years.

Matt: But because it's also a panel in some cases.

Matt: Some of the.

Matt: Customers have chosen to put metal strips in between those panels, which also can act as a way to charge the robots as they work across the floor. So there's some additional productivity and efficiencies.

Ty Silberhorn: So there's some additional productivity and efficiencies that that solution brings to those customers. The different go to market is really around, I would say, both the channel and who's driving the selection process. So UW has really worked to create some strong partnerships with some of the robotics companies. So they're actually, when they're selling their robotic equipment, they're actually calling out for resident deck to be specified as the flooring solution to be put in place. Now, they also do sell straight out to other system integrators and even through some contractors that are just putting either replacing flooring or putting in mezzanine flooring.

Speaker Change #129: That solution brings to those customers the different go to market is really around I would say, both the channel and who is driving the selection process.

UW has really worked to create some strong partnerships with some of the robotics companies. So they are actually when they are selling their robotic equipment, they're actually calling out for resin deck to be specified as the flooring solution to be put in place now they also do sell.

Speaker Change #129: Straight out to other system integrators, and even through some some contractors that are just putting.

Speaker Change #129: Either replacing flooring or putting in mezzanine flooring.

Ty Silberhorn: And we think there's an opportunity there to maybe tap into some of our relationships on the building product side, but it is a different go to market. We haven't really had a focus, as we've talked about before. We know we sell some entrance systems and punch out commercial windows into some a new manufacturing plan or distribution center, but that's such a small dollar sale for us. It's not a focus area. So this brings more attention for our teams to look at manufacturing, distribution centers, warehouses, and potentially even data centers. There's some work to do on the flooring terms of fire rating, but data centers provides a long term opportunities.

Speaker Change #130: And we think there is an opportunity there to maybe tap into some of our relationships on the building products side, but it is a it is a different go to market. We haven't really had a focus as we've talked about before we do we know we sell some entrants systems and punch out commercial windows into say, a new manufacturing plant our distribution center.

Speaker Change #130: That's such a small dollar sale for us it's not a it's not a focus area. So this brings more attention.

For our teams to look at manufacturing distribution centers warehouses and potentially even data centers. There is some work to do on the flooring in terms of fire rating, but datacenters provides a long term opportunity as well.

Julio Romero: as well. Very cool business. I'll be interested to dig into it a little bit more.

Speaker Change #131: Alright cool business.

Speaker Change #131: Just to dig into it a little bit more and then.

Julio Romero: And then, maybe just last one for me is just on project 4-5. Can you just make it easy for us to let us know how much restructuring is left for the next two quarters? Yeah, so from a comment, two things: from a charges perspective, you know, we're lucky. I think we've got a project to date, charges of about 14.7 million. And we range that between 15 and 16 million. So not much more, I would say, coming into three. And then, from a savings perspective, we raised our range. We were previously at a 12-14 annual run rate.

Speaker Change #132: Maybe just last one for me is just on project fortify can you just.

Make it easy for us and let us know how much how much restructuring is left.

Speaker Change #132: For the next few quarters.

Speaker Change #133: Yes, so from a <unk>.

Speaker Change #134: Comment two things from charges perspective, we're looking I think we've got <unk>.

Speaker Change #135: Project to date charges of about $14 7 million and we range that between 15% and $60 million in 15, and 16 million. So not much more I would say coming in Q3, and then from a savings perspective, we.

Speaker Change #135: We raised our range. We were previously added 12% to 14 annual operating our annual run rate, we moved that range of 13% to 14, so were seeing ourselves coming in a little bit towards that high end of that range on savings and still on track, we said, we'd deliver 60% of that in fiscal 'twenty five the rest in <unk>.

Matt Osberg: We removed that range from 13 to 14. So we're seeing ourselves coming in a little bit towards that high end of that range on savings. And still on track, we said we deliver 60% of that in fiscal 25, the rest in 26. So I think it's still panning out to be on that kind of a cadence. So, you know, I'd say on track, a little bit favorable from our perspective and how we're executing Project 4-5. Excellent. I'll pass it on. Thanks very much. Thanks, Julio.

Speaker Change #135: Six so I think it's still panning out to be on that kind of a cadence so.

Speaker Change #135: I'd say on track a little bit favorable from our perspective, and how we're executing project fortify.

Speaker Change #136: Excellent I'll pass it on thanks very much.

Julio Romero: Thanks, Julio Thanks Julio.

John Pratch: One moment for our next question. Our next question comes from John Pratch with KCCA. Your line is open. Good morning, everyone. We're in John. Hi. Going back to UW.

Speaker Change #137: Our next question.

John <unk>: Our next question comes from John <unk>.

Your line is open.

John <unk>: Good morning, everyone.

Good morning, John John.

Doug: Going back to you Doug.

John Pratch: Would it be fair to say that most of their coatings are proprietary or custom solutions? Yeah, I would look at, you know, let me characterize it this way, John. So RDC coatings have some meaningful R&D capacity, deep coatings expertise. You're talking even some PhDs in that operation. So they have worked to not create new molecules but find the right blends of different materials that they can put together that not only maximizes the performance of the coating itself but then working directly with UW Solutions, the process manufacturing engineering team to really maximize both the quality of the coating through the manufacturing process as well as the performance and also help drive, you know, higher throughput and yield.

John <unk>: <unk>.

Speaker Change #140: Would it be fair to say that.

Speaker Change #141: Most of their coatings are proprietary or custom solutions.

Speaker Change #142: Yes, I would look at.

Let me characterize it this way John So RTC coatings.

Speaker Change #142: Has some meaningful R&D capacity deep coatings expertise.

Youre talking even some phds in that operation. So they have worked to create new molecules, but find the right lens of different materials that they can put together that not only maximizes the performance.

Speaker Change #142: Of the coding itself, but then working directly with UW solutions.

Process manufacturing engineering team to really maximize both the quality of the coding through the manufacturing process as.

Speaker Change #142: As well as the performance and also help drive higher throughput and yield so it's a great combination from that standpoint.

Ty Silberhorn: So it's a great combination from that standpoint. The business historically is operated mostly on it. Think of it as on a trade secret model. So they're, they really are careful about disclosing anything specific on the recipe of the coatings or even the specificity of how the coatings are blended together. And then the same goes for the manufacturing process. But they're very careful about disclosing the different steps they do in the process to really get down the best coating possible that gives them the durability and the quality of that performance. So they're, they're, they enjoy higher margins than obviously some type of maybe commodity type of coating.

The business historically has operated mostly on it.

Speaker Change #142: Think of it as on a trade secret model so.

Speaker Change #142: There they really are careful about disclosing anything specific on the recipe of the coatings or even the specificity of how the coatings are blended together and then the same goes for the manufacturing process, but they are very careful about.

Speaker Change #142: Disclosing the different steps, they do and the process to really get down.

Speaker Change #142: The best coding possible that gives them the durability and the quality of that performance.

Speaker Change #142: So there are there.

Speaker Change #142: Enjoy higher margins obviously.

Some type of maybe commodity type of co.

Ty Silberhorn: Absolutely, for sure. Yeah. Okay. The, and again, Jan, I would, I would point to what I had said earlier. They do sell coatings externally. Our RDC coatings was a standalone business, and the heartwood had worked to acquire and bring that into the fold because the significant volume for them was coming through UW Solutions, but the majority of what the work they do is consumed internally now.

Speaker Change #142: Coating.

Speaker Change #143: Absolutely for sure Okay. Okay. Okay.

The.

And again, John I would I would point to is what I had said earlier, they do sell coatings externally.

Speaker Change #144: RTC coatings was a standalone business and heartwood had worked to acquire and bring that into the fold because.

Speaker Change #145: The significant volume for them was coming through UW solutions.

Speaker Change #146: But the majority of what the work they do is consumed internally now okay. Okay do you anticipate or was there any.

Ty Silberhorn: Do you anticipate, or was there any, when you look at the performance of UW, were they capital constrained at all? Was there a constraint to their growth? Both their growth and that maybe with your balance sheet, you can advance that a little bit further. Well, I think the good news is, you know, Hartward Partners, the private equity firm that had acquired them, was really focused on positioning that business for long-term growth. So they've made some significant capital investment. So they saw the double-digit growth being driven in that flooring business. And you know, in the last 18 months, they had done a significant capacity expansion.

Speaker Change #145: When you look at the performance of.

Speaker Change #147: UW, where they are capital constrained at all.

Speaker Change #148: Was there a constraint to their growth.

Speaker Change #149: The growth in that maybe with your balance sheet balance sheet you can.

Speaker Change #149: Advance that a little bit further.

Speaker Change #150: Well I think the good news is Hartford partners, a private equity firm that had acquired them was really focused on positioning that business for long term growth. So they've made some significant capital investments. So they saw the double digit growth being driven in that flooring business and in the last 18 months they had done a significant.

Speaker Change #151: <unk> capacity expansion, so we actually have a lot of runway.

Ty Silberhorn: So we actually have a lot of runway to grow that business. Okay, okay.

Speaker Change #151: To grow that business.

Ty Silberhorn: And maybe going back to a previous question, can you talk a little bit about the performance of UW across the cycle? And obviously, there are some things that have happened over the past couple of years that may have moved the needle a little bit, maybe more so than it's typical. But can you talk a little bit about, like I said, across the cycle, how you see the revenues and the profitability? Yeah, if you were to look at those financials clearly in 2020-2021, there was a healthy bump as, you know, everything went to online. And there was a need to quickly build out additional capacity and distribution centers.

Speaker Change #151: Okay. Okay.

Speaker Change #151: And maybe.

Speaker Change #151: Going back to a previous question.

Speaker Change #152: Can you talk a little bit about the performance of <unk>.

Speaker Change #152: <unk> across the cycle and obviously there are some things that have happened over the.

Speaker Change #152: Past couple of years.

Speaker Change #152: May have.

Speaker Change #153: Move the needle a little bit.

Speaker Change #153: Maybe more so than than is typical but can you is there any can you talk a little bit about.

Speaker Change #154: It's not across the cycle.

Speaker Change #154: You see the the revenues and the profitability.

Speaker Change #154: Yes.

Speaker Change #154: If you were to look at those financials clearly in 2000 22021, there was a healthy bump.

Speaker Change #155: As you know everything went to online and there was a need to quickly build out additional capacity in distribution centers. So they certainly enjoy it.

Ty Silberhorn: So they certainly enjoyed a very healthy jump and kind of drove the need to put additional capacity in or have the wherewithal to know that that was going to be a need going forward. You know, that of course settled back down, but then, you know, kind of with that, you know, big bumpier behind them, they were able to start to get that business back on to a double-digit growth rate. It is significant. You know, again, we're not going to share the percentages from a market competitive standpoint, but it is significant exposure to R&R. So they are not relying on new manufacturing or new distribution centers to be built.

Very healthy jump in kind of drove the need to put additional capacity and have the wherewithal to know that that was going to be a need going forward.

Speaker Change #155: Of course settled back down, but then kind of with that big bump year behind them. They were able to start to get that business back onto a double digit growth rate.

Speaker Change #156: His significant again, we're not going to share the percentages from a market competitive standpoint, but it has significant exposure to R&R. So they are not relying on new manufacturing, our new distribution centers to be built those certainly provide opportunities and they certainly have sold into new construction.

Ty Silberhorn: Those certainly provide opportunities, and they certainly have sold into new construction. But we like the fact that when we look at the stuff that they have sold over the last three years, it is the majority of it has gone to R&R. So someone in an older existing distribution center or manufacturing facility that they want to put mezzanine flooring, or they're moving to robotics and they want to put that flooring in to simplify the robotic solution.

Speaker Change #156: But we like the fact that when we look at the stuff that they have sold over the last three years. It is the majority of it has gone to R&R. So somewhat in older existing distribution center or manufacturing facility that they they want to put mezzanine flooring or theyre moving to robotics and they want to put that flooring into simplify.

Speaker Change #156: The robotics solution.

Ty Silberhorn: Okay. All right, Ty. Thank you very much. Appreciate it. Thanks, John. One moment for our next question.

Speaker Change #156: Okay, Alright, thank you very much I appreciate it.

John <unk>: Thanks, John Thanks, John.

Speaker Change #157: One moment for our next question.

Gossie Schuharan: Our next question comes from Gossie Schuhar and with Singular Researcher. Light is open. Good morning, guys. Can you hear me? Yes. Good morning. Congratulations on the acquisition.

Joshua <unk>: Our next question comes from Joshua <unk> with singular research your line is open.

Joshua <unk>: Good morning, guys can you hear me.

Joshua <unk>: Yes, so Ken good morning.

Joshua <unk>: Good morning, congratulations on the acquisition.

Gossie Schuharan: Just a question on the 100 million forecast for 2026 on the UW Solutions. Does this projection primarily reflect the existing product offerings, or does it include the product potential revenue from new products, cross selling? If you could just give us some color on that. Yeah, so yeah, I think the $100 million, you know, that's what we can see, you know, today with the current product offerings, you know, obviously. We want to, we're still in a stage where we're learning more and more about that business and what we can do, and we've done a lot of diligence out through the acquisition process.

Joshua <unk>: Just a question on the 100 million.

Forecast for 2026 on the UW solutions.

Speaker Change #159: This projection primarily reflect the existing product offerings or doesn't include.

Speaker Change #160: The potential.

Speaker Change #161: Potential revenue from new products cross selling if you could just give us some color on that.

Speaker Change #162: Yes, so yes, I think the $100 million, that's what we can see today with the current product offerings. You know obviously, we want to we're still in a stage, where we're learning more and more about that business and what we can do and we've done a lot of diligence obviously through the acquisition process. So the $100 million is what we can see is.

Matt Osberg: So the 100 million is, you know, what we can see is something that we can do with the business today. We're, of course, going to get into that business and look for further opportunities, but, you know, it takes time to develop new products, new relationships, cross-selling opportunities.

Speaker Change #162: It's something that we can do with the business today, we are of course going to get into that business and look for further opportunities, but it takes time to develop new products, new relationships cross selling opportunities and while we'll pursue them.

Matt Osberg: And while we'll pursue them, you know, I would say there's not much of those built into the fiscal 26 number.

Speaker Change #163: I would say there's not much of those built into the fiscal 'twenty six number.

Matt Osberg: Okay, and the CapEx guidance for $40 to $15 million for this, does that include any kind of additional CapEx for UW, or is that additional on top of it? No, it doesn't, but I wouldn't expect that to be very material. As Ty said, I think they're coming into, you know, to this acquisition in a good state. You know, we'll continue to look at their CapEx needs as we roll into fiscal 26, but I wouldn't expect. Our CapEx for this spent for this year to be impacted materially by the acquisition.

Okay.

Speaker Change #164: And in the Capex guidance for $40 million to $50 million does that include any kind of additional capex for UW.

Additional on top of that.

Speaker Change #165: No it doesn't but I wouldn't expect that to be very immaterial as Todd said, I think they're coming into <unk>.

Speaker Change #166: This acquisition in a good state.

Speaker Change #166: We'll continue to look at their capex needs as we roll into fiscal 'twenty, six but I wouldn't expect.

Speaker Change #166: Our capex for this spend for this year to be.

Speaker Change #166: Impacted materially by by acquisition.

Matt Osberg: Okay, and do you have any color on the kind of CapEx that will be required to fully leverage the UW acquisition beyond 25? I think that's something we can get into as we start looking into fiscal 26. You know, as we look at, you know, we have to balance those investments against the other priorities in our business and just make sure we're striking the right, you know, returns on our business. So something as we, as we get into fiscal 26, we'll be looking at.

Speaker Change #166: Okay.

Speaker Change #167: Do you have any color on the kind of capex that will be required to fully leverage the UW acquisition beyond 'twenty five.

Speaker Change #168: I think thats, something where we can get into as we start looking into fiscal 'twenty six as we look at we have to balance those investments against the other priorities in our business and and just make sure. We're striking the right returns on our investments so something as we as we get into fiscal 'twenty six we'll be looking at yes, I would just add what I said earlier the.

Ty Silberhorn: Yeah, I would just add what I said earlier; the hardwood partners had made a significant investment in coding capacity, and, you know, that was our question going in: double-digit growth and flooring. What's classy to look like, and the good news is brand new coder that's been running for over a year with really great yields and productivity and plenty of runway to add volume.

Hardwood partners had made a significant investment in coating capacity and you know that was our question going in double digit growth in flooring, what's capacity look like and the good news is brand new coder, that's been running for over a year with really great yields and productivity and plenty of runway to to add volume.

Ty Silberhorn: Okay, and I think you mentioned that the 30 million is not reflected in your sales forecast, or is that because you're still focusing on the client, 47%? Is that you're seeing extra softness in the market, or is that just not included in the sales forecast. So the sales forecast that we gave does not include any fiscal 25 impact for the UW Solutions acquisition, just because at this point it's not closed right and we have to think about asking it closing the timing of it, but I wanted to provide kind of an order of magnitude of what might happen if that acquisition was to close on November 21.

Speaker Change #168: Okay.

You've mentioned that the $30 million is.

Speaker Change #169: He is not reflected in your sales forecast is that because you're still forecasting decline.

Speaker Change #170: A decline of 47% is that youre seeing extra softness in the market or is that just not included in the sales forecast.

Speaker Change #171: So the sales forecast that we gave does not include any fiscal 'twenty five impact for the UW solutions acquisition, just because at this point, it's not closed right and we have to think about that as get close and the timing of it but I wanted to provide kind of an.

Speaker Change #171: In order of magnitude of what might happen if that acquisition was to close on November 21, so that from an EPS or revenue perspective. Our current guidance does not include any fiscal 'twenty five impact from UW solutions acquisition.

Matt Osberg: So that from an EPS or revenue perspective, our current guidance does not include any fiscal 25 impact from UW Solutions acquisition.

Ty Silberhorn: Okay, and just one last question on, you know, in your last call, you would think you'd mention that to be venturing beyond west of the Rockies, that the backlog reflects. How much of the backlog is reflecting that transition out into the west of the Roughies? Yeah, I would say it's promising. You know, we're seeing a lot more activity west of the Rockies. We obviously don't break out, you know, our backlog into that amount of detail, but I would say the teams are making progress and we're seeing a lot more activity in the west side of the US.

Speaker Change #171: Okay.

Speaker Change #172: And just one last question on you know that.

Speaker Change #173: Last call you I think you've mentioned that can be venturing beyond the west of the Rockies.

The backlog.

Speaker Change #174: The reflect how.

Speaker Change #175: How much of the backlog is reflecting that.

Speaker Change #176: The transition to opt into the rest of the properties.

Speaker Change #177: Yeah, I would say, it's promising we're seeing a lot more activity west of the Rockies, We obviously don't break out.

Speaker Change #177: Our backlog into that amount of detail, but I would say the team is making progress and we're seeing a lot more activity in the west side of the U S, particularly for services.

Ty Silberhorn: Yeah, particularly for services that, you know, they've won some stuff out there. They have some nice projects that are in queue that they're waiting to get green-lighted to move them into their backlog. That would boost their revenue for West of the Rockies as well.

Speaker Change #178: They've won some stuff out there they have some nice projects that are in queue that they are waiting to get green lighted to move them into their backlog that would boost there.

Speaker Change #178: Their revenue for west of the Rockies as well.

Gossie Schuharan: Okay, that's it for me. Thank you. All right. Thank you.

Speaker Change #178: Right.

Okay. Thanks, that's it from me thank you.

Speaker Change #179: Alright, thank you.

Operator: And I'm not showing any further questions at this time.

Speaker Change #179: And im not showing any further questions at this time I'd like to now turn the call back over to Todd for any closing remarks.

Ty Silberhorn: I'd like to turn the call back over to Ty for any closing remarks. All right. Well, great. Thank you very much for joining us today. And I look forward to providing another update in January. Have a great weekend.

Todd: Alright, great. Thank you very much for joining us today and I look forward to providing another update in January have a great weekend.

Operator: Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.

Speaker Change #180: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Q2 2025 Apogee Enterprises Inc Earnings Call

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