MINNEAPOLIS - Apogee (NASDAQ:APOG) Enterprises, Inc. (NASDAQ:APOG), a leader in architectural building products and services, announced the completion of its acquisition of UW Interco, LLC, a manufacturer of high-performance coated substrates. The deal, valued at $242 million in cash, is expected to expand Apogee's Large-Scale Optical segment and enhance its market reach.
The acquisition, initially disclosed in a September 25, 2024 press release, is projected to add approximately $30 million in net sales for fiscal 2025 but will see a $0.10 decrease in adjusted diluted EPS, mainly due to increased interest and amortization expenses. However, by fiscal 2026, the company anticipates the acquisition will be accretive to adjusted diluted EPS and contribute around $100 million in revenue with an adjusted EBITDA margin of about 20%.
CEO Ty R. Silberhorn expressed enthusiasm for the merger, noting the potential for growth by leveraging the strengths of both Apogee and UW Solutions. This strategic move is aimed at creating new avenues for expansion within Apogee's portfolio of industry-leading products and services, which include architectural glass, windows, curtainwall, storefront and entrance systems, as well as project management, installation services, and high-performance coatings.
Apogee Enterprises has emphasized that the financial measures used to assess the impact of the acquisition, such as adjusted EBITDA margin and adjusted diluted EPS, are non-GAAP measures. These are intended to supplement the understanding of the company's operating performance by excluding items not considered part of core operating results, aiding in the comparison of financial results across different periods.
This transaction is part of Apogee's broader strategy to enhance its product offerings and market position in the architectural building products and high-performance materials sectors. The information provided in this article is based on a press release statement from Apogee Enterprises, Inc.
In other recent news, Apogee Enterprises has been making headlines with a number of developments. DA Davidson has increased its price target for the company from $65.00 to $75.00, maintaining a Neutral rating, following Apogee's recent impressive performance and the acquisition of United Glass Corporation. The firm's analysis highlighted Apogee's strong results in its Glass segment, while acknowledging potential future challenges in maintaining high margins.
Apogee Enterprises reported mixed results for the second quarter, with a 3% drop in year-over-year revenue, a 6% increase in adjusted earnings per share (EPS) to $1.44, and an improvement in adjusted operating margins to 12.6%. The Architectural Glass segment experienced strong pricing and a record operating margin of 23.4%. Despite a projected 4% to 7% decline in net sales for the year, Apogee raised its full-year adjusted EPS outlook to between $4.90 and $5.20.
In addition, the company announced plans to acquire UW Solutions, a deal expected to close in 2025 and projected to bring in annual synergies of $5 million by fiscal 2027. However, the company expects margins to decline in the second half of the year, ranging between 10% to 15%, and anticipates pricing pressures in the Glass segment. Despite these challenges, the acquisition of UW Solutions is expected to contribute to Apogee's growth and the company's Project Fortify savings have been revised upwards.
InvestingPro Insights
Apogee Enterprises' recent acquisition of UW Interco aligns well with its strong financial position and growth trajectory, as revealed by InvestingPro data. The company's market capitalization stands at $1.68 billion, reflecting its significant presence in the architectural products industry.
InvestingPro Tips highlight Apogee's financial stability and shareholder-friendly policies. The company has maintained dividend payments for an impressive 51 consecutive years, demonstrating a commitment to returning value to shareholders. This track record is particularly relevant in light of the recent acquisition, as it suggests Apogee can balance growth investments with shareholder returns.
The acquisition's projected impact on earnings should be considered alongside Apogee's current valuation metrics. With a P/E ratio of 16.11 and a forward P/E ratio of 14.54, the company is trading at a reasonable valuation relative to its earnings potential. However, an InvestingPro Tip notes that Apogee is trading at a high P/E ratio relative to near-term earnings growth, which investors should weigh against the long-term benefits expected from the UW Interco acquisition.
Apogee's financial health appears robust, with InvestingPro data showing that liquid assets exceed short-term obligations and the company operates with a moderate level of debt. This financial flexibility is crucial for integrating the new acquisition and potentially pursuing further growth opportunities.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Apogee Enterprises, providing a deeper understanding of the company's financial position and growth prospects.
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