MINNEAPOLIS - Apogee (NASDAQ:APOG) Enterprises, Inc. (NASDAQ:APOG), a provider of architectural products and services, has announced the acquisition of UW Interco, LLC, a manufacturer of high-performance coated substrates, for $240 million in cash. The deal, which is subject to customary closing conditions, is expected to close in the third quarter of fiscal 2025.
UW Solutions, which operates under the brand names such as ResinDEK®, ChromaLuxe®, RDC Coatings™, and Unisub®, specializes in proprietary formulations and coating application processes. These brands are recognized in their respective markets, which include building products and graphic arts.
The acquisition is in line with Apogee's strategy to add differentiated businesses with strong market positions to its portfolio. The integration of UW Solutions is anticipated to create a scalable growth platform in specialty coatings and materials, particularly within Apogee’s Large-Scale Optical (LSO) segment.
Apogee CEO Ty R. Silberhorn expressed that the acquisition will bolster the company's most profitable segment by expanding its high-performance coated substrate solutions and providing entry into manufacturing, warehousing, and distribution center projects. He also highlighted the expected operational cost synergies of $5 million by the end of fiscal 2027.
The purchase price is approximately 8.5 times UW Solutions' estimated adjusted EBITDA for fiscal 2026, considering run-rate cost synergies and a tax step up benefit from the transaction. The acquisition is projected to contribute around $100 million in revenue with an adjusted EBITDA margin of about 20% in fiscal 2026.
Apogee plans to finance the transaction using cash on hand and its existing credit facility, expecting a Consolidated Leverage Ratio of approximately 1.5x post-close. The transaction is expected to be accretive to Apogee’s adjusted diluted EPS starting in fiscal 2026.
Legal counsel for Apogee in this transaction was provided by Cleary Gottlieb Steen & Hamilton LLP, and Centerview Partners LLC served as the financial advisor. Further details on the strategic and financial aspects of the transaction will be discussed in Apogee’s second quarter, fiscal 2025 earnings conference call scheduled for October 4, 2024.
This news article is based on a press release statement from Apogee Enterprises, Inc.
In other recent news, Apogee Enterprises has been making significant strides despite market pressures. The company reported strong profitability at the start of fiscal year 2025, achieving a record 12.8% adjusted operating margin. However, it anticipates a 4-7% decline in net sales for the fiscal year, while projecting an increase in its full-year adjusted diluted earnings per share (EPS) outlook to between $4.65 and $5.
The company is also undergoing changes in its executive team, with Curtis J. Dobler stepping down as Executive Vice President and Chief Human Resources Officer, and the Board of Directors appointing Raelyn A. Trende as his successor. This change was part of a planned succession strategy by Apogee Enterprises.
In terms of financial analysis, DA Davidson raised its price target for Apogee Enterprises from $60.00 to $65.00, maintaining a Neutral rating on the stock. This decision followed the company's strong earnings release, which exceeded both expectations and the previous year's performance. Singular Research also revised the company's rating from Buy to Buy-Long Term, indicating confidence in its long-term value.
Finally, Apogee Enterprises is exploring investment opportunities, including potential acquisitions, and is investing in capacity and capabilities expansion as part of its growth strategy. These recent developments mark a dynamic period for the company as it navigates the market environment.
InvestingPro Insights
As Apogee Enterprises, Inc. (NASDAQ:APOG) gears up to integrate UW Solutions into its portfolio, the company's financial health and investor appeal are key to understanding the potential impact of this acquisition. With a market capitalization of $1.46 billion and a trailing P/E ratio of 12.54, Apogee presents an interesting valuation relative to its earnings.
InvestingPro data shows that Apogee has a price-to-book ratio of 3.05 as of the last twelve months leading up to Q1 2025, which indicates the market's valuation of the company relative to its book value. Additionally, the company's gross profit margin stands at a solid 27.29%, reflecting its ability to retain a significant portion of revenue as gross profit.
InvestingPro Tips highlight Apogee's commitment to shareholder returns, with the company having raised its dividend for 12 consecutive years and maintaining dividend payments for an impressive 51 years. This consistent dividend growth, including a 4.17% increase in the last twelve months, underscores Apogee's financial stability and dedication to rewarding its shareholders.
Moreover, analysts have revised their earnings expectations upwards for the upcoming period, suggesting confidence in Apogee's operational performance and future profitability. In fact, the company is expected to be profitable this year, as indicated by recent analyst predictions. For investors seeking additional insights, there are numerous other InvestingPro Tips available at: https://www.investing.com/pro/APOG.
These financial metrics and strategic moves, including the acquisition of UW Solutions, position Apogee Enterprises as a company to watch in the architectural products and services industry.
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