Apogee Enterprises Inc. announced strategic actions to further streamline its business operations, enable a more efficient cost model and better position the company for profitable growth, referred to as Project Fortify.
Project Fortify
Project Fortify includes the following strategic changes related to the Architectural Framing Systems, or AFS, segment:
- Eliminating certain lower-margin product and service offerings, enabling the consolidation of AFS into a single operating entity.
- Transferring production operations from the company’s facility in Walker, Michigan, to the company’s facilities in Monett, Missouri, and Wausau, Wisconsin.
- Simplifying the segment’s brand portfolio and commercial model to improve flexibility, better leverage the company’s capabilities and enhance customer service.
Additionally, the company will implement actions to optimize processes and streamline resources in its architectural services and corporate segments.
What Apogee says
“The actions we are announcing today progress our enterprise strategy and help position the company to build on what we’ve achieved over the past two years,” says CEO Ty R. Silberhorn. “Project Fortify will further improve our cost structure, enhance organizational efficiency and enable our team to focus on higher-growth, higher-margin opportunities.”
Crunching the numbers
The company will begin executing these actions immediately and expects to be substantially completed in the third quarter of fiscal 2025. The company expects to incur approximately $16 million to $18 million of pre-tax charges in connection with Project Fortify, including $7 million to $9 million of severance and employee related costs, $2 million to $3 million of contract termination costs, and $6 million to $7 million of other expenses. Apogee will record these charges as incurred. Any restructuring charges incurred associated with Project Fortify are expected to be adjusted out of GAAP earnings and therefore would not impact adjusted diluted earnings per share for fiscal 2024 or 2025.
These actions are expected to lead to annualized cost savings of $12 million to $14 million and reduce Apogee’s workforce by approximately 250 employees. The company expects approximately 60% of the savings to be realized in fiscal 2025 and the remainder in fiscal 2026. The company expects that approximately 70% of the savings will be realized in the AFS segment, 20% in the architectural services segment, and 10% in the corporate segment.
