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Apogee Reports Improved First Quarter Results

Stocks in this article: APOG

Apogee Enterprises, Inc. (Nasdaq:APOG) today announced fiscal 2014 first-quarter results. Apogee provides distinctive solutions for enclosing commercial buildings and framing art.

FY14 FIRST QUARTER VS. PRIOR-YEAR PERIOD

  • Revenues of $179.3 million were up 16 percent.
  • Operating income was $6.1 million, up from $2.3 million.
  • Earnings per share were $0.14, up from $0.06.
  • Architectural Glass and Architectural Services segments had strong growth and improved operating income.
  • Consolidated backlog was $301.8 million, compared to $298.3 million at the end of fiscal 2013 and $269.1 million in the prior-year period.
  • Cash and short-term investments totaled $69.7 million, compared to $57.5 million.

COMMENTARY“Apogee recorded another quarter of strong growth, with revenues up 16 percent and operating income more than doubling,” said Joseph F. Puishys, Apogee chief executive officer. “Our operating margin increased 190 basis points to 3.4 percent driven by improvements in volume, pricing and productivity.

“Revenue and operating income growth came from our Architectural Glass and Architectural Services segments as we had anticipated,” he said. “We benefited from improved volume, mix, productivity and pricing in Architectural Glass and improved margins in Architectural Services.

“Revenues grew in our other two reporting segments, but Architectural Framing Systems operating income was negatively impacted by a gap in timing for more complex window work, which we expected, and Large-Scale Optical segment operating income by investments in promotion and growth,” he said.

“I am pleased that Apogee’s consolidated backlog grew to $302 million on top of the very strong first-quarter revenues,” said Puishys. “We continue to see improving margins in our backlog as we grow the business.”

FY14 FIRST-QUARTER SEGMENT AND OPERATING RESULTS VS. PRIOR-YEAR PERIOD

Architectural Glass

  • Revenues of $74.8 million were up 27 percent.
  • Operating income was $1.4 million, compared to an operating loss of $2.4 million.
    • Operating margin was 1.8 percent, compared to negative 4.1 percent.
  • Top- and bottom-line increases resulted from improved mix, volume, productivity and pricing.

Architectural Services

  • Revenues of $46.5 million were up 19 percent on volume growth and the timing of project cost flow.
  • Operating loss was $1.0 million, improved from an operating loss of $2.6 million, as volume increases and project margins improve from the cycle trough.
    • Operating margin was negative 2.1 percent, compared to negative 6.6 percent.

Architectural Framing Systems

  • Revenues of $44.4 million were up 5 percent.
  • Operating income was $2.1 million, compared to $3.1 million.
    • Operating margin was 4.6 percent, compared to 7.3 percent.
  • Top- and bottom-line growth in the storefront and finishing businesses was offset by the window business results, where revenues and operating income declined with an anticipated gap in the schedule for more complex projects.

Large-Scale Optical Technologies

  • Revenues of $19.5 million were up 1 percent.
  • Operating income was $4.7 million, compared to $5.3 million.
    • Operating margin was 24.1 percent, compared to 27.4 percent.
  • Volume growth and a positive mix of higher value-added products were offset by investments in promotion and for growth in new geographies and markets.

Consolidated Backlog

  • Consolidated backlog was $301.8 million compared to $298.3 million at the end of fiscal 2013 and $269.1 million in the prior-year period.
    • Approximately $238 million, or 79 percent, of the backlog is expected to be delivered in fiscal 2014, and approximately $64 million, or 21 percent, in fiscal 2015.

Financial Condition

  • Debt was $20.8 million, compared to $30.8 million at the end of fiscal 2013. Almost all the debt is long-term, low-interest industrial revenue bonds.
  • Cash and short-term investments totaled $69.7 million, compared to $85.6 million at the end of fiscal 2013 and $57.5 million in the prior-year period. The decline from year end was due to the redemption of approximately $10 million in recovery zone bonds and funding of normal seasonal working capital requirements.
  • Non-cash working capital was $68.2 million, up from $54.1 million at the end of fiscal 2013 due to normal seasonal working capital requirements; it was $61.2 million in the prior-year period.
  • Capital expenditures were $1.5 million, down from $9.5 million in the prior-year period due to the timing of planned investments in the current year.
  • Depreciation and amortization was $6.5 million.

OUTLOOK“We continue to expect strong top- and bottom-line growth in fiscal 2014 through our growth strategies and productivity initiatives,” said Puishys. “We are maintaining our outlook for revenue growth in the high single digits and earnings of $0.90 to $1.00 per share.

“Revenue expansion should largely come from geographic growth and new products, and our earnings should benefit from improvements in volume, mix, project margins and operating leverage,” he said.

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