- Revenues of $274.1 million were up 15 percent, vs. prior-year period.
- Operating income of $33.3 million was up 19 percent, vs. prior-year period.
- Operating margin was 12.1 percent, up 40 basis points, vs. prior-year period.
- Earnings per share of $0.78 were up 24 percent, vs. prior-year period.
- Earnings per share outlook for fiscal 2017 was increased to $2.85 to $2.95.
FY17 THIRD-QUARTER SEGMENT AND OPERATING RESULTS VS. PRIOR-YEAR PERIODArchitectural Glass
- Revenues of $107.0 million were up 25 percent, on strong U.S. growth in the mid-size sector.
- Operating income grew to $11.7 million, up 40 percent.
- Operating margin expanded 110 basis points to 10.9 percent, on volume growth and improved pricing, mix and productivity.
- Segment backlog was $84.7 million, compared to $90.7 million in the fiscal 2017 second quarter.
- Architectural glass segment continues to have the greatest visibility to future projects due to its daily interaction with architects, but has become a quicker lead-time business with a higher level of book and bill activity within quarters; therefore, revenue growth doesn't require an increase in backlog.
- Revenues of $90.9 million were up 19 percent, on volume growth in all four businesses.
- Operating income grew to $11.8 million, up 28 percent.
- Operating margin expanded 90 basis points to 13.0 percent, as a result of volume growth and productivity.
- Segment backlog was $164.1 million, compared to $130.5 million in the fiscal 2017 second quarter.
- Today's acquisition is expected to add $75 to $100 million to fourth-quarter framing segment backlog.
- Revenues of $64.4 million were up 5 percent.
- Operating income grew to $4.9 million, up 33 percent.
- Operating margin expanded 160 basis points to 7.6 percent, due to good execution on projects with better margins and volume growth.
- Segment backlog was $195.5 million, compared to $236.1 million in the fiscal 2017 second quarter.
- Since the third quarter ended, there have been substantial architectural services awards, leading to an expectation that the fourth-quarter services segment backlog will increase significantly from the third-quarter level.
- Revenues of $22.1 million were down 9 percent, due to softer than expected custom picture framing end markets; revenues are expected to grow in the fourth quarter.
- Operating income of $5.9 million was down 22 percent.
- Operating margin was 26.8 percent, compared to 31.5 percent, as a somewhat stronger product mix was more than offset by lower volume; operational performance remains strong.
FY17 OUTLOOK"For full-year fiscal 2017, we expect continued top- and bottom-line growth, and have increased our earnings per share outlook for the year to $2.85 to $2.95, from $2.80 to $2.90, as a result of solid execution of strategies to improve operational performance, productivity and project selection," said Puishys. "We are maintaining our outlook for revenue growth of approximately 10 percent."He said that fiscal 2017 capital expenditures are anticipated to be approximately $70 million, as Apogee invests primarily to increase capabilities and productivity. Gross margin is expected to be approximately 26.7 percent and operating margin approximately 11.5 percent. Puishys noted that this guidance does not include the impact of the acquisition completed today; the new curtainwall business is expected to add approximately $15 million to fourth-quarter revenues at a break-even operating margin due to purchase accounting costs. "Apogee expects mid-single digit U.S. commercial construction market growth in fiscal years 2017 and 2018, as market activity, the Architecture Billings Index, office employment and office vacancy rates all show positive momentum," he said. "With our internal market visibility and external metrics moving in the right direction, we see sustained U.S. non-residential market growth at least through fiscal 2020. "Our strategies to grow through new geographies, new products and new markets, along with our focus on better project selection, productivity and operational improvements are yielding strong results," Puishys said. TELECONFERENCE AND SIMULTANEOUS WEBCASTApogee will host a teleconference and webcast at 9 a.m. Central Time tomorrow, December 15. To participate in the teleconference, call (866) 525-3151 toll free or (330) 863-3393 international, access code 27081806. To listen to the live conference call over the internet, go to the Apogee web site at http://www.apog.com and click on investors, then overview and then the webcast link on that page. The webcast also will be archived for replay on the company's web site. ABOUT APOGEE ENTERPRISESApogee Enterprises, Inc., headquartered in Minneapolis, is a leader in technologies involving the design and development of value-added glass products and services. The company is organized in four segments, with three of the segments serving the commercial construction market:
- Architectural Glass segment consists of Viracon, the leading fabricator of coated, high-performance architectural glass for global markets.
- Architectural Framing Systems segment businesses design, engineer, fabricate and finish the aluminum frames for window, curtainwall and storefront systems that comprise the outside skin of buildings. Businesses in this segment are: Wausau, a manufacturer of custom aluminum window systems and curtainwall; Sotawall, a manufacturer of unitized curtainwall systems; Tubelite, a fabricator of aluminum storefront, entrance and curtainwall products; Alumicor, a fabricator of aluminum storefront, entrance, curtainwall and window products for Canadian markets; and Linetec, a paint and anodizing finisher of window frames and PVC shutters.
- Architectural Services segment consists of Harmon, one of the largest U.S. full-service building glass installation companies.
- Large-Scale Optical segment consists of Tru Vue, a value-added glass and acrylic manufacturer primarily for the custom picture framing market.
- Backlog represents the dollar amount of revenues Apogee expects to recognize in the near-term from firm contracts or orders. The company uses backlog as one of the metrics to evaluate near-term sales trends in its business.
- Free cash flow is defined as net cash provided by operating activities, minus capital expenditures. The company considers this measure an indication of the financial strength of the company.
- Days working capital is defined as average working capital (current assets less current liabilities) multiplied by the number of days in the period and then divided by net sales in the period. The company considers this a useful metric in monitoring its performance in managing working capital.
- Constant currency revenue excludes the impact of fluctuations in foreign currency on Apogee's international operations. The company believes providing constant currency information provides valuable supplemental information regarding its results of operations, consistent with how it evaluates its performance. Constant currency percentages are calculated by converting prior-period local currency results using the current period exchange rates and comparing these converted amounts to current period reported results.
FORWARD-LOOKING STATEMENTSThe discussion above contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect Apogee management's expectations or beliefs as of the date of this release. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the operating results of the company, including the following: (A) global economic conditions and the cyclical nature of the North American and Latin American commercial construction industries, which impact our three architectural segments, and consumer confidence and the conditions of the U.S. economy, which impact our large-scale optical segment; (B) fluctuations in foreign currency exchange rates; (C) actions of new and existing competitors; (D) ability to effectively utilize and increase production capacity; (E) product performance, reliability and quality issues; (F) project management and installation issues that could result in losses on individual contracts; (G) changes in consumer and customer preference, or architectural trends and building codes; (H) dependence on a relatively small number of customers in certain business segments; (I) revenue and operating results that could differ from market expectations; (J) self-insurance risk related to a material product liability or other event for which the company is liable; (K) dependence on information technology systems and information security threats; (L) cost of compliance with and changes in environmental regulations; (M) interruptions in glass supply; (N) loss of key personnel and inability to source sufficient labor; and (O) integration of recent acquisition. The company cautions investors that actual future results could differ materially from those described in the forward-looking statements, and that other factors may in the future prove to be important in affecting the company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For a more detailed explanation of the foregoing and other risks and uncertainties, see Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended February 27, 2016.
|Apogee Enterprises, Inc. & Subsidiaries|
|Consolidated Condensed Statement of Income|
|Dollar amounts and share counts in thousands, except for per share amounts||Thirteen Weeks Ended November 26, 2016||Thirteen Weeks Ended November 28, 2015||% Change||Thirty-nine Weeks Ended November 26, 2016||Thirty-nine Weeks Ended November 28, 2015||% Change|
|Cost of sales||201,204||175,898||14||%||590,581||544,326||8||%|
|Selling, general and administrative expenses||39,609||34,568||15||%||117,269||106,209||10||%|
|Other (expense) income, net||(158||)||(75||)||-111||%||350||(120||)||N/M|
|Earnings before income taxes||33,222||27,882||19||%||93,211||68,670||36||%|
|Income tax expense||10,670||9,361||14||%||30,540||23,264||31||%|
|Earnings per share - basic||$0.78||$0.64||23||%||$2.18||$1.56||40||%|
|Average common shares outstanding||28,828||29,181||-1||%||28,807||29,137||-1||%|
|Earnings per share - diluted||$0.78||$0.63||24||%||$2.17||$1.54||41||%|
|Average common and common equivalent shares outstanding||28,892||29,466||-2||%||28,913||29,479||-2||%|
|Cash dividends per common share||$0.125||$0.110||14||%||$0.375||$0.330||14||%|
|Business Segments Information|
|Thirteen Weeks Ended November 26, 2016||Thirteen Weeks Ended November 28, 2015||% Change||Thirty-nine Weeks Ended November 26, 2016||Thirty-nine Weeks Ended November 28, 2015||% Change|
|Architectural Framing Systems||90,850||76,419||19||%||264,212||228,990||15||%|
|Operating income (loss)|
|Architectural Framing Systems||11,838||9,244||28||%||35,070||24,197||45||%|
|Corporate and other||(1,115||)||(1,092||)||-2||%||(3,317||)||(3,292||)||-1||%|
|Consolidated Condensed Balance Sheets|
|November 26, 2016||February 27, 2016|
|Net property, plant and equipment||229,556||202,462|
|Liabilities and shareholders' equity|
|Total liabilities and shareholders' equity||$717,245||$657,440|
|Apogee Enterprises, Inc. & Subsidiaries|
|Consolidated Condensed Statement of Cash Flows|
|Weeks Ended||Weeks Ended|
|In thousands||November 26, 2016||November 28, 2015|
|Depreciation and amortization||24,270||23,336|
|Proceeds from new markets tax credit transaction, net of deferred costs||5,109||-|
|Changes in operating assets and liabilities||(18,735||)||23,260|
|Net cash provided by operating activities||70,481||86,167|
|Change in restricted cash||(14,884||)||-|
|Net purchases of marketable securities||682||(60,786||)|
|Net cash used in investing activities||(59,202||)||(91,418||)|
|Repurchase and retirement of common stock||(10,817||)||(7,257||)|
|Net cash used in financing activities||(20,488||)||(14,816||)|
|Decrease in cash and cash equivalents||(9,209||)||(20,067||)|
|Effect of exchange rates on cash||338||(1,405||)|
|Cash and cash equivalents at beginning of year||60,470||52,185|
|Cash and cash equivalents at end of period||$||51,599||$||30,713|