- Revenue grows 6 percent to $355 million
- Continued backlog growth in Architectural Services; backlog in
Architectural Framing Systems remains strong
- Strong year-over-year growth and margin gains in Architectural
Glass
- Company reaffirms full-year guidance
Apogee Enterprises, Inc. (Nasdaq: APOG) today announced
its fiscal 2020 first-quarter results. First-quarter revenue grew 6
percent to $355.4 million, compared to $336.5 million in the first
quarter of fiscal year 2019. Earnings per diluted share were $0.58,
compared to earnings of $0.54 per diluted share and adjusted
earnings1 of $0.60 per diluted share in the prior year period.
Commentary “We had a solid start to our fiscal year in
the first quarter with good progress toward achieving our full-year
goals,” said Joseph F. Puishys, Chief Executive Officer.
“Conditions in our end-markets remain healthy, which helped us
deliver another quarter of top-line growth and increased backlog.
We also advanced several key strategic and operational initiatives
and I’m pleased with the progress we made toward completing the
remaining legacy EFCO project.”
“We remain confident in our outlook for the rest of fiscal
2020,” added Mr. Puishys. “We continue to foresee improved
profitability in the second half of the fiscal year based on
project timing and operational initiatives. Looking beyond, we see
significant opportunities for long-term organic growth and margin
expansion across our business, which is supported by our strong
backlog and sales pipeline.”
1 Adjusted earnings and adjusted earnings per share are non-GAAP
financial measures. See Use and Reconciliation of Non-GAAP
Financial Measures at the end of this press release for more
information and a reconciliation to the most directly comparable
GAAP measures.
Segment Results
Architectural Framing Systems Architectural Framing
Systems revenue in the first quarter was $180.5 million, up from
$179.0 million in the prior year period. First-quarter operating
income was $12.3 million, in-line with the prior year quarter. Last
year’s first quarter included $2.9 million of expense for the
amortization of short-lived acquired intangibles. Excluding that
expense, adjusted operating income in the prior year quarter was
$15.2 million. First quarter operating margin was 6.8 percent, down
from 6.9 percent and adjusted operating margin of 8.5 percent in
last year’s first quarter, primarily due to a less favorable
project mix. Segment backlog stands at $407 million, compared to
$409 million a quarter ago and $427 million a year ago.
Architectural Glass Architectural Glass grew 30 percent
in the first quarter, with revenue of $100.3 million compared to
$76.9 million in the prior year quarter, primarily due to increased
volume driven by continued strong customer demand. Operating income
improved to $6.4 million and operating margin increased to 6.4
percent, compared to $1.6 million and 2.1 percent respectively in
last year’s first quarter, primarily due to operating leverage on
the higher volume and improved operating performance.
Architectural Services As expected, Architectural
Services’ revenue decreased to $65.1 million in the first quarter,
compared to $70.7 million in the prior-year quarter, on lower
volumes due to the timing of project activity. First-quarter
operating income was $4.6 million with operating margin of 7.0
percent, compared to $5.2 million and 7.3 percent respectively in
the prior year period, reflecting lower operating leverage on
decreased volumes. The segment continued to have strong order flow
during the quarter, with segment backlog increasing to $483
million, from $444 million last quarter and $439 million a year
ago.
Large-Scale Optical Large-Scale Optical revenue was $21.3
million, compared to $20.8 million in the first quarter last year.
Operating income was $4.2 million, compared to $5.0 million in the
prior year period, with operating margin of 19.6 percent, from 24.0
percent in the prior year quarter. Operating income and margin were
lower primarily due to increased costs related to the timing of
production schedules.
Financial Condition Net cash used by operating activities
in the first quarter was $9.7 million compared to $25.3 million
provided by operating activities in last year’s first quarter. The
year-over-year difference primarily reflected increased working
capital related to legacy EFCO projects, as disclosed in the
previous quarter. Capital expenditures in the quarter were $11.2
million, compared to $9.3 million in the first quarter of fiscal
2019, as the company continued to make investments in growth and
productivity improvement initiatives. During the quarter, the
company returned $24.6 million of cash to shareholders through
share repurchases and dividend payments.
The company ended the quarter with $293.3 million of long-term
debt. Subsequent to the end of the quarter, the company
successfully amended and extended its revolving credit facility,
extending the maturity to 2024 and increasing the credit limit from
$335 million to $385 million with more favorable terms and
conditions, which will provide the company with increased financial
flexibility.
Outlook The company reaffirmed its guidance for fiscal
2020. For the full-year the company continues to expect:
- Revenue growth of 1 to 3 percent, with growth in three of the
company’s segments, partially offset by a decline in Architectural
Services due to the execution schedules for projects in
backlog.
- Operating margins between 8.2 to 8.6 percent, with margin
improvement in Architectural Glass and Architectural Framing
Systems, offset by reduced margins in Architectural Services due to
negative leverage on lower volumes and less favorable project
maturity compared to fiscal 2019. The company also expects margins
will be negatively impacted by start-up costs related to a
strategic growth investment in Architectural Glass and increased
corporate costs from higher legal and other advisory expenses.
- Diluted earnings per share in the range of $3.00 to $3.20,
which excludes the possible benefit of any potential expense
recovery associated with the EFCO-related charges the company
recorded in the previous fiscal year.
- Tax rate of approximately 24.5 percent.
- Capital expenditures of $60 to $65 million.
Conference Call Information The company will host a
conference call today at 8:00 a.m. Central Time to discuss its
financial results and outlook. The call will be webcast and is
available in the Investor Relations section of the company’s
website at http://ir.apog.com/events-and-presentations. The
webcast also will be archived for replay on the company’s
website.
About Apogee Enterprises Apogee Enterprises, Inc.
(Nasdaq: APOG) delivers distinctive solutions for enclosing
commercial buildings and framing art. Headquartered in Minneapolis,
MN, we are a leader in architectural products and services,
providing architectural glass, aluminum framing systems and
installation services for buildings, as well as value-added glass
and acrylic for custom picture framing and displays. For more
information, visit www.apog.com.
Use of Non-GAAP Financial Measures This release and other
financial communications may contain the following non-GAAP
measures:
- Adjusted operating income, adjusted operating margin, adjusted
net earnings and adjusted earnings per diluted share (“adjusted
earnings per share” or “adjusted EPS”) are used by the company to
provide meaningful supplemental information about its operating
performance by excluding amounts that are not considered part of
core operating results to enhance comparability of results from
period to period. Examples of items excluded to arrive at this
adjusted measure include: the impact of acquisition-related costs,
amortization of short-lived acquired intangibles associated with
backlog, restructuring costs, non-cash goodwill and other
intangible impairment costs, and unusual project-related
charges.
- Backlog represents the dollar amount of revenues Apogee expects
to recognize from firm contracts or orders. The company uses
backlog as one of the metrics to evaluate sales trends in its long
lead-time operating segments.
- Free cash flow is defined as net cash provided by operating
activities, minus capital expenditures. The company considers this
measure an indication of its financial strength.
- Adjusted EBITDA is equal to the sum of adjusted operating
income depreciation and amortization expenses. We believe this
metric provides useful information to investors and analysts about
the Company's performance because it eliminates the effects of
period-to-period changes in taxes, interest expense, and costs
associated with capital investments and acquired companies.
Management uses these non-GAAP measures to evaluate the
company’s historical and prospective financial performance, measure
operational profitability on a consistent basis, and provide
enhanced transparency to the investment community. These non-GAAP
measures should be viewed in addition to, and not as a substitute
for, the reported financial results of the company prepared in
accordance with GAAP. Other companies may calculate these measures
differently, limiting the usefulness of the measures for comparison
with other companies.
Forward-Looking Statements This press release 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) loss of
key personnel and inability to source sufficient labor; (F) product
performance, reliability and quality issues; (G) project management
and installation issues that could result in losses on individual
contracts; (H) changes in consumer and customer preference, or
architectural trends and building codes; (I) dependence on a
relatively small number of customers in certain business segments;
(J) revenue and operating results that could differ from market
expectations; (K) self-insurance risk related to a material product
liability or other event for which the company is liable; (L)
dependence on information technology systems and information
security threats; (M) cost of compliance with and changes in
environmental regulations; (N) commodity price fluctuations, trade
policy impacts, and supply availability; and (O) integration of
recent acquisitions and management of acquired contracts. 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. More information
concerning potential factors that could affect future financial
results is included in the company’s Annual Report on Form 10-K for
the fiscal year ended March 2, 2019 and in subsequent filings with
the U.S. Securities and Exchange Commission.
Apogee Enterprises,
Inc.
Consolidated Condensed
Statements of Income
(Unaudited)
Thirteen
Thirteen
Weeks Ended
Weeks Ended
%
In thousands, except per share amounts
June 1, 2019
June 2, 2018
Change
Net sales
$
355,365
$
336,531
6
%
Cost of sales
274,398
255,801
7
%
Gross profit
80,967
80,730
—
%
Selling, general and administrative
expenses
57,926
58,735
(1
)%
Operating income
23,041
21,995
5
%
Interest and other expense, net
2,611
1,741
50
%
Earnings before income taxes
20,430
20,254
1
%
Income tax expense
4,987
4,881
2
%
Net earnings
$
15,443
$
15,373
—
%
Earnings per share - basic
$
0.58
$
0.55
5
%
Average common shares outstanding
26,597
28,189
(6
)%
Earnings per share - diluted
$
0.58
$
0.54
7
%
Average common and common equivalent
shares outstanding
26,843
28,437
(6
)%
Cash dividends per common share
$
0.1750
$
0.1575
11
%
Business Segment
Information
(Unaudited)
Thirteen
Thirteen
Weeks Ended
Weeks Ended
%
In thousands
June 1, 2019
June 2, 2018
Change
Sales
Architectural Framing Systems
$
180,522
$
179,037
1
%
Architectural Glass
100,291
76,925
30
%
Architectural Services
65,147
70,727
(8
)%
Large-Scale Optical
21,259
20,761
2
%
Eliminations
(11,854
)
(10,919
)
9
%
Total
$
355,365
$
336,531
6
%
Operating income (loss)
Architectural Framing Systems
$
12,273
$
12,339
(1
)%
Architectural Glass
6,399
1,579
305
%
Architectural Services
4,573
5,155
(11
)%
Large-Scale Optical
4,177
4,981
(16
)%
Corporate and other
(4,381
)
(2,059
)
113
%
Total
$
23,041
$
21,995
5
%
Apogee Enterprises,
Inc.
Consolidated Condensed Balance
Sheets
(Unaudited)
In thousands
June 1, 2019
March 2, 2019
Assets
Current assets
$
392,789
$
371,898
Net property, plant and equipment
317,522
315,823
Other assets
421,928
380,447
Total assets
$
1,132,239
$
1,068,168
Liabilities and shareholders'
equity
Current liabilities
$
214,905
$
227,512
Long-term debt
293,309
245,724
Other liabilities
139,049
98,615
Shareholders' equity
484,976
496,317
Total liabilities and shareholders'
equity
$
1,132,239
$
1,068,168
Consolidated Condensed
Statement of Cash Flows
(Unaudited)
Thirteen
Thirteen
Weeks Ended
Weeks Ended
In thousands
June 1, 2019
June 2, 2018
Net earnings
$
15,443
$
15,373
Depreciation and amortization
11,102
14,050
Other, net
9,196
5,168
Changes in operating assets and
liabilities
(45,483
)
(9,248
)
Net cash (used) provided by operating
activities
(9,742
)
25,343
Capital expenditures
(11,198
)
(9,327
)
Net purchases of marketable securities
—
(6,124
)
Other, net
(824
)
(779
)
Net cash used by investing activities
(12,022
)
(16,230
)
Borrowings (payments) on line of credit,
net
47,500
(2,000
)
Repurchase and retirement of common
stock
(20,010
)
—
Dividends paid
(4,598
)
(4,410
)
Other, net
(1,270
)
(721
)
Net cash provided (used) by financing
activities
21,622
(7,131
)
(Decrease) increase in cash and cash
equivalents
(142
)
1,982
Effect of exchange rates on cash
(143
)
279
Cash, cash equivalents and restricted cash
at beginning of year
29,241
19,359
Cash, cash equivalents and restricted cash
at end of period
$
28,956
$
21,620
Apogee Enterprises,
Inc.
Reconciliation of Non-GAAP
Financial Measures
(Unaudited)
Adjusted Net Earnings and
Adjusted Earnings per Diluted Common Share
Thirteen
Thirteen
Weeks Ended
Weeks Ended
In thousands
June 1, 2019
June 2, 2018
Net earnings
$
15,443
$
15,373
Amortization of short-lived acquired
intangibles
—
2,870
Acquired project profits (1)
—
(565
)
Income tax impact on above adjustments
—
(555
)
Adjusted net earnings
$
15,443
$
17,123
Thirteen
Thirteen
Weeks Ended
Weeks Ended
June 1, 2019
June 2, 2018
Earnings per diluted common share
$
0.58
$
0.54
Amortization of short-lived acquired
intangibles
—
0.10
Acquired project profits (1)
—
(0.02
)
Income tax impact on above adjustments
—
(0.02
)
Adjusted earnings per diluted common
share
$
0.58
$
0.60
(1) Adjustment for profits recognized
during the first quarter of fiscal 2019 on contracts that were
acquired with the purchase of EFCO.
Adjusted Operating Income and
Adjusted Operating Margin
Thirteen Weeks Ended June 1,
2019
Framing Systems
Segment
Corporate
Consolidated
In thousands
Operating income
Operating
margin
Operating loss
Operating income
Operating margin
Operating income
$
12,273
6.8
%
$
(4,381
)
$
23,041
6.5
%
Thirteen Weeks Ended June 2,
2018
Framing Systems
Segment
Corporate
Consolidated
In thousands
Operating income
Operating
margin
Operating loss
Operating income
Operating margin
Operating income
$
12,339
6.9
%
$
(2,059
)
$
21,995
6.5
%
Amortization of short-lived acquired
intangibles
2,870
1.6
—
2,870
0.9
Acquired project profits (1)
—
—
(565
)
(565
)
(0.2
)
Adjusted operating income
$
15,209
8.5
%
$
(2,624
)
$
24,300
7.2
%
EBITDA and Adjusted
EBITDA
Thirteen
Thirteen
Weeks Ended
Weeks Ended
In thousands
June 1, 2019
June 2, 2018
Net earnings
$
15,443
$
15,373
Income tax expense
4,987
4,881
Interest and other expense, net
2,611
1,741
Depreciation and amortization
11,102
14,050
EBITDA
$
34,143
$
36,045
Acquired project profits (1)
—
(565
)
Adjusted EBITDA
$
34,143
$
35,480
(1) Adjustment for profits recognized
during the first quarter of fiscal 2019 on contracts that were
acquired with the purchase of EFCO.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190627005132/en/
Jeff Huebschen Vice President, Investor Relations &
Communications 952.487.7538 ir@apog.com
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