- Q4 revenues up 6%, 8% in constant
currency
- Q4 EPS up 47%; operating margin up 300
basis points
- FY16 revenues up 5%, 7% in constant
currency
- FY16 EPS up 48% vs. prior-year adjusted
EPS
- Backlog >$0.5 billion for third
consecutive quarter
- FY17 outlook: ~10% revenue growth; EPS
of $2.65-$2.80
Apogee Enterprises, Inc. (Nasdaq:APOG) today announced fiscal
2016 fourth-quarter and full-year results. Apogee provides
distinctive solutions for enclosing commercial buildings and
framing art.
FY16 FOURTH QUARTER VS. PRIOR-YEAR PERIOD
- Revenues of $262.1 million were up 6
percent.
- In constant currency, revenues were up
8 percent.
- Operating income of $28.9 million was
up 47 percent.
- Operating margin was 11.0 percent, up
300 basis points.
- Earnings per share of $0.69 were up 47
percent.
- Backlog of $508.0 million was up 4
percent.
- Cash and short-term investments were
$90.6 million.
FY16 FULL YEAR VS. PRIOR-YEAR PERIOD
- Revenues of $981.2 million were up 5
percent.
- In constant currency, revenues were up
7 percent.
- Gross margin was 24.8 percent, up 250
basis points.
- Operating income of $97.4 million was
up 53 percent.
- Operating margin was 9.9 percent, up
310 basis points.
- Earnings per share of $2.22 were up 48
percent vs. prior-year adjusted EPS of $1.50.
- Prior-year reported EPS of $1.72
included $0.22 from a tax credit.
COMMENTARY“Strong fourth quarter results – with revenues
up 6 percent, earnings up 47 percent and operating margin growing
300 basis points to 11 percent – contributed to Apogee achieving an
across-the-board record performance in fiscal 2016,” said Joseph F.
Puishys, Apogee chief executive officer. “We did what we said we
would do three years ago, essentially delivering on our fiscal 2016
goals of $1 billion in revenues at 10 percent operating margin.
“I am pleased that all four of our segments grew revenues and
operating margin in fiscal 2016, and that our backlog grew from the
end of fiscal 2015 to exceed $0.5 billion for the last three
quarters,” he said. “Contributing to our strong earnings growth in
fiscal 2016 were improved pricing, mix, productivity and project
margins, as well as lower material costs and leverage on increased
volume.
“For fiscal 2017, we continue to expect U.S. commercial
construction market growth, based on our visibility from backlog,
commitments and bidding activity, as well as external market
metrics,” said Puishys. “This positive outlook supports our fiscal
2017 guidance for double-digit revenue growth of approximately 10
percent and record earnings of $2.65 to $2.80 per share.”
FY16 FOURTH-QUARTER SEGMENT AND OPERATING RESULTS VS.
PRIOR-YEAR PERIOD
Architectural Glass
- Revenues of $98.6 million were up 7
percent, on U.S. volume growth and improved pricing.
- In constant currency, revenues were up
10 percent.
- Operating income grew to $12.1 million,
up 169 percent from $4.5 million.
- Operating margin expanded 740 basis
points to 12.3 percent, compared to 4.9 percent, due to improved
pricing and mix, strong operational performance and volume
leverage.
Architectural Services
- Revenues of $76.8 million were up 21
percent, due to strong project activity during the quarter.
- Operating income grew to $5.6 million,
up 9 percent from $5.2 million, on increased volume at better
margins and good project execution.
- Operating margin was 7.3 percent,
compared to 8.1 percent.
Architectural Framing Systems
- Revenues of $79.6 million were up 3
percent, on U.S. volume growth and improved mix.
- In constant currency, revenues were up
5 percent.
- Operating income grew to $7.7 million,
up 60 percent from $4.8 million.
- Operating margin expanded 340 basis
points to 9.7 percent, compared to 6.3 percent, as a result of
lower raw material costs, volume leverage and execution of
higher-margin window projects.
Large-Scale Optical Technologies
- Revenues of $21.7 million were down 5
percent, due to timing of customer orders.
- Operating income of $4.8 million was
down 19 percent from $6.0 million.
- Operating margin was 22.3 percent,
compared to 26.2 percent, due to timing within the year of volume
and product mix; full-year results and operational performance
remained strong.
Consolidated Backlog
- Backlog of $508.0 million was up 4
percent from $490.8 million in the prior-year period, and down 7
percent from the backlog of $544.7 million in the third quarter.
- Approximately $407 million, or 80
percent, of the backlog is expected to be delivered in fiscal 2017;
and approximately $101 million, or 20 percent, in fiscal 2018.
Financial Condition
- Cash and short-term investments totaled
$90.6 million, compared to $52.5 million at the end of fiscal
2015.
- Share repurchases in fiscal 2016
totaled 575,000 shares at a cost of $24.9 million.
- Debt was $20.4 million, compared to
$20.6 million at the end of fiscal 2015. All debt is long-term,
low-interest industrial revenue bonds.
- Non-cash working capital was $68.8
million, compared to $97.5 million at the end of fiscal 2015.
- Capital expenditures in fiscal 2016
were $42.0 million, compared to $27.2 million in the prior
year.
- Depreciation and amortization in fiscal
2016 was $31.2 million.
FY17 OUTLOOK“For fiscal 2017, we expect another year of
strong top- and bottom-line growth, based on our backlog,
commitments and bidding activity,” said Puishys. “We expect revenue
growth of approximately 10 percent, as we had indicated previously,
and earnings of $2.65 to $2.80 per share.
“Apogee expects mid-single digit U.S. commercial construction
market growth in fiscal 2017, 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 strength that supports our
outlook for growth at least through fiscal 2020.”
Puishys said that capital expenditures for the year are
anticipated to be $50 to $60 million as Apogee invests to increase
capabilities, productivity and capacity. Gross margin is expected
to be greater than 26 percent and operating margin, approximately
11 percent.
“Longer term, we believe our strategies to grow through new
geographies, new products and new markets, along with our backlog,
bidding activity, and focus on better project selection,
productivity and operational improvements, support our fiscal 2018
goals of at least a 12 percent operating margin on revenues of $1.2
to $1.3 billion,” Puishys said.
TELECONFERENCE AND SIMULTANEOUS WEBCASTApogee will host a
teleconference and webcast at 9 a.m. Central Time tomorrow, April
7. To participate in the teleconference, call (866) 525-3151 toll
free or (330) 863-3393 international, access code 78435185. To
listen to the live conference call over the internet, go to the
Apogee web site at http://www.apog.com and click on “investor
relations” and then the webcast link at the top of 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 Services segment consists
of Harmon, Inc., one of the largest U.S. full-service building
glass installation and renovation companies.
- 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 Window and Wall Systems, a manufacturer of custom aluminum
window systems and curtainwall; 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.
- Large-Scale Optical segment consists of
Tru Vue, a value-added glass and acrylic manufacturer primarily for
the custom picture framing market.
USE OF NON-GAAP FINANCIAL MEASURESIn addition to
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), this news release also
contains the following non-GAAP measures:
- Constant currency revenue growth
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 our results of operations, consistent with how we
evaluate our performance. Constant currency percentages are
calculated by converting prior-period local currency results using
the current period exchange rates and comparing these adjusted
amounts to current period reported results.
- Adjusted earnings per share excludes
the benefit from an energy-efficient tax credit of $0.22 per share
recognized in the second quarter of fiscal 2015. The company
believes adjusting earnings per share for this credit provides a
more useful year-over-year comparison of earnings per share.
- 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 our 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.
- Non-cash working capital is defined as
current assets, excluding cash and short-term securities, less
current liabilities, excluding current portion of long-term debt.
The company considers this a useful metric in measuring working
capital management over time.
Apogee believes that these non-GAAP measures provide enhanced
transparency with respect to revenue and earnings per share growth,
cash management and operational management. These non-GAAP measures
should be viewed in addition to, and not as an alternative to, the
reported financial results of the company prepared in accordance
with GAAP. Other companies may calculate these measures differently
than Apogee, limiting the usefulness of the measure for comparison
with other companies.
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; and (N) loss of key personnel and inability to source
sufficient labor. 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 such 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 28, 2015.
Apogee Enterprises, Inc. & Subsidiaries Consolidated
Condensed Statement of Income (Unaudited)
Dollar amounts and share counts in
thousands,
ThirteenWeeks Ended
ThirteenWeeks Ended
%
Fifty-twoWeeks Ended
Fifty-twoWeeks Ended
%
except for per share amounts
February 27, 2016 February 28, 2015 Change February 27, 2016
February 28, 2015 Change
Net sales $262,149 $246,698 6 % $981,189 $933,936 5 % Cost of goods
sold 193,292 185,566 4 % 737,619 725,392
2 % Gross profit 68,857 61,132 13 % 243,570 208,544 17 %
Selling, general and administrative expenses 39,969 41,485
-4 % 146,177 144,959 1 % Operating income
28,888 19,647 47 % 97,393 63,585 53 % Interest income 219 247 -11 %
981 954 3 % Interest expense 116 150 -23 % 593 924 -36 % Other
income (expense), net (338 ) (78 ) -333 % (457 ) 1,384 N/M
Earnings before income taxes 28,653 19,666 46 % 97,324
64,999 50 % Income tax expense 8,718 5,779 51 %
31,982 14,483 121 % Net earnings $19,935
$13,887 44 % $65,342 $50,516 29 %
Earnings per share - basic $0.69 $0.49 43 % $2.25 $1.76 28 %
Average common shares outstanding 28,819 28,774 0 % 29,058 28,763 1
% Earnings per share - diluted $0.69 $0.47 47 % $2.22 $1.72
* 29 % Average common and common 29,063 29,448 -1 % 29,375
29,374 0 % equivalent shares outstanding Cash dividends per
common share $0.125 $0.110 14 % $0.455 $0.410 11 % *
Adjusted earnings per share for the twelve months ended February
28, 2015 was $1.50, excluding a $0.22 benefit from an
energy-efficient investment tax credit. Excluding the impact of
this credit, earnings per share for the twelve months ended
February 28, 2016 increased 48% over the prior year.
Business Segments Information
(Unaudited) Thirteen Thirteen Fifty-two Fifty-two
Weeks Ended Weeks Ended % Weeks Ended Weeks Ended % February 27,
2016 February 28, 2015 Change February 27, 2016 February 28, 2015
Change
Sales Architectural Glass $98,644 $92,333 7 %
$377,713 $346,471 9 % Architectural Services 76,842 63,504 21 %
245,935 230,650 7 % Architectural Framing Systems 79,603 77,026 3 %
308,593 298,395 3 % Large-Scale Optical 21,667 22,723 -5 % 88,541
87,693 1 % Eliminations (14,607 ) (8,888 ) -64 % (39,593 ) (29,273
) -35 % Total $262,149 $246,698 6 % $981,189
$933,936 5 %
Operating income (loss)
Architectural Glass $12,099 $4,496 169 % $35,504 $16,431 116 %
Architectural Services 5,624 5,163 9 % 11,687 7,442 57 %
Architectural Framing Systems 7,714 4,834 60 % 31,911 21,808 46 %
Large-Scale Optical 4,831 5,964 -19 % 22,963 21,954 5 % Corporate
and other (1,380 ) (810 ) -70 % (4,672 ) (4,050 ) -15 % Total
$28,888 $19,647 47 % $97,393 $63,585 53
%
Consolidated Condensed
Balance Sheets (Unaudited) February 27, 2016
February 28, 2015
Assets Current assets $336,793 $298,975
Net property, plant and equipment 202,462 193,540 Other assets
118,185 119,542 Total assets $657,440 $612,057
Liabilities and shareholders' equity Current
liabilities $177,381 $149,028 Long-term debt 20,400 20,587 Other
liabilities 53,464 59,966 Shareholders' equity 406,195
382,476 Total liabilities and shareholders' equity $657,440
$612,057
Apogee Enterprises, Inc. &
Subsidiaries Consolidated Condensed Statement of Cash
Flows (Unaudited) Fifty-two Fifty-two
Weeks Ended Weeks Ended Dollar amounts in thousands February 27,
2016 February 28, 2015 Net earnings $ 65,342 $ 50,516
Depreciation & amortization 31,248 29,423 Share-based
compensation 4,923 4,793 Other, net (10,312 ) 334 Changes in
operating assets and liabilities 32,750
(16,503 ) Net cash provided by operating activities 123,951
68,563 Capital expenditures
(42,037 ) (27,220 ) Net (purchases) sales of marketable securities
(31,767 ) 3,336 Other, net (4,052 ) (591 ) Net
cash used in investing activities (77,856 )
(24,475 ) Dividends paid (13,184 ) (12,071 ) Repurchase and
retirement of common stock
(24,911 ) (6,894 ) Other, net 1,682
(808 ) Net cash used in financing activities (36,413 )
(19,773 ) Increase in cash and cash
equivalents 9,682 24,315 Effect of exchange rates on cash (1,397 )
(595 ) Cash and cash equivalents at beginning of year 52,185
28,465 Cash and cash equivalents at end
of period $ 60,470 $ 52,185
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160406006456/en/
Apogee Enterprises, Inc.Mary Ann Jackson, 952-487-7538Investor
Relationsmjackson@apog.com
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