- Revenues up 3%
- Operating margin up 300 basis
points
- EPS up 49%
- Backlog up 8%
- FY17 outlook: ~10% revenue growth; EPS
range raised to $2.70-$2.85; backlog expected to grow for the
year
Apogee Enterprises, Inc. (Nasdaq:APOG) today announced fiscal
2017 first-quarter results. Apogee provides distinctive solutions
for enclosing commercial buildings and framing art.
FY17 FIRST QUARTER VS. PRIOR-YEAR PERIOD
- Revenues of $247.9 million were up 3
percent.
- In constant currency, revenues were up
4 percent.
- Operating income of $26.2 million was
up 44 percent.
- Operating margin was 10.6 percent, up
300 basis points.
- Earnings per share of $0.61 were up 49
percent.
- Backlog of $509.7 million was up 8
percent.
- Cash and short-term investments were
$67.5 million.
COMMENTARY“I am very pleased with our start to fiscal
2017 – in the first quarter, we grew gross margin by 280 basis
points, operating margin by 300 basis points and earnings per share
by 49 percent,” said Joseph F. Puishys, Apogee chief executive
officer. “Revenue growth at 3 percent was consistent with our
expectations, given the timing of project activity.
“All three architectural segments delivered significant
operating income growth, and two of these three segments grew the
topline double digits as well,” said Puishys. “Backlog also grew in
the quarter, both sequentially and compared to the prior-year
period.
“With our solid operational performance in the quarter and
expectations that this level of execution will continue throughout
the year, we’ve increased our earnings per share outlook for fiscal
2017 to $2.70 to $2.85, up from $2.65 to $2.80,” he said.
FY17 FIRST-QUARTER SEGMENT AND OPERATING RESULTS VS.
PRIOR-YEAR PERIOD
Architectural Glass
- Revenues of $93.4 million were down 8
percent, as expected, based on timing of project activity.
- In constant currency, revenues were
down 6 percent.
- Operating income grew to $9.5 million,
up 15 percent.
- Operating margin expanded 200 basis
points to 10.2 percent, due to improved pricing and mix, and strong
operational performance.
Architectural Services
- Revenues of $62.8 million were up 13
percent.
- Operating income grew to $3.2 million,
up 238 percent.
- Operating margin expanded 340 basis
points to 5.1 percent, on good project execution and increased
volume at better project margins.
Architectural Framing Systems
- Revenues of $81.1 million were up 13
percent, on volume growth.
- In constant currency, revenues were up
14 percent.
- Operating income grew to $10.2 million,
up 94 percent.
- Operating margin expanded 530 basis
points to 12.6 percent, as a result of improved operational
performance and volume growth.
Large-Scale Optical Technologies
- Revenues of $20.0 million were
flat.
- Operating income of $4.7 million was
down 4 percent.
- Operating margin was 23.2 percent,
compared to 24.1 percent, due to new market investments and product
mix; operational performance remains strong.
Consolidated Backlog
- Backlog of $509.7 million was up 8
percent from $470.8 million in the prior-year period, and up
slightly from the backlog of $508.0 million at the end of fiscal
2016.
- Approximately $364 million, or 71
percent, of the backlog is expected to be delivered in fiscal 2017;
and approximately $146 million, or 29 percent, in fiscal 2018.
Financial Condition
- Cash and short-term investments totaled
$67.5 million, compared to $90.6 million at the end of fiscal 2016.
- Seasonal first-quarter payments,
including annual incentive compensation, and significant capital
expenditures, primarily for new architectural glass capabilities,
reduced cash and short-term investments in the quarter.
- Non-cash working capital was $94.2
million, compared to $68.8 million at the end of fiscal 2016.
- Capital expenditures in the first
quarter were $17.8 million, compared to $8.8 million in the
prior-year period.
- Debt was $22.3 million, compared to
$20.4 million at the end of fiscal 2016. Almost all the debt is
long-term, low-interest industrial revenue bonds.
- Depreciation and amortization in the
first quarter was $7.7 million.
FY17 OUTLOOK“For fiscal 2017, we expect continued top-
and bottom-line growth, based on our backlog, commitments and
bidding activity,” said Puishys. “We’ve increased our earnings per
share outlook for the year to $2.70 to $2.85, from $2.65 to $2.80,
as a result of improved operational performance in the first
quarter that we expect will continue throughout the year. We are
maintaining our outlook for revenue growth of approximately 10
percent.
“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 growth at least through
fiscal 2020.”
Puishys said that fiscal 2017 capital expenditures are
anticipated to be approximately $60 million as Apogee invests to
increase capabilities, productivity and capacity. Gross margin is
expected to be greater than 26 percent and operating margin at
least 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 10 a.m. Central Time tomorrow, June
23. To participate in the teleconference, call (866) 525-3151 toll
free or (330) 863-3393 international, access code 30979915. 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 Services segment consists
of Harmon, Inc., one of the largest U.S. full-service building
glass installation 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 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 converted
amounts to current period reported results.
- 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 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 27, 2016.
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Condensed Statement of Income
(Unaudited)
Thirteen
Thirteen
Dollar amounts and share counts in
thousands,
Weeks Ended
Weeks Ended
%
except for per share amounts
May 28, 2016
May 30, 2015
Change
Net sales $247,880 $239,962 3 % Cost of goods sold 183,452
184,374 0 % Gross profit 64,428 55,588 16 % Selling, general and
administrative expenses 38,179 37,364 2 % Operating income 26,249
18,224 44 % Interest income 275 237 16 % Interest expense 157 167
-6 % Other income (expense), net 256 48 433 % Earnings before
income taxes 26,623 18,342 45 % Income tax expense 8,901 6,216 43 %
Net earnings $17,722 $12,126 46 % Earnings per share - basic
$0.62 $0.42 48 % Average common shares outstanding 28,702
29,044 -1 % Earnings per share - diluted $0.61 $0.41 49 %
Average common and common 28,901 29,479 -2 % equivalent
shares outstanding Cash dividends per common share $0.125
$0.110 14 %
Business Segments Information
(Unaudited)
Thirteen
Thirteen
Weeks Ended
Weeks Ended
%
May 28, 2016 May 30, 2015 Change
Sales Architectural
Glass $93,360 $101,175 -8 % Architectural Services 62,820 55,652 13
% Architectural Framing Systems 81,132 71,900 13 % Large-Scale
Optical 20,028 20,219 -1 % Eliminations (9,460 ) (8,984 ) -5 %
Total $247,880 $239,962 3 %
Operating
income (loss) Architectural Glass $9,531 $8,283 15 %
Architectural Services 3,181 942 238 % Architectural Framing
Systems 10,232 5,261 94 % Large-Scale Optical 4,652 4,870 -4 %
Corporate and other (1,347 ) (1,132 ) -19 % Total $26,249
$18,224 44 %
Consolidated Condensed Balance
Sheets (Unaudited) May 28,
2016 February 27, 2016
Assets Current assets $331,833
$336,793 Net property, plant and equipment 214,459 202,462 Other
assets 121,437 118,185 Total assets $667,729 $657,440
Liabilities and shareholders' equity Current liabilities
$170,146 $177,381 Long-term debt 22,305 20,400 Other liabilities
51,662 53,464 Shareholders' equity 423,616 406,195 Total
liabilities and shareholders' equity $667,729 $657,440
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Condensed Statement of Cash Flows
(Unaudited)
Thirteen
Thirteen Weeks Ended Weeks Ended In thousands May 28,
2016 May 30, 2015 Net earnings $ 17,722 $ 12,126
Depreciation and amortization 7,720 7,741 Share-based compensation
1,390 1,040 Other, net (372 ) (3,324 ) Changes in operating assets
and liabilities (27,318 ) 3,272 Net cash (used
in) provided by operating activities (858 ) 20,855
Capital expenditures (17,725 ) (8,752 ) Net purchases
of marketable securities (751 ) (34,091 ) Other, net (1,842
) (823 ) Net cash used in investing activities
(20,318 ) (43,666 ) Dividends paid (3,560 ) (3,215 )
Other, net 1,069 2,780 Net cash used in
financing activities (2,491 ) (435 ) Decrease
in cash and cash equivalents (23,667 ) (23,246 ) Effect of exchange
rates on cash 164 (735 ) Cash and cash equivalents at beginning of
year 60,470 52,185 Cash and cash
equivalents at end of period $ 36,967 $ 28,204
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160622006420/en/
Apogee Enterprises, Inc.Mary Ann Jackson, 952-487-7538Investor
Relationsmjackson@apog.com
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