- First-quarter revenue grows 9 percent, to $357 million
- First-quarter earnings increase to $1.00 per diluted share, up
from $0.42 in the prior year
- Increases full year adjusted earnings guidance to a range of
$3.50 to $3.90 per diluted share
Apogee Enterprises, Inc. (Nasdaq: APOG) today announced
its fiscal 2023 first quarter results. First-quarter revenue grew
9.4 percent to $356.6 million, compared to $326.0 million in the
first quarter of fiscal year 2022, led by growth in Architectural
Framing Systems and Architectural Services. Earnings per diluted
share increased to $1.00, compared to $0.42 per diluted share in
the prior-year quarter, primarily driven by improved profitability
in Architectural Framing Systems and Architectural Glass, and a
lower share count.
Commentary
“These strong results demonstrate the continued positive
momentum in our business as we execute our strategy to create peak
value,” said Ty R. Silberhorn, Chief Executive Officer. “Our team
did a terrific job executing this quarter, improving service to
customers, while effectively managing costs and pricing. Our
strategy is driving improved operational execution and productivity
gains, while strengthening our ability to manage costs.”
Mr. Silberhorn continued, “While we expect continued cost
inflation and supply chain challenges, we are encouraged by this
start to our fiscal year. We are well positioned to drive continued
year-over-year revenue growth and margin expansion. As a result,
we’re increasing our guidance for full-year earnings.”
Segment Results
Architectural Framing Systems
Architectural Framing Systems first-quarter revenue grew 19
percent, to $163.3 million, from $136.8 million in the prior-year
period, primarily driven by inflation-related pricing actions.
First quarter operating income increased to $23.7 million, compared
to $8.4 million in last year’s first quarter, reflecting improved
pricing and the benefits from previously completed restructuring
and cost actions, which offset the impact of inflation. Framing
Systems’ operating income also benefited from the timing of
inventory flows and the volatility of aluminum prices, as it sold
products this quarter using aluminum that was purchased in previous
periods at lower costs. Segment backlog increased to $310 million,
up from $281 million at the end of the fourth quarter of fiscal
2022. Framing Systems’ prior year results have been recast to
reflect the move of the Sotawall business to the Architectural
Services segment, effective this quarter.
Architectural Services
Architectural Services revenue grew 14 percent to $103.4
million, from $90.7 million in the prior-year quarter, driven by
increased volume from executing projects in backlog. Operating
income was $2.9 million, compared to $4.2 million in the prior-year
period, primarily reflecting performance write downs on a discrete
number of projects, increased costs for investments to support
future growth, and a less favorable project mix, partially offset
by the higher volume. Segment backlog improved to $681 million, up
from $665 million at the end of the fourth quarter of fiscal 2022.
Prior-year results for Architectural Services have been recast to
reflect the move of the Sotawall business into the segment,
effective this quarter.
Architectural Glass
Architectural Glass revenue in the first quarter was $76.3
million, compared to $83.0 million in the prior-year quarter,
primarily reflecting lower volume. Operating income improved to
$5.2 million, compared to $2.1 million in last year’s first
quarter, driven by productivity gains, the positive impact of
restructuring actions completed last year, and improved pricing,
which offset the impact of inflation and lower volume.
Large-Scale Optical
Large-Scale Optical revenue grew 4 percent to $25.2 million, up
from $24.3 million in the first quarter last year, driven by
improved pricing and a more favorable sales mix. Operating income
was $6.5 million, up from $5.8 million in last year’s first
quarter, primarily reflecting improved productivity, partially
offset by cost inflation.
Financial Condition
Net cash used by operating activities in the first quarter was
$30.5 million, compared to $6.9 million provided by operating
activities in the prior-year period. The lower cash flow primarily
reflected increased working capital related to revenue growth.
Capital expenditures were $5.1 million, compared to $4.7 million in
last year’s first quarter. During the first quarter, the company
repurchased 1.57 million shares of stock for $74.3 million and
returned $4.8 million to shareholders through dividend
payments.
Quarter-end total debt was $261 million, compared to $165
million at the end of last year’s first quarter. Cash and cash
equivalents were $15.2 million, compared to $36.5 million at the
end of the first quarter of fiscal 2022.
Outlook
Based on first-quarter results and increasing confidence in its
outlook, the company is raising its guidance for full-year adjusted
earnings to a range of $3.50 to $3.90 per diluted share, up from
the previously announced range of $2.90 to $3.30. The company
continues to expect full-year capital expenditures of $35 million
to $40 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 provide a
business update. This call will be webcast and is available in the
Investor Relations section of the company’s website, along with
presentation slides, at https://www.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) is a leading provider of
architectural products and services for enclosing buildings, and
glazing products for framing art. Headquartered in Minneapolis, MN,
our portfolio of industry-leading products and services includes
high-performance architectural glass, windows, curtainwall,
storefront and entrance systems, integrated project management and
installation services, 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 in recent reporting periods include: impairment
charges, restructuring costs, acquired project-related charges,
gains or losses from significant asset sales, and COVID-19 related
expenditures.
- 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. However, free cash
flow does not fully reflect the company’s ability to freely deploy
generated cash, as it does not reflect, for example, required
payments on indebtedness and other fixed obligations.
- Net Debt is a non-GAAP measure defined as the sum of long-term
and current debt on our consolidated balance sheet, less cash and
cash equivalents. The company considers this measure helpful to
evaluate our capital structure and financial leverage, and our
ability to fund investing and financing activities.
- Adjusted EBITDA represents net income before interest, taxes,
depreciation, amortization and certain non-cash, non-recurring and
other adjustment items. We believe this metric provides useful
information to investors and analysts about the Company's
performance because it eliminates the effects of certain items that
are unusual in nature or whose fluctuation from period to period do
not necessarily correspond to changes in the operations of the
company.
A reconciliation of non-GAAP guidance on Adjusted EPS to GAAP
guidance is not available on a forward-looking basis without
unreasonable effort due to the uncertainty of the magnitude and
timing of future adjustments. These adjustments may include the
impact of such items as impairment charges, restructuring costs,
acquired project-related charges, and gains or losses from
significant asset sales. Accordingly, the company is unable to
provide a reconciliation of Adjusted EPS to the most directly
comparable GAAP financial measure or address the probable
significance of the unavailable information, which could be
material to the company's future financial results computed in
accordance with GAAP.
An operational measure that management uses is backlog. Backlog
represents the dollar amount of signed contracts or firm orders,
generally as a result of a competitive bidding process, which is
expected to be recognized as revenue. Backlog is not a term defined
under U.S. GAAP and is not a measure of contract profitability.
Backlog should not be used as the sole indicator of future segment
revenue because we have a substantial number of projects with short
lead times that book-and-bill within the same reporting period and
are not included in backlog.
Management uses 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. 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. The words “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “forecast,” “project,” “should” and similar expressions
are intended to identify “forward-looking statements”. 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 results, performance, financial condition, prospects and
opportunities of the company , including the following: (A)
uncertainty regarding the potential impacts and duration of the
COVID-19 pandemic; (B) 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 condition of the U.S.
economy, which impact our large-scale optical segment; (C)
fluctuations in foreign currency exchange rates; (D) actions of new
and existing competitors; (E) ability to effectively utilize and
increase production capacity; (F) departure of key personnel and
ability to source sufficient labor; (G) product performance,
reliability and quality issues; (H) project management and
installation issues that could affect the profitability of
individual contracts; (I) changes in consumer and customer
preference, or architectural trends and building codes; (J)
dependence on a relatively small number of customers in certain
business segments; (K) revenue and operating results that could
differ from market expectations; (L) self-insurance risk related to
a material product liability or other event for which the company
is liable; (M) dependence on information technology systems and
information security threats; (N) cost of compliance with and
changes in environmental regulations; (O) fluctuations in the
availability and cost of materials used in our products and the
impact of trade; (P) integration of recent acquisitions and
management of acquired contracts; (Q) impairment of goodwill or
indefinite-lived intangible assets; (R) our ability to execute our
strategy to become the economic leader in our target markets and
build an operating model to enable profitable growth; (S) increases
in costs related to employee health care benefits; and (T) risks
that anticipated results from business restructuring initiatives
will not be achieved, implementation of cost-saving and business
restructuring initiatives may take more time or cost more than
expected, the anticipated cost savings may be materially less than
anticipated, and the restructuring may result in disruption in
delivery of services to our customers. 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, performance, prospects, or opportunities. 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 February 26,
2022 and in subsequent filings with the U.S. Securities and
Exchange Commission.
Apogee Enterprises,
Inc.
Consolidated Condensed
Statements of Income
(Unaudited)
Three Months Ended
(In thousands, except per share
amounts)
May 28, 2022
May 29, 2021
% Change
Net sales
$
356,635
$
326,006
9
%
Cost of sales
271,018
258,296
5
%
Gross profit
85,617
67,710
26
%
Selling, general and administrative
expenses
52,401
51,668
1
%
Operating income
33,216
16,042
107
%
Interest expense, net
1,206
1,238
(3
)%
Other expense, net
1,310
315
316
%
Earnings before income taxes
30,700
14,489
112
%
Income tax expense
7,969
3,672
117
%
Net earnings
$
22,731
$
10,817
110
%
Earnings per share - basic
$
1.01
$
0.43
135
%
Earnings per share - diluted
$
1.00
$
0.42
138
%
Weighted average basic shares
outstanding
22,399
25,402
(12
)%
Weighted average diluted shares
outstanding
22,651
25,822
(12
)%
Cash dividends per common share
$
0.2200
$
0.2000
10
%
Business Segment
Information
(Unaudited)
Three Months Ended
(In thousands)
May 28, 2022
May 29, 2021
% Change
Net sales
Architectural Framing Systems
$
163,292
$
136,768
19
%
Architectural Services
103,388
90,732
14
%
Architectural Glass
76,265
83,031
(8
)%
Large-Scale Optical
25,162
24,228
4
%
Intersegment eliminations
(11,472
)
(8,753
)
31
%
Net sales
$
356,635
$
326,006
9
%
Operating income (loss)
Architectural Framing Systems
$
23,665
$
8,371
183
%
Architectural Services
2,927
4,226
(31
)%
Architectural Glass
5,169
2,128
143
%
Large-Scale Optical
6,498
5,847
11
%
Corporate and other
(5,043
)
(4,530
)
11
%
Operating income
$
33,216
$
16,042
107
%
Apogee Enterprises,
Inc.
Consolidated Condensed Balance
Sheets
(Unaudited)
(In thousands)
May 28, 2022
February 26, 2022
Assets
Cash and cash equivalents
$
15,186
$
37,583
Restricted cash
8,685
—
Current assets
347,290
300,309
Net property, plant and equipment
237,412
249,995
Other assets
298,377
299,976
Total assets
$
906,950
$
887,863
Liabilities and shareholders'
equity
Current liabilities
207,065
231,946
Current debt
—
1,000
Long-term debt
261,000
162,000
Other liabilities
111,595
106,718
Shareholders' equity
327,290
386,199
Total liabilities and shareholders'
equity
$
906,950
$
887,863
Apogee Enterprises,
Inc.
Consolidated Condensed
Statement of Cash Flows
(Unaudited)
Three Months Ended
(In thousands)
May 28, 2022
May 29, 2021
Net earnings
$
22,731
$
10,817
Depreciation and amortization
10,849
12,980
Share-based compensation
1,597
1,674
Gain on disposal of assets
(660
)
(421
)
Other, net
6,012
4,518
Changes in operating assets and
liabilities:
Receivables
(26,671
)
4,455
Inventories
(17,744
)
2,252
Costs and earnings on contracts in excess
of billings
(5,325
)
1,205
Accounts payable and accrued expenses
(17,854
)
(22,449
)
Billings in excess of costs and earnings
on uncompleted contracts
(2,152
)
(6,434
)
Refundable and accrued income taxes
4,238
1,410
Operating lease liability
(3,333
)
(3,113
)
Other, net
(2,150
)
(11
)
Net cash (used) provided by operating
activities
(30,462
)
6,883
Capital expenditures
(5,125
)
(4,705
)
Proceeds from sales of property, plant and
equipment
4,087
438
Other, net
100
119
Net cash used by investing activities
(938
)
(4,148
)
Borrowings on line of credit
161,000
—
(Repayment) borrowings on debt
(1,000
)
—
Payments on line of credit
(62,000
)
—
Proceeds from exercise of stock
options
—
4,115
Repurchase and retirement of common
stock
(74,312
)
(12,625
)
Dividends paid
(4,793
)
(5,035
)
Other, net
(1,271
)
(712
)
Net cash provided (used) by financing
activities
17,624
(14,257
)
Decrease in cash, cash equivalents and
restricted cash
(13,776
)
(11,522
)
Effect of exchange rates on cash
64
714
Cash, cash equivalents and restricted cash
at beginning of year
37,583
47,277
Cash, cash equivalents and restricted cash
at end of period
$
23,871
$
36,469
EBITDA Reconciliation
(Unaudited)
Three Months Ended
(In thousands)
May 28, 2022
May 29, 2021
Net earnings
$
22,731
$
10,817
Income tax expense
7,969
3,672
Interest expense, net
1,206
1,238
Depreciation and amortization
10,849
12,980
EBITDA
$
42,755
$
28,707
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220623005209/en/
Jeff Huebschen Vice President, Investor Relations &
Communications 952.487.7538 ir@apog.com
Apogee Enterprises (NASDAQ:APOG)
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