- Net sales increase 1.4% to $362 million
- Diluted EPS grows 5% to $1.05
- Strong net sales and operating income growth in Architectural
Glass
- Cash flow from operations increases to $21 million, up $52
million compared to first quarter of fiscal 2023
- Increases full-year diluted EPS outlook to a range of $4.15 to
$4.45
Apogee Enterprises, Inc. (Nasdaq: APOG) today announced
its fiscal 2024 first-quarter results. Net sales grew 1.4% to
$361.7 million, led by strong growth in Architectural Glass,
partially offset by lower net sales in Architectural Services.
Diluted earnings per share ("EPS") increased 5% to $1.05, primarily
driven by improved profitability in Architectural Glass.
Three Months Ended
($ in thousands, except per share
amounts)
May 27, 2023
May 28, 2022
% Change
Net Sales
$
361,713
$
356,635
1.4
%
Operating income
$
33,767
$
33,216
1.7
%
Operating margin %
9.3
%
9.3
%
—
%
Diluted earnings per share
$
1.05
$
1.00
5.0
%
Additional Non-GAAP Measures1
EBITDA
43,761
42,755
2.4
%
Ty R. Silberhorn, Chief Executive Officer, stated, “The first
quarter was a solid start to our fiscal year, with top and
bottom-line growth and strong cash flow. We are raising our EPS
outlook for the fiscal year, as we continue to build on the
positive trends we established last year.”
Mr. Silberhorn continued, “Our first quarter results were led by
exceptional performance in Architectural Glass, building on our
progress over the past two years. Through executing our strategy,
we've driven sustainable cost and productivity improvements, and
shifted our sales mix to emphasize premium solutions that leverage
our unique capabilities. These efforts are transforming Glass from
an underperforming business to an economic leader that is
delivering significantly improved profitability. Framing Systems
and Large-Scale Optical both continue to deliver strong execution
and operating margins above our targeted levels, while results in
Architectural Services were below our expectations this
quarter.”
Mr. Silberhorn concluded, “Execution of our strategy continues
to drive improved financial performance. We believe our strong
market position, improving operational execution, and focus on
differentiated product and service offerings will position us to
deliver stronger results throughout the market cycle."
Segment Results - First Quarter Fiscal 2024 Compared to First
Quarter Fiscal 2023
Architectural Framing Systems
Architectural Framing Systems net sales grew 0.5%, to $164.2
million, driven by improved pricing and mix, which offset lower
volume, as the segment continued to increase focus on target
markets where it provides differentiated offerings. Operating
income was $19.9 million, or 12.1% of net sales, compared to $23.7
million, or 14.5% of net sales. Operating income in the prior-year
quarter benefited from the favorable timing of inventory flows and
aluminum prices, which did not repeat in this year's first quarter.
Segment backlog2 at the end of the quarter was $221 million,
compared to $243 million at the end of the fourth quarter of fiscal
2023.
Architectural Glass
Architectural Glass net sales grew 27.5%, to $97.2 million,
driven by improved pricing, higher volume, and a more favorable
sales mix, reflecting the segment's strategic shift to emphasize
premium, high-performance products. Operating income increased to
$16.5 million, or 17.0% of net sales, compared to $5.2 million, or
6.8% of net sales. The higher operating income was primarily driven
by improved pricing, favorable mix, and increased volume, partially
offset by cost inflation.
Architectural Services
Architectural Services net sales were $89.4 million, compared to
$103.4 million, primarily reflecting lower project volume. The
segment had an operating loss of $(0.6) million, primarily due the
impact of lower estimated profitability levels on certain projects,
the impact of lower project volume, and severance costs related to
a facility closure. Segment backlog ended the quarter at $709
million, compared to $727 million at the end of the fourth quarter
of fiscal 2023.
Large-Scale Optical
Large-Scale Optical net sales were $22.5 million, compared to
$25.2 million, primarily reflecting lower volume due to timing of
customer orders and customer inventory destocking. Operating income
was $5.5 million, or 24.6% of net sales, compared to $6.5 million,
or 25.8% of net sales, primarily reflecting the impact of lower net
sales.
Financial Condition
Net cash provided by operating activities was $21.3 million,
compared to a use of cash of $30.5 million in last year’s first
quarter. The improved cash flow was primarily driven by lower
working capital requirements compared to the prior year. Capital
expenditures were $7.4 million, compared to $5.1 million last year,
as the Company increased investments in projects to support its
strategy. During the quarter, the Company returned $10.4 million of
cash to shareholders through share repurchases and dividend
payments.
Quarter-end total debt was $170.7 million, down from $261.0
million at the end of last year's first quarter. Cash and cash
equivalents were $24.6 million, compared to $15.2 million at the
end of the first quarter of fiscal 2023.
Outlook
The Company is raising its outlook for full-year diluted EPS to
a range of $4.15 to $4.45, up from the previously announced range
of $3.90 to $4.25. As a reminder, fiscal 2024 will be a 53-week
year, with an extra week in the fourth quarter. Including the extra
week of operations, the Company continues to expect flat to
slightly declining net sales compared to fiscal 2023, primarily
reflecting expected lower volume in Architectural Services and
Architectural Framing Systems, partially offset by expected net
sales growth in Architectural Glass. The Company continues to
expect a long-term average tax rate of approximately 24.5% and
capital expenditures in fiscal 2024 between $50 to $60 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
high-performance glass and acrylic products used for preservation,
energy conservation, and enhanced viewing. 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:
- 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 total debt (current
debt plus long-term 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.
- EBITDA represents net income before interest, taxes,
depreciation, and amortization. The Company believes this metric
provides useful information to investors and analysts about the
Company's operating performance.
Backlog is an operating measure used by management to assess
future potential sales revenue. Backlog is defined as 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 revenue because the Company has a
substantial number of projects with short lead times that
book-and-bill within the same reporting period that 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) U.S. and
global economic conditions, including the cyclical nature of the
North American and Latin American commercial construction
industries and the potential impact of an economic downturn or
recession; (B) fluctuations in foreign currency exchange rates; (C)
actions of new and existing competitors; (D) ability to effectively
utilize and increase production capacity; (E) departure of key
personnel and ability to source sufficient labor; (F) product
performance, reliability and quality issues; (G) project management
and installation issues that could affect the profitability of
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 one
operating segment; (J) net sales and operating results that could
differ from market expectations; (K) self-insurance risk related to
a material product liability or other events 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) supply chain disruptions,
including fluctuations in the availability and cost of materials
used in our products and the impact of trade policies and
regulations; (O) integration of acquisitions and management of
acquired contracts; (P) impairment of goodwill or indefinite-lived
intangible assets; (Q) our ability to successfully implement our
strategy to become the economic leader in our target markets and
build an operating model to enable profitable growth and execute
our priorities for fiscal year 2024; (R) increases in costs related
to employee health care benefits; (S) 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; (T) U.S. and global instability and
uncertainty arising from events outside of our control; and (U) the
impact of cost inflation and rising interest rates. 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 25, 2023, and in subsequent filings with the U.S.
Securities and Exchange Commission.
____________________ 1 See Use of Non-GAAP Financial Measures and a
reconciliation to the most directly comparable GAAP measures later
in this press release.2 Backlog is a non-GAAP financial measure.
See Use of Non-GAAP Financial Measures later in this press release
for more information.
Apogee Enterprises,
Inc.
Consolidated Condensed
Statements of Income
(Unaudited)
Three Months Ended
(In thousands, except per share
amounts)
May 27, 2023
May 28, 2022
% Change
Net sales
$
361,713
$
356,635
1.4
%
Cost of sales
268,727
271,018
(0.8
) %
Gross profit
92,986
85,617
8.6
%
Selling, general and administrative
expenses
59,219
52,401
13.0
%
Operating income
33,767
33,216
1.7
%
Interest expense, net
2,036
1,206
68.8
%
Other expense, net
288
1,310
(78.0
) %
Earnings before income taxes
31,443
30,700
2.4
%
Income tax expense
7,867
7,969
(1.3
) %
Net earnings
$
23,576
$
22,731
3.7
%
Earnings per share - basic
$
1.08
$
1.01
6.9
%
Earnings per share - diluted
$
1.05
$
1.00
5.0
%
Weighted average basic shares
outstanding
21,883
22,399
(2.3
) %
Weighted average diluted shares
outstanding
22,386
22,651
(1.2
) %
Cash dividends per common share
$
0.2400
$
0.2200
9.1
%
Business Segment
Information
(Unaudited)
Three Months Ended
(In thousands)
May 27, 2023
May 28, 2022
% Change
Segment net sales
Architectural Framing Systems
$
164,162
$
163,292
0.5
%
Architectural Glass
97,202
76,265
27.5
%
Architectural Services
89,418
103,388
(13.5
) %
Large-Scale Optical
22,456
25,162
(10.8
) %
Intersegment eliminations
(11,525
)
(11,472
)
0.5
%
Net sales
$
361,713
$
356,635
1.4
%
Segment operating income (loss)
Architectural Framing Systems
$
19,945
$
23,665
(15.7
) %
Architectural Glass
16,521
5,169
219.6
%
Architectural Services
(596
)
2,927
N/M
Large-Scale Optical
5,525
6,498
(15.0
) %
Corporate and other
(7,628
)
(5,043
)
51.3
%
Operating income
$
33,767
$
33,216
1.7
%
Segment operating margin
Architectural Framing Systems
12.1
%
14.5
%
Architectural Glass
17.0
%
6.8
%
Architectural Services
(0.7
) %
2.8
%
Large-Scale Optical
24.6
%
25.8
%
Corporate and other
N/M
N/M
Operating margin
9.3
%
9.3
%
- Segment net sales is defined as
net sales for a certain segment and includes revenue related to
intersegment transactions.
- Segment operating income is
defined as operating income for a certain segment including
operating income related to intersegment transactions and excluding
certain corporate costs that are not allocated at a segment
level.
- Segment operating margin is
defined as segment operating income divided by segment net
sales.
Apogee Enterprises,
Inc.
Consolidated Condensed Balance
Sheets
(Unaudited)
(In thousands)
May 27, 2023
February 25, 2023
Assets
Cash and cash equivalents
$
24,642
$
19,924
Restricted cash
—
1,549
Current assets
369,083
361,628
Net property, plant and equipment
246,343
248,867
Other assets
281,131
283,397
Total assets
$
921,199
$
915,365
Liabilities and shareholders'
equity
Current liabilities
233,159
242,549
Long-term debt
170,669
169,837
Other liabilities
107,165
106,571
Shareholders' equity
410,206
396,408
Total liabilities and shareholders'
equity
$
921,199
$
915,365
Apogee Enterprises,
Inc.
Consolidated Condensed
Statement of Cash Flows
(Unaudited)
Three Months Ended
(In thousands)
May 27, 2023
May 28, 2022
Net earnings
$
23,576
$
22,731
Depreciation and amortization
10,282
10,849
Share-based compensation
2,178
1,597
Gain on disposal of assets
(27
)
(660
)
Other, net
2,117
7,307
Changes in operating assets and
liabilities:
Receivables
(13,476
)
(18,468
)
Inventories
(2,068
)
(17,744
)
Contract assets
14,368
(13,528
)
Accounts payable and accrued expenses
(21,702
)
(18,576
)
Contract liabilities
8,158
(1,907
)
Refundable and accrued income taxes
7,590
4,238
Operating lease liability
(3,101
)
(3,333
)
Prepaid expenses and other current
assets
(6,608
)
(2,968
)
Net cash provided (used) by operating
activities
21,287
(30,462
)
Capital expenditures
(7,398
)
(5,125
)
Proceeds from sales of property, plant and
equipment
66
4,087
Sales/maturities of marketable
securities
400
100
Net cash used by investing activities
(6,932
)
(938
)
Borrowings on line of credit
105,852
161,000
Repayment on debt
—
(1,000
)
Payments on line of credit
(105,000
)
(62,000
)
Repurchase and retirement of common
stock
(5,193
)
(74,312
)
Dividends paid
(5,245
)
(4,793
)
Other, net
(1,677
)
(1,271
)
Net cash (used) provided by financing
activities
(11,263
)
17,624
Increase (decrease) in cash, cash
equivalents and restricted cash
3,092
(13,776
)
Effect of exchange rates on cash
77
64
Cash, cash equivalents and restricted cash
at beginning of year
21,473
37,583
Cash, cash equivalents and restricted cash
at end of period
$
24,642
$
23,871
Reconciliation of Non-GAAP
Measure - EBITDA
(Earnings before interest,
taxes, depreciation and amortization)
(Unaudited)
Three Months Ended
(In thousands)
May 27, 2023
May 28, 2022
Net earnings
$
23,576
$
22,731
Income tax expense
7,867
7,969
Interest expense, net
2,036
1,206
Depreciation and amortization
10,282
10,849
EBITDA
$
43,761
$
42,755
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230623632330/en/
Jeff Huebschen Vice President, Investor Relations &
Communications 952.487.7538 ir@apog.com
Apogee Enterprises (NASDAQ:APOG)
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