Apogee Beats Estimates, Ups Guidance - Analyst Blog
December 20 2012 - 4:10AM
Zacks
Apogee Enterprises,
Inc. (APOG) delivered third quarter fiscal 2013 earnings
of 28 cents per share, up 40% from 20 cents per share earned in the
prior-year quarter and ahead of the Zacks Consensus Estimate of 24
cents per share.
Total revenue improved 9% year
over year to $190 million in the quarter and surpassed the Zacks
Consensus Estimate of $184 million. The improvement was driven by
growth in the Architectural segment, somewhat offset by a decline
in the Large-Scale Optical Technologies segment.
Operational
Update
Cost of sales increased 6% to
$148 million in the quarter. Gross profit improved 22% to $42.2
million. Gross margin in the quarter improved 230 basis points to
22.2%.
SG&A expenses increased 12%
to $30.8 million. Operating income was $11.4 million, up 59% from
the $7.1 million in the year-ago quarter.
Segment
Performance
Revenues from the Architectural
Products and Services segment rose 11% year over year to $168.8
million, led by solid performance of installation business.
Operating income in the quarter
was $5.8 million, a stellar improvement from $0.6 million in the
year ago quarter, The improvement was driven by higher pricing of
architectural glass; increased margins in the installation
businesses along with better mix and good operation performance
throughout the segment. Backlog in the segment was $300 million
compared with $225 million in the year-ago quarter.
Large-Scale Optical Technologies
segment’s revenues went down 5% to $21.6 million. Operating income
in the reported quarter dipped 12% to $6.5 million, impacted by
timing of customer promotions and Hurricane Sandy.
Financial
Position
Apogee ended the quarter with
cash and short-term investments of $75 million, compared to $68.3
million at the second quarter end. Long-term debt amounted to $30.8
million, flat compared with the second quarter. Cash provided by
operating activities was $23 million during the first nine months
of fiscal 2013 compared to cash used amounting to $4.7 million in
the comparable period last year.
Looking
Ahead
For fiscal 2013, Apogee has
increased its earnings guidance to the range of 62 cents to 67
cents per share from the previous guidance of 56 cents to 64 cents.
It expects revenue growth in the range of 5% to 6% and improved
margins resulting from better mix and good operational
performance.
Further, the company expects to
generate positive free cash flow after spending $30 million to
improve productivity and capacity, besides introducing new products
along with maintaining the requirements.
Our Take
The company has significant
exposure to the U.S. market in the installation and storefront
businesses and is focusing on further expansion to gain market
share. The strategy of increasing its domestic geographical
footprint will help revenues increase moving forward.
The architectural segment
returned to profitability in the second quarter and maintained the
momentum in the third quarter as well. Moreover, the segment’s
backlog has reached its maximum level in 13 quarters, which bodes
well for its future performance.
However, macroeconomic conditions
might be a headwind for Apogee in fiscal 2013. Moderating global
economic growth and uncertainty in the global economic scenario can
limit Apogee’s near-term revenue visibility. Apogee retains a
short-term Zacks #3 Rank (Hold).
Apogee Enterprises is a leader in
technologies for the design and development of value added glass
products, services, and systems. The company presently has two
reportable segments - The Architectural segment and the Large-Scale
Optical Technologies segment. Owens-Illinois, Inc.
(OI) is a Zacks #3 Rank (Hold) stock in the same
industry.
APOGEE ENTRPRS (APOG): Free Stock Analysis Report
OWENS-ILLINOIS (OI): Free Stock Analysis Report
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