Apogee Enterprises, Inc., a manufacturer of value-added glass solutions for the architectural and picture framing industries, announced fiscal 2011 full-year and fourth-quarter results on 6 April.
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Apogee Enterprises, Inc., a manufacturer of value-added glass solutions for the architectural and picture framing industries, announced fiscal 2011 full-year and fourth-quarter results on 6 April. Financial year 2011 full-year versus prior year results were as follows: – revenues were down 16% at USD 582.8 million; – operating loss was USD 21.0 million, compared to earnings of USD 45.4 million; – loss per share from continuing operations was USD 0.51, versus earnings of USD 1.13; – architectural segment revenues dropped 19%, with an operating loss of USD 37.7 million compared to earnings of USD 31.6 million; – large-scale optical segment revenues gained 7%, and operating income totalled USD 20.5 million; – net loss was USD 0.37 per share, compared to net earnings of USD 1.15 per share; – discontinued operations resulted in net earnings from resolution of outstanding exposures regarding foreign operations discontinued in 1998; – cash and short-term investments were USD 60.6 million, compared to USD 46.4 million at the end of the third quarter, and USD 102.6 million at the end of fiscal 2010; – a Brazilian architectural glass fabricator was acquired for about USD 21 million in cash in the third quarter. Financial year fourth-quarter versus the prior year period results were: – revenues of USD 147.9 million were flat; – operating loss was up at USD 5.6 million, compared to a loss of USD 0.2 million.; – loss per share from continuing operations totalled USD 0.12, versus earnings of USD 0.01; – architectural segment revenues lost 2%, with an operating loss of USD 9.9 million; – backlog was USD 237.2 million, compared to USD 165.7 million at the end of the third quarter and USD 227.5 million at the end of the prior year; – large-scale optical segment revenues increased 10%, while operating income increased 54% to USD 5.5 million; – net loss was USD 0.16 per share, compared to net earnings of USD 0.02 per share; – discontinued operations expense was USD 0.04 per share from resolution of the final significant exposure related to foreign operations discontinued in 1998. “Our fiscal 2011 results were impacted by extremely challenging commercial construction market conditions for our architectural segment. Architectural segment revenues were down consistent with our markets served, and low architectural glass pricing and low segment capacity utilization led to losses,” said Russell Huffer, Apogee chief executive officer. “Earnings from our picture framing business were unable to offset architectural segment losses. “Our strategy to manage our business over a cycle has positioned us to sustain these losses while maintaining a strong balance sheet and cash on hand. At year-end, our cash and short-term investments totalled approximately USD 60 million,” he said. “During fiscal 2011, we also remained focused on longer-term opportunities and used cash to purchase a leading architectural glass fabricator in Brazil, giving Apogee entre to the large developing market for energy-efficient architectural glass products in Latin America. “In the fiscal 2011 fourth quarter, we achieved our highest quarterly revenue level for the year, and had positive cash flow from operations,” Huffer said. “However, architectural segment losses, resulting from low architectural glass pricing, low segment capacity utilization, expenses related to architectural glass quality issues and costs to implement architectural glass productivity improvements, more than offset another good performance in our large-scale optical segment, where retail picture framing markets are beginning to improve. “Architectural segment revenue declines slowed and backlog grew in the fourth quarter, signalling that our markets may be stabilizing. We believe that we are well positioned for a market rebound with our strong balance sheet, green energy-efficient products, expertise in complex institutional projects, and success in pursuing installation work in new domestic geographies,” he said. Financial year fourth-quarter segment and operating results vs. prior-year period with regards to architectural products and services: – revenues of USD 128.0 million dropped 2%; – operating loss was USD 9.9 million, compared to a loss of USD 3.6 million; – segment losses were mainly caused by low pricing, costs to implement productivity improvements and expenses related to quality issues, all in the architectural glass business. The segment continued to operate at a low capacity utilization of 50%, similar to the level in the prior-year period; – the installation business performed well, completing projects that had been awarded with higher margins; – the Brazilian architectural glass business acquired during the third quarter added USD 3.7 million to segment revenues, but had minimal impact on the bottom line. Its results are reported on a two-month lag; – backlog increased to USD 237.2 million, with an increase in order intake and inclusion of USD 15 million in backlog from the Brazilian acquisition. This compares to architectural segment backlog of USD 165.7 million at the end of the third quarter and USD 227.5 million at the end of the prior-year period; – the level of projects awarded but not yet reflected in backlog declined approximately USD 30 million in the quarter to USD 50 million at the end of the fourth quarter, but remains above the historical level of projects awaiting final contracts; – approximately USD 200 million, or 84%, of the backlog is expected to be delivered in fiscal 2012, and approximately USD 37 million, or 16%, in fiscal 2013. With regards to large-scale optical technologies: – revenues of USD 19.9 million were up 10%; – volume of value-added picture framing products grew for both large and independent framers; – operating income increased 54% to USD 5.5 million; – operating margin of 27.7% resulted from the volume increase, the ongoing strong mix of value-added products and excellent operational performance. This compares to an operating margin of 19.9% in the prior-year period when there was a write-off of production equipment. The financial condition of the company was reported as follows: – long-term debt totalled USD 21.4 million, an increase from USD 8.4 million at the end of fiscal 2010; – long-term debt includes USD 20.4 million in long-term, low-interest industrial revenue and recovery zone facility bonds, – cash and short-term investments came to USD 60.6 million, compared to USD 46.4 million at the end of the third quarter and USD 102.6 million at the end of fiscal 2010, – non-cash working capital (current assets, excluding cash and short-term investments, less current liabilities) was USD 39.4 million, compared to USD 15.1 million at the end of fiscal 2010; – fiscal 2011 capital expenditures were down 7% from the prior year at USD 9.1 million; – fiscal 2011 depreciation and amortization totalled USD 28.2 million, a 5% decrease from the prior year. “For fiscal 2012, we are expecting a slight increase in revenues, and believe we have the potential to be profitable for the year, with first-half losses offset by second-half earnings,” Huffer said. “This outlook factors in our expectations that increased architectural glass pricing will flow through in the second half and that we will be able to fill open fourth-quarter architectural segment capacity. We are anticipating lower margins in the installation business with execution of projects bid at the cycle trough. Overall, we are expecting that actions we“ve taken in our architectural businesses, ranging from price increases and productivity improvements to project selection changes, will result in improving results as fiscal 2012 progresses. “The McGraw-Hill Construction forecast for non-residential construction and the American Institute of Architects Architecture Billings Index indicate that our end markets should start improving later in calendar 2011,” Huffer said. “However, Apogee is a very late cycle company that lags commercial construction markets by several months.” He added that architectural bidding activity continues to be good and remains driven by institutional work – government, education and health care projects – but that the majority of work currently being bid is scheduled for fiscal 2013. “We anticipate that our large-scale optical segment will continue to be profitable throughout fiscal 2012,” he said. “We also expect Apogee to generate positive cash flow from operations. “We believe we are well positioned financially and anticipate renewed interest in value-added, energy-efficient products as domestic commercial construction markets recover. We are focused on introducing new green products, both in the United States and internationally, including in Latin American markets through our Brazilian acquisition,” he said.