Apogee reports fiscal 2012 first-quarter results

Apogee Enterprises, Inc. announced fiscal 2012 first-quarter results on 21 June. With regards to FY12 first quarter vs. prior-year period:
revenues of USD 153.3 million were up 7%;
operating loss …

Apogee Enterprises, Inc. announced fiscal 2012 first-quarter results on 21 June. With regards to FY12 first quarter vs. prior-year period: revenues of USD 153.3 million were up 7%; operating loss was USD 3.4 million, compared to a loss of USD 6.1 million; per share loss was USD 0.08, compared to a loss of USD 0.13; architectural segment revenues increased 7%, with an operating loss of USD 7.1 million; backlog ended at USD 247.0 million, compared to USD 237.2 million at the end of fiscal 2011 and USD 214.9 million in the prior-year period; large-scale optical segment revenues grew 8%, while operating income increased 38% to USD 4.6 million; cash and short-term investments totalled USD 43.0 million, compared to USD 60.6 million at the end of the fiscal 2011. Although losses continued for Apogee with the ongoing difficult commercial construction market conditions, we are encouraged that revenues increased year on year and our architectural segment backlog again grew sequentially, said Russell Huffer, Apogee chief executive officer. Our large-scale optical segment grew revenues and earnings with a good mix of value-added picture framing glass and acrylic in an improving retail market. As expected, our first-quarter architectural segment losses resulted from low pricing on architectural glass projects and lower margins on installation projects bid at the bottom of the commercial construction cycle, as well as low architectural glass capacity utilization, he said. Our balance sheet remains solid with cash and short-term investments at USD 43 million. He added that all businesses operated well in the quarter. FY12 first-quarter segment and operating results vs. the prior-year period are as follows for Architectural Products and Services: o revenues of USD 135.3 million were up 7%, with the addition of the Brazilian architectural glass business, which contributed 5%age points of the increase, and growth in the window and storefront businesses; operating loss was USD 7.1 million, compared to a loss of USD 8.6 million; o operating loss was lower than in the prior-year period, with the revenue growth in the window and storefront businesses offset by lower margin work in installation; o the Brazilian architectural glass business had minimal impact on operating income; backlog ended at USD 247.0 million, compared to USD 237.2 million at the end of fiscal 2011 and USD 214.9 million in the prior-year period; o approximately USD 175 million, or 71%, of the backlog is expected to be delivered in fiscal 2012, and approximately USD 72 million, or 29%, in fiscal 2013. With regards to Large-Scale Optical Technologies: revenues of USD 18.1 million were up 8%; o volume of value-added picture framing products grew for large and independent framers, and for the fine art/museum market; operating income increased 38% to USD 4.6 million; o operating margin of 25.7% resulted from the ongoing strong mix of value-added products, the volume increase and strong operational performance. This compares to an operating margin of 20.2% in the prior-year period. Financial Condition reported that long-term debt, which includes USD 20.4 million in long-term, low-interest industrial revenue and recovery zone facility bonds, was USD 21.3 million, compared to USD 21.4 million at the end of fiscal 2011. Cash and short-term investments totalled USD 43.0 million, compared to USD 60.6 million at the end of fiscal 2011. Key drivers for the change were: execution of a sale/leaseback transaction for equipment generated more than USD 10 million in cash; working capital used USD 25 million in cash, with USD 15 million for seasonal use to fund incentive and retirement plans, and tax payments, and USD 10 million to support current and planned growth; funding of a previously recognized settlement on a discontinued operations matter used USD 3 million. Non-cash working capital (current assets, excluding cash and short-term investments, less current liabilities) was USD 63.3 million, compared to USD 39.4 million at the end of fiscal 2011. Capital expenditures were USD 1.6 million, down 24% from the prior-year period. Depreciation and amortization were USD 7.0 million, up 1% from the prior-year period. Our outlook for fiscal 2012 has improved slightly as we“ve become more confident that architectural glass price increases should flow through as the year progresses and stronger volume is anticipated for our architectural glass and storefront businesses, Huffer said. For fiscal 2012, we now expect revenue growth to exceed 10%, and we expect to be slightly profitable for the year. This outlook, in part, depends on our ability to fill in open fourth-quarter capacity in our architectural segment. We also expect Apogee to generate positive cash flow from operations in fiscal 2012. We believe that actions we“ve taken in our architectural businesses, ranging from price increases and productivity improvements to project selection changes, will contribute to improved fiscal 2012 results. Somewhat offsetting improvements will be lower margins in the installation business as it executes projects bid at the cycle trough, Huffer said. We anticipate that our large-scale optical segment will continue to be profitable throughout fiscal 2012. 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 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. Apogee Enterprises, Inc., headquartered in Minneapolis, is a leader in technologies involving the design and development of value-added glass products and services.