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Apogee reports improved first quarter results

Apogee’s fiscal 2014 first-quarter results reported revenues up 16%; operating income more than doubles; EPS of USD 0.14 vs. USD 0.06.

Apogee Enterprises, Inc. has announced fiscal 2014 first-quarter results.
During FY14 first quarter vs. prior-year period, revenues of USD 179.3 million were up 16%; operating income was USD 6.1 million, up from USD 2.3 million; and earnings per share were USD 0.14, up from USD 0.06.
Architectural Glass and Architectural Services segments had strong growth and improved operating income.
Consolidated backlog was USD 301.8 million, compared to USD 298.3 million at the end of fiscal 2013 and USD 269.1 million in the prior-year period.
Cash and short-term investments totalled USD 69.7 million, compared to USD 57.5 million.
“Apogee recorded another quarter of strong growth, with revenues up 16% and operating income more than doubling,” said Joseph F. Puishys, Apogee chief executive officer. “Our operating margin increased 190 basis points to 3.4% driven by improvements in volume, pricing and productivity.
“Revenue and operating income growth came from our Architectural Glass and Architectural Services segments as we had anticipated,” he said. “We benefited from improved volume, mix, productivity and pricing in Architectural Glass and improved margins in Architectural Services.
“Revenues grew in our other two reporting segments, but Architectural Framing Systems operating income was negatively impacted by a gap in timing for more complex window work, which we expected, and Large-Scale Optical segment operating income by investments in promotion and growth,” he said.
“I am pleased that Apogee’s consolidated backlog grew to USD 302 million on top of the very strong first-quarter revenues,” said Puishys. “We continue to see improving margins in our backlog as we grow the business.”
With regards to architectural glass revenues of USD 74.8 million were up 27%. Operating income was USD 1.4 million, compared to an operating loss of USD 2.4 million. Operating margin was 1.8%, compared to negative 4.1%. Top- and bottom-line increases resulted from improved mix, volume, productivity and pricing.
Architectural Services saw revenues of USD 46.5 million, up 19% on volume growth and the timing of project cost flow. Operating loss was USD 1.0 million, improved from an operating loss of USD 2.6 million, as volume increases and project margins improve from the cycle trough. Operating margin was negative 2.1%, compared to negative 6.6%.
Architectural Framing Systems revenues were up 5% at USD 44.4 million. Operating income was USD 2.1 million, compared to USD 3.1 million. Operating margin was 4.6%, compared to 7.3%.
Top- and bottom-line growth in the storefront and finishing businesses was offset by the window business results, where revenues and operating income declined with an anticipated gap in the schedule for more complex projects.
Large-Scale Optical Technologies reported revenues of USD 19.5 million, up 1%, operating income was USD 4.7 million, compared to USD 5.3 million, operating margin was 24.1%, compared to 27.4%.
Volume growth and a positive mix of higher value-added products were offset by investments in promotion and for growth in new geographies and markets.
Consolidated backlog was USD 301.8 million compared to USD 298.3 million at the end of fiscal 2013 and USD 269.1 million in the prior-year period.
Approximately USD 238 million, or 79%, of the backlog is expected to be delivered in fiscal 2014, and approximately USD 64 million, or 21%, in fiscal 2015.
Debt was USD 20.8 million, compared to USD 30.8 million at the end of fiscal 2013. Almost all the debt is long-term, low-interest industrial revenue bonds.
Cash and short-term investments totalled USD 69.7 million, compared to USD 85.6 million at the end of fiscal 2013 and USD 57.5 million in the prior-year period. The decline from year-end was due to the redemption of approximately USD 10 million in recovery zone bonds and funding of normal seasonal working capital requirements.
Non-cash working capital was USD 68.2 million, up from USD 54.1 million at the end of fiscal 2013 due to normal seasonal working capital requirements; it was USD 61.2 million in the prior-year period.
Capital expenditures were USD 1.5 million, down from USD 9.5 million in the prior-year period due to the timing of planned investments in the current year.
Depreciation and amortization was USD 6.5 million.
“We continue to expect strong top- and bottom-line growth in fiscal 2014 through our growth strategies and productivity initiatives,” said Puishys. “We are maintaining our outlook for revenue growth in the high single digits and earnings of USD 0.90 to USD 1.00 per share.
“Revenue expansion should largely come from geographic growth and new products, and our earnings should benefit from improvements in volume, mix, project margins and operating leverage,” he said.
“We are experiencing strong bidding activity for future architectural work, and margins on new orders are improving,” Puishys said. “The outlook for US commercial construction markets in fiscal 2014, based on Apogee’s lag to McGraw-Hill forecasts for the segments we serve, is for low single-digit market growth. We again anticipate outperforming market growth by several percentage points.
“We continue to expect that capital spending for fiscal 2014 will be in the range of USD 40 to USD 45 million as we invest for growth, productivity and product development capabilities, including for the new Architectural Glass coater,” he said. “We expect to be free cash flow positive after this level of investments.” He added that the fiscal 2014 gross margin is anticipated to be at least 22%.
“I believe that our strategies to grow through new geographies, new products and new markets will allow Apogee to reach USD 1 billion in revenues by the end of fiscal 2016,” Puishys said. “At the same time, we believe we can achieve 10% operating margin in this timeframe, in part through our focus on productivity and operational improvements.”

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