Apogee sees revenue up to 9% higher in fiscal 2007

Apogee Enterprises, Inc. expects “another year of improved performance” in fiscal 2007 with revenue expected to grow by 5 to 9%. The Minneapolis-based firm, which serves the architectural, large-scale…

Apogee Enterprises, Inc. expects “another year of improved performance” in fiscal 2007 with revenue expected to grow by 5 to 9%. The Minneapolis-based firm, which serves the architectural, large-scale optical and automotive sectors, announced on 1 February 2006 guidance for fiscal 2007 and reaffirmed guidance for fiscal 2006, which ends 25 February 2006. “We are looking forward to another year of improved performance, as commercial construction markets continue to improve and we execute our updated five-year strategic plan for growth,” said Russell Huffer, Apogee chairman and CEO. “We are anticipating earnings of USD 0.88 to USD 0.94 per share for fiscal 2007, which includes the required expensing of options. This is strong earnings growth compared to fiscal 2006, which includes the impact of one-time net tax benefits. These anticipated earnings are based on expected revenue growth of 5 to 9%”. “We are focused on delivering results in the top half of our fiscal 2006 guidance range of USD 0.81 to USD 0.87 per share,” Huffer said. “As we stated at the end of the 3Q, timing of project flow as we finish the year could impact our performance within this guidance range”. “Our architectural markets continue to improve, and we expect to gain further share through strong sales of our value-added products and services, including energy-efficient, and hurricane and blast resistant products and systems,” said Huffer. “We also anticipate a solid performance in our large-scale optical segment, as sales and earnings normalize after strategic changes that led to significant growth in revenues and earnings the prior two years”. “Apogee has also updated its strategic initiatives for growth, which continue to focus on expanding its markets for architectural and picture framing glass products,” said Huffer. “Our longer-term goals of 8% annual growth in revenues and 20% growth in earnings per share support our objective of being a great USD 1 billion company within five years. Our strategic plan supports our vision: Distinctive solutions by Apogee … for enclosing commercial buildings and framing art”. Building on its strategic plan, Apogee has updated its priorities to support growth to USD 1 billion in revenues over the next five years; defend and grow the architectural glass, installation and window businesses through expanding available capacity and providing more value-added products and services; expand into new and broader architectural markets, by evaluating opportunities such as standard window products and exterior glass installation services; grow opportunities in consumer-oriented products, including domestic and international picture framing glass and acrylic; expand, improve and implement key enablers, ranging from innovative products and services to improved systems and processes; and manage non-core businesses, such as auto glass, to maximize cash flow. For fiscal 2007, the company expects overall revenues for the year to increase 5 to 9%. Architectural segment revenues are expected to increase 6 to 9% for the year. Growth is expected due to market improvement and share gain as increased architectural glass capacity added during fiscal 2006 is fully utilized. Large-scale optical segment revenues are expected to be up 3 to 5%, with continued mix shift in picture framing glazing products. Auto glass segment revenues are expected to be flat compared to fiscal 2005. Annual gross margins are expected to be up in fiscal 2007 from fiscal 2006 as operational improvements and cost reductions more than offset higher costs for wages, energy, materials and freight. Expected annual operating margins by segment are: architectural, 4.4 to 4.6%; large-scale optical, approximately 14 %; and auto glass, slightly better than breakeven. Selling, general and administrative expenses as a percentage of sales are projected to be slightly less than 14%. Equity in affiliates, which reflects Apogee“s portion of the results of the PPG Auto Glass joint venture, is expected to report earnings of approximately USD 3 million due to increased volume and operational improvements. Capital expenditures are projected to be USD 40 to USD 45 million, including an estimated USD 20 million related to building the new architectural glass plant. Depreciation and amortization are estimated at USD 19 million for the year. Debt is expected to be approximately USD 50 to USD 60 million at year end. The effective tax rate for the full year is anticipated to be approximately 35 %. Earnings per share from continuing operations are expected to range from USD 0.88 to USD 0.94, including USD 0.05 per share impact of expensing options.