Apogee Enterprises, Inc. announced in mid-September 2009 its fiscal 2010 second-quarter earnings.
Operating margin was 9.5%, compared to 7.7% for the same period of the previous fiscal year, and a l…
Apogee Enterprises, Inc. announced in mid-September 2009 its fiscal 2010 second-quarter earnings. Operating margin was 9.5%, compared to 7.7% for the same period of the previous fiscal year, and a lower tax rate contributed USD 0.03 per share. Backlog resulted at USD 295.0 million, compared to USD 310.0 million for the first quarter, and USD 316.2 million at the end of fiscal 2009. There were discontinued operations earnings of USD 0.01 per share in the present period due to the favourable resolution of an outstanding claim. Revenues of USD 187.4 million dropped 23%, while operating income came to USD 17.9 million, a decrease of 5%, and earnings from continuing operations were USD 0.46 per share compared to USD 0.43 per share. Architectural segment revenues were down 25%, while operating income dropped 2%. Increases were seen in large-scale optical segment revenues at 3%, and operating income at 11%. Cash and short-term investments came to USD 52.3 million, compared to USD 30.8 million at the end of the first quarter and USD 5.5 million in the same period of the prior year, while net earnings came in at USD 0.47 per share, compared to USD 0.43 per share. Apogee achieved strong operating performance and exceeded prior-year earnings per share on revenues that were down consistent with the decline in the commercial construction market, which continues to be impacted by tight commercial real estate credit and decreasing employment levels, said Russell Huffer, Apogee chairman and chief executive officer. As we executed work largely bid in stronger markets, we operated well, improved productivity, managed costs and generated cash. It is also positive that our architectural segment backlog was down only slightly compared to the previous two quarters, said Huffer. In addition, our picture framing business performed well, growing revenues and operating income in the quarter as it continues to convert customers to our best value-added framing products. Our second-quarter performance shows our agility in adapting to the downturn as well as our ability to operate through a commercial construction cycle, he said. Although future periods will be impacted by the construction slowdown, we are in a strong financial position – we have a healthy balance sheet and are generating positive cash flow. Our solid performance to date in these challenging economic times supports our outlook for continued profitability, Huffer said. For fiscal 2010, we continue to expect a mid-single digit operating margin on revenues that we anticipate will be down 20 to 25% as project timing for new orders has shifted into fiscal 2011. We had previously anticipated fiscal 2010 revenues would decline at least 15%. He went on to say that the large-scale optical segment was expected to continue converting buyers to higher value-added products. Since Apogee is a late cycle commercial construction company and our markets have yet to show signs of a rebound, we expect that fiscal 2011 will be tougher than the current year, he said. We are seeing some success in filling in backlog for fiscal 2011, and believe we are well positioned financially and in the marketplace, especially with our leading green, energy-efficient building products. We are seeing early success in pursuing work in underserved, shorter-lead time architectural glass markets, including smaller and international projects, which is benefiting fiscal 2010, and have won a few stimulus projects incorporating our energy-efficient products and services, although most of this work is scheduled for fiscal 2011, said Huffer. To manage through the downturn, we have reduced costs more than USD 45 million on an annualized basis since last October and continue to evaluate further reductions in headcount and discretionary spending; we are also working continuously on productivity improvements, he said. Our balance sheet remains strong, and we expect to generate positive cash flow throughout fiscal 2010. We have good architectural businesses with strong brands and operations that are positioned to serve the growing interest in green, energy-efficient commercial buildings, he said. Apogee will be well positioned when commercial construction markets improve – we have people and capacities in place to profitably grow for several years.