Apogee Enterprises, Inc.
) delivered third quarter fiscal 2013 earnings of 28 cents per
share, up 40% from 20 cents per share earned in the prior-year
quarter and ahead of the Zacks Consensus Estimate of 24 cents per
Total revenue improved 9% year over year to $190 million in
the quarter and surpassed the Zacks Consensus Estimate of $184
million. The improvement was driven by growth in the
Architectural segment, somewhat offset by a decline in the
Large-Scale Optical Technologies segment.
Cost of sales increased 6% to $148 million in the quarter.
Gross profit improved 22% to $42.2 million. Gross margin in the
quarter improved 230 basis points to 22.2%.
SG&A expenses increased 12% to $30.8 million. Operating
income was $11.4 million, up 59% from the $7.1 million in the
Revenues from the Architectural Products and Services segment
rose 11% year over year to $168.8 million, led by solid
performance of installation business.
Operating income in the quarter was $5.8 million, a stellar
improvement from $0.6 million in the year ago quarter, The
improvement was driven by higher pricing of architectural glass;
increased margins in the installation businesses along with
better mix and good operation performance throughout the segment.
Backlog in the segment was $300 million compared with $225
million in the year-ago quarter.
Large-Scale Optical Technologies segment's revenues went down
5% to $21.6 million. Operating income in the reported quarter
dipped 12% to $6.5 million, impacted by timing of customer
promotions and Hurricane Sandy.
Apogee ended the quarter with cash and short-term investments
of $75 million, compared to $68.3 million at the second quarter
end. Long-term debt amounted to $30.8 million, flat compared with
the second quarter. Cash provided by operating activities was $23
million during the first nine months of fiscal 2013 compared to
cash used amounting to $4.7 million in the comparable period last
For fiscal 2013, Apogee has increased its earnings guidance to
the range of 62 cents to 67 cents per share from the previous
guidance of 56 cents to 64 cents. It expects revenue growth in
the range of 5% to 6% and improved margins resulting from better
mix and good operational performance.
Further, the company expects to generate positive free cash
flow after spending $30 million to improve productivity and
capacity, besides introducing new products along with maintaining
The company has significant exposure to the U.S. market in the
installation and storefront businesses and is focusing on further
expansion to gain market share. The strategy of increasing its
domestic geographical footprint will help revenues increase
The architectural segment returned to profitability in the
second quarter and maintained the momentum in the third quarter
as well. Moreover, the segment's backlog has reached its maximum
level in 13 quarters, which bodes well for its future
However, macroeconomic conditions might be a headwind for
Apogee in fiscal 2013. Moderating global economic growth and
uncertainty in the global economic scenario can limit Apogee's
near-term revenue visibility. Apogee retains a short-term Zacks
#3 Rank (Hold).
Apogee Enterprises is a leader in technologies for the design
and development of value added glass products, services, and
systems. The company presently has two reportable segments - The
Architectural segment and the Large-Scale Optical Technologies
) is a Zacks #3 Rank (Hold) stock in the same industry.
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