Apogee Enterprises Inc.
) reported earnings of 11 cents per share for fiscal 2012 fourth
quarter ending March 3. Results, which comfortably surpassed the
Zacks Consensus Estimate of 7 cents, improved considerably from the
year-ago quarter in which the company reported a loss of 12 cents
Fiscal 2012 earnings came in at 17 cents per share compared with
a loss of 51 cents per share in fiscal 2011. Results were ahead of
the Zacks Consensus Estimate of 12 cents per share.
Total revenue increased 14% to $662.5 million in fiscal 2012.
The improvement in revenue was driven by double-digit growth in
Architectural Products and Services revenue.
Apogee's total revenue improved 14% to $168.7 million in the
reported quarter, beating the Zacks Consensus Estimate of $168
million by a small margin. The increase in revenue was attributable
to growth in Architectural Products and Services as well as
Large-Scale Optical revenue.
Cost of sales increased 9% year over year to $135.9 million
during the quarter while selling, general and administrative
expenses were up 4% year over year to $29.9 million. Apogee
reported an operating profit of $2.8 million in the quarter, an
improvement from the year-ago quarter's operating loss of $5.6
Architectural Products and Services Segment:
Net sales increased 15% year over year to $147.4 million in the
quarter. The improvement was due to improved architectural glass
pricing and project mix, in addition to market share gains in the
window and storefront businesses.
The segment reported an operating loss of $0.5 million compared
with the year-ago loss of $9.9 million. The year over year decline
in operating loss was brought about by higher architectural glass
pricing and mix, as well as leverage on volume growth, partially
offset by lower margin work in the installation business.
The segment's backlog was $242.0 million at the end of the
quarter compared with $230.7 million at the end of the third
quarter and $237.2 million at the end of the prior-year quarter. Of
this, 76% is expected to be delivered in fiscal 2013 and 24% in
Large-Scale Optical Segment:
Segment revenue increased 7% year over year to $21.3 million. The
segment's operating profit decreased to $4.0 million in the quarter
from $5.5 million in the year ago quarter.
Apogee ended the quarter with cash and short-term investments of
$79.3 million compared with $46.4 million at the end of the
sequentially preceding quarter. Long-term debt decreased slightly
to $20.9 million at the end of fiscal 2012 compared with $21.4 at
the end of fiscal 2011. During fiscal 2012, cash provided by
operating activities was $27.9 million compared with $7.9 million
used in the comparable year-ago period.
The company expects revenue and earnings growth in fiscal 2013,
driven by increased market share of the architectural business. It
intends to focus on operational improvements, introduction of new
products as well as growing international opportunities.
Apogee expects revenue growth in the mid-single digits in fiscal
2013 due to geographic expansion in installation and storefront
businesses in the U.S. The company expects earnings in the range of
40-50 cents per share. Guidance was well below the current Zacks
Consensus Estimate of 59 cents.
It also expects to generate positive free cash flow after
spending nearly $25 million in certain investments related to the
introduction of new products, productivity improvements and
Neutral on Apogee
Apogee has a robust architectural backlog to start with in the
fiscal 2013. Furthermore, it plans to invest a considerable amount
in new products to boost its product portfolio. Furthermore, it
intends to spend on capacity as well as productivity improvements.
The company, however, faces competition from the privately held AGC
Flat Glass North America, Inc., Guardian Glass Company and
Pilkington Group Limited. Our long-term recommendation on Apogee
remains Neutral. Currently, the stock retains a Zacks #3 Rank,
implying a short-term "Hold" rating.
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