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Apogee (APOG) Q4 Earnings Beat Estimates, Revenues Miss

Apogee Enterprises, Inc. APOG reported fourth-quarter fiscal 2020 (ended Feb 29, 2020) adjusted earnings per share of 51 cents, which beat the Zacks Consensus Estimate of 35 cents by a margin of 46%. However, the reported figure declined 40% from the prior-year quarter.

Including one-time items, the company reported earnings per share of 45 cents against a loss per share of 45 cents in the year-ago quarter.

Apogee reported revenues of $337 million, missing the Zacks Consensus Estimate of $370 million. The reported figure was also down 3% from the prior-year quarter.

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise

Apogee Enterprises, Inc. price-consensus-eps-surprise-chart | Apogee Enterprises, Inc. Quote

Operational Update

Cost of sales in the fiscal fourth quarter was down 14% year over year to $256.6 million. Gross profit improved 75% year over year to $77.5 million. Gross margin came in at 23% compared with 12.8% in the year-ago quarter.

Selling, general and administrative (SG&A) expenses came in at $61.8 million, up 5% from the prior-year quarter. Adjusted operating income plunged 44% year over year to $17.6 million. Operating margin in the reported quarter was 5.2% compared with the prior-year quarter figure of 9.0%.

Segment Performance

In the fiscal fourth quarter, revenues in the Architectural Framing Systems segment declined 10% year over year to $153 million, owing to lower volumes. The segment’s operating income plunged 79% year over year to around $2 million.

Revenues in the Architectural Glass Systems segment slipped 5% year over year to $98.3 million reflecting lower volumes driven by increased competition from foreign competitors leveraging the strength of the U.S. dollar. Operating income came in at $3.8 million, reflecting year-over-year decline of 48%. This decline can be attributed to start-up costs related to the new manufacturing facility for the small projects growth initiative, higher insurance costs, and decreased volumes, partially offset by improved factory productivity.

Revenues in the Architectural Services segment were up 11% year over year to $73 million on higher volumes driven by favorable project timing. The segment’s operating profit fell 6% year over year to $8.5 million.

Revenues in the Large-Scale Optical Technologies segment declined 11% year over year to $21.5 million due to lower U.S. retail sales. Operating income dipped 1% year over year to $7.1 million.

Backlog

The Architectural Services segment’s backlog rose 9% year over year to a record $660 million in the reported quarter. Backlog in the Architectural Framing segment amounted to $432 million, up 14% from the prior-year quarter’s $378 million.

Financial Position

Apogee had cash and cash equivalents of $14.9 million at the end of the fiscal 2020 compared with $29.2 million at the end of the prior fiscal. Cash flow from operating activities were $107 million in fiscal 2020 compared with the $96 million reported in the prior fiscal. Long-term debt was $62.5 million as of fiscal 2020-end compared with $245.7 million as of the end of fiscal 2019.

In fiscal 2020, Apogee has returned $43.9 million of cash to shareholders through share repurchases and dividend payments.

Fiscal 2020 Results

Apogee reported adjusted earnings per share of $2.38 in fiscal 2020, down 20% from the prior-year reported figure of $2.96. Earnings beat the Zacks Consensus Estimate of $2.22 and management’s guidance of $2.15-$2.30. Including one-time items, the bottom line came in at $2.32, up 42% from $4.63 in fiscal 2019.

Sales dipped 1% year over year to $1.39 billion from the prior-year figure of $1.40 million. The top line missed the Zacks Consensus Estimate of $1.44 billion.

Withholds Fiscal 2020 Guidance

The company has not provided any guidance for fiscal 2021 citing the uncertainty related to the COVID-19 outbreak. The company added that it remains focused on safeguarding its employees. All of Apogee’s architectural segments continue to operate, ship product and meet customer’s requirements. However, the Large-Scale Optical segment is witnessing a significant reduction in near-term customer demand. Meanwhile, the company is assessing the potential impact on its business and evaluating actions to react to changing market conditions.

Price Performance

Apogee along with O-I Glass, Inc. OI falls under the Zacks Glass Products industry. Shares of the company have fallen 51.7% in the past year compared with the industry’s decline of 63.5%.
 

Zacks Rank & Other Stocks to Consider

Apogee currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Industrial Products sector are Sharps Compliance Corp (SMED) and Ampco-Pittsburgh Corporation (AP), both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Sharps Compliance has an estimated earnings growth rate of 800% for 2020. In a year’s time, the company’s shares have gained 118%.

Ampco-Pittsburgh has an estimated earnings growth rate of 2.7% for 2020. In a year’s time, the company’s shares have gained 2%.

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