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Apogee Gains on Q4 Earnings Beat, Upbeat FY16 Outlook - Analyst Blog

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Shares of Apogee Enterprises, Inc.APOG rose nearly 2.31% after the company reported strong fourth-quarter fiscal 2015 results (ended Feb 28, 2015), wherein earnings of 47 cents per share improved an impressive 74% year over year. Earnings also beat the Zacks Consensus Estimate of 44 cents.

Total revenue increased 15% year over year to $247 million driven by double-digit growth in Architectural Glass, Architectural Framing Systems and Large-Scale Optical segments and also surpassed the Zacks Consensus Estimate of $243 million.

Apogee Enterprises Inc. - Earnings Surprise | FindTheCompany

Operational Update

Cost of goods sold increased 11% to $185 million from $167 million in the year-ago quarter. Gross profit improved 30% year over year to $61 million. Gross margin also expanded 290 basis points (bps) to 23.2%. Selling, general and administrative (SG&A) expenses rose 19% year over year to $41 million. Operating income was $19.6 million, rising 62% from $12.1 million earned in the year-ago quarter. Operating margin grew 240 bps year over year to 8%.

Segment Performance

Revenues for the Architectural Glass segment increased 22% year over year to $92.3 million. Operating income in the quarter grew to $4.5 million compared with $0.08 million in the prior-year quarter.

Revenues for the Architectural Services segment remained flat at $63.5 million. The segment reported operating profit of $5.2 million compared with $5.9 million in the year-ago quarter.

The Architectural Framing Systems segment's revenues increased 22% year over year to $77 million. The segment's operating income grew to $4.8 million from $1.9 million in the prior year quarter.

Large-Scale Optical Technologies segment's revenues were up 18% year over year to $22.7 million. Operating income in the reported quarter was $5.96 million, which increased 15% from $5.2 million in the year-ago quarter, benefitting from improved product mix.

Financial Position

Apogee had cash and short-term investments of $52 million at the end of fiscal 2015 compared with $28.5 million at the end of fiscal 2014. Cash flow from operations was $68.6 million for fiscal 2014 compared with $52.9 million in the year-ago period. Long-term debt was $20.6 million at the end of fiscal 2015 compared with $20.7 million in the prior-year period.

Consolidated backlog at the end of the year went up 49% year over year to $490.9 million. Approximately 80% or $393 million of the backlog is expected to be delivered in fiscal 2016 and the balance 20% or around $97 million in fiscal 2017.

Fiscal 2015 Performance

Apogee reported adjusted earnings per share of $1.50, up 58% year over year, which trumped the Zacks Consensus Estimate of $1.47. Including one-time items, earnings stood at $1.72 compared with 95 cents in the prior year. Revenues increased 21% to $933.9 million, ahead of the Zacks Consensus Estimate of $930 million.

Fiscal 2016 Guidance

Apogee expects revenues to grow 10% to 15% in fiscal 2016 and earnings to lie within $2.05 and $2.20 per share. Capital expenditures are projected to range from $45 to $50 million as Apogee intends to make investments in order to increase capabilities, capacity and productivity. Gross margin is expected to be approximately 24%.

Apogee expects to cross the $1 billion threshold in revenues in fiscal 2016 and to achieve a trailing 12-month operating margin of 10 midway through fiscal 2017. For the longer term, its outlook is $1.3 billion for revenue and 12% percent for operating margin in fiscal 2018.

Apogee will benefit from its sound backlog, strong momentum in the architectural markets and robust bidding and award activity. Moreover, the company continues to make significant investments for capability, capacity and productivity, including in its architectural glass business where it completed installation and startup of a new coater. These investments will support growth.

Apogee Enterprises is a leader in technologies for the design and development of value-added glass products, services and systems. Apogee currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the industrial product sector include Multi-Color Corp. LABL , RBC Bearings Inc. ROLL and Astec Industries, Inc. ASTE . While Multi-Color Corp sports a Zacks Rank #1 (Strong Buy), RBC Bearings and Astec Industries carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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