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Apogee (APOG) to Resume Share-Buyback Program, Reduce Costs

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Apogee Enterprises, Inc. (APOG - Free Report) recently announced the recommencement of its previously-authorized share-repurchase program which was temporarily suspended in April due to the coronavirus pandemic-induced economic uncertainty. The company now has share buyback authority of up to 2,063,596 shares.

Following the announcement, the company’s shares have gained 6% in the last trading session. Moreover, Apogee identified certain opportunities to reduce selling, general, and administrative (SG&A) expenses and improve productivity across the company. These are likely to deliver at least $10-$20 million cost savings on an annual run-rate basis by the end of fiscal 2023. Additionally, the company announced annual cost savings of $40 million during the fiscal second-quarter earnings call. The company plans to utilize these savings to improve overall operating margins. Moreover, Apogee expects the cost-reduction plan to significantly improve working capital and cash flow performance.

Recently, the company completed a sale and leaseback deal for its McCook, IL-based facility for $25 million. The company has entered into a lease agreement for its McCook facility with an initial term of five years and multiple renewal options. The facility is part of the company’s Large-Scale Optical segment, and will continue to operate and serve the segment’s customers.

The deal fortifies the company’s strong financial position. During the second quarter of fiscal 2021, it reduced total debt to $168 million from the $218 million at the end of fiscal 2020. Apogee will utilize excess free cash flow to further reduce debt.

Apogee expects to report stellar results in the upcoming quarters with the stabilization in its end markets as well as in the economy after a prolonged period of pandemic-related shutdowns. The company’s Architectural segments are likely to gain from the solid backlog in the long lead-time business. The company’s segments have the potential to increase its market share, expand into newer geographies and markets, and introduce fresh products.

Price Performance

The company’s shares have lost 38.6% over the past year as against the industry’s gain of 0.9%.

Zacks Rank & Other Stocks to Consider

Apogee currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the Industrial Products sector include Titan International, Inc. , Berry Global Group, Inc. (BERY - Free Report) and Fortune Brands Home & Security, Inc. , each carrying a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Titan International has an estimated earnings growth rate of 21.1% for 2020. The company’s shares have gained 10.3% in a year’s time.

Berry has a projected earnings growth rate of 32.3% for fiscal 2020. Shares of the company have appreciated 21.8% over the past year.

Fortune Brands has an expected earnings growth rate of 6.9% for the current year. The stock has surged 55.6% in the past year.

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