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Why Is Apogee Enterprises (APOG) Up 3.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Apogee Enterprises (APOG - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Apogee Enterprises due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Apogee's Q2 Earnings Decline Y/Y on Lower Margin

Apogee reported second-quarter fiscal 2022 (ended Aug 28, 2021) adjusted earnings per share of 53 cents. The bottom line declined 27.4% year over year.

Including one-time items, the company reported a loss per share of 8 cents as against the year-ago quarter’s earnings per share of 67 cents.

Apogee generated revenues of $326 million during the fiscal second quarter, up 2% year over year, on solid growth in the Architectural Services and Large-Scale Optical segments.

Operational Update

Cost of sales in the fiscal second quarter climbed 14% year on year to $278 million. Gross profit plunged 37% year over year to $48 million. Gross margin contracted to 14.7% during the quarter compared with the prior-year quarter’s 23.8%.

Selling, general and administrative (SG&A) expenses declined 4% year over year to $51 million. The adjusted operating income dipped 31% year over year to $18 million. Operating margin in the reported quarter was 5.4% compared with the prior-year quarter’s 8%.

Segment Performance

In the fiscal second quarter, revenues in the Architectural Framing Systems segment fell 2% year over year to $149.9 million on lower volume. This was partly offset by an improved pricing. The segment’s operating profit was $8.2 million compared with the year-ago quarter’s $11.6 million.

Revenues in the Architectural Glass Systems segment decreased 8% year on year to $79 million on dismal volume. The segment reported an operating loss of $17 million as against the year-ago quarter’s operating profit of $5 million.

Revenues in the Architectural Services segment grew 13% year over year to $83 million, driven by an increased volume from executing projects in backlog. The segment’s operating profit increased 10% year over year to $7.2 million.

Revenues in the Large-Scale Optical Technologies segment surged 40% year over year to $24 million, driven by a favorable sales mix and increased volume, as demand recovered from the pandemic-induced slowdown in the prior year. The segment reported an operating profit of $5.4 million during the fiscal second quarter compared with the prior-year quarter’s $2.1 million.

Backlog

The Architectural Services segment’s backlog grew to $572 million from the $559 million witnessed at the end of first-quarter fiscal 2022. Backlog in the Architectural Framing segment amounted to $406 million, down from $423 million at the end of first-quarter fiscal 2022.

Financial Position

Apogee had cash and cash equivalents of $62 million at the end of second-quarter fiscal 2022 compared with $47 million at the end of fiscal 2021. Cash generated from operating activities came in at $55 million in the first half of fiscal 2022 compared with the prior-year period’s $85 million.

Long-term debt was $162 million as of Aug 28, 2021, compared with $163 million as of Feb 27, 2021.    

Apogee has returned $32.5 million of cash to shareholders through share repurchases and dividend payments in the fiscal year so far.

Fiscal 2022 Guidance

Apogee now projects fiscal 2022 adjusted earnings per share to lie between $2.20 and $2.40. The company expects significant cost inflation in the remaining period of fiscal 2022. It will implement pricing actions and cost-control measures to offset these impacts.  Management projects capital expenditures of $35 million for fiscal 2022.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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