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Apogee Enterprises (APOG) Down 10.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Apogee Enterprises (APOG - Free Report) . Shares have lost about 10.3% in that time frame, underperforming the S&P 500.

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

Apogee Q2 Earnings Top Estimates, FY24 EPS View Rises

Apogee reported record adjusted earnings per share (EPS) of $1.36 for second-quarter fiscal 2024 surpassing the Zacks Consensus Estimate of $1.01 per share. The bottom line increased 28.3% from the prior-year quarter.

Including one-time items, earnings in the quarter under review were $1.52 per share compared with the $1.68 reported in the prior-year quarter.

Apogee generated revenues of $353.7 million in the quarter under review, down 5% from the year-ago quarter. This was mainly due to lower volumes in the Architectural Services and Architectural Framing Systems segments, which was partially offset by solid growth in the Architectural Glass segment. The top-line figure missed the Zacks Consensus Estimate of $367 million.

Operational Update

Cost of sales in the fiscal second quarter moved down 10.1% from the prior-year quarter to $258.3 million. The gross profit increased 12.3% from the prior-year quarter to $95.4 million. The gross margin expanded to 27.0% in the quarter under review from the prior-year quarter's 22.8%.

Selling, general and administrative (SG&A) expenses moved up 3.7% from the prior-year quarter to $54.8 million. The operating income rose 26.4% from the year-earlier quarter to $40.6 million. The operating margin in the reported quarter was 11.5% compared with the prior-year quarter's 8.6%.

Segmental Performance

In the fiscal second quarter, revenues in the Architectural Framing Systems segment were down 8.1% from the prior-year quarter to $159 million. We predicted the segment’s quarterly revenues to be $171 million. The segment's adjusted operating profit was $21 million compared with the year-ago quarter's $20.5 million. Our prediction for the segment’s operating profit was $19 million.

Revenues in the Architectural Glass segment improved 21.6% from the prior-year quarter to $94 million. Our prediction for the segment’s revenues was $85 million. The segment reported operating income of $17 million, up from $6.5 million in the second quarter of fiscal 2023. We predicted an adjusted operating income of $10 million for the quarter.

Revenues in the Architectural Services segment fell 17.5% from the prior-year quarter to $88 million. Our model estimated the segment’s revenues to be $100 million. The segment's operating profit declined 35.9% from the prior-year quarter to $3.5 million. We expected the operating profit to be $9 million.

Revenues in the Large-Scale Optical Technologies segment were down 6% from the prior-year quarter to $24 million. We projected revenues of $25 million for the quarter. The segment posted an operating profit of $5 million in the fiscal second quarter compared with the prior-year quarter's $6 million. Our estimate for the segment’s operating profit was $5.8 million.

Backlog

The Architectural Services segment's backlog came in at $674 million at the end of the second quarter of fiscal 2024 compared with $709 million at the end of the first quarter. The backlog in the Architectural Framing segment amounted to $197 million, down from $221 million at the end of first-quarter fiscal 2024.

Financial Position

Apogee had cash and cash equivalents of $18 million at the end of second-quarter fiscal 2024 compared with $20 million at the end of fiscal 2023. Cash provided by operating activities was $41.3 million in the quarter compared with the prior-year quarter’s $27.8 million.

Long-term debt was $145.7 million at the end of second-quarter fiscal 2024 compared with $169.8 million at the end of fiscal 2023.    

Apogee returned $22.3 million in cash to its shareholders in the first half of fiscal 2024 through dividend payments and share repurchases.

FY24 Guidance

Apogee expects fiscal 2024 adjusted EPS between $4.35 and $4.65, up from the previously disclosed $4.15-$4.45. The company anticipates flat to modestly declining revenues from that reported in fiscal 2023. Management projects capital expenditure between $50 million and $60 million for fiscal 2024, and a long-term average tax rate of 24.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Apogee Enterprises has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Apogee Enterprises has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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