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Apogee (APOG) Earnings & Revenues Beat Estimates in Q4

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Apogee Enterprises, Inc. (APOG - Free Report) reported earnings per share of 80 cents in fourth-quarter fiscal 2017 (ended Mar 4, 2017), up 16% from 69 cents per share in the prior-year quarter. Further, earnings also surpassed the Zacks Consensus Estimate of 71 cents.

The company reported total revenue of $314 million, which grew 20% year over year. Revenues beat the Zacks Consensus Estimate of $288 million.

Apogee delivered another quarter of strong top- and bottom-line growth. This performance can be attributed to its strategies to grow through new geographies, new products and new markets as well as its ongoing Lean initiatives, productivity, automation, project selection and pricing initiatives.
 


This is also reflected in Apogee’s share price performance year to date. It has outperformed the Zacks categorized Glass Products industry, with a year-to-date gain of 14.5% compared with the industry’s increase of 11.9%.


Cost of goods sold in the quarter went up 20% year over year to $232 million. Gross profit improved 19% year over year to $82 million. Gross margin remained flat at 26%. Selling, general and administrative (SG&A) expenses increased 31% year over year to $52.5 million. Operating income jumped 3% year over year to $29.7 million. Operating margin contracted 160 basis points to 9.4%.

Segment Performance

Revenues at the Architectural Glass segment increased 14% year over year to $112 million. Operating income in the quarter went up 14% to $13.8 million from $12.1 million in the prior-year quarter.

Revenues at the Architectural Services segment plunged 14% year over year to $66 million. The segment reported an operating profit of $4.2 million, down 26% from $5.6 million in the year-ago quarter.

The Architectural Framing Systems segment’s revenues surged 53% year over year to $122 million. The segment’s operating income was up 26% to $9.7 million from $7.7 million in the prior-year quarter.

The Large-Scale Optical Technologies segment’s revenues went up 22% year over year to $26.3 million. Operating income in the reported quarter was $6.8 million, which rose 42% from $4.8 million in the year-ago quarter.

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise | Apogee Enterprises, Inc. Quote

Financial 2017 Performance

Apogee reported earnings per share of $2.97 in fiscal 2017, up 34% year over year. Earnings surpassed the Zacks Consensus Estimate of $2.88. Revenues increased 14% year over year to $11.1 billion, beating the Zacks Consensus Estimate of $1.089 billion.

Financial Position

At the end of fiscal 2017, Apogee had cash and short-term investments of $19.5 million compared with $60.4 million as of fiscal 2016 end. The company generated cash flow from operations of $121 million in fiscal 2017 compared with $129 million in the prior fiscal. The company also hiked cash dividend by 12%.

Segment backlog at the Architectural Glass segment was pegged at $66.4 million in the fourth quarter, down from $75.9 million in third-quarter fiscal 2017. In the Architectural Framing Systems segment, backlog was $245.4 million, compared with $164.4 million in third-quarter fiscal 2017. Architectural Services’ segment backlog was $255 million, a $60 million improvement from third-quarter fiscal 2017.

In the fourth quarter, Apogee acquired Sotawall Limited, a leading designer and fabricator of high-performance, unitized curtainwall systems for commercial construction projects in North America. The buyout will expand Apogee’s geographic presence in Canada and the U.S., while adding unique curtainwall products to its offerings. The acquisition of this $100 million revenue business will add to architectural framing systems segment and will also be accretive to Apogee’s earnings in fiscal 2018.

Outlook for Fiscal 2018

For fiscal 2018, Apogee projects earnings per share to lie between $3.35 and $3.55 while revenues are expected to grow 10%. The upbeat guidance came on the back of solid execution of strategies to improve operational performance, productivity and project selection. Gross margin is estimated to be approximately 28% and operating margin of approximately 12.5%.

The company anticipates delivering capital expenditures of approximately $50 to $60 million in fiscal 2017, as it is investing to enhance capabilities and productivity capacity.

As market activity, the Architecture Billings Index, office employment and office vacancy rates have witnessed positive momentum, Apogee expects mid-single digit U.S. commercial construction market growth in fiscal 2018. With internal market visibility and external metrics showing positive signs, the company expects U.S. non-residential market to continue to grow.

Apogee currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector include Donaldson Company, Inc. (DCI - Free Report) , Brady Corporation (BRC - Free Report) and Alarm.Com Holdings, Inc. (ALRM - Free Report) .

Donaldson has delivered a positive average earnings surprise of 5.93% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Brady Corporation, which also carries a Zacks Rank #1, has an average positive earnings surprise of 20.84% in the last four quarters.

Alarm.Com Holdings has an impressive track record of earnings surprises, with an average positive earnings surprise of 40.56% in the last four quarters and carries a Zacks Rank #2 (Buy).

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