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Apogee (APOG) Lags Q1 Earnings & Sales, Updates FY18 View

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Apogee Enterprises, Inc. (APOG - Free Report) reported adjusted earnings per share of 62 cents in first-quarter fiscal 2018 (ended Jun 3, 2017), up 2% from 61 cents per share in the prior-year quarter. Earnings, however, lagged the Zacks Consensus Estimate of 71 cents.

Including one-time items, the company posted earnings of 56 cents per share compared to 61 cents per share recorded in the year-ago quarter.

The company reported total revenue of $272 million, which grew 10% year over year. However, revenues lagged the Zacks Consensus Estimate of $273 million.

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise

 

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

Cost of goods sold in the quarter flared up 10% year over year to $202 million. Gross profit improved 9% year over year to $70.3 million. Gross margin contracted 20 basis points (bps) to 25.8%. Selling, general and administrative (SG&A) expenses jumped 21% year over year to $46.2 million. Operating income declined 8% year over year to $24 million. Operating margin dipped 70 bps to 9.9%.

Segment Performance

Revenues at the Architectural Glass segment climbed 5% year over year to $97.7 million. Operating income in the quarter went down 2% to $9.3 million from $9.5 million registered in the prior-year quarter.

Revenues at the Architectural Services segment dropped 20% year over year to $50.2 million. The segment reported an operating profit of $0.8 million, down significantly from $3.2 million recorded in the year-ago quarter.

The Architectural Framing Systems segment’s revenues surged 36% year over year to $110.5 million. The segment’s operating income was up 17% to $12 million from $10 million witnessed in the prior-year quarter.

The Large-Scale Optical Technologies segment’s revenues went down 7% year over year to $18.6 million. Operating income in the reported quarter was $4 million, which decreased 13% from $4.7 million in the comparable period last year.

Financial Position

Apogee ended the quarter with cash and cash equivalents of $23 million compared with $37 million at the end of the prior-year quarter. Cash provided by operating activities increased to $5.9 million for the fiscal first quarter compared with cash usage of $0.5 million in the year-ago quarter. Long-term debt was $71.4 million as of Jun 3, 2017, compared with $65.4 million as of Mar 4, 2017.

In the Architectural Framing Systems segment, backlog was $255.1 million in the fiscal first quarter, up from $245.1 million in the year-earlier quarter. Architectural Services’ segment backlog came in at $292.9 million, a $40-million improvement from first-quarter fiscal 2017.

Outlook for Fiscal 2018

Apogee updated its earnings per share guidance to $3.65–$3.85 from the prior range of $3.35–$3.55 for fiscal 2018. The company also lifted its revenue growth outlook to 26–28% from the previous projection of 10%. The raised guidance is supported by internal market visibility from backlog, commitments and bidding activity, and positive external metrics, including forecasts for mid-single digit U.S. commercial construction market growth this year.

The company anticipates delivering capital expenditures of approximately $60 million in fiscal 2017.

Share price Performance

In the last one year, Apogee has outperformed the Zacks classified Glass Products sub-industry with respect to price performance. The stock gained around 21.9%, while the industry recorded growth of 18.7% over the same time frame.



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

Other similarly-ranked stocks in the same sector are AGCO Corporation (AGCO - Free Report) , Altra Industrial Motion Corp. and Parker-Hannifin Corporation (PH - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an average positive earnings surprise of 40.39% for the trailing four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% over the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 14.94% for the last four quarters.

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