Apogee (APOG) Beats Q3 Earnings Estimates, Narrows FY22 View
Apogee Enterprises, Inc. APOG reported third-quarter fiscal 2022 (ended Aug 28, 2021) adjusted earnings per share of 63 cents, surpassing the Zacks Consensus Estimate of 53 cents. The bottom line, however, declined 30% year over year.
Including one-time items, the company reported earnings per share of 44 cents compared with the year-ago quarter's earnings per share of $1.42.
Apogee generated revenues of $334 million in the quarter under review, up 7% year over year, on solid growth in the Architectural Framing Systems and Architectural Services.
Apogee Enterprises, Inc. Price, Consensus and EPS Surprise
Apogee Enterprises, Inc. price-consensus-eps-surprise-chart | Apogee Enterprises, Inc. Quote
Operational Update
Cost of sales in the fiscal third quarter climbed 10% year over year to $269 million. Gross profit declined 7% year over year to $65 million. The gross margin contracted 280 basis points to 19.4% in the quarter from the prior-year quarter's 22.2%.
Selling, general and administrative (SG&A) expenses soared 137% year over year to $47 million. The adjusted operating income plunged 33% year over year to $21 million. The operating margin in the reported quarter was 6.3% compared with the prior-year quarter's 10.1%.
Segment Performance
In the fiscal third quarter, revenues in the Architectural Framing Systems segment rose 11% year over year to $152 million, aided by pricing actions. The segment's adjusted operating profit was $10.6 million compared with the year-ago quarter's $7.2 million.
Revenues in the Architectural Glass segment decreased 12% year over year to $74 million on lower volumes, offset by an improved sales mix. The segment reported an adjusted operating income of $2.2 million, marking a 79% drop from the year-ago quarter's operating profit of $10.8 million.
Revenues in the Architectural Services segment grew 20% year over year to $92 million, attributed to higher volumes. The segment's operating profit increased 7% year over year to $9.2 million.
Revenues in the Large-Scale Optical Technologies segment went up 8% year over year to $27 million, driven by a favorable sales mix. The segment reported an adjusted operating profit of $6 million in the fiscal third quarter compared with the prior-year quarter's $6.8 million.
Backlog
The Architectural Services segment's backlog remained flat at $572 million with that reported in second-quarter fiscal 2022. Backlog in the Architectural Framing segment amounted to $419 million, down from $406 million at the end of second-quarter fiscal 2022.
Financial Position
Apogee had cash and cash equivalents of $78.3 million at the end of third-quarter fiscal 2022 compared with $47 million at the end of fiscal 2021. Cash generated from operating activities was $86.3 million in the first nine months of fiscal 2022 compared with the prior-year period's $120 million.
Long-term debt was $162 million as of the end of third-quarter fiscal 2022 compared with $163 million as of fiscal 2021-end.
Apogee has returned $44.2 million of cash to shareholders through share repurchases and dividend payments so far in the fiscal year.
Fiscal 2022 Guidance
Apogee expects fiscal 2022 adjusted earnings per share between $2.25 and $2.40 compared with the previously mentioned $2.20-$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 expenditure of $25 million for fiscal 2022, lower than the previously stated $35 million, as the company has slowed some investments while conducting its strategic review.
Price Performance
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Shares of the company have gained 40.9% over the past year against the industry's decline of 37.9%.
Zacks Rank & Stocks to Consider
Apogee currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Greif, Inc. GEF, SPX Flow FLOW and Emerson Electric Co. EMR. While GEF and FLOW flaunt a Zacks Rank #1 (Strong Buy) at present, EMR carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Greif has an estimated earnings growth rate of 11.4% for the current year. In the past 30 days, the Zacks Consensus Estimate for GEF's current-year earnings has been revised upward by 2%.
In a year, the company's shares have gained 25%. Greif has a trailing four-quarter earnings surprise of 16.8%, on average.
SPX Flow has an expected earnings growth rate of 102% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised upward by 1% in the past 30 days.
SPX Flow's shares have gained 50% in a year's time. FLOW has a trailing four-quarter earnings surprise of 40%, on average.
Emerson Electric has a projected earnings growth rate of 19.9% for 2021. The Zacks Consensus Estimate for EMR's current-year earnings has been revised upward by 1% in the past 30 days.
The company's shares have appreciated 15% in the past year. Emerson Electric has a trailing four-quarter earnings surprise of 10.7%, on average.
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