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Apogee (APOG) Q4 Earnings Up Y/Y on Cost-Cutting Actions

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Zacks Equity Research
·5 min read
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Apogee Enterprises, Inc. APOG reported fourth-quarter fiscal 2021 (ended Feb 27, 2021) adjusted earnings per share of 63 cents. The bottom line improved 26% year over year. The company’s continued focus on cost reduction was instrumental in driving this improved performance despite the pandemic-induced challenges, and weak conditions in the architectural end markets.

Including one-time items, the company delivered loss per share of $1.65 as against the earnings per share of 45 cents earned in the year-ago quarter.

Apogee generated revenues of $309 million during the quarter, down 8% year over year on pandemic-induced volume declines in Architectural Framing Systems and Architectural Glass, partly offset by growth in Architectural Services.

Operational Update

Cost of sales in the fiscal fourth quarter was down 8% year on year to $239 million. Gross profit declined 10% year over year to $69.7 million. Gross margin came in at 22.5% during the quarter compared with the prior-year quarter’s 22.8%.

Selling, general and administrative (SG&A) expenses flared up 100% year over year to $124 million. Adjusted operating income climbed 22.2% year over year to $22 million. Operating margin in the reported quarter was 7.1% compared with the prior-year quarter’s 5.2%.

Apogee Enterprises, Inc. Price, Consensus and EPS Surprise

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

Apogee Enterprises, Inc. price-consensus-eps-surprise-chart | Apogee Enterprises, Inc. Quote

Segment Performance

In the fiscal fourth quarter, revenues in the Architectural Framing Systems segment slid 14% year over year to $131 million on lower order volume for short lead-time products and COVID-related project delays. The segment incurred an operating loss of $71 million, as against the operating profit of $2 million registered in the prior-year quarter.

Revenues in the Architectural Glass Systems segment dropped 17% year on year to $82 million, due to the pandemic and market-related project delays. The segment reported an operating profit of $3.4 million compared with the year-ago quarter’s $3.8 million.

Revenues in the Architectural Services segment increased 12% year over year to $82 million, driven by increased volume from executing projects in backlog. The segment’s operating profit jumped 26% year over year to $11 million on increased volume and continued solid project execution.

Revenues in the Large-Scale Optical Technologies segment inched up 1% year over year to $22 million. The segment reported an operating profit of $6 million during the fiscal fourth quarter, down 14% year over year. This downside resulted from higher manufacturing costs and increased lease expense from the sale-leaseback transaction completed in the fiscal third quarter.

Backlog

The Architectural Services segment’s backlog decreased to $571 million from the $597 million witnessed at the end of third-quarter fiscal 2021. Backlog in the Architectural Framing segment amounted to $411 million, up from $408 million at the end of third-quarter fiscal 2021.

Financial Position

Apogee had cash and cash equivalents of $47.3 million at the end of fiscal 2021 compared with $15 million at the end of fiscal 2020. Cash generated from operating activities were $142 million in fiscal 2021 compared with $107 million in fiscal 2020.

Long-term debt was around $163 million as of Feb 27, 2021, compared with $212.5 million as of Feb 29, 2020.

During the fiscal fourth quarter, Apogee repurchased 326,000 shares for $12.1 million. In fiscal 2021, Apogee returned $52.5 million of cash to shareholders through dividends and share repurchases.

Fiscal 2021 Results

Apogee reported adjusted earnings per share of $2.40 for fiscal 2021 compared with the $2.38 reported in the prior fiscal year. Including one-time items, the bottom line came in at 59 cents per share, down 74.5% from the $2.32 reported in fiscal 2020. Sales were down 11% year over year to $1.23 billion in fiscal 2021.

Fiscal 2022 Guidance

Apogee projects fiscal 2022 earnings per share to lie between $2.10 and $2.35 per share. The company expects capital expenditures of $45 million.

The company continues to aggressively manage costs and improve execution across the business. Apogee has initiated an effort to reduce its fixed cost base, which will lead to incremental cost savings in fiscal 2022.

Price Performance

Shares of the company have gained 79.8% in the past year compared with the industry’s growth of 54.5%.


Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the Industrial Products sector are Deere & Co. DE, AGCO Corp. AGCO and Applied Industrial Technologies, Inc. AIT, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deere has a projected earnings growth rate of 82.5% for fiscal 2021. Over the past year, the company’s shares have soared 133.2%.

AGCO has an estimated earnings growth rate of 29.9% for the ongoing year. The company’s shares have surged 134.1% in the past year.

Applied Industrial has an expected earnings growth rate of 0.8% for fiscal 2021. The stock has appreciated 78.5% in a year’s time.

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