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Why Is Apogee Enterprises (APOG) Down 5.9% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Apogee Enterprises (APOG). Shares have lost about 5.9% 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 drivers.

Apogee Beats Earnings and Revenue Estimates in Q1

Apogee delivered adjusted earnings per share of 58 cents in first-quarter fiscal 2020 (ended Jun 1, 2019), down 3.3% year over year. The quarterly figure surpassed the Zacks Consensus Estimate of 53 cents.

Apogee generated revenues of $355 million, up 6% year over year. Also, the figure comfortably beat the Zacks Consensus Estimate of $325 million. Higher demand in its end-markets drove the company’s top- and bottom-line results.

The company’s shares have returned 11.02% during the last trading session, closing at $43.74. The upside followed after the company generated better-than-expected fiscal first-quarter results.

Operational Update

Cost of sales in the reported quarter was up 7% year over year to $274 million. Gross profit inched up 0.3% year over year to $81 million. Gross margin came in at around 23% compared with 24% in the year-ago quarter.

Selling, general and administrative (SG&A) expenses declined 1% year over year to $58 million. Adjusted operating income fell 5.2% year over year to $23 million. Operating margin in the quarter was 6.5% compared with 7.2% in the prior-year quarter.
Segment Performance

In the fiscal first quarter, revenues in the Architectural Framing Systems segment inched up 1% year over year to $180.5 million. The segment’s operating income declined 19.3% year over year to $12.3 million.

Revenues in the Architectural Glass Systems segment rallied 30% year over year to $100.3 million. The upside can be attributed to higher volume driven by strong customer demand. Operating income surged 305% year over year to $6.4 million.

Revenues in the Architectural Services segment declined 8% year over year to $65.1 million on lower volumes due to the timing of project activity. The segment’s operating profit plummeted 11% year over year to $4.6 million.

Revenues in the Large-Scale Optical Technologies segment climbed 2% year over year to $21.3 million. Operating income dropped 16% year over year to $4.2 million.


The Architectural Framing Systems segment’s backlog fell to $407 million in the reported quarter compared with $427 million in the year-ago quarter. Backlog in the Architectural Services segment amounted to $483 million, up from $439 million in the prior-year quarter.

Financial Position

Apogee had cash and cash equivalents of $29 million at the end of the fiscal first quarter compared with $21.6 million at the end of the prior-year quarter. Cash used in operating activities were $9.7 million in the quarter under review compared with cash generation of $25.3 million reported in the year-ago quarter. Long-term debt was $293.3 million as of Jun 1, 2019 compared with $245.7 million as of Mar 2, 2019.

During the quarter under review, Apogee returned $24.6 million of cash to shareholders through share repurchases and dividend payments.

Fiscal 2020 Guidance

Apogee reaffirmed guidance for fiscal 2020. The company expects revenue growth between 1% and 3%, with growth in three of the company’s segments. The upside is likely to be offset by decline in Architectural Services due to execution schedules for backlog projects.

Apogee anticipates operating margin in the range of 8.2-8.6%, with margin improvement in Architectural Glass and Architectural Framing Systems. However, margins in the Architectural Services segment are expected to affect lower volumes and less favorable project maturity compared with fiscal 2019 levels. Moreover, start-up costs related to the strategic growth investment in Architectural Glass as well as higher corporate costs from higher legal expenses may weigh on margins.

The company projects adjusted earnings per share in the range of $3.00-$3.20 and capital expenditures in the band of $60-$65 million.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -5% due to these changes.

VGM Scores

Currently, Apogee Enterprises has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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


Apogee Enterprises has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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