Apogee Enterprises Reports Fiscal 2024 Third Quarter Results

Apogee Enterprises, Inc. reported its fiscal 2024 third-quarter results. The Company reported the following selected financial results:

• Third quarter diluted EPS grows 15% to $1.23, on net sales of $340 million
• Operating margin expands 170 bps to 11.1%
• New project awards drive 15% sequential backlog growth in Architectural Services
• Year-to-date cash flow from operations increases $78 million to $129 million
• Increasing full-year adjusted diluted EPS outlook to a range of $4.55 to $4.70

“Our team continued to deliver strong results, with another quarter of year-over-year margin expansion, double-digit adjusted EPS growth, and significantly improved cash flow, despite lower revenue,” said Ty R. Silberhorn, Chief Executive Officer. “Execution of our strategy continues to drive improved performance, enabling us to achieve operating margin above our 10% target for the second consecutive quarter.”

Mr. Silberhorn continued, “As we move forward, we will continue to focus on building differentiated offerings that provide compelling value for our customers, driving productivity gains, and improving our cost structure. Additionally, our strong cash flow and balance sheet provide significant flexibility to make investments to accelerate our profitable growth.”

Consolidated Results (Third Quarter Fiscal 2024 Compared to Third Quarter Fiscal 2023)

• Net sales were $339.7 million compared to $367.8 million, primarily reflecting lower volumes, partially offset by improved mix and pricing.
• Gross profit increased by 4.3% to $90.3 million and gross margin improved by 310 bps to 26.6%, primarily driven by higher pricing, improved product mix, lower short-term incentive compensation expense, and lower insurance-related expense, partially offset by the impact of lower volume and a less favorable mix of projects in Services.
• Selling, general and administrative expenses increased $0.8 million to 15.5% of net sales compared to 14.1%, primarily due to higher salaries and benefit costs, partially offset by lower short-term incentive compensation expense.
• Operating income grew 8.3% to $37.6 million, and operating margin increased 170 basis points to 11.1% primarily driven by improved segment operating margin in Architectural Glass as well as the Architectural Glass segment comprising a higher mix of the consolidated results, partially offset by lower segment operating margin in Architectural Framing Systems.
• Net interest expense was $1.5 million, compared to $2.6 million, reflecting a lower average debt level, partially offset by higher average interest rates.
• Income tax expense was $8.3 million, compared to $7.9 million.
• Diluted earnings per share (“EPS”) grew 15% to $1.23.

Segment Results (Third Quarter Fiscal 2024 Compared to Third Quarter Fiscal 2023)

Architectural Framing Systems

Architectural Framing Systems net sales were $139.6 million, compared to $165.0 million, primarily reflecting lower volume due to slowing demand in our short-cycle business, partially offset by a more favorable sales mix. Operating income was $17.0 million, or 12.2% of net sales, compared to $22.1 million, or 13.4% of net sales, primarily reflecting the impact of lower volume, partially offset by improved sales mix, the impact of cost savings initiatives, improved productivity, and lower short-term incentive compensation expenses. Segment backlog² at the end of the quarter was $183.9 million, compared to $197.5 million at the end of the second quarter.

Architectural Glass

Architectural Glass net sales grew 11.6%, to $91.0 million, primarily driven by improved mix and pricing, reflecting the strategic shift to emphasize premium, high-performance products. This was partially offset by lower volume. Operating income increased to $15.2 million, or 16.7% of net sales, compared to $7.5 million, or 9.1% of net sales. The higher operating margin was primarily driven by the impact of improved mix and pricing, partially offset by the impact of lower volume and cost inflation.

Architectural Services

Architectural Services net sales were $94.7 million, compared to $102.0 million, primarily reflecting a less favorable mix of projects. Operating income was $5.3 million, or 5.6% of net sales, compared to $6.0 million, or 5.9% of net sales. The change in operating margin was primarily driven by a less favorable mix of projects, partially offset by lower short-term incentive compensation expense. Segment backlog at the end of the quarter was $776.5 million, an increase of 15% compared to $674.4 million at the end of the second quarter, as several large projects were awarded in the quarter.

Large-Scale Optical

Large-Scale Optical net sales were $26.0 million, compared to $26.7 million, primarily reflecting lower volume, partially offset by a more favorable mix and pricing. Operating income was $7.1 million, with operating margin improving to 27.3% of net sales, compared to 26.7%, due to favorable mix and pricing.

Corporate and Other

Corporate and other expense was $6.9 million, compared to $7.9 million, primarily reflecting lower insurance-related costs.

Financial Condition

Net cash provided by operating activities in the quarter was $66.7 million, compared to $53.8 million in last year’s third quarter. Fiscal year to date, net cash provided by operating activities increased to $129.3 million, compared to $51.1 million in the prior-year period. The improved cash flow was primarily driven by favorable working capital changes compared to the prior year. Fiscal year to date, capital expenditures were $27.0 million, compared to $18.1 million last year, as the Company increased investments in projects to support its strategy. Fiscal year to date, the Company has returned $27.5 million of cash to shareholders through share repurchases and dividend payments.

Quarter-end total long-term debt was $100.7 million, compared to $169.8 million at the end of fiscal 2023. The net leverage ratio³ as of the end of the third quarter improved to 0.4x compared to 0.9x at the end of fiscal 2023.

Updated Outlook

The Company increased its outlook for full-year GAAP diluted EPS to a range of $4.71 to $4.86, and adjusted diluted EPS to a range of $4.55 to $4.70⁴. As a reminder, fiscal 2024 is a 53-week year, with an extra week in the fourth quarter. Including the extra week of operations, the Company now expects net sales to decline approximately 3% compared to fiscal 2023. The Company continues to expect a long-term average tax rate of approximately 24.5% and now expects capital expenditures in fiscal 2024 between $40 to $50 million.

For full third quarter fiscal results click here.

About Apogee Enterprises

Apogee Enterprises, Inc. (Nasdaq: APOG) is a leading provider of architectural products and services for enclosing buildings, and high-performance glass and acrylic products used for preservation, energy conservation, and enhanced viewing. Headquartered in Minneapolis, MN, our portfolio of industry-leading products and services includes high-performance architectural glass, windows, curtainwall, storefront and entrance systems, integrated project management and installation services, as well as value-added glass and acrylic for custom picture framing and displays. For more information, visit www.apog.com.

Contact:

Jeff Huebschen – Vice President, Investor Relations & Communications – ir@apog.com – (952) 487-7538

Source: Apogee Enterprises, Inc.