Apogee Enterprises Is Reaching for the Heights

Apogee Enterprises Inc. (APOG, Financial) beat Wall Street revenue estimates as fiscal 2022 ended, and full-year revenue climbed by a healthy 7%.

The Minneapolis-based company on Thursday announced its fiscal fourth-quarter and full-year 2022 results. Fourth-quarter revenue grew 6.3% to $328 million, topping the consensus of $323.33 million, compared to $308.6 million in the same quarter in 2021, led by growth in Architectural Services and Architectural Framing Systems.

The company reported full-year revenue grew 7% to $1.31 billion from $1.23 billion in the prior year. Full-year earnings were 14 cents per diluted share, compared to 59 cents in fiscal 2021, with full-year adjusted earnings per share of $2.48, up from $2.40 in 2021.

Apogee is a leading provider of architectural products and services for enclosing buildings and glazing products for framing art, whose 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.

Shares on Friday closed at $43.61, down 3.33% or $1.50 per.

The company reported a net loss of 67 cents per diluted share in the fourth quarter, which included a non-cash, pre-tax impairment charge of $49.5 million in the Architectural Framing Systems segment, $6.3 million of pre-tax restructuring costs and a $19.5 million gain on the sale of assets. This compares to a net loss of $1.65 per diluted share in last year’s fourth quarter, which included $75 million of pre-tax impairment and restructuring costs. Adjusted earnings in this year’s fourth quarter were 91 cents per diluted share, up from 63 cents in the prior-year period.

“Our team continued to build momentum in the fourth quarter, delivering revenue growth, and increased adjusted earnings in what remains a challenging operating environment,” CEO Ty R. Silberhorn said. “I am proud of what our team accomplished in fiscal 2022, achieving full-year revenue and adjusted earnings per share growth, while driving significant progress on our new strategy to position the company for long-term profitable growth.”

He added that Apogee will continue to execute its three-pillar strategy, working to become the “economic leader” in the company’s target markets.

Thanks to a mix of “inflationary pressures, supply chain issues and restructuring activities aimed at better positioning the company for the future, profits and cash flows have been under pressure,” Crude Value Insights' Daniel Jones reported. “Due to this, relative to the company's peers, it currently is trading at a rather lofty price. But on an absolute basis, shares are priced reasonably well at this time… The picture for the business is fine, but APOG stock likely remains a ‘hold’ at this time.”

Apogee’s Architectural Framing Systems segment led the way, with fourth-quarter revenue growing 9% to $143.1 million, from $131.1 million in the prior-year period, primarily driven by inflation-related pricing actions and partially offset by lower volume. Architectural Services revenue grew 21% to a record $98.7 million, up from $81.9 million in the prior-year quarter, driven by increased volume from executing projects in the backlog. Fourth-quarter operating income increased to a record $11.8 million, compared to $10.7 million in the prior-year period, primarily reflecting the increased volume but partially offset by the impact of inflation.

The company's initial guidance for 2023 shows full-year adjusted earnings expected to be in the range of $2.90 to $3.30 per diluted share. Management expects revenue growth in fiscal 2023, primarily driven by growth in Architectural Framing Systems. The company forecasts full-year capital expenditures of $35 million to $40 million.