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Apogee Enterprises (APOG) Down 0.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Apogee Enterprises (APOG). Shares have lost about 0.5% in that time frame, outperforming 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 Q3 Earnings Estimates, Narrows FY22 View

Apogee reported third-quarter fiscal 2022 adjusted EPS 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 EPS 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.

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 EPS 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.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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