Why Is Apogee Enterprises (APOG) Up 0.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Apogee Enterprises (APOG). Shares have added about 0.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Apogee Enterprises due for a pullback? 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’s Earnings Miss Estimates in Q1, Down Y/Y

Apogee reported first-quarter fiscal 2021 adjusted earnings per share of 15 cents, missing the Zacks Consensus Estimate of 34 cents. Also, the reported figure plummeted 74% from the prior-year quarter.

Including one-time items, the company reported earnings per share of 11 cents compared with the 58 cents recorded in the year-ago quarter.

Apogee reported revenues of $289 million during the quarter, marking a year-over-year decline of 18.6% on lower volumes across all of the company’s segments on account of the coronavirus crisis.

Operational Update

Cost of sales in the fiscal first quarter was down 17% year over year to $229 million. Gross profit declined 26% year over year to $60 million. Gross margin came in at 21% compared with the year-earlier quarter’s 23%.

Selling, general and administrative (SG&A) expenses decreased 7% year-over-year to $54 million. Adjusted operating income slumped 65% year over year to $8 million. Operating margin in the reported quarter was 3% compared with the prior-year quarter’s 6%.

Segment Performance

In the fiscal first quarter, revenues in the Architectural Framing Systems segment slid 17% year over year to $150 million on dismal lower volume due to several COVID-19-related project delays and disruptions. The segment’s operating income plunged 41% year over year to around $7 million.

Revenues in the Architectural Glass Systems segment dropped 23% year over year to $77 million, reflecting lower volumes due to coronavirus outbreak. The segment reported an operating loss of $0.5 million as against the operating profit of $6.4 million registered in the prior-year quarter. This decline resulted from lower volume and the coronavirus pandemic-related costs.

Revenues in the Architectural Services segment slipped 2% year over year to $64 million on project delays due to the pandemic. The segment’s operating profit increased 17% year over year to $5.3 million. This was driven by strong project execution and effective cost management.

Revenues in the Large-Scale Optical Technologies segment tanked 70% year over year to $6 million as most of the segment’s customers were closed for a large part of the quarter. In response to the lower demand, and to comply with state government mandates, the segment closed its two primary manufacturing locations for most of the fiscal first quarter. These facilities are expected to resume operations late in the fiscal second quarter, as customers reopen. The segment incurred an operating loss of $3 million as against the prior-year quarter’s operating profit of $4 million, reflecting lower volume.

Backlog

The Architectural Services segment’s backlog rose 42% year over year to a record $685 million in the reported quarter. Backlog in the Architectural Framing segment amounted to $423 million, down 2% from the prior quarter’s $432 million.

Financial Position

Apogee had cash and cash equivalents of $12 million at the end of fiscal first quarter compared with the $29 million witnessed at the end of prior-year quarter. Cash generated from operating activities were $24 million in the reported quarter compared with cash utilization of around $10 million in the prior-year quarter. Long-term debt was $56 million as of May 30, 2020 compared with $213 million as of Feb 29, 2020.

In fiscal first quarter, Apogee returned $4.9 million of cash to shareholders through dividend payments and repurchased 231,000 shares for $4.7 million before announcing the temporary suspension of its share-repurchase program.

Fiscal 2021 Guidance

The company expects to report solid results in the upcoming quarters with the stabilization in its end markets as well as in the economy. Apogee’s Large-Scale Optical customers have started to gradually reopen, while Architectural segments expect moderate project delays. The company is also poised to gain from strong backlog. Apart from this, the company expects to benefit from cost-reduction actions in the fiscal second quarter. However, given the coronavirus pandemic-related uncertainties in the end markets and economy, the company has not issued any guidance for fiscal 2021.

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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