Apogee Enterprises Announces First Quarter Fiscal 2004 Earnings; Revises Full-Year Guidance.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--June 16, 2003 Apogee apogee (ăp`əjē), point farthest from the earth in the orbit of a body about the earth. See apsis. The farthest point. Enterprises, Inc. (Nasdaq:APOG APOG Advanced Operational Planning Group APOG Aberdeen Police Officer's Guild ), which develops and delivers value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: glass products and services for the architectural, large-scale large-scale adj. 1. Large in scope or extent. 2. Drawn or made large to show detail. large-scale Adjective 1. wide-ranging or extensive 2. optical and automotive industries Automotive Industries, Ltd. (Hebrew: תעשיות רכב נצרת עלית, תע"ר , today announced that first quarter fiscal 2004 earnings declined more than anticipated and full-year guidance has been reduced, due to the continuing decline in the commercial construction market. Apogee's first quarter earnings were $0.01 per share or $0.3 million, compared with $0.18 per share or $5.2 million in the fiscal 2003 first quarter. All earnings per share figures refer to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Revenues for the first quarter totaled $171.3 million, down 7 percent compared to revenues of $184.7 million in the same period last year. "Our first quarter results were most heavily impacted by the continued decline in our architectural business," said Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. Huffer huff n. A fit of anger or annoyance; a pique: stormed off in a huff. v. huffed, huff·ing, huffs v.intr. 1. To puff; blow. 2. , Apogee chairman, president and chief executive officer. "Our earnings came in below our guidance due to greater than expected construction project delays and the lower margins experienced on short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. , fill-in fill-in n. Informal 1. One that serves as a substitute for another. 2. A short informative summary. Noun 1. work. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in disappointed that we continue to see low levels of bid activity and slower in-bound orders in our architectural segment, which is our largest," he said. "And, as a result, we are lowering our full-year expectations to $0.50 to $0.65 per share from our previous guidance of approximately $0.85. Our revised fiscal 2004 outlook for the architectural segment includes revenues down by 5 to 7 percent and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. down by about half compared to the prior year. "This outlook is based on architectural market conditions and not our operating performance," said Huffer. "Our businesses are running as well as can be expected in this environment, and the segment has gained market share in the lag-adjusted non-residential construction market during the multi-year slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. ." Apogee's businesses get involved in projects an average of nine months after work starts and thus lag behind the construction market trends. Architectural products and services First quarter revenues for Apogee's largest segment, architectural products and services, decreased due to the construction industry decline. Revenues decreased 12 percent to $94.9 million, compared to $108.0 million in the prior-year quarter. Operating income was $0.9 million, compared to $6.4 million a year ago. Revenues and earnings were impacted by delays in construction projects leading to lower production levels at all businesses, as well as an increase in lower margin short-term, fill-in work. These factors were only slightly offset by the ongoing improved operating performance. The architectural segment backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. was up slightly to $150.9 million, compared to $147.3 million at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. ; the backlog was $183.4 million in the first quarter of last year. Automotive replacement glass and services Automotive segment revenues for the first quarter were $60.6 million, flat compared to $60.4 million in the prior-year period. The segment reported operating income of $1.8 million, down from $4.7 million in the prior-year period. The prior year included gains of $1.4 million from asset sales. At retail, units increased more than 20 percent driven by new business, and pricing declined approximately 13 percent due to industry conditions and business mix, compared to the same period last year. In addition, pricing at our manufacturing location continued to erode Erode (ĕrōd`), city (1991 urban agglomeration pop. 361,755), Tamil Nadu state, S India, on the Kaveri River. The city is located in a cotton-growing region, and its industries include cotton ginning and the manufacture of transport equipment. and was down approximately 15 percent from the year-ago quarter. Large-scale optical technologies First quarter large-scale optical segment revenues were $15.7 million, down 4 percent compared to revenues of $16.4 million in the prior-year period, due to the short-term slowdown in retail markets served by the segment driven by economic uncertainties. The segment had an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $0.4 million, showing improvement from an operating loss of $0.9 million in the same period last year. The segment continues to benefit from prior-year operational improvements and new product introductions, as well as from the ongoing conversion of the retail picture framing market to higher value-added glass. Equity in affiliates Apogee's loss from investments in PPG PPG Points Per Game (basketball player statistic) PPG Power Play Goals (hockey) PPG Planning Policy Guidance (UK) PPG Programmable Pulse Generator PPG Power Puff Girls Auto Glass, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , owned 34 percent by Apogee, was $0.6 million in the first quarter, versus a loss of $1.1 million in the prior-year period. This reflects increased volume and improved operating performance, somewhat offset by declining pricing for the windshield distribution joint venture, despite challenging market conditions. Financial condition Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $51.7 million at the end of the first quarter, up from $47.3 million at year-end as anticipated, due to seasonal working capital needs. The company's debt-to-total-capital ratio was 22 percent at the end of the quarter, compared to 21 percent at the end of fiscal 2003. In the first quarter, depreciation and amortization totaled $6.2 million, compared with $6.1 million in the same period last year. Non-cash working capital increased to $56.5 million at the end of the quarter, versus $40.8 million at the end of fiscal 2003. Capital expenditures were $1.1 million in the quarter, versus $3.4 million in the prior-year period. Outlook "The delay in the construction turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. has led us to reduce our outlook for fiscal 2004," Huffer said. "Our customers have been delaying projects, and we're we're Contraction of we are. we're we are not seeing the increases in bidding activity and inbound in·bound 1 adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound order rates necessary to drive strong improvement in our second half performance. We continue to pursue short-term, fill-in work but don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. anticipate that we'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall be able to completely offset the lower levels of commercial construction activity. "Construction industry indicators also show the slowdown continuing, declining further since our last earnings release in April," he said. "F.W. Dodge, a leading industry forecaster, now expects the non-residential construction market to decline 2 percent in calendar 2003. And, of greater concern, commercial office construction is off more than 40 percent from its calendar 2000 peak. Dodge's outlook for calendar 2004 total non-residential construction is improvement of 6 percent over 2003, with office work up 16 percent. "We did cut costs in our architectural and auto glass segments at the end of last year and the first quarter of the current year, and are looking at our company-wide cost structure and expect to make further reductions," he said. "In light of the uncertain architectural outlook, we're forecasting second quarter earnings of $0.14 to $0.18 per share and full-year earnings of $0.50 to $0.65," said Huffer. "I remain encouraged by the ongoing improvements we're achieving in our operations, including the reductions in lead-time lead-time n. The time between the initial stage of a project or policy and the appearance of results: a long lead-time in oil production because of the need for new exploration and drilling. in the architectural businesses," he said. "All of our companies are aggressively pursuing market opportunities, ranging from hurricane and protective glazing Glazing The application of finely ground glass, or glass-forming materials, or a mixture of both, to a ceramic body and heating (firing) to a temperature where the material or materials melt, forming a coating of glass on the surface of the ware. for the architectural businesses to international markets for picture framing and insurance company customers for auto glass retail. These efforts are key to our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. performance. "We cannot wait for the construction industry to turn before initiating growth strategies," Huffer said. "Therefore, we have engaged external resources to assist us in achieving more profitable growth. It is imperative that we continue working to enhance shareholder value, despite the market challenges we are facing. "We'll continue to use our positive cash flow to strengthen our balance sheet by further reducing our debt during fiscal 2004, and we intend to start executing our new share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program," said Huffer. The following statements are based on current expectations for fiscal 2004. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially. -- Overall revenues for the year are expected to be down slightly. We anticipate a low to mid-single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. decline in second quarter revenues, driven by the commercial construction market softness, but continue to expect overall growth in the second half. -- Architectural segment second quarter revenues are expected to be down by mid to high-single digits compared to the fiscal 2003 period. Annual revenues are expected to be down 5 to 7 percent compared to fiscal 2003. Market forecasters are now looking at a commercial construction turnaround later in calendar 2004 versus earlier in the year. -- Auto glass segment revenues for the second quarter are expected to be flat versus fiscal 2003, with volume growth offset by reduced pricing. For the full year, revenues are expected to grow in the mid-single digits. -- Large-scale optical revenues in the second quarter are expected to be down slightly to flat compared to the fiscal 2003 period, with growth expected in the second half from expanded distribution and increasing market penetration from newer products. Revenues for the full year are still anticipated to grow in the mid to high-single digits. -- Annual gross margin percentages are expected to decline as productivity improvements and cost controls, including estimated new fiscal 2004 Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. savings of $6 million, only somewhat offset reduced pricing, excess capacity, and increases in material costs, insurance and wages. -- Expected annual operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by segment are: architectural, 2 to 3 percent; auto glass, 3 to 4 percent; and large-scale optical, 6 to 7 percent. -- SG&A, both in dollars and as a percent of sales, is projected to be down slightly for the year. -- Equity in affiliates will likely show an increase in the second quarter compared to the prior-year period. The second quarter is usually the seasonally strongest for the wholesale auto glass market. The full-year performance is expected to be better than the fiscal 2003 results. -- Capital expenditures remain targeted at $20 million, but will be tightly managed as Apogee leverages excess capacity. -- Depreciation and amortization is estimated at $24 million for the year. -- Debt is expected to be reduced to below $40 million by year-end. -- The effective tax rate for the full year is anticipated to be 24 percent at the low end ($0.50) of the guidance range and 27 percent at the higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. ($0.65). The rate reduction is the result of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacts of constant tax credits relative to a declining base of pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. . -- Earnings per share for the second quarter are expected to be $0.14 to $0.18, and for the full year, $0.50 to $0.65. The discussion above contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements reflect management's expectations or beliefs as of the date of this release. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the operating results of the company, including the following: Operational risks within (A) the Architectural segment: i) competitive, price-sensitive and changing market conditions; ii) economic conditions and the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the worldwide commercial construction industry; iii) product performance, reliability or quality problems that could delay payments, increase costs, impact orders or lead to litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and iv) the segment's ability to fully utilize production capacity and project managers; (B) the Auto Glass segment: i) changes in market dynamics; ii) market seasonality; iii) highly competitive, fairly mature industry with relatively low barriers to entry; iv) performance of the PPG Auto Glass LLC joint venture; and v) possible industry consolidation; and (C) the Large-Scale Optical segment: i) new product introductions and management of product life cycles; ii) intensely competitive markets; iii) highly cyclical markets that are impacted by economic slowdowns; iv) dependence on a relatively small number of customers; and v) ability to utilize manufacturing facilities. Additional factors include: i) quarterly revenue and operating results that are volatile and difficult to predict; ii) the possibility of a material product liability event; iii) the costs of compliance with governmental regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc hazardous substances; iv) management of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. exiting activities; and v) foreign currency risk related to discontinued operations. The company cautions readers that actual future results could differ materially from those described in the forward-looking statements. The company wishes to caution investors that other factors may in the future prove to be important in affecting the company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For a more detailed explanation of the forgoing for·go also fore·go tr.v. for·went , for·gone , for·go·ing, for·goes To abstain from; relinquish: unwilling to forgo dessert. and other risks and uncertainties, see Exhibit 99.1 to the company's Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended March 1, 2003. Teleconference and simultaneous webcast Analysts, investors and media are invited to listen to Apogee's live teleconference or webcast at 2 p.m. Central Daylight Time tomorrow, June June: see month. 17. To participate in the teleconference, call 1-800-606-8940 toll free or 952-556-2833 local, and reference "Apogee Enterprises." The replay will be available from 4 p.m. Central Daylight Time on Tuesday Tuesday: see week. , June 17, through midnight Central Daylight Time on Tuesday, June 24, by calling 1-888-211-2648 toll free, access code 174944. To listen to the live conference call over the internet, go to the Apogee web site at http://www.apog.com and click on "investor relations Investor relations The process by which the corporation communicates with its investors. " and then the webcast link at the top of that page. The webcast also will be archived on the company's web site. Apogee Enterprises, Inc., headquartered in Minneapolis, is a world leader in technologies involving the design and development of value-added glass products, services and systems. The company is organized in three segments: -- Architectural products and services companies design, engineer, fabricate, install and renovate the walls of glass and windows comprising the outside skin of commercial and institutional buildings. Businesses in this segment are: Viracon, the leading fabricator fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: of coated, high-performance architectural glass for global markets; Harmon, Inc., the largest U.S. full-service building glass installation, maintenance and renovation company; Wausau Window and Wall Systems, a manufacturer of custom aluminum window systems and curtainwall; and Linetec, a paint and anodizing anodizing Method of coating metal for corrosion resistance, electrical insulation, thermal control, abrasion resistance, sealing, improving paint adhesion, and decorative finishing. finisher of window frames and PVC PVC: see polyvinyl chloride. PVC in full polyvinyl chloride Synthetic resin, an organic polymer made by treating vinyl chloride monomers with a peroxide. shutters. -- Automotive replacement glass and services companies fabricate, repair and replace automobile windshields and windows. Businesses in this segment are: Harmon AutoGlass, a U.S. chain of retail auto glass replacement and repair shops; and Viracon/Curvlite, a U.S. fabricator of aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. foreign and domestic car windshields. -- Large-scale optical technologies companies develop and produce high technology glass that enhances the visual performance of products for the display, imaging and picture framing industries. Businesses in this segment are: Tru Vue, a North American value-added glass and matboard manufacturer for the custom framing and pre-framed art markets; and Viratec, a producer of optical thin film coatings for the global display and imaging markets.
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Condensed Statement of Income
(Unaudited)
Thirteen Thirteen
Dollar amounts in thousands, Weeks Ended Weeks Ended %
except for per share amounts May 31, 2003 June 1, 2002 Change
------------- ------------ ------
Net sales $171,318 $184,709 -7%
Cost of goods sold 138,170 138,757 0%
------------- ------------
Gross profit 33,148 45,952 -28%
Selling, general and administrative
expenses 31,326 36,250 -14%
------------- ------------
Operating income 1,822 9,702 -81%
Interest income 126 291 -57%
Interest expense 966 1,317 -27%
Other income, net - 34 -100%
Equity in (loss) of affiliated
companies (561) (1,118) 50%
------------- ------------
Earnings from continuing
operations before income
taxes 421 7,592 -94%
Income taxes 113 2,354 -95%
------------- ------------
Net earnings $308 $5,238 -94%
============= ============
Earnings per share - basic: $0.01 $0.19 -95%
Average common shares outstanding 26,945,922 28,060,382 -4%
Earnings per share - diluted: $0.01 $0.18 -94%
Average common and common
equivalent shares outstanding 27,646,895 29,090,059 -5%
Cash dividends per common share $0.0575 $0.0550 5%
----------------------------------------------------------------------
Business Segments Information
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended %
May 31, 2003 June 1, 2002 Change
------------- ------------ ------
Sales
Architectural $94,944 $107,993 -12%
Auto Glass 60,642 60,361 0%
Large-Scale Optical 15,737 16,355 -4%
Eliminations (5) - N/M
------------- ------------
Total $171,318 $184,709 -7%
------------- ------------
Operating income (loss)
Architectural $946 $6,425 -85%
Auto Glass 1,836 4,683 -61%
Large-Scale Optical (352) (918) 62%
Corporate and other (608) (488) -25%
------------- ------------
Total $1,822 $9,702 -81%
------------- ------------
----------------------------------------------------------------------
Consolidated Condensed Balance Sheets
(Unaudited)
May 31, March 1,
2003 2003
------------- ------------
Assets
Current assets $160,603 $171,463
Net property, plant and equipment 109,612 114,527
Other assets 96,851 96,851
------------- ------------
Total assets $367,066 $382,841
------------- ------------
Liabilities and shareholders'
equity
Current liabilities $99,645 $120,428
Long-term debt 51,650 47,258
Other liabilities 37,444 36,945
Shareholders' equity 178,327 178,210
------------- ------------
Total liabilities and shareholders'
equity $367,066 $382,841
------------- ------------
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
Dollar amounts in thousands May 31, 2003 June 1, 2002
------------- ------------
Net earnings $308 $5,238
Depreciation and amortization 6,160 6,089
Results from equity investments 561 1,118
Other, net (2,058) (1,995)
Changes in operating assets and liabilities (14,263) (9,791)
------------- ------------
Net cash (used in) provided by continuing
operating activities (9,292) 659
------------- ------------
Capital expenditures (1,064) (3,357)
Other investing activities (497) 5,648
------------- ------------
Net cash (used in) provided by investing
activities (1,561) 2,291
------------- ------------
Proceeds (payments) on long-term debt and
revolving credit agreement 4,160 (12,712)
Proceeds from issuance of common stock 2,210 1,466
Dividends paid (1,579) (1,573)
Other, net - (801)
------------- ------------
Net cash provided by (used in) financing
activities 4,791 (13,620)
------------- ------------
Cash provided by (used in) discontinued
operations 401 (602)
------------- ------------
Decrease in cash and cash equivalents ($5,661) ($11,272)
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