Apogee Enterprises Reports Fiscal 2006 First Quarter Earnings; Increases Guidance for Fiscal 2006.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- 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 ) today announced fiscal 2006 first quarter earnings. Apogee 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 . FIRST QUARTER HIGHLIGHTS --Earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $0.14 per share, versus $0.11 per share a year earlier. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 3.8 percent, up from 2.9 percent the prior-year period. --Revenues of $164.1 million were up 12 percent versus the prior-year period, with the architectural segment accounting for the majority of the growth. --Architectural segment revenues were up 15 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. increased 14 percent to $3.6 million. Share growth and market improvement led to increased volume. --Large-scale optical segment revenues increased 12 percent, while operating income increased to $3.1 million from $0.6 million the prior-year period. Sales of higher value-added picture framing 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. products continue to increase. --Full-year guidance was increased to a range of $0.74 to $0.80 per share on revenue growth of 9 to 11 percent for fiscal 2006, reflecting positive trends in the architectural and picture framing businesses. Commentary "We started the fiscal year exceeding our expectations and are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that momentum is building," 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 and chief executive officer. "Our first quarter revenues and earnings were ahead of prior year and our fiscal 2006 plan, as our architectural segment continues to grow market share in an improving commercial construction market and our picture framing business experiences better than expected conversion to higher value-added glass products." SEGMENT AND OPERATING HIGHLIGHTS Architectural Products and Services --Revenues of $134.8 million were up 15 percent over the prior-year period. Revenues were slightly stronger than anticipated due to strength in high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. condos, government and institutional work, along with ongoing improvement in the office market. These projects generally also use more value-added energy-efficient, hurricane and blast products. --Operating income was $3.6 million, up 14 percent from a year ago on higher revenues. Operating margin was 2.7 percent, flat compared to the prior year as current lower-margin projects are completed. --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 $235.0 million, compared to a backlog of $233.7 million in the prior-year period and $220.1 million at the end of the fourth quarter. Large-Scale Optical Technologies --Revenues of $20.8 million were up 12 percent over the prior-year period. Increased sales of higher value-added picture framing products more than offset reduced volume from consumer electronics products. --Operating income was $3.1 million, up significantly from earnings of $0.6 million in the prior-year period. Operating margin was 14.8 percent, versus 3.1 percent the prior year. Conversion of the custom framing market from clear glass to value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. , as well as from value-added to higher-end, value-added products was better than anticipated. Margins also benefited from consolidation of the two operating facilities and the reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation of manufacturing capacity from consumer electronics to picture framing glass. Consumer electronics products are expected to decline to approximately 10 percent of segment revenues in fiscal 2006. Automotive Replacement Glass and Services --Revenues of $8.6 million were down 12 percent from the prior-year period. --Operating income was $0.1 million, compared to earnings of $1.1 million in the prior-year period. The segment met expectations for break-even results in difficult market conditions. Equity in Affiliates --Earnings were $0.2 million from investment 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 , an improvement from a prior-year period loss of $0.6 million. Operations are improving in a market impacted by reduced volume and lower pricing. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. --There was no earnings per share impact in the quarter. This compares to prior-year, after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. earnings of $0.1 million. Financial Condition --Long-term debt was $47.2 million at the end of the first quarter, up from $35.2 million at the end of fiscal 2005 due to the timing of capital investments and seasonal working capital changes. --Debt-to-total-capital ratio increased to 20 percent, from 17 percent at the end of the prior year. --Non-cash working capital (current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. , excluding cash, less current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. ) of $77.2 million was up from $61.6 million at the end of fiscal 2005. --First quarter depreciation and amortization were $4.8 million, up 7 percent compared to the prior-year period. --Capital expenditures were $5.1 million, including spending for our architectural capacity expansion in Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , which is on schedule for a full start up at the beginning of the second half. This compares to capital expenditures of $3.3 million in the prior-year first quarter. --The prior-year period included an IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. interest refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies that increased the prior-year results by $0.02 per share, and a tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. that increased prior-year results by $0.02 per share. OUTLOOK "Looking ahead, we are encouraged by our performance to date and ongoing market conditions," Huffer said. "Building on the positive trends we are experiencing in our architectural and picture framing businesses, we are increasing our fiscal 2006 full-year guidance to $0.74 to $0.80 per share, up from previous guidance of $0.72 to $0.76 per share. We are also increasing our revenue guidance for the year to 9 to 11 percent growth, up from 6 to 8 percent." Factors impacting Apogee's performance within this increased earnings per share range include: --Architectural segment, the mix and pricing of work secured to fill in open second-half production capacity. Bidding activity is strong and this work is expected to be secured during the second quarter. --Large-scale optical segment, the ability to maintain the current stronger mix of higher value-added picture framing products. "We are expecting stronger architectural segment revenue growth as markets further improve and we continue to gain share, including from the exit of a smaller architectural glass competitor," he said. "Our guidance for fiscal 2006 architectural revenue is being raised to 10 to 12 percent growth, from the previous rate of 6 to 9 percent growth. Our expected growth surpasses the F.W. Dodge outlook for our year of 4 percent improvement in the non-residential construction market." Dodge's estimate for calendar 2004 correlates to Apogee's fiscal 2006 due to the average nine-month lag between project starts and the installation of glass on buildings. "In addition, we anticipate that strong growth in sales of value-added picture framing glass will continue, and as a result, are increasing our large-scale optical segment operating margin guidance for fiscal 2006 to 13 to 14 percent, from 12 percent," said Huffer. "We're we're Contraction of we are. we're we are seeing a better product mix in the segment as the market converts to higher-margin products, and we move away from less-profitable consumer electronics products faster than expected. "Our longer-term goal is to achieve an average of 8 percent annual revenue growth and 20 percent annual earnings per share growth over the three-year period from fiscal 2006 to 2008," he said. "We expect continued improvement in architectural segment margins as we see market share growth in more attractive segments of the market, including new office construction and building renovation. For our large-scale optical segment, we anticipate maintaining current margin levels over the period with continued conversion to value-added products. "We are excited about our prospects for the current year, as our initiatives deliver results and our architectural markets strengthen," said Huffer. The following statements are based on current expectations for fiscal 2006. 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 increase 9 to 11 percent (prior guidance was 6 to 8 percent). --Architectural segment revenues are expected to increase 10 to 12 percent for the year (prior guidance was 6 to 9 percent). --Growth is expected due to market improvement and share gain through success of growth initiatives. --Large-scale optical segment revenues are expected to be up 7 to 9 percent (prior guidance was 4 percent), with growth in picture framing glazing products continuing to be somewhat offset by the shift away from consumer electronics products. --Sales of value-added picture framing products are expected to again grow more than 20 percent. --Auto glass segment revenues are expected to be approximately 4 percent lower than in fiscal 2005 (prior guidance was 3 percent). --Despite challenging market conditions leading to slightly lower pricing and volume, we are winning new independent customers for aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. windshields. --Annual gross margins are expected to be slightly less than 1 percentage point higher than the prior year as operational improvements and cost reductions are somewhat offset by higher costs for wages, materials, utilities and freight. --Expected annual operating margins by segment are: architectural, 3.5 to 4.0 percent, as margins continue to increase over the fiscal 2005 margin of 3.0 percent with improved pricing and capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. (prior guidance was 3.5 to 4.5 percent); large-scale optical, 13 to 14 percent (prior guidance was approximately 12 percent), relatively flat with the focus on making products more affordable for consumers; and auto glass, breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations or slightly better, a decrease due to competitive market dynamics. --Selling, general and administrative expenses as a percent of sales are projected to be approximately 14.0 percent (prior guidance was 14.5 percent). --Equity in affiliates, which reflects Apogee's portion of the results of the PPG Auto Glass joint venture, is expected to report earnings of approximately $1 million due to increased volume and operational improvements. --Capital expenditures are targeted at $25 million. --Depreciation and amortization are estimated at $19 million for the year. --Debt is expected to be reduced to approximately $30 million by year end. --The effective tax rate for the full year is anticipated to be 33 to 34 percent. --Earnings per share from continuing operations are expected to range from $0.74 to $0.80 (prior guidance was $0.72 to $0.76). The discussion above, including all statements in the Outlook section, 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 Apogee 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, including unforeseen delays in project timing and work flow; 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 North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. 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. ; iv) the segment's ability to fully utilize production capacity; v) integration of the AWallS acquisition in a timely and cost-efficient Adj. 1. cost-efficient - productive relative to the cost cost-effective efficient - being effective without wasting time or effort or expense; "an efficient production manager"; "efficient engines save gas" manner; and vi) completion and production ramp-up of the Viracon capacity expansion in a timely and cost-efficient manner; (B) the Large-Scale Optical segment: i) markets that are impacted by consumer confidence; ii) dependence on a relatively small number of customers; and iii) ability to utilize manufacturing facilities; and (C) the Auto Glass segment: i) transition of markets served, as the 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. supply agreement with PPG Industries PPG Industries (NYSE: PPG) was founded in 1883 as the Pittsburgh Plate Glass Company. PPG is an American manufacturer of glass and chemical products, including automotive safety glass. for auto replacement windshields expires in the second quarter of fiscal 2006 and product is then marketed to independent distributors; ii) changes in market dynamics; iii) market seasonality; iv) highly competitive, fairly mature industry; and v) performance of the PPG Auto Glass, LLC joint venture. Additional factors include: i) revenue and operating results that are volatile; 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 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 foregoing and other risks and uncertainties, see Exhibit 99.1 to the company's Annual 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 February February: see month. 26, 2005. TELECONFERENCE AND SIMULTANEOUS WEBCAST Analysts, investors and media are invited to listen to Apogee's live teleconference or webcast at 7:30 a.m. Central Time tomorrow, June June: see month. 21. To participate in the teleconference, call 1-888-396-2386 toll free or 617-847-8712 international, access code 88380295. The replay will be available from 9:30 a.m. Central Time on Tuesday Tuesday: see week. , June 21, through midnight Central Time on Tuesday, June 28 by calling 1-888-286-8010 toll free, access code 15428407. 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 and services. The company is organized in three segments: --Architectural products and services companies design, engineer, fabricate, install, maintain 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 Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" architectural glass for global markets; Harmon Harmon is a surname, and may refer to:
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. --Large-scale optical technologies segment consists of Tru Vue, a value-added glass and acrylic acrylic, artificial fiber made from a special group of vinyl compounds, primarily acrylonitrile. Acrylic fibers are thermoplastic (i.e., soften when heated, reharden upon cooling), have low moisture regain, are low in density, and can be made into bulky fabrics. manufacturer for the custom framing and pre-framed art markets, and a producer of optical thin film coatings for consumer electronics displays. --Automotive replacement glass and services segment consists of Viracon/Curvlite, a U.S. fabricator of aftermarket foreign and domestic car windshields.
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Condensed Statement of Income
(Unaudited)
Thirteen Thirteen
Dollar amounts in thousands, except Weeks Ended Weeks Ended %
for per share amounts May 28, 2005 May 29, 2004 Change
------------ ------------ ------
Net sales $164,132 $145,900 12%
Cost of goods sold 134,283 120,087 12%
------------ ------------
Gross profit 29,849 25,813 16%
Selling, general and administrative
expenses 23,663 21,516 10%
------------ ------------
Operating income 6,186 4,297 44%
Interest income 187 1,083 -83%
Interest expense 617 897 -31%
Other income (expense), net (34) (43) 21%
Equity in income (loss) of affiliated
companies 190 (649) N/M
------------ ------------
Earnings from continuing
operations before income taxes
and other items below 5,912 3,791 56%
Income taxes 1,972 702 181%
------------ ------------
Earnings from continuing
operations 3,940 3,089 28%
Earnings from discontinued operations - 67 N/M
------------ ------------
Net earnings $3,940 $3,156 25%
============ ============
Earnings per share - basic:
Earnings from continuing operations $0.14 $0.11 27%
Earnings from discontinued
operations $- $0.01 N/M
Net earnings $0.14 $0.12 17%
Average common shares outstanding 27,280,889 27,104,296 1%
Earnings per share - diluted:
Earnings from continuing operations $0.14 $0.11 27%
Earnings from discontinued
operations $- $- -
Net earnings $0.14 $0.11 27%
Average common and common equivalent
shares outstanding 27,750,695 27,771,235 0%
Cash dividends per common share $0.0625 $0.0600 4%
----------------------------------------------------------------------
Business Segments Information
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended %
May 28, 2005 May 29, 2004 Change
------------ ------------ ------
Sales
Architectural $134,829 $117,549 15%
Large-Scale Optical 20,766 18,548 12%
Auto Glass 8,610 9,819 -12%
Eliminations (73) (16) N/M
------------ ------------
Total $164,132 $145,900 12%
------------ ------------
Operating income (loss)
Architectural $3,606 $3,176 14%
Large-Scale Optical 3,083 575 436%
Auto Glass 73 1,140 -94%
Corporate and other (576) (594) 3%
------------ ------------
Total $6,186 $4,297 44%
------------ ------------
----------------------------------------------------------------------
Consolidated Condensed Balance Sheets
(Unaudited)
May 28, February 26,
2005 2005
------------ ------------
Assets
Current assets $191,491 $187,106
Net property, plant and equipment 101,244 100,539
Other assets 80,143 80,820
------------ ------------
Total assets $372,878 $368,465
------------ ------------
Liabilities and shareholders' equity
Current liabilities $108,756 $119,492
Long-term debt 47,200 35,150
Other liabilities 33,634 35,743
Shareholders' equity 183,288 178,080
------------ ------------
Total liabilities and shareholders'
equity $372,878 $368,465
------------ ------------
Apogee Enterprises, Inc. & Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
Dollar amounts in thousands May 28, 2005 May 29, 2004
------------ ------------
Net earnings $3,940 $3,156
Net earnings from discontinued operations - (67)
Depreciation and amortization 4,784 4,490
Results from equity investments (190) 649
Other, net (806) 415
Changes in operating assets and liabilities,
net of effect of acquisitions (14,646) (3,444)
------------ ------------
Net cash (used in) provided by continuing
operating activities (6,918) 5,199
------------ ------------
Capital expenditures (5,116) (3,265)
Proceeds on sale of property 2 69
Net purchases of marketable securities (300) (612)
Other investing activities - (14)
------------ ------------
Net cash used in investing activities (5,414) (3,822)
------------ ------------
Net proceeds from (payments on) long-term
debt and revolving credit agreement 12,050 (358)
Proceeds from issuance of common stock, net
of cancellations 2,119 209
Dividends paid (1,738) (1,647)
Other, net (250)
------------ ------------
Net cash provided by (used in) financing
activities 12,181 (1,796)
------------ ------------
Cash used in discontinued operations (294) (513)
------------ ------------
Decrease in cash and cash equivalents (445) (932)
Cash and cash equivalents at beginning of
year 5,967 7,822
------------ ------------
Cash and cash equivalents at end of period $5,522 $6,890
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