Apogee Enterprises Reports Fiscal 2021 Fourth Quarter and Full Year Results

-Fourth-quarter revenue declines 8 percent to $309 million, with continued end-market headwinds

-Fourth-quarter loss of $(1.65) per diluted share, which includes $70 million of non-cash impairment charges and $5 million of restructuring charges

-Fourth quarter adjusted earnings per diluted share grow 26 percent to $0.63

-Full-year cash flow from operations increases 32 percent, to record $142 million

-Provides guidance for fiscal 2022

Apogee Enterprises, Inc. today announced its fiscal 2021 fourth-quarter and full-year results and provided guidance for fiscal 2022. Fourth-quarter revenue was $308.6 million, compared to $337.1 million in the fourth quarter of fiscal year 2020, reflecting market-related volume declines in Architectural Framing Systems and Architectural Glass, partially offset by growth in Architectural Services. The company reported a net loss of $(1.65) per diluted share in the fourth quarter, which included non-cash, pre-tax impairment charges of $70.1 million in the Architectural Framing Systems segment, $4.9 million of restructuring costs, and $0.9 million of costs related to COVID. This compares to earnings of $0.45 per diluted share in the fourth quarter of fiscal 2020. Adjusted earnings, which exclude the impact of these charges, were $0.63 per diluted share, up from $0.50 in the prior-year period¹.

Full-year fiscal 2021 revenue was $1.23 billion, compared to $1.39 billion in the prior-year. Full-year earnings were $0.59 per diluted share, compared to $2.32 in fiscal 2020, with full-year adjusted earnings per share of $2.40, compared to $2.38 in fiscal 2020.

Commentary

“Apogee’s fourth-quarter results demonstrate our team’s ability to respond in challenging times, with adjusted earnings growth despite continued softness in our architectural end markets,” said Ty R. Silberhorn, Chief Executive Officer. “There is no question fiscal 2021 was a difficult year for our business and the broader non-residential construction industry. Apogee’s team rose to the challenge, adapting our business to protect the health of employees and serve our customers, while making significant progress on cost initiatives to deliver solid adjusted earnings and record full-year cash flow.”

Mr. Silberhorn continued, “As we enter fiscal 2022, uncertainty remains about the direction of non-residential construction markets. We are using this as a catalyst to accelerate our transformation, to better position the company for sustainable growth and improved profitability in the future. We will also build on the work we began in fiscal 2021, continuing to improve our cost structure and strengthen operational execution to deliver near-term results.”

Segment Results

Architectural Framing Systems

Architectural Framing Systems fourth-quarter revenue was $131.1 million, compared to $153.2 million in the prior-year period, primarily reflecting lower volume for short lead time products and market-related project delays. Framing Systems had a fourth-quarter operating loss of $(71.0) million and operating margin of (54.1) percent, which included the $70.1 million impairment charge and $4.4 million of restructuring charges. This compares to operating income of $2.0 million and operating margin of 1.3 percent in last year’s fourth quarter. Excluding the charges, fourth-quarter adjusted operating income² increased to $3.5 million, with adjusted operating margin of 2.7 percent, up from $2.0 million and 1.3 percent respectively in last year’s fourth quarter. This was primarily driven by cost reductions, which helped offset the impact of lower revenue. Segment backlog increased slightly to $411 million, compared to $408 million at the end of the third quarter.

Architectural Glass

Architectural Glass revenue in the fourth quarter was $82.0 million, compared to $98.3 million in the prior-year quarter, primarily reflecting market-related volume declines and project delays. The segment had operating income of $3.4 million and operating margin of 4.1 percent, which included $0.2 million of restructuring costs. This compares to $3.8 million and 3.9 percent in last year’s fourth quarter. Excluding the restructuring costs, adjusted operating income² was $3.6 million, with adjusted operating margin of 4.4 percent, compared to $3.8 million and 3.9 percent in last year’s fourth quarter, reflecting improved factory productivity in core glass operations, which partially offset lower volumes as well as increased costs related to the small projects growth initiative.

Architectural Services

Architectural Services revenue grew 12 percent to $81.9 million, from $73.4 million in the prior-year quarter, driven by increased volume from executing projects in backlog. Fourth-quarter operating income increased to $10.7 million with operating margin of 13.1 percent, up from $8.5 million and 11.6 percent respectively in the prior-year period, primarily driven by increased volume and continued strong project execution. Segment backlog stood at $571 million, compared to $597 million at the end of the third quarter.

Large-Scale Optical

Large-Scale Optical revenue was $21.6 million, up slightly from $21.5 million in the fourth quarter last year. Segment operating income was $6.1 million, with operating margin of 28.1 percent, compared to $7.1 million and 33.0 percent respectively in last year’s fourth quarter, reflecting higher manufacturing costs and increased lease expense resulting from the sale-leaseback transaction completed in the third quarter.

Financial Condition

Net cash provided by operating activities in fiscal 2021 increased 32 percent to a record $142 million, compared to $107 million last year, primarily driven by strong working capital management. Capital expenditures for the fiscal year were $26.2 million, down from $51.4 million in fiscal 2020, as the company limited spending on non-essential capital projects. During the fourth quarter, the company repurchased 326,000 shares of stock for $12.1 million. For the full year, the company returned $52.5 million to shareholders through dividend payments and share repurchases, up 20 percent compared to $43.9 million in fiscal 2020.

During the fiscal year, the company reduced its total debt by $52.9 million, to $165.0 million. Year-end cash and cash equivalents increased to $47.3 million, from $15.0 million at the end of fiscal 2020.

Outlook

Apogee is providing initial guidance for fiscal year 2022, with full-year earnings expected to be in the range of $2.10 to $2.35 per diluted share. This guidance includes $7 to $10 million of expected pre-tax costs related to investments in transformation initiatives. The company expects a full-year tax rate of approximately 24.5 percent, and capital expenditures of approximately $45 million.

About Apogee Enterprises

Apogee Enterprises, Inc. (Nasdaq: APOG) delivers distinctive solutions for enclosing commercial buildings and framing art. Headquartered in Minneapolis, MN, we are a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings, as well as value-added glass and acrylic for custom picture framing and displays. For more information, visit www.apog.com.

Contact:

Jeff Huebschen – Vice President Investor Relations & Communications – ir@apog.com – (952) 487-7538

Source: Apogee Enterprises, Inc.