Apogee Enterprises Inc. reports that its fourth quarter (Q4) 2023 revenue grew by 4.9% to $344 million due to double-digit growth in architectural framing systems and glass. Its full-year fiscal 2023 revenue grew by 9.6% to $1.44 billion, up from $1.31 billion in 2022.

Despite the growth in overall revenue, company officials say Apogee’s architectural services revenue dropped 14% in Q4 2023 to $98.5 million, compared to $114.9 million in Q4 2022.

The decline in architectural services revenue resulted from lower volume to “the time of projects in backlog,” says Mark Richard Augdahl, interim chief financial officer. Operating income was $3.7 million, compared to an operating loss of $41.2 million in the prior-year period. The decreased adjusted operating income in Q4 2023 reflects lower volume and higher costs for legacy Sotawall projects. Segment backlog at the end of the quarter was $727 million, compared to $741 million at the end of Q3 and $665 million one year ago.

Augdahl states Apogee has made progress in integrating Sotawall, which it acquired in 2016, into its services segment. The company has retired the Sotawall brand, and the entire segment is now transitioning into the Harmon brand and business model.

“We are no longer pursuing the type of work that Sotawall competed for in the past,” says Augdahl. “And going forward, we see significant opportunity to improve overall profitability in the services segment.”

Architectural Framing Systems

The architectural framing segment’s Q4 revenue increased by 13% to $148.6 million, up from $131.4 million in the prior-year quarter. This was driven by inflation-related pricing and an improved mix. Officials say operating income increased to $15.6 million, compared to $9.3 million in Q4 2022, which mitigated the impact of inflation.

Architectural Glass

Apogee’s architectural glass segment grew 12% to $81.4 million in Q4, up from $72.5 million in the prior-year quarter, primarily driven by improved pricing and mix. Operating income was $9.5 million, compared to $17.9 million in last year’s Q4, which included a $19.5 million gain on the sale of assets and $6.2 million in restructuring costs.

“Overall, results in our fourth quarter were largely as expected,” says CEO Ty R. Silberhorn. “We continue solid operational execution, effectively managing price and costs. As expected, holiday shutdowns and normal seasonality impacted sales volume, especially in framing systems. Architectural glass delivered another quarter of impressive progress, with an operating margin exceeding 11%. Results were softer than expected in architectural services as we continue to work through the Sotawall integration and the improvement of that business.”

Apogee officials predict that fiscal year 2024 will usher in declining revenue compared to 2023, with lower volume expected in its architectural services segments. Silberhorn told Q4 2023 earnings call attendees that a large services backlog should strengthen the company’s financial position in the fiscal year 2025.