Apogee Sees 5.5 Percent Drop in Revenue in Third Quarter 2020

Apogee Enterprises’ architectural framing systems and architectural glass segments saw dips in third quarter revenue year-over-year while the architectural services and large-scale optical segments saw growth, according to the company’s fiscal 2020 third-quarter results. Third-quarter revenue was $337.9 million, compared to $357.7 million in the third quarter of fiscal year 2019. Earnings per diluted share were $0.57, down from $0.78 in the prior year period, primarily driven by lower revenue and margins in the architectural framing systems segment.

Architectural Framing Systems

Revenue for the architectural framing systems segment, which includes Alumicor, EFCO Corp., Linetec, Sotawall, Tubelite and Wausau Window and Wall Systems, in the third quarter was $165.5 million, down from $181.3 million in the prior year period, primarily due to lower volumes from customer driven schedule delays and operational difficulties, which have been identified and are being addressed, according to the company. Operating income was $6.3 million, compared to $12.9 million in the prior year quarter, reflecting lower revenue, and higher than expected manufacturing costs in two of the segment’s businesses.

Architectural Glass

Third quarter revenue for the architectural glass segment, which includes Viracon, was $89.4 million, down from $98.5 million in the prior year quarter. This was primarily due to lower volumes driven by increased competition from foreign competitors leveraging the strength of the U.S. dollar, according to the company. Operating income was $4.1 million and operating margin was 4.6%, compared to $5.9 million and 5.9% respectively in last year’s third quarter, due to start-up costs related to the new manufacturing facility for the small projects growth initiative, and decreased volumes, partially offset by improved factory productivity.

Architectural Services

The architectural services segment, which includes Harmon, continued to have strong order flow during the quarter, with segment backlog increasing by 21% to a record $607 million, from $502 million last quarter, according to the company. The segment’s revenue decreased to $69 million in the third quarter, compared to $72.8 million in the prior-year quarter, on lower volumes due to the timing of project activity. Third-quarter operating income was $6.5 million with operating margin of 9.5%, compared to $8.7 million and 11.9% respectively in the prior year period, reflecting reduced operating leverage on the decreased volume and less favorable project maturity.

Large-Scale Optical

Revenue for the large-scale optical segment, which includes Tru Vue, was $24.4 million, up from $23.4 million in the third quarter last year, primarily due to improved sales mix. Operating income was $6.8 million, up slightly from the prior year period, and operating margin was 27.7%, compared to 28.4% in last year’s third quarter.

Outlook

The company is adjusting its guidance for fiscal 2020, reflecting lower than expected sales volumes in architectural framing systems and architectural glass, as well as the operational difficulties in architectural framing systems in the third quarter and continued impact in the fourth quarter.
The company now anticipates:
• Full-year revenue flat to down 1%, compared to previous guidance of 1-3% growth;
• Diluted earnings per share in the range of $2.15 to $2.30, compared to previous guidance of $3.00 to $3.20 per share; and
• Capital expenditures of approximately $55 million, compared to previous guidance of $60 to $65 million.

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