Apogee Updates FY18 Outlook for EFCO Acquisition Impact
August 23 2017 - 6:30AM
Business Wire
- Apogee remains confident in longer-term
growth outlook for U.S. commercial construction markets, has
positive outlook for FY19
- Apogee to host investor conference call
today at 8 a.m. CT/9 a.m. ET
Apogee Enterprises, Inc. (Nasdaq:APOG) today announced revisions
to its fiscal 2018 outlook primarily related to the acquisition of
EFCO, which closed early in the second quarter that ends September
2.
“We continue to feel good about the North American
non-residential construction markets. Based on second-quarter
growth in our reported segment backlogs, our bidding activity and
external metrics, we see continued market growth for three years
and feel especially good about Apogee’s growth and profit prospects
for fiscal 2019,” said Joseph F. Puishys, Apogee chief executive
officer. “Our recent acquisitions of Sotawall and EFCO are helping
us build a more diversified portfolio, which offers greater
long-term growth opportunities while contributing to more stable
performance throughout an economic cycle.”
Apogee estimates that EFCO revenues and margins will be slightly
lower than initially anticipated due to revised cost estimates made
post closing on some projects that EFCO will be delivering in the
second half of fiscal 2018. Fiscal 2018 revenues for EFCO are now
expected to be approximately $200 million, compared to the previous
outlook of $200 to $220 million, and the operating margin is
expected to be 2 to 3 percent, compared to mid-single digit.
“EFCO is a great acquisition with significant long-term
potential. With a concentration in mid-size to smaller commercial
construction projects, EFCO supports our efforts to diversify
future revenue streams. At the same time, it complements and
accelerates our strategies to grow through new products and new
geographies,” said Puishys. “In three years, we expect to improve
EFCO operating margins to double-digits and to achieve annual
synergies of $10 to $15 million.”
Additional impacts to outlook include growing competitive
pressures in the architectural glass mid-size project market that
are expected to reduce full-year growth to low single-digits as
ongoing productivity improvements drive increases in operating
margin. The longer-term outlook related to European competition on
larger projects is brightening with strengthening of the Euro.
Relative to foreign exchange, Apogee expects an approximate $2
million non-cash, negative impact in the second quarter from the
architectural framing systems segment Sotawall business, which
fabricates in Canada and currently is primarily executing projects
in the United States.
“Looking ahead, for fiscal 2019 we expect double-digit revenue
growth and triple-digit operating margin improvement, based on our
order pipeline, bidding and backlog already booked for fiscal
2019,” said Puishys.
Updated fiscal 2018 full-year guidance, compared to earlier
guidance, includes:
- Revenue growth of 24 to 26 percent,
compared to 26 to 28 percent.
- Operating margin of 10.0 to 10.5
percent, compared to 10.5 to 11.0 percent.
- Adjusted operating margin of 11.0 to
11.5 percent, compared to 11.5 to 12.0 percent.
- Earnings per share of $3.05 to $3.25,
compared to $3.31 to $3.51.
- Adjusted EPS of $3.40 to $3.60, up at
least 12 percent from the prior year; this compares to prior
adjusted EPS guidance of $3.65 to $3.85.
- Adjusted earnings guidance excludes the
after-tax impact of:
- Amortization of short-lived acquired
intangibles associated with the acquired backlog of Sotawall and
EFCO of $7 million ($0.24 per diluted share).
- Acquisition-related costs for Sotawall
and EFCO of approximately $3 million ($0.11 per diluted
share).
CONFERENCE CALL TODAYApogee will host a teleconference
and webcast at 8 a.m. Central Time/9 a.m. Eastern Time today,
August 23. To participate in the teleconference, call (866)
525-3151 toll free or (330) 863-3393 international, access code
75298290. To listen to the live conference call over the internet,
go to the Apogee web site at http://www.apog.com and click on
investors, then overview and then the webcast link on that page.
The webcast also will be archived for replay on the company’s web
site.
ABOUT APOGEE ENTERPRISESApogee Enterprises, Inc.,
headquartered in Minneapolis, is a leader in technologies involving
the design and development of value-added glass products and
services. The company is organized in four segments, with three of
the segments serving the commercial construction market:
- Architectural Glass segment consists of
Viracon, the leading fabricator of coated, high-performance
architectural glass for global markets.
- Architectural Framing Systems segment
businesses design, engineer, fabricate and finish the aluminum
frames for window, curtainwall and storefront systems that comprise
the outside skin of buildings. Businesses in this segment are:
Wausau, a manufacturer of custom aluminum window systems and
curtainwall; Sotawall, a manufacturer of unitized curtainwall
systems; EFCO, a manufacturer of aluminum window, curtainwall,
storefront and entrance systems; Tubelite, a manufacturer of
aluminum storefront, entrance and curtainwall products; Alumicor, a
manufacturer of aluminum storefront, entrance, curtainwall and
window products for Canadian markets; and Linetec, a paint and
anodizing finisher of window frames and PVC shutters.
- Architectural Services segment consists
of Harmon, one of the largest U.S. full-service building glass
installation companies.
- Large-Scale Optical segment consists of
Tru Vue, a value-added glass and acrylic manufacturer primarily for
framing and display applications.
USE OF NON-GAAP FINANCIAL MEASURESThis news release and
other financial communications may contain the following non-GAAP
measures:
- Adjusted operating income, adjusted
operating margin, adjusted net earnings and adjusted earnings per
diluted share (“adjusted earnings per share or adjusted EPS”) are
used by the company to provide meaningful supplemental information
about its operating performance by excluding amounts that are not
considered part of core operating results when assessing
performance to improve comparability of results from period to
period. Examples of items excluded to arrive at these adjusted
measures include the impact of acquisition-related costs and
amortization of short-lived acquired intangibles associated with
backlog.
- Backlog represents the dollar amount of
revenues Apogee expects to recognize in the near-term from firm
contracts or orders. The company uses backlog as one of the metrics
to evaluate near-term sales trends in its business.
Management uses these non-GAAP measures to evaluate the
company’s historical and prospective financial performance, measure
operational profitability on a consistent basis, and provide
enhanced transparency to the investment community. These non-GAAP
measures should be viewed in addition to, and not as an alternative
to, the reported financial results of the company prepared in
accordance with GAAP. Other companies may calculate these measures
differently, limiting the usefulness of the measure for comparison
with other companies.
FORWARD-LOOKING STATEMENTSThe discussion above contains
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act 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: (A) global
economic conditions and the cyclical nature of the North American
and Latin American commercial construction industries, which impact
our three architectural segments, and consumer confidence and the
conditions of the U.S. economy, which impact our large-scale
optical segment; (B) fluctuations in foreign currency exchange
rates; (C) actions of new and existing competitors; (D) ability to
effectively utilize and increase production capacity;
(E) product performance, reliability and quality issues; (F)
project management and installation issues that could result in
losses on individual contracts; (G) changes in consumer and
customer preference, or architectural trends and building codes;
(H) dependence on a relatively small number of customers in certain
business segments; (I) revenue and operating results that could
differ from market expectations; (J) self-insurance risk related to
a material product liability or other event for which the company
is liable; (K) dependence on information technology systems and
information security threats; (L) cost of compliance with and
changes in environmental regulations; (M) interruptions in glass
supply; (N) loss of key personnel and inability to source
sufficient labor; and (O) integration of recent acquisitions. The
company cautions investors that actual future results could differ
materially from those described in the forward-looking statements,
and 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 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
Item 1A of the company’s Annual Report on Form 10-K for the fiscal
year ended March 4, 2017.
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version on businesswire.com: http://www.businesswire.com/news/home/20170823005181/en/
Apogee Enterprises, Inc.Mary Ann Jackson,
952-487-7538Investor Relationsmjackson@apog.com
Apogee Enterprises (NASDAQ:APOG)
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