APOG - Earnings call transcript Q2 2019 | Apogee Enterprises, Inc.

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Operator

Good day ladies and gentlemen, and welcome to the Q2 2019 Apogee Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to introduce your host for today’s conference call, Mr. Jeff Huebschen.

sir. begin, may You

Jeff Huebschen

Porter, Good to second and of me quarter Apogee's available that Investor and Joe Kevin. like the I Enterprises remind in today's to today to Web remarks, fiscal Apogee's Puishys, everyone Jim Officer; Executive XXXX earnings are Chief section Financial morning you, site. Officer. welcome would slides everyone there Apogee are Chief accompany Thank Relations call. are With which

measures. expectations, in financial we forward-looking that Definitions the are found morning, can call, information. to More reference statements currently available differ our we on management's will site. call I available measures nearest the and non-GAAP results financial factors our issued also in you these this information and I that Also SEC of call During would about reconciliation And contain over GAAP Joe. certain non-GAAP business on results measures reflecting Actual earnings this the Apogee's with to based may to like that, materially. is filings. will everyone Web be turn our affect which is which provided release could remind will

Joe Puishys

joined and everyone conditions Strong year has a earnings flow. to and us read per numbers. a comes had us Jeff line Apogee. at him market solid helped in and now, increased ago, with chance organic a our By cash and have release here. of to our welcome you, we’re share Relations press deliver the and growth, adjusted to experience look to lead Investor Thank wealth recently with Jeff he us happy to

line segments Scale Services, and and solid Our Architectural Framing expectations. our results Large all Optical with delivered Architectural Systems, in

resolve expectations demand positioning like these highlights I faced the our one, rest more significant it and to for Glass faster-than-expected well the plan the our up issues impact our This Glass to Apogee's the Architectural segment and over for morning, quarter would that will production the outlook. This full-year short quarter's to details caused business to the of of fall for it outlook. impacted business I the and and quarter on meet challenges increases. to challenges. in ramped However, place as and turn our discuss Jim businesses the future review to I'll then the we our have across discuss;

digging segment. with starting into So, the Glass

Over the anticipating we’ve quarters, past few business. rebound been in Glass a our

out in on, bring longer tight orders in prior quarter. customer productivity strongest even Glass new saw of them targeted large We of recovery we we operation. happened increased It's the including our continued employees that market and demand workforce core in the in was over customer was we commented taken within to segments labor Glass this, mid-size detail and over market, XXX inherently production XX than lumpy to traditional levels. up of the to challenge the prior during recruit, market, some regained up complex in days, a added new quarter, quarter the we hire, train, factories. we put quarter in qualified over making years, At our strong behind slope root three project rapidly segment’s saw some peak to staff of nice As XX large our segments, share in To had custom surge second to including bidding the wins in the commitments This retain issues levels we projects. than expected the last projected. increase XX% and our recovery in the factories, the the new it substantially hiring to across manufacturing in employees all this struggled We an orders Unfortunately, the saw ramp market. and business, than of hoped work. we and win levels played training and and abruptly of the an expected, steeper we the more as extremely

margins business up, for As and ramp all we We've lower we orders, successfully worked experienced fluctuations related the is, our through The have the this scrap through drop-off challenges? simple we been higher and managed employees. yes. new of to before. better influx in expedited in more answer Glass rates, throughput, prepared Should these

the the recruiting the over by However, orders prior and The current up we the new what the we years. over quarters market. preceding we expected, were ramp last four four the and normally four happens order over of hiring was faced greater labor mirrored and fluctuations experienced than the drop-off quarters in difficulty surprised in magnitude much staff

While manageable we're its business this to with address results, disappointed these of which steps challenges, taken performance. aggressive these are return and we’ve to levels typical

these and quality resources the across the As new rest as from address lean employees. quarter. the we productivity through July, With the quarter. Apogee August of and production their new ramp-up. mentioned, enhanced employees scrap, Glass rework, saw added help manage We've manufacturing other employee XXX in to we segment June to progressed new in issues compared with training also the deployed our to I we’ve moved Operational performance improved and over we've

labor-related our orders fast pressures. continue is market. production strength in make a of scaling Glass targeted to its Viracon have in meet leader the underlying to saw Though demonstrate in we quarter to enough the challenges demand, we we relieve business. Finally, automation investments the

strength, the building into we're visibility our the year. new Just as a which of order and remainder that momentum growth this team, we is With for importantly, fiscal have have world-class revenue to XXXX, up to will carry we challenge. recent

not strong at is solid about good the This historical its can performance heights, level I'm its as productivity business steady our is highest and typical a the Apogee. margins to quarter levels Our levels and a unprecedented X-year performance my X very for move other EFCO up presentation. on of driven we'll as Glass growth to comments anniversaried XX% is Glass, the fully backlog organic the the taking three from backlog through of revenue over segment XXXX. XX% rest across return Total remainder quarter we're by the fiscal to in fiscal we a The was in XXXX is Slide the of performance at in and improvement headwinds backlog booked history of my in of than challenge. in Services which Glass on Shifting see we see segment, grew segments, the and you confident Architectural rest Growth was year. and to in restoring this XXth growth. business Apogee, the company rather to past which of in our this consecutive from of now was was X% and of execute segment healthy the for the as booked acquisition. quarters. we’ve the up Services spite remained continued year-over-year more we quarter much several sales our

in impressively, margin, as quarter. up ramp the Services Just nice in first from operating a turned X.X% XX%

project in project While from The margins selection fully benefited has made strong great in improving in also continuous its strides our had they’ve business embraced operating execution initiatives, pricing. and and lean improvement portfolio leverages, field. the Services across

in business year. XXXX operating a into margin revenue together, outlook line much our today to run better last strong Services and Results with fiscal beyond. Taken with a comparable and Framing in with is expectations were Architectural

Systems which under continued Framing offsetting businesses. been for to lower running margins Our acquired those past Legacy perform recently the well businesses, growth X playbook in our we’ve our quite years expected in

at these improvement make initiatives to our progress acquired in steady continue We companies.

and Finally, in is Large Scale quarter. its had segment plus core positioned to Large topline margins. well XX% Scale business that another efficient markets. growth Optical run, this Year-to-date, delivered Optical operating continues X% solid is The uniquely a post has

our continued significant through year. fiscal Architectural Cash in prior adjusted year-to-date free $X.XX, together, flow. the the in also per growth nice of strong expect all line performance We steady year, earnings the despite cash remained Glass. with it share in Putting drop-off we flow of delivered rest with

performance Glass, at confident in business. with markets in direction. but of frames across production our outlook, most ever our my I'm solid. short-term frustrated as I confidence my was we presentation issues our long-term Looking our and businesses the Slide in Yes, I'm in strategy our serve noted the X

growth and gives the X in most the have markets, solid end top our collection with robust a despite also trend opportunities XXXX, rest across commercial portfolio. market for opportunities past and visibility illustrates reshaping diversification. our outlook the quarters to into chart of highlights to a delivered the significant and we positioning several are a a new continued multiple growth American supported Architectural We've Apogee's share, fiscal made growth emphasis line new continue and shifted each has increase we've market where see year of progress expansion. we will North businesses mix. order and This introduce construction Slide Framing, increasing where on assembled we've to fragmented how a and we in growth strong for XXXX. our this our markets backlog variability every over strong of in year competitive for segment in activity, products. have business expand tremendous market-leading favorable segments, levers The year. by our opportunities discussed since bidding in outlook for long-term us and Apogee strength which consistent growth that margin market. geographies fiscal lumpiness diversifying our We've and growth we of consistent this These In First, confidence this year-over-year revenue achieved and

near-term return typical operating profitability Framing across Sotawall to a Legacy operating in beyond. playbook also in acquired improve are margin to our disciplined level pursuing operating legacy reliable a many EFCO In We numerous gains Systems, discussed our allowed ago our repeatable to businesses. recently plan XX% to We’ve Apogee that which move have our margins businesses, has make Framing we executing margin and multiyear achieved to businesses. significant in plans years business business toward of levels segments. and processes, in us Glass performance already opportunities we’re developed the Framing our plus

methods improvements are and We these performance EFCO Sotawall. to applying drive at

operational to further to realizing lower we're improvement continuing in and the purchasing investments driving and also lean our continues Throughout costs. and productivity from strategies synergies these increase are automation making Apogee, work We acquisitions. towards and

We are expansion most pursuing businesses. our geographic also profitable in core

sheet, balance We’ve shareholder gives This track us solid record a financial low Finally, position. of -- cash to debt value. very financial Apogee strong flow. flexibility strong a maintains significant and levels, a drive remain

strategic operating mentioned acquisitions short-term is acquired Glass and on long-term focus returning of of performance to last in the a our current part at significant its operational recently while margins. remain our place businesses I As our quarter, growth, improving

I our investments we cash regular drive productivity evaluate that, and questions. pass With to disciplined and provide the capability that quarter come details closing make back more who to Jim? And to call over high continue and will returning our dividend. will share take on and I'll shareholders will and gains. comments through add the outlook, to internal Jim, your projects We repurchases return then continue and

Jim Porter

and lived in primarily by Architectural strong $XX.X decline the acquisitions. in begin driven will due consolidated decline with Joe, short in EBITDA the share with volume million, to to diluted on Adjusted prior income increased intangibles revenue earnings was in everyone. in which per $XX.X by growth EFCO partly and that Total in performance Earnings operating Architectural This discussed. $X.XX $XX.X million to results. the Optical, by per with adjust Consolidated good Glass. a Sotawall Joe company year. period. was Glass X% was Framing offset $X.XX were even Adjusted year offset productivity Thanks, good operating last Adjusted compared Systems were increased share and our partially profit Services was higher $X.XX million. from morning, Architectural for amortization the income Services. Slide Large-Scale of up I along X, Architectural Architectural and

to the turn segment improved line adjusted Systems, to million XX.X% which X. Slide on quarter margin with Adjusted XX.X% Now income in year. of with I Architectural results, million slightly roughly In revenue was last to the Framing of $XXX.X year. operating compared $XX.X the in operating are will prior

led to the of fiscal the have factors portions quarter good Joe have backlog in Systems orders more was segments the that to continue to been our Glass. years. described compared to sequential project two time $XXX since some Architectural of relation to XX% in the Framing the Segment Systems for already driving marking segment. X.X% revenue momentum growth million. also nice of the XXXX. Segment year, up declined quarter $XX.X longer million. In results than prior wins the another businesses lead Architectural had in We of kicked up strong in sequentially first revenue Framing the end by portfolio quarter first

point increased at to a to and turn. dramatically income, described, leverage production multiyear inbound training this Joe challenges reaching a demand decrease for meet levels The million the in in lower new to with quarter we of along million orders it at orders operating has hiring high perform quick quarterly early for beginning towards compared with year. Services We're progression As came $X.X can weekly staff lead terrific in operating performance to confident in Glass and return Architectural another quarter. are ability the which last turned in $XX.X to that. Architectural seeing and

expectation and driven expected, $X.X Operating a bit in last income million came to million. quarter, back over year in our mix This performance on visibility the backlog margins income at a operating Segment was to million. plus and operating flat Optical compared to At XX%. line single-digit healthy fiscal Services tracking segment strong to continued was segment Architectural stands fiscal a As level, this Segment also last with year. growth strong leverage $XX Segment by booked Large-Scale sharply a XX% good still year previous XXXX for The and fully was Large-Scale deliver beyond and -- we Optical project the X% favorable during were a but performance volume revenue our execution. continued to grew XX XX% with project consistent as decreased mid this is plus at quarter. expectations Fiscal revenue XXXX increasing in pipeline. by solid operating the year-to-date, deliver the have margins. sequentially year. a above has grown $XXX strong a growth,

The Turning to stands EBITDA. or financial position trailing debt XX-month remains roughly company's million strong. at XX. X.Xx Slide Total $XXX

compared cash last investments expenditures $XX flow We add year-to-date above continue which operations is make disciplined been year's of improve million, higher we Year-to-date, return to high cash will through year, cash flow level. with that year. projects approximately of million year-to-date Free $X the last continue to $XX first productivity. $XX as to generate of XX% shareholders capital the cash stands have from the through half million In fiscal and last capabilities in we to million $XX dividend XX% at than second returned quarter million year. payments,

our prior Slide updated the revenue between an me the let growth fiscal expect Systems turn lower XX% remainder guidance. Framing full-year and to for now We our Finally, X% to revenue of presents in Architectural outlook with from year. XX guidance. look at our projected Glass and

be will expect We weren't Glass the of we quarter revenues to flat in won't to the the Architectural slightly capture down for some revenue able recovered. second as be full-year

the sequential in throughput and expect we segment third As growth in the in again Glass the quarter fourth quarter. improves,

prior to slight year up XX% Services full-year second continue with moderating growth the be around on Architectural the we quarter project over half the expect year Driven last Systems show Framing expect which with lower now related the quarter Architectural strongest. year. We of for by based the schedules. single-digit up sales of full-year nearly the year the decline fourth in should strongest through the mid to will will growth expect the growth fourth a we quarter, timing, with for third with revenue be Optical year-over-year Large-Scale full-year. the XX% in project And and the

from X.X% Glass previously margins X.X% in to for is Services. operating outlook to range margins expected in offsetting expect improved are We between X%. with margin lower second expected full-year margin be quarter, Architectural now and margins margin XX%. of but the X% the in Architectural an steady X% Glass expected for segment a operating at X% level X%. of approach adjusted to now margin to X.X% full-year X.X% Architectural We Architectural now Our full-year and segment the would Services see improvement We outlook between the

Our is disciplined facilitating process project continued strong execution. project selection

Optical are Large-Scale X% Framing Architectural Systems and Systems and guidance. with forecast XX%. prior margin Optical approximately almost our at for full-year Large-Scale Our Framing consistent

tax than approximately we per $X estimate at $X.XX. expecting adjusted per together, range of million. depreciation Putting expense forecast expect and amortization the to to for continue we now rate year approximately and it $XX earnings our share interest XX%. slightly are at to We to in expected of We we earnings be higher share $X.XX $X.XX and previously all the

that as [Technical As we’ve business we past, large in Glass expected some for in With is the With difficulty] in quarter-to-quarter to the down Joe as results I fourth driven changes. than described call in third the project the third by make projects timing construction beyond holds quarter that, Framing our and segment expect our timing progress back forecasting and inherently overall continues control. stronger segment. customer lumpy with turn often to will currently quarter, the that’s concluding said, schedules difficulty the performance remarks. over quarter

Joe Puishys

All right. Thanks, Jim.

the as I'd delivered part that significant issues year-over-year are due in direction nonrecurring. operating expect segments sequential said segment the hundred underlying several all our the flow growth, we compared I businesses I organic basis rest in improve significant in is happy long-term positive, growth, good one strength. and into our Glass year points activity as to the This order our bump admit, revenue earlier, our were the we products, the And cash customer point basis a in the were which similarly to and points a in The the hundred mainly rest will on the a give to significant significant margin of In with So backlog for margin. but confidence with by the in despite we segment Industry which EPS, Glass solid third several by remain the QX QX future. surge margins strong together road, Glass our in display us challenges than segment quarter. strong orders line to reiterate not was very due higher better like this and and shortfall of the Glass. will in operational demand of be fundamentals QX quarter, adjusted for strength it

flow positions Kevin, would cash long-term remains for like that, you. value. Thank so. you Finally, which With do deliver and sheet shareholder open-up questions, I to and please balance would if us well to strong our

Operator

[Operator Instructions] Eric Craig-Hallum. Our first question from with comes Stine

Eric Stine

morning, everyone. Good

Joe Puishys

Good morning.

Jim Porter

Good morning.

Eric Stine

business I due the timing. the 'XX Architectural fiscal over up you and largely entering experienced or quarters, to you Framing impact in XQ, that’s As 'XX? you and think of back a XQ, think out wrapped to fiscal expect Glass, will bit the component you about much issues the you year in that be a couple next called look Do you’ve do have you think 'XX, pretty want or be them fiscal there to where an little to in

Joe Puishys

we Yes, Jim normal. quarter fourth the on quarter the in will Eric, to expect margins I to take absolutely, be Framing. will should end and Glass, Yes, normal fourth -- close to very or comment the back

end monitoring They results, year, be of substantially by the there mention the with hundred end at quarter situation. to won't the job rate. We fourth improvement need good the least quarter, good business. by I’m we the would by operating run and certainly several fourth The I’m of where -- margin call it will in would September what I quarter, third year, we a will it the that be quarter address the is expect going every QX. end of we basis the to margins be we done the week end August, over Obviously, be let's to at it, our the year. have full and into close of showing is hoping to this the certainly did February month improvement full points the have I of but expected

Eric Stine

Okay.

Jim Porter

the the we carrying ahead but comment And rate of just into on that work a Similarly, and from run is 'XX. QX forward us Eric, it's have, lighter, Jim. Systems. timing the I will Framing we the of bit QX fiscal see work

Eric Stine

the virtually Maybe Services you’ve did booked. that segue, and got in fiscal good business, just the 'XX booked year 'XX a you Okay. give visibility

last commentary, have on in you've Framing, wondering the of you quarter given Glass if just know the seen give or you on level you the I orders Just over and Glass certainly past, saw quarter plus. -- can the similar in and on this

Joe Puishys

Yes, it for six order lower the and substantially I Framing times those. to mentioned Systems are are delivery in lead businesses. briefly. Glass most

orders about increased a of due in they in our than the XX any year year. September. also in to partly and order That virtually The history strong as we’ve start than out years last the fiscal and work to about backlog the feel had I continues, XXXX Our in we Glass the problems, to business obviously mentioned, higher business. this in say already its I quarter, they’ve but the is any had fiscal down lead better would at starting times time next substantially

last Framing segment, very next as very to it, Their revenues headwinds, orders activity fiscal substantial. substantially year 'XX. I backlog lower businesses have some won in this well year from segment. So, large welcome, the bidding orders the share overall we the be are short state feel the We revenues pretty to is that to for growth in year six about Bidding of pretty Obviously, positive. come frank this and the with going year. delivery. activity Systems award are did some did but this and four due to solid spite we’ve substantially QX. is and the well. In back be The short the achieved next bodes is of was it mentioned easier, about Sotawall's comps it. substantial project up but order in headwinds QX notice and That We’ve the year. of the of

revenue since new good It's in award We States. see Canada, business. the us And starting for next again, Sotawall's year. in growth acquired solid are is primarily United which will activity we been stream we see Northeast to

and well. long a is business So, lead-time bodes Sotawall that

say, 'XX. too to others I The would really address fiscal are short,

Eric Stine

last for me. one Maybe Understood. okay. Yes,

and work you through. legacy on to projects Just the EFCO -- need on that the

one, you will update, I few you a believe, that, are you well? are I still mean, thinking as out being done; and complete if an to look be close another, Just quarters, that

Joe Puishys

is still that One Yes, is complete. nearly true.

The we will for frankly will totally frankly, revenue of years, start, other be and to about then two focused half production. in QX one really second as on

told is that for system. EFCO building the all solely you we've responsible think I

Services will Our be doing project. business this and management installation the over installation year couple

Eric Stine

Okay. Thank you.

Joe Puishys

is low margins, it to profitable. Eric. expect We Thanks, be but expected

Operator

Moore Our next Securities. question from comes CJS Chris with

Chris Moore

Hey. little good Good morning, any perspective any guys. talked fear from Joe, about bit challenges bit like -- of, in little yes, -- a of a that or expansion. geographic you there see morning more a And on Can you you that is get kind maybe there? labor that, terms specific front? or anything

Joe Puishys

we’ve the Yes, going -- not into Things specifically expansion businesses internal which talking location, but of looking obviously we're talking analysis at. profitable They about about, the we to labor we’ll are business some there. up in best where which these Board our quite get workforce are now painstakingly till be are well the very to done better of regions investments detailed us. I'm and out for with handled in markets have

as Our Minnesota. has biggest been challenge, frankly, Southern company a

production. had would asked, saw you this that struggles in quarter in down factory a up Some fair Utah, in the minor our But question. Utah frankly, did shut you That's factory of help have to only second meet this capabilities people the if have a ramp coming? why

with be Minnesota to The our segments. have -- some the all in scale. adjustments of in recruiting made some The We’ve really in both plans us. in pay our frankly. labor innovative helped other issue team is has would of expansion force and techniques, regions U.S., wouldn’t the our that come So Southern up

Jim Porter

important you that businesses look availability at our the know, an and is strategy looking for criteria top expansion. all as expansion all Chris, the at in we geographic labor in our for across those, evaluations of process really is of frankly

Joe Puishys

U.S. equipment, I’m world investing stranger in the And and that our we And talking to of acquiring part particular opposed are as sure appreciate Chris, about in respect the processes in investors businesses very profitable it. or that internally will a

Chris Moore

Got it. helpful. very That’s

Joe, but You went through it. it, missed I

spike? of It to the -- slow it half of couple point progression, just terms and you profitable -- years? being over EFCO. are where Is that is likely I about be so would know in any of year trajectory is this talking in steady second Just kind margin EFCO going a standpoint, the from next of there

Joe Puishys

It slow steady. and be will

investment called We that of non-residential are didn’t an understand factory exit to long-term why trying the announced for. on plans to prior leaders midst parent approval the the prior the based under prior there in approve that I of business get were it, in EFCO. the their the parent business

margin in and we're basis we I for slow my improvements have couple June. would steady will have hundred -- in timeframe expansion three some really productivity We that until factory next we up or business. Missouri and driving then approved year, over Monett, And that a done be the cost investment adding and synergies will that to we substantial years, in start still it's May, about are say that we year. amp purchasing been the and in of each press for goal is the May the the of next points

Chris Moore

jump line. it. Got I in will helpful. back That’s guys. Thanks,

Joe Puishys

Chris. Thanks,

Operator

with comes Thielman D.A. Davidson. next Our Brent question from

Brent Thielman

Thank Hey. good morning. you,

Joe Puishys

Hi, Brent.

Brent Thielman

that Joe, and on see larger-project Glass, you even we because with growth orders guess, Is the faster of this up why year picking inefficiencies. the wouldn’t are shorter lead strong more with times business? I’m pretty I confused here,

Joe Puishys

No.

had talking prior will quarters orders We coming. the to the You was on a -- trajectory QX. on been four been about for wave see downward last we’ve

would the run the was when August ever are and a then drill from July become a better. started issue under have main a You prepared it's be you've -- better. we and us in it. will and avalanche seen and been would overwhelmed We’ve hit. where better. improvement. surprise, slightly with factory it unfortunate. to It But fire June, to think slightly it's the working crisis was we snowball. better out starts unfortunate it magnitude And business, was that by it caught if you're September

revenues in in of year. this growth will second Glass see in and year half next nice We the

So, first three was in growth quarters we reason The or back. year, of come half this is in Brent. it quarters the last see last the it's two flow of the last quarter year the of of didn't coming, roaring orders the the revenue year and first simply

mentioned, fighting business. backlog times get XX We markets. X are And in which in down, a of to half have and X that share mid the the Typically, publish to we lead in second next win be days. back down will I we don’t the orders always strived have As to to up XX-week those really allowed growth business. see of in solid that that year us historically pretty we in weeks the to backlog managed time manage consistently, to The we the Glass. as revenue lead you driven XXX avalanche

Brent Thielman

demand? some mean, in I to pedal -- you I new about you guess then what hires And Okay. to gas given think in And there, are kind you are are need round the given of in terms of response the off do also to seeing addition deliberately accepting guess, that, out I of challenges laying there, orders? you of another

Joe Puishys

plans hiring of That’s not learned lot up We a continue is a hired of for actually -- place. let our in the language, the fairly we’ve bringing the blip, second have second and people Brent, the as are to we're improve. clear, be -- hiring half beyond crisis, to but the the the we've the clearly Apogee. to work other the road. substantial continue hire. hiring me of me backwards, in learned first resources forward. translators. go year in the move how English more in recruiting bump The been half from for amp still they of lot. They’ve They -- I’m to We We’ve do their we confident has so had business let year,

Brent Thielman

Okay.

Joe Puishys

And hiring, I you the sorry. forgot, asked before something I’m

Joe Puishys

Jim. Hey, Brent, it's

orders. So continue we to take

day, times. requires think, lead kind some end I the of of the of at shorter mid-market work the

to and we’ve continue still regional we kind pursue Joe As out that’s that largely work said, made improvements but of fabricators, with we there. are actively all potential to competitive

Brent Thielman

within behaviors guess the that’s back impacted will doesn't that order and it's seen just if segment competitive but seem we’ve the more means, get trend one then a again. I And It sort any queue. any Okay. of I there? out changed reversal dollar in by like curious in

Jim Porter

U.S. would of Yes, area, $X.XX, range. to not most we it the is important It's is. issue euro, $X.XX nothing flub in which -- exchange around I rate us. for where see I changed it mean, in because back the the has $X.XX continue the go to to dollar love

It logistical supply It really the and when biggest expedite expensive. not does you and even a project unanticipated what extremely realize expected, total wasn’t be the come a to good a costs you it's glass, if that may have to respect greatly, glass complete have Brent, know, it competitors hidden delivered fault. is chain. long cost quite we costs, You you with issue, challenge fabricator's such the

to cheap to us has Somebody that customers see big the to way. offshore to leave due in to price back cover were to first cost. come that some the fairly glass a us test We started

in So gained share balanced. of we this I issue better position. mid-market, blip back, second it's We’ve helped our the would like us quarter, become This aside. some say the

to We well are the getting we’ve become of learning in million project is and to projects think better got capable deliveries. balancing very job do and we prepared business better as a on And I it, projects We’ve small consistent well. to from take that -- but $XX,XXX being are size with we and $X mid are do the close.

Brent Thielman

Thank Okay. you.

Joe Puishys

Brent. Thanks,

Operator

with Jon Capital. comes City question from next Our Instructions] [Operator Kansas Braatz

Jon Braatz

Good morning, Joe, Jim.

Joe Puishys

Good morning.

Joe Puishys

Hi, Jon.

Jon Braatz

quarter, a you relative the quarter? in What Architectural question. that people of the do did to be hiring on In you the in Just past going number this will XXX magnitude new you think last Glass. in forward past hired XXX the this -- follow-up last

Joe Puishys

Yes, maybe it's -- that. a third of

I’m shortage facing challenge. just challenges That make and simple. a hiring year, the a workers. I would or Minnesota One we a We tight turnover did all do, And as are issues behind since have labor good over more said, although labor we but issues kinds anticipating that probably we’ve time facilities, a work. first was hired of a these substantially was days, in the It's getting like this, still XX we is the the We the better to market, that We, like to us we gravity us not QX a effort XXX we’ve Those to the Georgia net market labor qualified first had it's some anticipate we been of got in we XX but go they’re way, knew tighter. there's market. but surprise. say it. of which should QX, the I has hiring we and the maybe through last had manufacturers, Jon, not now. not prepared? to the It's add XXX both missed adds, center last gotten through of employees, still of tough in about by to it actually dearly. had, And ton cost stay the XXX. days and the get not that have

Jon Braatz

making Of you at the hires look might will XXX when or be you … -- the new make

Joe Puishys

we XXX the have? already Counting …

Jon Braatz

yes. Yes,

Joe Puishys

XXX, … not is it?

Jon Braatz

exactly. yes, Yes,

that will market question one, Why handle so stabilizes, productivity the last of wasn’t you secondly, continue the better automation then, in the need business. a questions. more two able As I years to and bigger over heavily And Glass those guess is, in you’ve incoming to on invested Number efficiently? orders the couple XXX?

Joe Puishys

you The made you modeled. see have It the had in returns. than the that investments made you it that’s quarter, we if the a the probably Well, worse argue the not is been we like have better impact won't of would could returns is, truth question When automation. had the does answer, and but the matter fair we’ve automation expensive. substantially are of

on cutting IGs, front factory. you middle We and We peaks continue of a in this going feel a I call, have how say believe not market, earlier back expected insulated up have still opportunities. to factory build the that, evaluate substantial towards slowly within But the and area, cheap. grow, the We valleys. the end we asked I opportunity of question have do end the then it. substantial in It's our units. Those we kind walked that where that a automation in the There's anticipate is seen are in we would we this along I orders? trend to bounce -- to to manage that within are end don’t more continue downturn see top, grow. markets are egregious the when going seeing we there's a glass

out violent the if plot downs a ups year quarter, should We markets. turned to our of X, but and the have peaks be as So, the see will see to The -- short-term our in those at you news out you and years, to have It's the QX. trend -- kind we’ve the production start trend valleys. up, in intra you week this hiring peaks of in better very good, overall intra but you last X overreaction have The We out and was our done that. took is managing valleys. a people mistake. challenging. to get more not back That world,

be look still we not more that. I help the month at to the certain turnover. We where so of payroll expense on at more And labor micromanaging next, appropriately our temporary do work flex we amount one in will We careful. will have us classification highest practice. are mentioned, can substantial We adjustments more the some workforce to made a hiring to creative P&L for as may the continue that having and job we use be we we of

manage feel forward. in operational mis-performance good going we all forward have don’t So, this about so do to going I ability all, explain our to

Jon Braatz

… you would So,

Jim Porter

We long-term do, to of implemented with we can that to are in continue to the the in have whatever still do automate. that being additional Jon, process continuing automation of projects eye so

Jon Braatz

Okay.

Joe Puishys

… will Jon, questions, ask one I will give all metric your you, I you let

Jon Braatz

Okay.

Joe Puishys

of and than QX … the orders our in QX. greater QX both orders were XX%

We a come of revenues we workforce to in annualize and going seen quarters -- quarters orders our place those higher second at kept rate than decline. our should the year. were out that record in we would after So run have -- XX% if be for few had had quarter our

time minting rework, quality is we I we but expect at money, I quarter and path problems with show this So you. should high, But shame. have quickly. this productivity it And we very be does don’t a and right us have creating believe said, were to it's it we're every where the behind It's to a like a been embarrassing. on shame

Jon Braatz

Ultimately, consider be to XXX the new you hires some Joe, would temporary? of

Joe Puishys

that’s at labor time. Not new outside temporary hires this force ongoing of Certainly, we’ve … really an the

Jon Braatz

Okay.

Joe Puishys

workforce. we that … flex our would use to

Jon Braatz

Thanks, right. All Joe. Okay.

Joe Puishys

you. Thank

Operator

Brent question D.A. from Thielman with comes next Our Davidson.

Brent Thielman

not I’m about ask guys. Glass. Hey, going to

Systems does last Framing back they’re it after look margins, the and quarters. on couple like Just bouncing the

evidence solid EFCO? pretty are issues surpassing this of at some Is unusual? anything Just these you

Joe Puishys

Yes.

me there every some related let will business in six the are cylinders, They have markets, fire So all are Systems. seven. businesses just eight comment, listen, but fire some in on on Framing

like going. lights lights quarter. the red in particular in a is You always we have business and green All all, where

job got my a leader sales new He businesses We that from at growing course, brand our He most was fantastic making. a be this He team. services at a help the Sotawall years. terrific I’ve in, started business are Our over. initiative. profitable earlier a effort line the Harmon better with ran sales new leader, behind more proven retrofit a worked EFCO our us. headwinds at is to doing new He for we're of Wausau he put EFCO. job. improvements that, in take anybody to executive our our we year so The that. us leverage team a than He's him fastest. respect several can put will and -- drive running I did built operational now before a we leading top

anytime and the Systems. quarter good different Framing feel puts businesses. Short-term, there So within six always about for will a long-term takes I we really have be

Jim Porter

and Yes segment Architectural leverage volume Systems productivity. our Framing the and in selection really project drivers are and

to we and leverage had the really selection able where And really of quarter, project through out. so attribute, as where key a see look primarily fourth we businesses particularly, the we our is longer go in of that move we’ve the volume see some lead-time more help to be that, to

QX into well that is positioned. next So, really and year, segment

Brent Thielman

you those Okay. But surpassing the problem EFCO, are contracts now? effectively at

Jim Porter

Yes. Yes.

-- XX% are like project As we the complete. is Joe described, one

because project drag a it. that of just it's little other and associated the costs overall, that’s really bit is has with mean, starting. just it's I so, really -- work a And But the

initiatives, it's was to business. to that continuing -- core nice business, of making grow drive their and progress productivity we the that order kind that bread-and-butter And business the on really are on so getting intake core

with we later As see the momentum to start that. year, look in some we

Joe Puishys

The project Jim incurred get to referenced headwinds lot point. and we’ve that's cost just this of basically to a starting,

focus can has in are where producing big and I that. with instead getting we I’m totally a are milestone and hopefully this but we producing will more focused to there engineering past pretty past now be So, Getting third the and on this much comfortable we is or been We're there, on of designing. the battle. expect quarter, a almost quite stage not units

Brent Thielman

I Okay. think you and Services, And year gets into what done fiscal percentage said don't XXXX? Jim, then portion backlog on just this then one what of

Jim Porter

It's rest Yes. little beyond this and about then the less than XX% year that.

this that is quarter-to-quarter, between breakout and and But Some fiscal booked. year of have specific 'XX fully I it, around. largely don’t booked kind the 'XX, of is year moves next

Brent Thielman

Thank Okay. you.

Joe Puishys

Thanks, Brent.

Operator

to like at the time. turn Joe. I’m further showing back I'd call to questions any over this And not

Joe Puishys

ours, all the you, It's I and a but appreciate symptom this patience Thank inflicted to we the said, health an not in your to the of is which had Kevin. And and miss issue. today. I you. Glass quarter, of wound self episodic time to expectations right, as contributed realize of All business. your a I our

of third all your the of the the Glass the that our through results Apogee rightful the is year segment you and of course to Thank two look rest appreciate We operating call as margins forward restore time to day many better are you double-digit -- We or next will engagement delivering this quarter, that go look over we very further its place on out. in over of and before to of this and quarter forward with in I we and much. today.

Operator

Ladies presentation. does gentlemen, conclude today’s and this

You may have disconnect day. and now a wonderful

Apogee Enterprises (APOG) 18 Sep 182019 Q2 Earnings call transcript