APOG - Earnings call transcript Q1 2020 | Apogee Enterprises, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2020 Apogee Enterprises, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]

pleasure the my Jeff over now Huebschen. is to call turn to It sir. go Please ahead,

Jeff Huebschen

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

non-GAAP is certain that's measures we reference measures. the will Definitions to non-GAAP we call, morning, also this release these financial and website. our the of During and earnings on this issued nearest provided reconciliation available a GAAP measures in

management's expectations, are currently like results differ results information. Apogee's on to may our which Actual everyone found available financial and filings. I'd affect More can that call could remind be factors reflecting in information will business about materially. our based Also, statements that contain forward-looking SEC

I'll over that, the with call Joe. to turn And you,

Joseph Puishys

All right. Good joining for Thanks call everyone. today. our Thanks, morning, Jeff.

first launching touch start progressing fiscal strategic on while We hit and which ones, is for commitments. holding on solid quarter Backlog was year. our we're up. initiatives our on We're The today. we'll new a guidance,

and for it full from And perspectives is Jim cost more progress of finally, some our what excellent. initiatives. of a the quarter. to we end We then This the details guidance. lot the on charges year I'd And still on pursuing in markets recovery turn our I'll from key discuss the morning, we're to have us quarter specific quarter are progress of of the on the highlights our and and some share course, but prior seeing work strategic in like over ahead

and the economy market conditions. First, the

the the with sector in. the market bumping to continue continue along in end me Apogee which play our condition Let environment some as we in the healthy I economy can describe observations top, about grow. the markets and to overall start

conditions economic Underlying remain stable.

the bit, continue still for the new see the past per While education jobs economic And occupying we segments employment month gain over important office XXX,XXX most U.S. health care, averaged market to and slowed Apogee. growth a over in the sectors, has quarter.

vacancy at at commercial rents decade of housing are office at new specifically demand Looking unit point forecasted market, for are XXXX. multifamily office in new Demand levels construction. to rates higher, historically and office low also to continued high which both for remain strong remains construction with moving levels

interest new in be projects, building I'm for - trend downward should rates recent supportive the products sorry. Additionally,

still positive. news is market there course, overreacts economic bad often Of macro situation the overall is the uncertainty, and but to

the We billing the index, it, indicators construction industry monitor starts. Momentum new the call ABI and as Index Dodge architectural the like we

months, favorable. in the a recent indicators While bit trends fluctuated been have these have long-term

healthy levels has been market but of in and The is last without at positive this today. end XX stability. flattish ABI XX in flattish, XX key we're the stable, peaks recent it's the valleys with sustainable growth months, XX to been okay last months, of It's and the and

I New healthy quarter. construction a revisit at starts I'd also point made remain to like levels. last

way on sector new still has activity peaks. reach While activity previous a prior fallen the to short relatively over pace the construction to long cycles. of up a non-resi has period in go of construction time, improved And of square-foot a has a long basis,

or seeing commercial might approximately U.S. about now is although, recovery we're indicate economic top recovery speculative market of that. not making, in overbuilding Also is XX of that building And the cycle. the half years construction

tied starts see of to balance continue to a nice demand. We construction new tenant

for is services. environment solid into translating Apogee's market and demand and products economic favorable The

geographic footprint, quarter. We booked segment. several of during past across winning new in sub-sectors. significant we're this We're We services architectural and projects our in business markets build continue to our winning backlog, all especially key business

in and see backlog further commitments pipeline, customer services timing growth for quarter, could our on certainly we second of depending the contracts. Based sales on the

shorter remains In our businesses, healthy. activity lead-time customer

pipeline bidding sales seeing activity. we're good have quoting and solid and We

So the growth fiscal and line market for top into believe supports Apogee overall, we year backdrop this 'XX.

Okay.

Let's turn highlights our strategic initiatives. to and

key Looking quarter, touch on a I'll at the first fee highlights.

First, last the significant project we we're and we've several legacy talking steps progress planned made remaining as proceeded about releases. the prior the quarter, in that closer finish to been completing line. toward EFCO projects now in The

we for project, more now than project, being with EFCO. complete which are the XX% last this manufacturing On by is led

managed our complete installation, is with team. services We which by XX% are architectural more being than

report be quarter by continuing fourth typical this to finished and of results quarter expect We our project some with projects. commercial into all the we largely second activity the time limited

also driving quarter. progress are operational We I'm initiatives, improvements on could lean in work excellent key Frankly, potential to charge on and cost EFCO making an and offset quality pleased quarter. made the some which operational we that steady of the last with We're had we in productivity the portion continue quarter. headway recoveries increases metrics. also recorded EFCO in

quarter, improve the of complete and factory allow our the facility flow EFCO, upgrade further productivity material positively impact results year. we in a second itself. half at expect will the out In the second This inside project to of which factory will

to the take continue Framing we drive steps in to Systems synergies segment. addition, In

base our make cyclical the more of of has Over market. diversifying large project unlock strategic less to on been and company one the Apogee's revenue the non-resi construction years, growth segments the several new dependent past to priorities

legacy product geographic X successful acquisition our this growth businesses of motion results. in in growth line And and Over we markets in four the expansion. market ago better executed new Framing very tuck-in. by acquisitions driving way achieved bottom and segment, And Systems strategy focusing our set including our new than years around businesses line introductions, amazing I segment a Apogee by efforts growth product in

in biggest expanding market fragmented our opportunities revenue product with opportunity segment the operates margin because expansion Systems through had on a share, geographic growth but Framing long-term for focus more for expense Systems numerous at new and of and innovation. not segments, We growth the expansion. Framing other Framing

our We’ve through scale growth key add opportunity executed The by margin segment and increase organic also framing. these strategy offers to capabilities making acquisitions in substantial expansion. both for and

discussed the we behind progress previous which calls, slowed of opportunities X in efforts our synergy now and in cost years, unexpected but our us both past Systems issues the attention over with acquisition, and in inherited on are EFCO these Framing revenue margin some P&L. with problems the parts we full the the As we growth returning to realizing putting

will supply framing materials likely other businesses, will synergies several some second among incurred draw - quarters. the purchasing purchased we integration drive Jim benefits outside guidance the in in-sourcing several be synergies. and quarter, comments. be These concrete will long-term carry over and reduce drive next his This more of currently cost, the and actions some which about costs We'll talk steps taking include to in upfront increased will that will chain and

In Architectural Glass we expansion. growth had margin very sales strong and year-over-year

quarters, third segment is and new Over million begin improved the demand reflect $XXX quarter operations steady which that fiscal quarter. expected plan revenue, growth highlighted progressing past averaged three in to last our has Glass I initiative also The Architectural as the and we Glass in throughput.

past to excellence discipline adding I mentioned on backlog. is to the been in execution several Services, this our Architectural project has and And results. million selection, the $XX we focused site. in segment strong demonstrate segments years, another the That pricing the disciplined business record flow the amazing Services saw continues at order case and job

entire project's And is best of We're revenue the margins Based positioned for continue offer the and on and XXXX. concentrating services projects team excellence at backlog, execution cycle. phases segment on for well life to the growth best projects solid the opportunities through on even for those Services in higher in profitability. our schedules fiscal is focused the capabilities we believe all

generates to amazing team, of that deliver scale is finally, growth variability And segment performance by position. run potential margin segment plan the business the leadership quarter-to-quarter gem to Through with on first flow. well and track meet - our on large an segment our targets. basis, a strong cash strong profitability has always and leadership a it consistent year full quarter, led but This Optical LSO is continues annualized

are confident we remainder the a We year. So overall, the how of good the year. feel fiscal start to for positioned about

over that, provide who'll wrap with and with you details our and I'll final up outlook. quarter the the the to Jim, from And Jim, on you comments. more time. And pass take questions call some I'll then have

James Porter

Total see $XXX in everyone. first revenue morning, X million I'll begin year's significant Good to grew with in Joe. the by presentation. earnings Page Thanks, our consolidated X% you to Architectural which primarily of last quarter, driven growth $XXX results, Glass. compared million our on can

quarter. down in Operating line margin with X.X% of adjusted from margin first was but in operating last of year year's X.X% last

intangibles. the of adjusted is have acquired the reminder, year. adjustment quarter the primarily no excluded a current there As in results fiscal so These intangible in of been fiscal now first amortization similar assets XXXX fully amortized short-lived

came in million to $X.X at million from level. $X.X increased debt year's quarter. million higher year's $XX.X quarter and of in in EBITDA to million adjusted last EBITDA compared $XX.X Interest expense first last

And in were all on per XX.X%. XXXX Putting quarter $X.XX adjusted year's last approximately earnings year to an guidance XX.X% together, of with it of the was basis. first $X.XX share tax rate compared with line in $X.XX fiscal last our

was Framing in year Systems from million, which $XXX last Slide last X.X% $XXX the of Now Operating and margin X. income operating an to quarter. results, year's slightly first of margin $XX.X adjusted last million year's operating with X.X% cover I'll million. segment are on revenue up was compared X.X%

into levels. as of couple well Framing less margin Systems' high coming lower was locations. due million near favorable held $XXX in we as lower to leverage year, primarily backlog as the of historically project The expected some mix a volume

year-over-year impacted continues the force improvement segment XXXX the Architectural issues and fiscal progress segment The past productivity work that strong Glass has performance. as to

to by and the primarily Glass Operating $XXX as weak our XXXX, as improved to compared quarter demand in revenue operating prior on first comparison. the improved leverage year well by volumes. increased strong a of grew throughput million, X.X% XX% margin in driven fiscal X.X% to factories, driven

Glass the early XX the hire new and new growth impacted from staff initiative segment facility related operations. expenses were by margins points the begin costs negatively in to to startup as approximately first quarter for we basis the incur

$X.X timing X% million Services was million first and X.X% $XX million last from Architectural year's million quarter projects. in revenue expected, quarter. Operating $X.X $XX had margin to we decreased last the compared in with As of due operating to first income to of year's

to strong has backlog the Services increased $XXX mentioned, past the on million. X Page slide segment years. Joe The backlog few the over growth illustrates As achieved

by our XXXX or fiscal customers, schedules 'XX. fiscal revenue to backlog almost project 'XX converted remainder of the balance we expect in current in be of Given Services will the established XX% with

and we this up As to good for set the Services strong further point, could backlog in have mentioned, 'XX, a has continue that like opportunities Joe increase at it fiscal of another quarters. year pipeline in coming looks

increasing of Large-scale was the with and million $XX Optical operating in XX%. results segment roughly with line X% expectations revenue segment to margin our

quarter margin to see large-scale by driven schedules. First is margin last is And of segment this typical around below year's timing small production of level, Optical primarily the operating quarter-to-quarter. bounce

to expenses I'd that also like the range compared We full achieved legal due continue expenses fiscal increased segment the in Optical operating past corporate to margins has XXXX. and in to the primarily XX% advisory mention anticipated, year years. over expect the as were that to higher quarter Large-scale several

to turn sheet. balance Now and I'll cash flow

capital by X. our $X.X million Cash and incentive-based cash. quarter compensation timing insurance primarily. used Turning normal to uses, activities in payments impacted working was Operating flow the of seasonal Slide negatively first of

quarter, Also, on project operating cash working roughly EFCO mentioned as on caused progress quarter. the flow increased million $XX to continued this last which drive drag legacy we capital,

driven segment. the primarily and Framing and productivity for Architectural Capital million, capabilities expenditures by were EFCO new Glass Systems investments our at $XX in

million we debt million, Total during for times and trailing or XX-month increased to of $X.X paid X.X of Also $XXX out the XXX,XXX EBITDA. million quarter, stock shares adjusted repurchased we dividends. $XX

favorable maturity credit first terms to successfully and our limit from the to credit conditions. $XXX end securities and and XXXX, extended of we $XXX to Subsequent million facility, amended up the the quarter, and million increasing extending our revolving

our to lower will financial also give The borrowing costs. our and revolver us changes flexibility increased

due We expect completion to in the stay but cash flow requirement EFCO remainder blow capital actually of to project. level working the primarily the increased legacy until last of year, it will improve fiscal year's

favorable to charts. of secure cost have to quarter's last As able a the be we recover earnings. both we efforts and recorded recoveries costs outlook some we're for in And cash that to any continued the will reminder,

down to to We continue pay full deploy capital expenditures expect debt. we $XX cash flow to look and year excess of free $XX million to million,

opportunistic We will to share also evaluate continue buybacks.

X. Page on is which outlook, our to turn I'll Now

We the provided full last guidance are maintaining quarter. year that we

some details Let me additional offer the outlook. on

Framing in First Systems.

the project, in to year, timing, growth half well driven We easier as the of year expect as the comparisons. prior by rates second revenue improve

half transition We continue mix to margin less the the be have to of improvements across to year will contributions. weighted to favorable and a begin initiatives fiscal drive Systems the back underway expect and we as we Framing positive

traditionally quarter the is Framing quarter expect which to third the The we for be year. case this Systems, strongest

some the are benefits some mentioned, that Framing upfront year starting we This in to quarter. in the headwind supply new expected quarter. synergy in XXX by to a half roughly is fiscal actions Joe we offset implement the point As the will see and of chain second costs, margin to expected which have basis Systems segment third second purchasing be

revenue full expect to Architectural growth of we In approximately XX%. continue Glass, year

have easier will growth comparisons. the year-over-year year second quarters to first The prior due largest the rates and

approximately startup Glass reduce costs million the year to continue XXX Architectural we growth will by to Also full of margin glass expect points. new initiatives, to full $X which year $X XXX for basis for million

noted in limited the in impact revenue the and second quarter. in quarters and we some the will startup impact to initial costs quarter. have I the begin will The fourth greatest generate first that third saw

will We expect ramp XXXX. in startup initiative this new fiscal quickly

are In in of XXXX to due compared we decline year needed compared And quarter, to significant segment's we full last aggressively as execute future. a this project revenues Architectural pipeline the timing on to overhead backlog robust that and discussed will continue year operating the and fiscal projects cut to backlog. XX% the have costs impact the in last in the cannot as margins Services, expect we leverage to

Architectural will fiscal half we Based second expect the have, margin lowest on second for of with the be the current of the Services the at year for quarter and revenue improving project quarter gradually performance we the quarter, lowest the schedules year. revenue in

and finally, digit full operating approximately Large-scale single year And Optical, expect mid of on growth we continue XX%. to margins

that, to Joe. turn the call With I'll back

Joseph Puishys

All stronger right. We're our with top that line fiscal of earnings was up, remainder margins start this number growth, for should position making Thank a us wrap improved to year. flow you, and Jim. the in to But and nice a good progress of areas the further year. cash

Looking growth us market margin our expansion longer up improvement and pipeline initiatives in set backlog term for continued our revenue 'XX. healthy conditions, of in operational fiscal

the in economy end things But the where favorable to inflation like I'd still being going very there are low There's and low markets. confidence, a I many on our in interest lot started worries very going world that unemployment, strong end geopolitical and today. business unprecedented many there rates. well very are

and laser going if We lot cost you good a at markets. today, in are heard focus on end of putting but feel our There things about a substantial it, cost we're Apogee. actions right

like up Andrew? to for So the with questions. that, And I'd open our operator to you call thank to I today. ask you for me listening Andrew,

Operator

right. All Instructions] [Operator Certainly.

from comes Securities. line with question CJS the Moore first Our of Chris

line now open. is Your

Chris Moore

Good you. guys. morning, Thank

Joseph Puishys

Hey, Chris.

Chris Moore

around the looking with little just core most bit Can conversations of Framing. morning. there? Maybe about are talk is maybe the we margins just a EFCO. Obviously, we'd business? Framing Good How start

James Porter

Sure. talk well. but core to Chris, businesses. our some continuing is mean, we we I businesses perform this timing it. good have performance about our quarter-to-quarter to Framing see Jim. continue are Systems I'll overall, And across

Chris Moore

could in the said over repeat can to QX just again you earlier, maybe And or go - related basis you quickly? EFCO point XXX just impact the what is that you Framing

James Porter

Systems the which our we in well as able is we some that how services that's finishing, of been and to be purchasing in chain really do outside our step businesses, in-house. of on in-sourcing Yeah. some real looking Our really No, finishing some a of some Framing from initiatives, extrusions increased the to and across our up - really as been and - chain where quarter supply some through frankly some we’ll purchasing do at is in-sourcing enabling a extrusion capacity to we've us of both some productivity so we’ve supply second number opportunities optimize trying starting what we're increase

launching which Framing across expanded well within As we're savings concentrated Systems is drive as our effort procurement really company, the to on segment. an

lot activity on and going, foot on there putting the our we've get of place. these we're these get initial them in the working in number really initiatives, been So of to a second some but is just gas to cost quarter

Chris Moore

maybe seeing is about Got of it. a little what from? these That's helpful. the And of just And further you What days? where Can the in talk growth you're are glass building kind large versus coming you midsize? market. seeing bit terms

Joseph Puishys

one. the top. many in this seeing use bumping advancing - has markets, care, This years bidding and stole is been continue And me is from office, I Chris, the education. I I'll recently we're take along stole we're that to seeing and end somebody and ago We're Joe, from consistent term take health somebody good projects

I construction in stand say no sector one full. sites laggard. really out would It's multifamily sub-sectors The are or housing, healthy. no one -

and that the at So we these work side. perhaps tend to flows construction often driven of have ebbs by over-subscription the are

a you’ll backlog maybe contract as So the couple thought. have the as quarters or don’t of where enter fast you projects

more now, work the markets. I there there's say end schedules about manage is But trying concern the then to right would probably

the So sub-segments, the across frankly, across it's consistent U.S. and

Chris Moore

in can this say terms Got it. that of on Helpful. Last else question for initiatives, at new that anything point? me, just glass you

Joseph Puishys

time able second I begin begin really. stuck be to half report we The second - But more XX a sorry financial of year. nothing as No. our days certainly plan for is will and our I just now. to in project the has I you everything the actually when - And for talk to The was XX We're the progressed it quarter days little expect whatever will is to in about earnings think ago. progressing. we’ll - in I'm to the days. announced not impact that. or production all - by it we XX probably we be be on - it according revenues bit

Chris Moore

right. All it. Appreciate

in Let me line. back jump

Joseph Puishys

Thanks, Chris.

Operator

next our question comes line And you. Eric Craig-Hallum. the Thank of from with Stine

Your line open. now is

Eric Stine

everyone. Good morning,

Joseph Puishys

Good morning, Eric.

Eric Stine

progress this hiring obviously, operational I should mean where I very still good there Or with the things the as being of of maybe something that quarter. an stands? that all corner want Glass, lot the on are past in turned we some update start you've the in is if are things where view some to challenges there and a just there? a and

Joseph Puishys

it's Eric, made Thanks. Yeah. progress. an process. good had definitely ongoing We

We have add overtime to improve had a keep was and enough more. businesses We in like place issue our a ago people little production run some could just couldn't effectively. margins the year up with demand. The remove bit. we We'd we to

able we're up Now keep demand. with to

new Still a tight. region It's in opportunity, little and markets people have bit of to the out. get labor remain a particularly largest challenge hire factory is. But cost people to the where our we production the the

more progress little make they to quarter. and opportunity a every continue have We

was were again. us weather quarter hear And March. of Remember April it But complaining started even We fiscal first environment brutal in here. out about year quarter and here. transition. challenging the don't our bit our March first a a in was weather a

May operationally. quarter, Glass in June at the of the quarter. improved And best month business. we throughout out was strong So come the we our productivity

and continue enough we process. end an do I ongoing talent. We'd a few started, to more I'll creative people. We've things some to it's again, to like So got have find where

Eric Stine

it. Got

not a that significant I Okay. about mean, maybe I'm follow-up just frame a That contributor to I ask in 'XX necessarily to, I Jim anyway contributor. the question. you Glass previous to you believe, said is maybe potentially But new helpful. mean and initiatives. on expect fiscal the details can going And

the kind you of a of high level? anyway can magnitude that So from frame

that then that you which there is that plus. would your of margin And know XX% shoot for initiative anything I outlook long-term kind change different about for operating segment,

Joseph Puishys

that This point today. a fiscal I for and obviously, careful. I'll helping bit guidance I at project this directionally I'm to in and revenue later yes, year. us fiscal Jim start for that sorry, with Eric, will potential be certainly bodes providing have I some of and little be margins don't the business to well 'XX. think similar doing to want Yes.

year. investment. some good happy headwinds guidance on It made to gives It to upside and perhaps our we It contribute leveraging are off us fiscal in we'll will be helps when just fixed. end hold provide segment there in that day We’ll markets. 'XX this us have we this until later

Eric Stine

got it. Okay, a lot. Thanks

Joseph Puishys

to Good though try Thanks. Yeah. Eric.

Operator

our Brent next line from D.A. you. of Davidson. comes Thank Thielman And question the with

now line Your open. is

Brent Thielman

Thanks. Good morning.

Joseph Puishys

Brent. morning, Good

Brent Thielman

Hey first quarter? of what startup impact were you the have cost Jim, do to the the

James Porter

Yes. It it Glass - points was yes, basis XX in impact. of about so Architectural is

Brent Thielman

maybe amplified here the to trying think in sort and things have offset stable of I'm about year. other up the impact by it? you're to and Should see the that about the XQ, think And the of we quarters talked puts of be you takes just next productivity all going that know that picks the XQ. way guys Okay. better such here in to of XQ? couple I Is to given over that margins kind more

James Porter

bit of the a it'll those segment. in be still heavier be QX Those impact are will points quarters terms mean, going dilutive basis impact, be XXX in each for in to it much the over QX. and of I a

Joseph Puishys

guidance the question the business, But the headwinds the momentum the you couple traditional Eric prior be for on, productivity for about business itself, productivity expect year. that But improvements mentioned will that's a core in Brent, asked, quarters. the in know, you're in its we asking of project our business I its continued Glass more as cost

Brent Thielman

Got it.

in evolution you're tight there? Services the market new environment. of very business, on a these you is signing, on it robust a terms little then Maybe you're contracts you some the could terms, obviously, just And talk bit about out seeing Okay. the relatively

Joseph Puishys

your approach most we're in changes I conditions It's mentioned, and on to for terms fees project that of execution. about and their estimates getting right. projects on. disciplined I'm then No project No. the and all working proud business selection

yes and job course, industry, of in construction the execute the - at I itself. a in doing And at fab think we factories and site to best site we're have our glaze frankly. assembly we're that where the the

on - say, competitors. we're there. would contract. But There's competition healthy got in as well. all great the been We've competitor I changing, the I We're bidding. - Nothing out great a

I think share projects. of fair our we’re winning than more share our

This very business very, bigger great of of market. We're a fragmented fraction markets. for us. players is have a It's one a the end we the and

select there's a think work terms. against to So margin we're bids lot compete I consistent on of seeing and and and

nothing exciting, sorry, So changing on that.

Brent Thielman

there? mid-west. Is if That's with you okay. happening Maybe base last the that there's question, having could material on continue you in -- it, obviously, the blame Or you out But some that know that? tremendous talked the a a just Joe, little weather. been about talk bit I pretty customer to out like you is about don't that serve impact business? thing Maybe

Joseph Puishys

to feel out, Brent. Nothing the its call are for – terrible We impacted. people that

devastation up – work Our doing, really is seeing this we’re we're facilities bizarre not the the pattern parts that picture of when of hitting the going have of U.S. you building and kind not been we’re to where some impacted weather

So not company. impacted fortunate its as has our we’ve unfortunate, really been

James Porter

business, framing projects activity a it's think In but probably the significant bit, aware but of our enough smaller as issue. to and has call projects, It's construction us smaller where not just for system little really certain none. been rain out is I projects moved gets a delayed everyone segment, in timeline our particularly affected off,

Joseph Puishys

recovery of bit. glad our productivity up Glass out, to again. called is so a just winter's continued our Glass kind at for calling our but it momentum of I was provide weather, challenges kind the certainly behind little winter us out business, not severe - that on picking Again, - it What Viracon,

Brent Thielman

Okay, you. great. Thank

Joseph Puishys

Yeah. Thanks, Brent.

Operator

comes of question line with City Braatz next Capital. our Jon the And Kansas you. Thank from

Your line now is open.

Jon Braatz

Joe, Jim. Morning,

Joseph Puishys

Jon. Hey,

Jon Braatz

EFCO little past, the opportunity, you a would when what you that realizing you originally Can relative potential at potential? as talk at item how about of to of an that… Joe, - bit view problems become EFCO - about of expectations your it? the more today timeline And the relative acquired the the

Joseph Puishys

It's arrived the it Yes, have we. potential legacy, we do customer looks is much existed window end and similar businesses - Yeah. extrusion, segment I for and that sales, when what a which call production thanks. Yes John, amazing. this our - here. They wall little same we often like more like. in Sure, diverse I markets, business that very the the base, very three finishing,

double-digit operating a margin be would this business. stated We

when Our starting we the thought lower was did acquisition. we than point

we're problem we've projects from As the first engineering to experience has that. top would place a admit been tremendous had be We we out operations, sales, under. and said people in both getting core They in that some a EFCO in a great in Apogee it. the at help new for put to estimating. got great team

margin for that the too certainly now basis is type. over years, business from year I'm expansion business. I X and that So break few XXX say would double-digit looking it's points next a every way I expect to that and barrier

they amazing under, of prior about and was these quarter. that time seeing QX they projects that from excellent was, acquisition out with I would told were mentioned, the a very they booked of the momentum an I as got the I that team happy performance. see as Frankly, just couple it. business really to problem they're had

and the mentioned, is manufacturing, productivity. these I called attention And business focused as we’ve on that away we on exports which been has And the projects our to which that and working project - full done. They out, they’ve almost turned particular their units, took they’re services. now quality from over management installation done, them on

manufacturing we approved live our ago. end year to we project the put back in tomorrow our primary shipping from start nice a automation. operation This mentioned a I in actually of this improvement

that of gem nicely get Systems goal X with So my just it's to My from drive will year pushed Framing This My X that of or business starting a a original rest point and business the is continue year a it's momentum. back to - XX% above expectations. over got horizon. segment.

James Porter

and behind Jim. us. getting we And about the talking improvements because benefits first was And visibility little largely of been quarter talked really Joe's spot that think their we’ve it's bit think I we point fourth to getting Jon, I just that a been We've your to allowed the the think, in see momentum project this us the on. I of want productivity it that I behind legacy quarter, question in have emphasize the is about as working on. us

Jon Braatz

million, Jim, investment EFCO. think – that I you I we’ll get million $XX you think know - $XX it To investment Joe additional to you Okay. think putting double-digit capital – into was require I that mentioned or another think? I

Joseph Puishys

even Nothing, the before was investment. We it. not no. This make important, going business were bought to This Frankly, was the company. a made it. prior big that that investment we we identified the identified owners

forward, investment, and our productivity everything substantial fall Going into investment out this call would normally tooling, that some would like as projects. one. traditional a maintain perhaps I Nothing that CNC operate,

James Porter

Yeah, large pay would we them anticipate any I to see investment for and would that themselves. would driven productivity that be by

Jon Braatz

All very right. Thank Okay. you much.

Joseph Puishys

Jon. Yeah, questions. the Thanks. Appreciate

Operator

comes Thank from the Company. line you. next Sidoti question And of from our Julio Romero &

Your line open. now is

Julio Romero

Hi, good morning.

Joseph Puishys

morning. Good

James Porter

How are Julio. doing? you Hi,

Julio Romero

your the any you're you on procurement about see of about Maybe Framing good. And kind what you any if opportunities there? I in Very if similar focus there ask can business? are Can talk putting of increased businesses? across just opportunity the margin

James Porter

address Julio, I'll this that. is Jim.

things that saw leveraging upfront. after purchases all was when of first that we and and types the to vendors of one EFCO acquired low-hanging of we which with business, those opportunities and fruit EFCO we business went So specific similar

Apogee. is focus segment, resources going entire as as we the at that to to now broader well help across on and engaged us. frankly, effort outside doing the a redirecting we’ve is some and taking drive really accelerate systems And this really What framing we're think look

we and materials, really But think kind just the too more at driving indirect more impact supply initiative, of direct for holistic what there's looking margin of chain. across think everything, is. and it's synergy we early at now we're materials to as focused all really take us a a our look spend. we're focus on we Really launching lot benefits opportunity categories this And call materials to

Julio Romero

project what maybe and segment? give the for earnings the that in looks That's revenue to XXXX? for in can color the of margin if any maybe work since improve you And margins Can you do to cadence mentioned fiscal the And you Services us profile expect like Okay. schedules on point 'XX. business there it helpful. in

Joseph Puishys

Yeah.

certainly kind on. at Let 'XX itself. out, call The the me It backlog we're repeat, Q, in record. guidance this not week. our higher release. business backlog fiscal the next which can and Again first for last speaks goes was out it of it I'll pile today. than I We take is for $XX for was Jim think, a That providing million earnings

contract because know, on guarantee a I backlog always will mentioned on if go backlog have But the I I today, orders can't QX. But my my I I hedge quarter. carefully in in as call in words the second increase choose that. into you increase we expect, bet

by driven - as that a be so It's - today. there's good is year. And in But far we're it's business. strong, not primarily execute significant a margins. it's the business movement work we year-over-year I business believe it that mostly leveraging But prepared as guidance, think do will revenue we that at growth volume to don't well. next It's in can

James Porter

see all is what on it, Julia, that we know, on all of we that to the to the segment. fiscal what the work comment potential perform caveats over what execution. of we for have depends the actually has the timing flow the the fiscal similar is you 'XX based Yes, on it have, actual But the project Services with 'XX visibility have in from we Architectural today visibility

Joseph Puishys

and lumpiness, big that for on a company, business business such as year I it's report provides that I could X because wish this we public an it is a - - 'XX, stronger a time And backlog was, proceeding than record every us I year. our I Yes. record fiscal had yet year metric, at It wish that amazing today a across basis.

Okay.

So just another the look timing 'XX It's of we're will be you year We're and our you well, world. work. ask very, continuing in F the get X fiscal way the backlog. in 'XX at why construction have have I sound backlog the in frustrated, as to And can't well record? work projects put it very is It the a based current on view of well. performing would

Julio Romero

certainly I there. And helpful. appreciate color That’s Okay. the

from credit to amended better facilities flexibility. last one some the give you Just is,

your which going see is encouraging. are certainly some of capital outline allocation repurchased also you what You Could you just priorities shares, you. Thank kind forward?

James Porter

Sure.

investments business continuing in capital back the a first at to attractive look from Our perspective. is priority

remains important. Our dividend

I to excess we free to will continue that evaluate flow cash looking think debt we’re at using down pay repurchases. share

You know, focused our back really margin for M&A burner on driving is still us in we improvement as business. really are the

Julio Romero

in year. the Helpful. of Thanks very fiscal rest and much the luck good

Joseph Puishys

Julio. Thanks,

Operator

from Tieton comes of And our next question Dezellem you. Bill with the Capital. line Thank

is line open. now Your

Bill Dezellem

on business whether have facility? to increase a actually with the Hi. like solely question I capital M&A, you perspective? flexibility Thank for would to not credit initiative, additional is up you. it running that the this last Is but do working Or start follow what with like be yourself initiative place? framing be flexibility give that, that that you please? glass some or initiatives putting you that talk are these you're going visibility like in that for – to to something something you’re have already Can doing you from extra

Joseph Puishys

you Jim me is let Clearly, macro give not M&A. details. to it a give the and Bill, support will

As back certainly in knows for happen years. the it was to But Jim? time any end markets. Jim for X a block terms. for favorable need. in wasn't that’s these that obviously, position Who terms lock more repeated reset to It We're will what good in a specific burner us. strong get and said,

James Porter

Yeah.

we in term the flow I capital good actually in in that But next then expectation expand. flexibility, increased level. differences year's just flexibility got that the I'll structure working the cash of and by all it some over to too So driven commitment of revolver over generation driven addition, really our us to allow of and its mean, is the managing with – increased this even sizing terms Bill, CapEx. it the relative by adjust of have

Bill Dezellem

Great. Thank you. initiatives the And chain to front you at on the that have. would to supply shift then I like Framing

improve impact negative understand margins Could you're the here on that’s that's I what kind margins I why to the those in business is that having impact the QX? quarter? of you term. its moving about – – the talk are headwinds doing to leading longer understand So don't - to activity second you in the

James Porter

some businesses our this there's then to mentioned so accelerate And associated outside many really things. it's I'm focus those going two details with upfront to But here. And go the first use Bill, look we're activities that. too going the activities, One is, and not some that is rebalancing initiatives be expenses with on little thing Sure. at of resources help Jim. just that I we within going quarter. into really as of costs third normal some it bit there's some operational in our of associated to

Bill Dezellem

then I Okay. better. to as And That guidance, want sounds don't think to I'd look final recognize conceptually. like to question, when I'll 'XX out to year, and take provide off-line understand about however, just like my next up you the we fiscal

having revenue the some You have projects, year, right, trend will business revenues talked will Framing opportunity to show the the growth? then Service will and business be no above and next to stage an about them give longer higher assign add its EFCO which profitability if complete

growth. initiative, glass new above are the we trend And also revenue

is year would thought you that average all growth Is an with that something level put be above expect. this there you beyond one if am next what earnings that ourselves I setting So up together, process? for something normally of should that implies missing

Joseph Puishys

glass, next where be we of what working have have. believe will that for project our thought better meaning visibility a with that especially - - not obviously, We you're prospects. services our year, today larger will see a on anything kind do I your with improvement, feel large solid initiatives feel, missing be we we year, we a project businesses revenue, strong we revenue

Framing of Systems, mix time. shorter lead

perform continue us does. small business, our capital working help and that Optical I give - productivity there focus Our to to is cash Large-Scale cost, the and it think, with we’ll continue

I issue Bill, So, with. I that any said think don't you take would

Bill Dezellem

Great. both. Thank you,

Joseph Puishys

Thank Bill. you,

Operator

Thank you.

Joseph Puishys

to up. forward Look follow

Operator

And I'm time. at this no showing further questions

back Joe for closing that, I'll So Puishys with turn remarks. to the call

Joseph Puishys

All appreciate you. and joining in right, care. Certainly, in you second have my Thank again right, updating I day, thanks look us Andrew, forward thank quarter September. results a today. to on interest everybody our Take for All great company, and everybody. performance I you. your And

Operator

conference. you thank for you disconnect. gentlemen, have conclude and may in all today's This day. participating Everyone, program, Ladies wonderful the does a and

Apogee Enterprises (APOG) 27 Jun 192020 Q1 Earnings call transcript