APOG - Earnings call transcript Q2 2022 | Apogee Enterprises, Inc.

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Operator

Good day and thank you for standing by. Welcome to the Second Quarter 2022 Apogee Enterprises, Inc. Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your host today, Jeff Huebschen. Please.

Jeff Huebschen

Michelle. you, Thank welcome earnings and Enterprises XXXX fiscal Good to quarter call. second morning Apogee today Apogee’s With and Ty are me Silberhorn, Chief Officer. Nisheet Chief Financial Gupta, Officer Executive accompany that I’d remind there today’s remarks. are like everyone slides to to These website. Apogee’s section in are the available Relations of Investor

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

Ty Silberhorn

This rest your everyone are Then will Thanks, will seeing you we insights Jeff that, more business, of update on second and provide in trends and discuss outlook. about thank details our quarter us questions. our take Nisheet for the share morning, results the our some I quarter and the today. joining and we give strategy our will the After year on fiscal work. an

quarter. team’s this X slide deck. our efforts of I start let’s Page proud results the with of very on So, our highlighted quarter am

double-digit COVID-related Cash environment. positive optical from $XX and sign This executed services. in in in headwinds was improved to encouraging strong strong. even We its cash continued in also revenue that that an this Adjusted and year. are position operations Services our this it first backlog architectural from growth managing impacted a maintained compared and had flow last operating pieces, the the We earnings to impacted recovery, delivered face Architectural quarter. LSO very team bouncing income. And first led in by of growth lot momentum backlog Architectural margins quarter, several and as be its our difficult quarter. large-scale sequentially back and a quarter, well our We operating past moving we this our Services very have disruptions continues the but both segment year. increased has is healthy million in results improving cash financial we did returned that to already of shareholders. the the business

are faster companies, businesses. of our As price their increasing with is impact of time mitigate inflation many given can than the significant the we cost increases of costs Input speed some issue. a material cycle and raw

which increased example, has For XX% largest of Apogee’s the is price in material year. category, past the aluminum, cost

call. last XX% prices In earnings fact, nearly our since are aluminum just up

coatings, and We breadth do are mitigate also We these outstripped that. have for increases of the seeing glass, increases depth some but direct other meaningful to work and used much freight through indirect materials cost and contracts, the operations. hedging of and of in

materials many of challenges navigate I sources. with company seek are suppliers supply like out some in very we is through chain. lead acknowledge would business take new and the to to for procurement the we this additional reluctant The experiencing some pushing our market times on Additionally, helping team efforts as in tight, are our situation.

were materials stronger negotiations cost alternatives, offset not fully driving years, business some impact X supplier of to our aligned efforts, build to a and organization savings with in segment added able is past sourcing we procurement Over new from the other and priorities. of offsetting increased team This to the these cost inflation categories. talent have freight. Even we

our but in meaningful We this as results in has operations, cost inflation rate. driving a efforts faster visible our well in at as progress out these outstripped clearly as procurement achieving is are not

of cost and to to and our taking efforts, price impact the mitigate addition actions procurement material are labor cost both we In inflation.

As a long reminder, many lead our projects of have times.

when shows The take impact we up pricing until lag there financial So, us inflation results. impact our that actions in a of hitting is is from now. cost

Framing how full trend construction the in pricing our Census thought comment show non-residential Bureau not out. and also will start things Total downturn. Architectural fourth the that tough the reasons for the be While to be this Systems term from year markets. continues to recent quarter a I’d like from spending to next fiscal Glass our to especially We Non-residential down optimistic construction going XX% about remains up playing are non-residential outlook and into pre-pandemic the volumes, are from was benefits is on until year. in to and markets. lower. spending data that high. shows longer a in The is most end There

several months. direction These the to of indicators construction the business are for metrics positive ABI Forward been like out of the forward past starts and XX XX the months indicators into have our future.

begin it’s show these results. a So, few our before up see quarters in more business to likely we improvements

Looking we ahead do quarter we to this the dissipate. to rest the challenges faced not of expect the year,

focus from and We will our benefits controllable actions as realize soon to fourth price actions working a restructuring as and quarter possible, our actions more into savings margins our appropriate take to on as the originally our the execution, in closely planned. of these near-term. protect than This costs pulling continue to continued includes managing

will plays the the that actions out, we a headwinds large expect year As are facing. of these portion we offset

year. confident we the remain So, in for our guidance full

fiscal also long-term. this the to are work for we year, we positioning company While results the deliver

X our the have Page as shown not changed presentation. on priorities of for year Our

of these. Let a me highlight few

certainly area, improvement encouraged more continue focus improving execution. across to in have of on company. am will to we operational We our First, I this by signs work do but

execution of business and originally restructuring coming our is than realignment of schedule are restructuring example, and lower ahead For the costs in planned.

operations savings productivity us path and our glass in leave for grow solid plant. business. still our to a meaningful capacity Statesboro seeing Owatonna absorb also This allows the glass are We to

important acquirer as efficient we and we that provide us investments manage to continue work underway back a Even help have foundation These processes a the make more systems areas, The we build our profitable efforts. and will forward and to including with for capabilities core are enterprise in costs, strengthen growth move and office human stronger several across new supply will and digital chain. projects future. finance, resources transformation

work make on is Finally, for strategy the substantial we progress continue complete, a work. now clear of setting Much to this enterprise. direction our

have to From out presentation. I’d do building detailed the guiding this evaluated a key aspects the As We key like this of we from previously, benchmarking. share markets are approach. ensure business to work, of deliver our roadmap our right included detailed of models all and in best We process consistent, we analyzed on have to Apogee’s customers that extensive are building input X outside-in the discussed detailed forward. few of I This we the operating a a capabilities was We elements in and profitable took systematic rigorous our growth competitive strategy. mix identify to future strategic the and portfolio work a Apogee outlined to Page and have but plans, and to specifics These move we growth. we analyzed still products, for compete how avenues services serve. that are

markets and clearly our economic are the to to differentiated leader we markets the opportunity target positioning products most see for we serve. This means understanding drive customers in We and services. where value through become the

that relentless a own products have We way operational services to managing a strategies, execution, are best to meets customers. to more our on will our of profitability. focus customers, similar have businesses together driving and And aligning improvements our improve bring in clear productivity the needs to go-to-market value and we

transformation how return our profitable we allocation key have investment how are our provide future This as capital centers metric important of we strong allow products growth, This capital invested this for better direct and on To portfolio will of are core decisions. businesses. on of leverage The enterprise us guide emphasize will support ROIC to initiatives excellence and we manage a we we overall to scale and will underway processes backbone effort. services. forward, our will enable Going our focus a and inform building parts capabilities. to

talent, adding actions and processes August efforts. steps are initial we in are tools to key The announced executing support our transformation in we Finally, strategy. our

the improvements and productivity. We of are segments most Glass see provide differentiation market to glass we cost will steps where to also segment’s refocusing value. drive we are The emphasize structure in the opportunity the Architectural and taking accelerate

execution bring cost our margin markets. target We changes more also focus to increased are in will reduce levels. Systems go-to-market our Framing and on Framing Systems to and importantly clarity approach a realigning The overall raise improve in

our accelerate unified We to a These moving market begin facade for the profitable focus, actions business Sotawall journey and Finally, our plan simplification more services we architectural growth larger execution. into improved create to to of through details Invitations the custom projects. offering and share are in over it the Investor expected Nisheet our weeks. provide out Investor our couple strategy Day outlook. more details upcoming in are me next turn the go that, for on With to to let Day. of to quarter

Nisheet Gupta

you, Thank everyone. good morning and Ty

proud maintaining significant the are we this Ty momentum challenges the As in our quarter, team’s efforts despite we our of business mentioned, faced. positive

Services by presentation. with and both X%. consolidated double-digit segment. start grew me earnings led revenue of our was on in Total X Page by Let Architectural results LSO This growth

were on margin basis quarter cost included included and of on Glass of Systems. costs This of reported costs the we in we restructuring estimated to costs and announced total As restructuring due by our million This challenges. expected, included the $XX.X gross million some pre-tax lower the various in announced were income between of restructuring, volumes the restructuring These $X.X Architectural continued our $XX.X points. was softness SG&A. the XXX Framing reduced and million chain market million. $XX sales statement. we quarter The are in million related were $XX XX. in When to line actions August supply costs.

most expected, quarter. this in incurred of As the was second

first total Based fiscal than on complete initially to-date, to continue lower expect quarter that ‘XX. restructuring to costs expect the we our be progress We be will of largely estimated. restructuring by now

pre-tax approximately $X quarters. We costs next be two the expect million incurred of to remaining restructuring over

inflation, headwind higher adjusted million. quarter. The the had Excluding we of place year-over-year year. down was million second last driven resulting cost in temporary from was $XX.X in last in input mainly by a cost, quarter the $XX.X $XX operating restructuring labor year’s reversal income cost million This the and from the costs, was primarily which actions decline was

$X.X transformation improvements savings finally, and initiatives. of cost insurance. cost benefits pricing, improved had cost These enterprise million and operating structure increases productivity by we to increased approximately costs offset procurement we Additionally, our were partially had healthcare related of from initiatives. And

the in first adjusted by operating This in driven XX down our performance of points was was to margin primarily While quarter. sequentially stronger Services. X.X% improve Architectural did basis X.X% by margins compared year-over-year,

results stock earnings costs benefited adjusted share. diluted count $X.XX per adjusted included Our quarter of this Without lower net by our reduced This of came to improved the million. lower resulting Similar first and this first loss $X.XX impact, restructuring also in buybacks by in We of from to share a from compared margins, year. reported expense at half the debt XX% balances EPS sequentially, net restructuring the $XX.X a driven increasing the share. quarter. per interest

Framing offset costs. results, revenue than included are by was by million and This of lower Let’s slightly Starting reserves restructuring volumes pricing. of Systems, supply X. year. which segment partially driven Architectural on million lower prior was $X improved turn to Slide this Framing primarily quarter chain with the Systems challenges, $XXX

gains restructuring, offset the partially volume, was than X.X%. was prior X.X% cost by improved from driven from prior that restructuring adjusted X.X% and productivity actions. the resulting inflation margin pricing Excluding Sequentially, by improved margins lower and lower operating year, to

revenue X%. to Glass Moving segment, was Architectural down

was As Glass restructuring volumes. to $XX.X segment’s by impairment Velocity related was included along of expected, This driven asset primarily for million lower with closure severance of employee this results The costs. costs. business,

costs opportunity other productivity our were differentiated We these expect higher adjusted from freight of costs, increased costs. Glass Framing with products in restructuring breakeven. improved most Most materials labor were margins improvement. the improvements. segment, higher Owatonna, the lumber The glass, systems improvements restructuring the profitability framing by impacted announced Glass Minnesota primarily contributing segments. also fourth were to value-add mix on see where margin in in the August and and long-term should along offset The quarter. starting the facility. focused cost see of long-term sales margin and by with operating actions are Refocusing business now actions and we to be and along for high Margins is Excluding glass higher slightly above

We came XX% gains. Services we Services, million have backlog. in XX% project $XX productivity million are continues continuous projects improvement continue to margins income operating X.X%. Operating focus grew at renewing our on to in lean grew Architectural execute as strong to and $X.X to drive revenue and segment to execution. The In

a margins year. quarter. down compared to full were was the overall compared in We remain for outlook nice slightly confident first quarter and improvement While year, to this the the Services prior execution

encouraged also trends in to improving our grew of Services three order We’re quarters. has this mentioned, net by Architectural And as Ty the each order increased quarter backlog the flow $XXX million. last

operating of expenses finally, increased million. primarily driven mentioned with LSO XX.X%. And normal year’s that healthcare also was million more this Scale also of million normal included continued corporate year’s to compared line grew XX% our last costs Revenue quarter and mix $X.X from COVID-related to transformation The level $X.X products, has to LSO $X.X our of is Optical, by to and operating Operating corporate quarter. was costs. has margin of restructuring recover more returned Turning to $XX I profitability. a to increased to Large returned This last sales shutdowns. premium million income projects costs included related second earlier. Demand

last expect We remain year’s throughout corporate fiscal above will year. rest the of the expenses level

Cash our brings flow quarter Page through remains is typically year-to-date and last of the than flow and results million. unusually sheet strong. strong. million. X, These flow lower $XX flow operations are fiscal which year, to Cash where to is the was the the strong cash in Turning was cash balance flow year. cash $XX This been half it first above has from

actions Year-to-date CapEx benefited $XX.X to remember, cost reduced last related you As year, from we level. capital working is below COVID. last temporary million and year’s

initiatives. year up more second approximately on fiscal we previous down million. to year-to-date expect We our as Based the $XX investment half CapEx the we of related now spending expect $XX see of estimate in million, of transformation capital year spending, ramp to from full

million We first we $XX continue to and double cash shareholders. from Year-to-date, the to more last in share over level is year’s that buyback half. return returned than have dividends

very Net debt $XXX down Our million. to balance sheet remains is strong.

have new debt to until no our no in vision of credit revolving strategy. maturities We significant we significant start have execute This we borrowings on as facility. $XXX June strong XXXX, and our enterprise provides million flexibility

of to Page outlook an our turning Now, our we XXXX of our are Ty reiterating fiscal mentioned, on basis [ph]. to for year a presentation, rest the of based which full XX is $X.X in as $X.X guidance on adjusted EPS range

this As especially believe will and quarter in chain faced likely In Glass a the persist. excludes will significant and expected restructuring cost issues, reminder, costs. this challenges guidance supply inflation headwinds the we segment. order, Input framing we remain

parts framing line top in softness lower systems We volumes expect business. particularly in in short continued the lead-time and glass, our of

from headwind continued cost last also place the temporary in a reversal were year. faced that actions year-over-year We of

headwinds. and these on to closely costs, adjusting execution, working including pricing inflation managing our controllable benefits to to near-term a taking restructuring. actions from offset offset We We focus achieve are continued

these actions year will facing, the headwinds we in outlook. expect which confidence our are of gives We much us full offset

Our similar third quarter will the results to quarter. likely second be

last architectural expect year’s a when expect larger included as as third pricing glass the actions. benefit our to realize Also credit. We quarter. move in benefit and fourth a $X.X third make not year’s earnings new we will market into repeat from will more million this benefits improvement reminder, to restructuring quarter of the This tax quarter in we related

year. offset I’ll remarks. fiscal This outlook remains to we Ty we put as it the can will to concluding confident footing our continue substantially to close are that, in as out in the headwinds With the team near-term, fiscal we move strong XXXX. over us for execute into So challenging our while back that turn some

Ty Silberhorn

Thanks, Nisheet.

As progress able There to team proud of very this was earlier, moving quarter. team’s drive positive am I in business. a of efforts said our momentum I were sustain our our but pieces, and lot

continued significant financial move encouraged which particularly flow, our cash as by are strong we provides We strength forward.

quarter. will operating through We especially our third expect challenging, the remain environment

right our of company This strategy have the challenging, position time economic the Most to headwinds, fourth results the Apogee. exciting remains to we offset a to quarter taking better for the see move elements Our We next we fiscal actions year importantly, we are long-term. team challenges knew execute will be the improved and for these in year. to beginning path those an as increased given is into this environment. and and broader

fronts, also a that larger would work. today, we highlighted shift to But We realized this details the start we’ve to are with to of on we really you fiscal making with we being expect ‘XX time we and we fiscal in strategy sharing our out see upcoming as accelerate And take year. progress year take on it implementing Investor that, would the as several forward making close that this major Day. ready and look questions. your more We to with are

Operator

comes [Operator Chris from Our Securities. first the line with of question CJS Instructions] Moore

open. is line ahead. Your Please go

Chris Moore

good taking Hey, for guys. the Thank questions. few morning

Ty Silberhorn

morning. Good

Chris Moore

Maybe morning. inflation. with start just Good input

talked you about really it’s glass where little it Is Glass. easier $XX from that little and was a million provide within bit. there headwind. or pricing? talk to split to bit more understand if than is trying to a raise coming detail you the easier like of Framing the maybe It So on framing and sounds that could I wondering most a just segment

Nisheet Gupta

Chris, Sure. Good this morning, is Nisheet.

have on in offsetting $XX quarter today the inflation actions a gross we that. So million to-date, is place for lot of

the for the $XX million. million. this as about of on is When quarter pricing split million, quarter. XX-XX think you I basis, glass on would savings moving year-to-date basis, about $XX number and the $XX inflation split. million on helped net a the it’s offset well a procurement And about within XX-XX impact is this, has So fair so between the as on would the would are I say There a But split a lots of directional be framing inflation. say segment pieces of $XX

us time the as certain number are a times our to look of do As it some some the of for to we we of takes committed projects. lead we changes at recovering businesses, price start

we we four. remain a to So inflation positive net but on impacts in under three inflation, expect quarter through quarter coming trend negative start to see our

Ty Silberhorn

to Yes. Maybe, Chris, I’ll just that. add

to that the never lot about trying think respect see obviously, have least become year them If broader even you with framing it, going increases, ourselves. some across like months not to though price this economy. in offset Framing split but shorter industry used at it costs Customers to I first has to we’re as cycle time. several a pricing, of of mean, just a was our

So been more taking they pricing. have

probably they inflation. a larger of So offset that chunk

However, bit for net increases a sales forward. it’s the flow been quoted and how on them cycle through just pricing little still there is been in longer time as giving glass speed the their jobs go that negative see price to a bigger ability a projects are and and we given of lag

Chris Moore

term, Very end million expectation $XX Got that is to helpful. I the of guess, savings ‘XX. it. the by longer $XX you fiscal million can annualized of achieve

between $XX this perspective, point? Where certain at that what to savings talk from can are less big million? would a and about the going delta come Just drivers, those picture you are $XX that from million be

Nisheet Gupta

Sure.

to restructuring the it, about all people. of the in get So about I and is more that improvements framing our cost it’s we there if to or segment, improve Glass goods SG&A Framing So our and think structural is on think are where say an on on areas piece split program glass sold doing, to importantly, we segments. a would there piece if you a both our restructuring, running but focus is going of is the right? you

of piece benefits. as facilities, restructuring we to go. we people let So our shut our would down be one have some That of

be and I can on pieces and two optimization that Ty. SG&A. are Those The from the second restructuring important shutdowns think cost would related optimizing of cost our of facility

Ty Silberhorn

an doing perspective but we think over go services. And No, savings consolidation from fiscal the also the high-level business moving simplification realignment framing in as that the really that larger Yes. that will we’re hits impacts some Sotawall into that that to in from year framing, I it. architectural it SG&A obviously, our well. There next is benefit

Chris Moore

Day, range Got may for it. This is for non-res restructuring a market operating bit for a me. maybe is margin but Last little be stronger? complete expectations one Investor Glass once question and your

Ty Silberhorn

right to Yes. with put or can the business parts for identified the I market at you fiscal segments. more that with this of more guidance I that delivering through respect into well emphasis and and to the any strongly, margin we now in and work, that’s business opportunities overall margins and Apogee any value will improve shows to would customers, that strategy as say tell point, to our differentiate value to probably focus which of not margins. to ready really ‘XX shareholders where more long-term significant ourselves respect up in want the refocus the turn Apogee for we we’re we for our

is We upside glass. year that for for significant the margin So some improvement the over on so. see them or do next focus

Chris Moore

leave it there. I it. guys. Thanks Got

Ty Silberhorn

Thank you.

Nisheet Gupta

Chris. Thanks,

Operator

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

ahead. line Please go open. Your is

Julio Romero

Nisheet. and Ty the for taking questions. morning, good Hey, Thanks

Ty Silberhorn

morning. Good

Nisheet Gupta

Good morning.

Julio Romero

examples to speaking the margins high-performance maybe your bit more maybe the release. to on maybe out of broadly you August you wanted without forward focus premium on a in I called Glass? press talk could So little products Maybe Glass I string if product think that some the the speak going about segment, in

Ty Silberhorn

Yes.

position in on Let of capabilities we as as will Day. the where me an parts this looked doing that to the leverage can at have part we the now it opportunities we at wanted into of to market, market, well area some varies forward. you especially is go that foreign we we look certain level, their the as the and opportunity coatings is we are on business give of we saw deeper types into have we But unique is competition. our versus Investor that that high selling certain projects portfolio. differentiate of go a and competition, where What emphasis of It ourselves on stronger as is some that putting some an we

market. also an value take more We into to we bring see what opportunity to

in Some that would organic that of innovation ourselves. invest be would product we

be other we that the partnerships that thereby glass out can through would third-party our essence, leverage market technologies where it margins of are Some we with of are selling also the to in raise combine higher offerings in generate and value what and business. for that

Julio Romero

color about a the of you restructuring support there. at in Appreciate Can will you activity. segment? Owatonna give Great. And maybe additional spoke and the looking the adequate what are running to be capacity rates at you post Glass sense like us what utilization

Nisheet Gupta

our we we of don’t shutdowns based With can on work. capacity that Owatonna of detail the of And productivity believe is that’s have into continuing mentioned just next work our part there of growth adequate take really for we expand restructuring, that in capacity the lot market All that say utilization. productivity kind several the years to to of we capacity on that are still is Sorry, level as that’s couple happening all coming I comment up. have a on now. right we

Julio Romero

you side, of Okay. backlog see sequential trending on fiscal I on, one for it year? the improvement just to backlog me, how you remainder will services some Fair the did the for see enough. last there. And for Can you services think is then pass speak I and

Nisheet Gupta

in saw the out was sign challenges. is year this economic a the it we for as as see that still think moving I around with that quarter. that unevenness to look business we expect There just positive quoting broader activities we

going very the improvement up thing. the we So, in positive orders a seen backlog have is and

not we got to moving are good that business victory very that call positive ready we some We we as respect consistently signals forward. will see with ahead, to but that move have

Julio Romero

Great. it and Thanks I on. very much will pass

Operator

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

open. ahead. Your go line is Please

Eric Stine

Good morning, everyone.

Ty Silberhorn

morning. Good

Nisheet Gupta

morning. Good

Eric Stine

trends a at you to you little I services. to the just I obviously, you business, one feel know start the now, in well that of a are that doing question services as little follow-up mean impact said than is and last bit, businesses. the going but early the on But too So, that later I the to downturn bit other will look you are call on

– stand get that you and which more is feel confidence do of I backlog, that some sizable mean, in glass for of where very and to fiscal does making ‘XX As still terms your of I services clearly up about framing, mean you optimistic kind softness.

that So, maybe able there? business some are to flat than ‘XX in rather compression you keep

Ty Silberhorn

actively working fiscal that not fiscal fill see guidance appreciate I it’s would business midway them has soon the I question. downside that later to too how we to really given we see that did commented are call gap. that ready And I been anyway tell we performing. that have give are on calls Yes, to that What just on previous ‘XX. this they hitting team, will while is you year, through

So, progress continue I see them to time to give forward. continues. that And think we to we work have as that

year We quarter, bit as ‘XX fiscal calendar to fourth and more our we have visibility insight in some to of will end then the get that we start the better have certainly for to will business. little a

Eric Stine

that. it services Yes. executing. how No, sound I are can appreciate you been pleased has But does like with

are it it on. you on would just so that sounds – will in path been have like that they – And the they that context, your optimistic looking continue at

Ty Silberhorn

Yes.

as not deliver this see year, how have have that its a been And a been ‘XX. of move Sotawall to under pleased we well. out business frankly has from they is strength strength year the after to also and only that that business they build fiscal year working as performance within some opportunity perspective to raise where opportunities that because and margin with leverage that last and saw how very really business performing been having We great margin we

Eric Stine

Yes, got for Well, maybe one last it. me.

to Just focus that market of the what Glass that that’s clearly, that anything maybe you a learned on. operationally business, on decision in of in whether in learned or Maybe But back velocity and you it’s the the can to talked you just market-facing the want you take not you business that part segment? now about have August. rest

Ty Silberhorn

Yes.

looked As through the business market, future out. into we to strategy significant as market the the that looked that saw respect market at playing we we with as current how pressure on And margins. work, at we well saw

we anticipated that the not so we that business. not seeing originally therefore, price margin expected the points were was for seeing that that And and

wasn’t few that was were what we a the space, view really forward. a product that in being from the automation a next as end different years. technology led difficult improving that while to doing So, said we well, to see materially forward-looking differentiation from our as our And goals taking that and decision move dilutive we over the margins exit we took didn’t perspective. and it approach and us And saw business. That to ROIC a as It itself. it strong

We are respect those and some the with are team sale indications investment working as to we of operations, we some shutdown as offset that positive to that effectively diligently seeing well. with the through equipment of

Eric Stine

Okay. Thank you.

Ty Silberhorn

Thank you.

Operator

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

open. is Your Please ahead. line go

Brent Thielman

Thank you. Good morning.

Ty Silberhorn

morning. Good

Brent Thielman

just the move does from perspective? become Ty of a business services into Nisheet effective, when reporting the or Sotawall

Ty Silberhorn

Sure.

transitioning Xst March would you businesses. of on seen But So, we will of transfer the the parts working some XXth the year. business have fiscal are happen next announcement, already real August of in as the from of

will within understand and Sotawall the the our be a We segment business this or drive. moving the business is can lot they opportunities focused understanding on are key it. of year, we transitioning And to Services trying looking pieces at

of year. March, say, So, of our from numbers starting from restate Xst segments we are let’s next looking to, some coming – recast or and

Brent Thielman

And services, revenue growth, little mean, a lower. margins then but Perfect. Okay. were had you good the on I

the Is in for guidance You change of last different the some of just talked margins year versus services the your the business, a the about expectation function mix. mix for of the in year? that rest for

Nisheet Gupta

Yes.

comes element this say is an in project performing would business that well. And I services there of is always really So, along business. mix

ever. highest in we to It strong they the a that the hard the XXXX, and margins will improve repeat continuing in but the job sequentially, down project exceptionally how So this over as their in their can quarters, ‘XX, team business but projects. see And we their is strong are margins to be backlog strong. is quarter-over-quarter, select margins, good second fiscal opportunities going selection still very in doing see to

good see be and to over positive continue momentum time. should improving margin we So,

Brent Thielman

the could The the going here? be come transformation initiatives all could this there out to – to that that, that we sheet guess are facility also of of consider and assets coming estate might Okay. contribute significant there some consolidation real I that’s balance with

Nisheet Gupta

of that one assets What announced looking in are we at. XXth, we August the key have

Beyond assets that, significant our do now. for any not opportunities see we on

some the was course, Of for the and Glass those be now, assets assets, of the part are segment different we assets our on strategies of XXth announced terms whatever are evolve we decisions continue August in course and reducing. are to that of time. But of strategy in execution of understanding made our that on may key

Brent Thielman

year-to-date, half, well just from year-to-date? fiscal mean, below the CapEx second the Are saw I revised I that. CapEx the that rate up there Okay. And that you guidance, running have we guess of run projects then seen sort you step earmarked in some are I

Nisheet Gupta

Yes.

So, where investment. far, reduce have have if we you so which to our the want we enterprise done more strategy want that we invest are and the understood work we think do where about to areas

already. that’s of of at year. up the ramp in looking the our invested reasons what lot have are that differently versus of in strategy originally one backbone work some we half happening the we doing, key year. work second are thought that’s systems we to plan continue enterprise the that A it will fir was and secondly, investing we this And of So,

Ty Silberhorn

Yes.

seeing things and a actually This with will strategic caveat, that is had mean, in on sense better we that. said, Nisheet we are that’s materials, as some Ty, The I we perspective, slow a manage having de-prioritized queue. in we a some second we work from the strategy half. dependent investments planned just the were supply. team And raw of from that do were step-up those So, as expect of the until walk the

of to equipment to we So, and rely have in the the execute etcetera. will we know bring on ability some that work want that to

now are level go half. we something that we the as spend But second through So, that to move watching is as ahead. that plan to our is we

Brent Thielman

Great. Thank you. Look more. forward to talking more and

Ty Silberhorn

you. Thank

Nisheet Gupta

Thanks.

Operator

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

Please Your go line is open. ahead.

Jon Braatz

and everyone. positive ABI glass months aluminum, bodes and so that that tabled has architects industry as that? But the Do these see go. a with seeing hopefully, X where while people, projects you road. on. the been is such are and index so might morning these Good last evidence some Hi, anything discussing to pressures costs the the that for you well down of the seeing, cost be that they on, see for Are maybe any

Ty Silberhorn

might are as really on soon to We going a non-resi tell It’s impact have it’s the material you say would have if too we seen watching I to recovery. closely imagine. that that with saw come and push projects other time, at pull that. or some same respect schedules to quotes the bids. pause projects for forward were out we ahead And ready to their

what So, as as what’s projects. seeing. the to what other this come that with that in as any signals workplace deciding variants out, happening are return people Obviously, Delta could with it’s an do mixed point to we with at well variant, been COVID, impact are have far

that. pointing recovery the say but watch something I continue recovery. we of a that’s So, to we the seen an haven’t this it’s deceleration of at to uneven, to or pointing would point, anything that’s acceleration

Jon Braatz

million said the you and in restructuring announced it’s, of And $XX million to or the million it, $XX think What’s couple $XX the when difference? delta to perfect. that. like something months missed $XX ago, million costs – I I $XX may there what’s million you Okay, and have a now what,

Nisheet Gupta

numbers yes, So got right. the you

as million selling. now. buyers we looking million was we in spend estimate, the $XX some from anticipated a $XX potential had There that $XX change to we $XX million the So, of to about and million a for are that assets to initial are is interest big

We assets some the down need of we don’t to write see have equipment. and that good we interest seen therefore, a and property, and plant

details monitor equipment. by more We property, quarter time transactions continuously will and have which details and selling some on three of provide will this on these plant these we in

Ty Silberhorn

those future an would us, say would are out M&A, together looked a put thing. the units move area plan. integration how this we quarter, that I forward, detailed as the of actually really the point we where of get executed will is if we executing And confident coming good well some work. mergers. this very of flow teams very against into our the business for extremely piece to into a approaching at We is we that team are against this which this see other And have plan want that going ahead the was strategy we we well as across Jon, benefits on is fourth the back some work to

this will teams some the and do is work. Wausau is intend to which so at to our building that portfolio and we to we exercise future, the Our EFCO to teams we a point and market, back how managing that an playbook to out some that and manager, that’s in are for means muscle, they start can Window they Wall our instruction and are combining business the chance a because start be of exercise active be in

Jon Braatz

Thank you alright. very Okay, much.

Ty Silberhorn

you. Thank

Nisheet Gupta

Thank you.

Operator

questions And And conference I the any remarks. back further this Silberhorn time. showing at Thank turn you. further no would for to Ty am to like over I

Ty Silberhorn

environment. are and for in Well, today thank you us learning how even driving a joining we Michelle and thanks progress very everyone challenging

As some have ROIC offsetting And near-term cost and through are margin significant significant we headwinds see actions we we navigated of earlier, second I this said difficult the we to taking long-term faced. protect quarter margins, but for gains. opportunity have

or progress on to in execution. strategy forward that, will great day our person seeing at week. have on our a long-term upcoming share done With and work made to you, Day outlook have We Investor we we and of look where and our great more have strategy. Finally, we rest that your you thank virtually a

Operator

conference concludes Thank for This call. today’s you participating.

You disconnect. may now

Apogee Enterprises (APOG) 21 Sep 212022 Q2 Earnings call transcript