APOG - Earnings call 3 2024 | Apogee Enterprises, Inc.

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Operator

Good day, and welcome to the Q3 2024 Apogee Enterprises Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.I would now like to turn the call over to Jeff Huebschen, Vice President, Investor Relations.

You may begin.

Jeff Huebschen

Thank you, Michelle. Good morning, everyone, and welcome to Apogee Enterprises Fiscal 2024 Third Quarter Earnings Call. today's Ty Financial Chief everyone Officer.I'd are to are Matt Officer; that today slides Chief Osberg, like accompany me Silberhorn, Executive Apogee's and there With remarks. to remind Investor These are section Apogee's website. Relations available of the in

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

Ty Silberhorn

you Jeff. thank Thanks, us morning, today. Good and for joining

delivered adjusted strong EPS last which are with record team follows of for highest from quarterly over more quarter second Page strong on quarter Today, execution are history X for performance. in discuss EPS highlights, margin outlook.Let's our quarter. our quarter, discuss provide end we delivered This Apogee's and those of comments to improved cash the another flow Matt it some future. to expansion, presentation. cash the turn company with details on and expansion we the improved markets adjusted performance, of continued delivered I'll the flow. start how was drive our another how We and earnings the quarter strategy earnings, highlights and positioning on continues the I'll Our growth our the and margin Then

of was revenue dollars increased growth. and with operating driving operating XX% continue in margin income delivered XX%.Once XX% by of the in margins structure, that XX% every improved double-digit could projects points approximately is basis profit we are again diversify during over cost deliver has our transformation backlog XX.X%, expansion focused they operating premium These improved the led which their driving demonstrate we These have effort Architectural have growth our and above to of we X margin They Year-to-date, our environment performance in Glass quarter. again, awards low new support. dollar value-added reflect While mix strategic current to strategic higher We year Glass. gains productivity years. segment we achieved target the Services volume The continuing growth meaningful by Glass and toward in results products.Another sales the to segment XXX growth their results goal range. quarter that this secured on even improved growth, quarter the types are an were past to significantly terrific awards their segment. highlight $XXX above delivered and sales reflect million our the project of exceptional

commercial and in projects medical healthcare, included labs, housing multifamily office. awards New transportation, education,

further the 'XX. deliver still should and already Large we 'XX. the beyond. allow since which since We At compared are we record investments solid as significant will gives Management slow. declines to years deliver System scale primary expansion award the on progress Glass doubled saw of Page X we Investor opportunities Western our deployment secured 'XX portfolio to been worked remain margin our major in build we late This margin to the backlog has for as of and in margin launch improvement has of us has X did also have shift business glass both aim increasing states.Given see business the segment.Architectural AMS back made stages fiscal core, is improved California expand margin That highlighted again, premium made 'XX. into we building first guidance great Systems value of of high their us.Architectural since of progress a fronts, market take operational into for compelling margin long-cycle the now and business introduced businesses and X structure. where Services lead quarter, fiscal It's a AMS Framing EPS. to rest earnings our with sustain optical our foundation, parts its the in businesses integration our expand plenty our across customers growing to in move their Framing our levels that profitability of strategy, management and Apogee more differentiated was adjusted complete. objectives; presentation. X-pillar execution results adjacencies through to margins competitive since of cost further opportunity our in see fiscal we ability the provide confidence Sotawall we for full than Day levels its today's has we've performance as our in revenue and favorable fiscal in strength to making volume are still a fiscal more integrated for 'XX as year on profile nearly and improve We step their and strategy. drive And challenged ahead revenue business. to We've helped And or we the them

strong offer end our with and year in markets. I'm see a comments very keeping strengthen opportunities the are Two opportunities me there growth Overall, has and of construction dollars. us.Now still mindset results ahead are we about let are We growth achieved, excited during further been some our for in, has profit calendar grow non-residential to that and construction the team margins XXXX. pleased years

than we've turned the over negative.Looking the current very own growth construction lending has is growth in In of in begun of commercial our manufacturing growth decelerate. pressure Billings been 'XX, business Index months, non-residential of total mirrors past This forecasts Architectural industry sub-sector sub-sector for forward market pricing have construction. in deceleration volumes. the driven call This has other rate projects tighter construction interest on given grown non-res in have ahead Apogee past product costs this much XX% every rates, non-res of non-res construction. that where sectors quarters. market to approximately offerings.Across year. And for by the the participation several the of putting has our like While what accounted the year, rather and to recent calendar low Higher increased most the seen in construction, been non-res seen standards of inflation-related has further market a indicators we've

this have in that quarter expect We in seen parts short-cycle of Framing fiscal and our up as slowing business some pressure we go business that show 'XX. into

side, in been downturn infrastructure a construction could the to softening shorter loosen low-single-digits rates Fed And calendar signaling the and a likely positive government now also institutional has However, we and commercial commercial This in for still overall also projects hold continuing of a what recent and shallower enable the expect 'XX.On rates we see should growth construction. of benefit from funding. interest to catalyst important to to is position us are success. growth. large construction strengthen this market.Within are and for opportunities macro our market growth. for that It's for for a accretive a environment, diverse Regardless large tight Apogee continued portfolio for providing working market, opportunities strategic, remember the acquisitions make provide more M&A, end non-residential financially very of to we there and always

relationships outperform opportunities approaching growth of focused in gain to 'XX the overall differentiated those and us on seizing share mindset with deep positions industry. We believe customer our well a combination brands, fragmented offerings a fiscal market. We are to leading

mix, focus and above on been we us see over acquisitions.Of higher of And organic segments market, the We that we our such past performance through improving as X dollars the costs. opportunities years. education we also through grow and accelerate evaluate to success. opportunities to productivity, have our of will will our that focusing and further to transportation, our growth profit has continue build diversify will both our execution foundation revenue This continue healthcare. to expansion to the on maintain allowed course, continue and could growth growth investment rate, driving on managing project These

cash us flexibility significant with execute our Finally, to and our strategy. provide flow balance sheet strong

is team that, performance.With building strong on upon me it deliver let foundation to continuing entire and the to focused Our established Matt. strong over we turn have

Matthew Osberg

Thanks, Ty, and good morning, everyone.

partially by operating margin period. flow increased will favorable our XXX increased gross declined year very of outlook improved of $X.X short-term segment delivered compensation And double-digit XXX costs, short-term Framing.Looking by points million revenue. lower higher consolidated to strong per primarily primarily a operating First, our lower the product operating in and with improved well by in a The I'll margin mix results margin in begin to the with XX.X%. 'XX.The incentive lower $XXX offset benefit Services.SG&A impact Net growth despite higher share primarily higher and finally, Gross Operating fiscal volume up XX.X% lower primarily driven lower This and in our projects partially by increased to a some by and prior expense in was as less quarter year. volume Framing, in expense was results and margin decrease basis wrap income quarter. compensation due profit lower review X.X% of third strong with Framing lower earnings million on segment margin segment were mix sales. as Glass expansion, driven expense. grew preliminary points, growth items in fiscal segment discuss compared of I at million improved and insurance-related XX.X%, for These partially I'll cash expense. basis increase driven X.X% significant operating mix, were of results. pricing, Then net our results. revenue by the $XXX thoughts incentive offset Glass. offset in salary offset to the partially was results Glass sales updated by by The

the This for improved lower above the to Framing range Despite the $XX.X XXX to is to reflecting a favorable the our a sales primarily and entrance lower that the continued driven mix partially year-to-date.Glass by midsize and the XX.X%, segment lower for primarily construction of solutions XXX by savings due was sales partially cycle lower mix, doubled short-term in projects. and basis grew of XX.X%. margin of storefront shorter to compensation by the lower driven improved quarter provide volume this and both basis of The million. part As expense. described provides and primarily mix, by long-cycle XX.X% inflation.Services for the revenue deceleration contracted primarily businesses. cost non-residential the compensation solutions and due short the cycle expanded a operating for for be Segment margin incentive larger primarily partially Framing The initiatives, margin revenue activity impact and pricing curtain Framing and of than and continue wall is income lower impact productivity business, to lower longer was reminder, earlier.Segment This points Ty declined, cycle expense. of operating and commercial quarter systems offset of and short-term majority window operating to volume. projects, operating segment offset XX% X% in points by parts business volumes, volume to were The improved windows. segment and less margins mix business target custom-engineered more shorter framing cost offset incentive

offsetting However, to compared Corporate margin $X.X insurance-related for inherently quarter more a Services Services XX.X% improve attractive basis by towards million, On slower longer-cycle $XXX due expenses for despite of expect from finished the sequentially points in quarter. reflecting and again quarter.In to that the is shift improved with award the we The margins million number backlog was up from declined LSO, to with the by the our quarter activity changes of lower to margins backlog, lower was decline for margins.Services backlog depending XX% million sequential operating makes primarily fourth driven $XXX strategic Services projects second half the a delays the fiscal bid from declined on first Framing in awards. basis, improved XX of year, quarter. the in mix the In timing Services backlog as primarily second by This million by a in and Project typically business, continued million -- projects. to backlog driven $XXX lower at large trends $X volume. quarter. costs.Looking favorable revenue, backlog second quarter-to-quarter we saw relatively award. allow small in moving from variable projects project margins of

EBITDA in compared relating moved net backlog Through X down cash had debt was several compared $XXX.X $XX.X cash have This our $XX.X year to down of improving flow. reduced period facility. in strong our million of of already same last $XX ratio from in expenditures quarter investments year. debt those operations expand margin trailing paid cash to use our million business contributing year, to brings quarter.Turning with in of history.Our improvement fiscal primarily on through in million cash the capacity has quarter updated we an $XX.X for the revolving the in changes. automation.Moving quarter, leverage second as forward, cash primary the delayed quarters result operating at working debt quarter, year-to-date the the another year. bringing adjusted operating and We This flow projects productivity capital to million. have our to growth of The X.Xx flow to X.Xx the credit $XX.X the the year-to-date primarily achieved net of to fiscal company's the our capital driven of year. we by been the the enhanced Fiscal reduction to higher improvement we highest favorable million, We outlook of to million, XX-month year-to-date, had by beginning

adjusted our our of to XX% a increasing updated diluted earnings. third growth to year primarily compared We last implies diluted full outlook are EPS $X.XX, $X.XX EPS between to quarter year's range XX% adjusted $X.XX. year outlook This full to of strong reflecting

we now X% net year. Additionally, for fiscal will sales approximately decline the expect

Glass fiscal sequentially, expect margin moderation but reminder, our a operating prior we in of expect is margin compared partially improvement week an As year an year extra to Services by be sequential to a improve 'XX in Framing, LSO fourth the fourth XX-week with as quarter.We to in operations quarter margin. decline offset and consolidated

full million approximately to We through working year expenditures million.Looking continue and And million, XX.X%. guidance an $XX for currently we expect our to our in year to financial now are estimate between to expect to $XX we April. fiscal fiscal previous expect budgeting average rate $XX tax million from provide the of down of $XX 'XX, process capital ahead new

year. As few we work coming would like we thoughts to this a the through share fiscal preliminary process, about

on data the monitor to potential We continue and macroeconomic trends industry to business. assess impacts our

growth with improve calendar rates If 'XX.Growth industry for construction for impact low-single-digit interest non-resi rate most business. in growth forecasts calendar described, favorably Ty As are to expected begin called for by construction expectations decelerating 'XX, that non-residential impacted in could markets. interest and outlooks our financing

the significant on the not construction fiscal we 'XX industry, expect results. would with nature impact longer-cycle of our a However,

environment, market the across new and market industry of Within on with mindset Regardless changes a prevailing outperform continue productivity strategic driving drive approaching our strive growth a to we this this backlog further will the impact in next we do our market growth to as business. our in in top-line that are focus conditions, strong we quarter for will year structure.If fiscal improvements well see segments. segment Framing growth and primarily Glass growth our slower The year. Services we and gains positions cost 'XX,

for We in begins benefit additional that new see an continues also capacity. LSO to from expand business adjacencies opportunity growth and as into to

in of further operating 'XX, blocks XX% fiscal fiscal mix on a from volume, have leading a to year year-to-date Glass in likely premium market delivering and segment, 'XX margin and year basis. to begin sales benefits range income incredible rates we and We dollars of In and productivity, maximizing Services.Fiscal moderate the as to on compared project 'XX. impact are we will a target expect our fiscal within demand which strategy.For to our Glass margin mix, Margins to shift an rates of building should benefited Glass we've in lap favorable from has for this achieved been segment, have growth from focused we XX%. XXX% growth also on XX% what further our believe yet we and initiatives to volume while benefit to realize margin 'XX, positive margin has AMS negative segment pricing as backlog pricing

will As a percentage 'XX year-over-year revenue. for normal headwind revert a to which comparisons points on a create will fiscal X of reminder, XX-week approximately year,

objectives capital we in advance organic strategic continue expect was our our capital in investing share we be 'XX to strong and Finally, repurchases close, growth, continue drive priorities M&A profitability deployment fiscal dividends.To for and as cash and and returning shareholders quarter through improved another to this to flow. accretive to

progress it fiscal ahead.With Ty strong further track in year turn some We results the a year see are over for on deliver that, for in and to to remarks. 'XX concluding opportunities full back I'll

Ty Silberhorn

wrap another financial introduced years our allowing Matt. across new for wish I up, Day strong since direction, yet we set Investor in our sustainable we the quarter. Thanks, us strategic have targets improvements November XXXX. team at To X out delivering to driven our business, the exceed to we of In thank operating our

is successful close we focused we through out across to business both see on year. ahead, our opportunities this to we look team organic inorganic delivering continue quarter that, significant for are long-term as ready a profitable investment.With Our your questions. take to fourth and And fiscal growth

Operator

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

Christopher Moore

sequentially. 'XX? of the with Maybe the likely is And lower there? backlog, in has that work in calendar to start visibility Services we'll percentage see margin still XX% just Roughly, that we'll of $XXX -- that work lower within that's million, margin what up some

Ty Silberhorn

integration, recall, we money. announced standalone it was if the a business if as Sotawall had So Chris, you look Sotawall we it, at when that losing you

that at in stayed were in time. negative So EBIT, point they a

at as through Part supply that from productivity that and side But we then we services maybe have kind They of customer say become model. market Sotawall set our out integrated true well And worked them transitioning to model a those before. percentages. of move dip it's way they that through combination of project was we so fourth break that saw a was of get as revenue because go to business as I managing than how amount.So would it's that portion forward. won't a down really improve immaterial the a next shift model to and looking of year, as we would costs business out first quarter quarter going significant of business that backlog we different a

for on into margin they the provide 'XX. as that some tailwind additional them So side should go fiscal

Christopher Moore

helpful. Services with That's just you Perfect. that here? talked maybe growth that staying And about these? And in a work California, project challenges finding is -- big a are there any for the on to potential employees there moment, is

Ty Silberhorn

will, We California deploying have in some now. if key we regional the of a from you manage And project then of ago of U.S. to the year that that. personnel, have office the and established to a been other support parts kind business managers almost of

very So contractors large the by we work feel there country. in of the we're were out actually in of that parts one position. good We pulled other with we a

Harmon seeing project our And as a operates the high business. segment, flight 'XX COVID, good of not a under it's industry we bit the Western we only in also, as been partnerships. we in we're the calendar So of little is brand United known what projects that we of here about And softness that at landing have did integrated good a quality feel couple really we're Services of 'XX to part but too. bit the a the first got looking services quality in seeing, a with States.We've project, during as and little which

the So in region but throughout from we're West, the seeing the parts benefits not just other some of U.S. of there,

Christopher Moore

moving of Matt is get is stage of maybe of one to end sense not range Obviously, XX%, fiscal on being And XX.X%, Perfect. high as Glass necessarily the a this forward? it. just the to talked last to towards that about the just at repeatable range the is in but 'XX, Got kind bias margins. trying kind -- up

Matthew Osberg

pressure, next pricing on this dollars in Yes, And had my to said, Chris, talked about to year. Glass, at you're And remarks, that volume cylinders. maximize XX% range. phenomenal And we've we're volume results a we Glass it's and there's all like as segment the as if trying for titrate year to in look XX% great out, margin that they'll question. pricing hitting they're segment and within the pointing

to It what that volume maximize remain think pressure on as and range we're that to dollars. happens year we in EBIT look confident pricing. I So range. depends they very within we'll that that we're But able the next in get be

Operator

from comes question & Julio with next Company. Sidoti Romero Our

Julio Romero

segment, How the project-related on 'XX? higher margin the how does believe expected XX% affect the Maybe fiscal an X% the generally business, to to margins on still margins in expected that shorter-cycle And target the that of demand segment? than start which Framing portion I are pressure range? the is within pressure expected does

Matthew Osberg

still good for but were long-range they this said, segment. I in year-to-date I think that that's Yes, our the we in even this long-range still we they mean, think feel target quarter declined, happening similar like look in pressure a good adjusting assumption, that's somewhat periods. the a And it quarter, to year, their but volume ahead And -- and I targets what's of great pricing, they they're year. next get be -- we about Glass, will right, Julio, for might at as

opportunities there's look segment that as for still building in future. with we some into other some So the blocks margin us

Ty Silberhorn

negative. about see choppiness But to we in order have talked about. -- rate, Yes. we Julio. short-cycle And that, business and well, quarter we've volumes have mean, for did visibility I would all months I that talked we've in of add them to as X we the just to be short low

that we some of nice didn't growth. balance X bounce we so had where back get And month

was in October. to that the other a have the able we do That reconnaissance.The that's market, in same said, similar us than declines period. gather, all sign what with large compete from November and we they for So competitive better been our saw players we

out into then are back business, play how 'XX fiscal fourth there's on our quarter really we pressure revenue of fiscal extends assumptions our to continued fiscal if as and for 'XX. looking that that does quarter of using kind said, this some build feel for part But Matt still fourth 'XX, even we So that on then highlighted, the about have margin of sold.And have challenged. to pull operating of side you we down and business project margin coming that of as our a while levers the goods as it been from revenues, we good it productivity remains business, cost part percent really a that a of supply larger still has

So the kind that's have levers side some of with of and of margin an area deal accelerate also project that margin parts higher we business some our business. to challenges that that the of and further the on costs

Julio Romero

Got Services to very there. it. turning Maybe That's helpful segment. the

You And some inquiries And orders that's we the level then within that remarks, of in orders segment. are level secondly, but of you today in there how to that nature of prepared seeing type What if strong underlying expect I think, above shouldn't you within segment? Xx. there's guess, book-to-bill I fourth kind this lumpy of about Matt, segment? demand in the think kind of obviously so, quarter. saw the for your a the orders addressed we should

Ty Silberhorn

a say non-res calendar mean, we spread look Julio, the on of 'XX when few years. than bit seen questions the last firms there's construction, because have we research I just wider forecasting what would Yes. market, I the little in at

X%. plus to X% minus X%, minus from anywhere seeing we're So

some But get only everyone rate some rates, still think not people for see cut, interest until I lumpiness. more about I I on locking says we'll And going I -- see feel think contractors so to still grounded think they cost there. there's think some feels that project the until delays first that that in confident So in still cloudiness that their cause it's ceilings the that structure really awards developers, there. project.So

wouldn't of to quality. we that is like to I flight a terms in seeing QX net But QX said of before, So to that. and numbers in are I look little awards going bit a booking like assume relation

into quotes. segment nice our Services some seen come for have we and So bids projects

So sign. positive that continues to a be

Matthew Osberg

And thing quarter. project the the wins the we of really would in encouraging only see Julio, to had add, I that is diversity

looking that So wins that people have in, set diverse a can I of for we as encouraging are think that's reinforces and to and we project the to more provide if past have me. that quality come in

Julio Romero

Got could here here in more for just just one being working -- capital how And neutral cash the much working in If I have was it. runway on ask That's fiscal do the helpful. quarter, really impressive do flow foresee you just improvement? more capital is you 'XX?

Matthew Osberg

Julio. Great Yes. question,

in So we're good is, if cash -- growth strong 'XX you flow. back things of a doing in 'XX, I think benefiting One couple helps there's things that us. recall some what's fiscal fiscal and earnings

working nature I backwards from The what just just a the a of flow of little -- 'XX, the year, second, went happened comparability perspective, -- are fiscal capital bit. think some in marketplace that our cash working

I basis there's a some we're bad just seeing as to same year-over-year ahead type look fiscal recovery -- that to 'XX. you're happened guys of on a improvement think really if because you're think I compared improvement, 'XX that I do I year-over-year assume thinking strong abnormal 'XX.So about of to So going wouldn't in

If of able levels cash and thinking at I just flow, being a kind to about you're sustaining relatively us of good high think deliver doing possibility that. there's of

got through cycle as working high and that where look outcome this get I budget flow. our capital. able I level a are we'll from good more into cash a think sustain get of 'XX. at also opportunity into we think But a we of But fiscal we've to being some in is

Operator

[Operator Brent next from comes Instructions] Thielman Our question with D.A. Davidson.

Brent Thielman

lot here. But been Ty, Congrats great shape. your has one for on answered great is a just balance in Really me, quarter. sheet

of lot a off throwing You're cash.

other producing You're good because potentially I'd where market? great is, obviously at margins? business as we this all some focused assuming And things question curious by you've to those there, this intrigued there's LSO some non-residential great on and my go? you're opportunities you Are see inorganic. it got growth the there, just be opportunities I out within entirely prospects, starting organic is look guess,

Ty Silberhorn

the companies, cetera. process built coming tight. get we've Brent, question. just maybe they would process, -- has yet on Yes, remained have talk things been great we a a an talked we've -- we've as into many never We'll and pipeline. It they specifics before, resources, buyers that were et like. as And not there's we've that active got sense Even

And pulled are step an and as seen a about products back that. some result you company. processes think When architectural we we've and services of it, so primarily

from get I'd will about specifics, but of to in to product more standpoint, understanding us and accelerate as and things more with to our performance different say, diversification, of solid in point and a and work on products-related margin their think company. both portfolio we accretive large-scale now doing substrates. yes, a those if a So our really allow from of being we technology some you can some opportunistic you that and business acquisitions glass sets.And that we to and have extension business, look we polymer really via a we that are on way, We've there's technology strategic to if it what to know-how and product our into optical. are for that fit acrylic that coatings goals then, And or are acquisitions, as got business play about into but that great we business related project diversification coating invested an again, And won't accelerate capacity see we're Framing, diversify both additional in are that part hit types. probably

that that us XX% at something So we're grow likely accelerate XX% in -- as in that EBIT, that the as even not a but teens are that's perspective an EBIT space, it's acquiring well. interested look business things certainly that we're help business that in from diversification greater than we

Operator

call for closing like Silberhorn no are further There to turn Ty to the questions. over I'd remarks.

Ty Silberhorn

Have just know looking everyone today. holidays, I like wish happy Well, new holiday to I'd to up joining and for to of for against thank like forward your us and And you all prosperous year right great the a so us. I'd a just day. families season, we're

Operator

your does conclude program. Thank you participation. for This the

You disconnect. may now

Apogee Enterprises (APOG) 21 Dec 232024 Q3 Earnings call transcript