Apogee 2Q Operating Loss Narrows On Another Revenue Gain

Apogee Enterprises Inc. (APOG) fiscal second-quarter loss widened due to benefits the year before from now-discontinued operations, but the industrial-glass maker's operating loss narrowed on another revenue increase.

Chief Executive Joseph F. Puishys noted some positives in the latest results, his first quarterly report at the company's helm. Apogee has been reporting some encouraging signs in recent quarters, such the first quarter's top-line gain--the company's first in more than two years--and backlog increase at its biggest segment, that for architectural glass.

"We grew revenues organically while substantially reducing architectural segment losses, and we were nearly at breakeven excluding the CEO transition costs," Puishys said Wednesday. He added that Apogee had positive cash flow from operations and maintained a "solid cash and short-term investments position."

Puishys became CEO Aug. 22, late in the fiscal quarter, as the successor to Russell Huffer, who stepped down as chairman in January and stayed on as chief executive until the company found a replacement. Puishys has participated in manufacturing businesses for 32 years, coming to Apogee from Honeywell International Inc.'s (HON) Environmental and Combustion Controls division, where he was president.

Apogee swung to the red in every quarter of the previous fiscal year, as an anemic commercial construction market resulted in weak architectural-glass pricing and low capacity utilization. During the recession, the company cut jobs and spending to match lower demand.

For the quarter ended Aug. 27, the company posted a loss of $1.7 million, or 6 cents a share, compared with a year-earlier loss of $122,000, which was a break-even bottom line on a per-share basis. Loss from continuing operations narrowed to 6 cents a share, which included 5 cents a share in CEO transition costs, from 18 cents a share.

Revenue increased 14% to $165.6 million.

Analysts, who typically exclude one-time items from their estimates, predicted a 4-cent loss per share on revenue of $158 million, based on a survey by Thomson Reuters.

Gross margin rose to 15.7% from 12.4%.

Sales climbed 17% in Apogee's architectural segment, which provided 90% of total revenue, and the segment's operating loss narrowed. Sales were down 5.6% while earnings fell 17% in the large-scale optical technologies segment.

Backlog in the architectural segment was $231.3 million, up from $193 million a year earlier but down from $247 million in the first quarter. The company said the sequential decline was because of timing of projects entering backlog.

Shares in Apogee, which affirmed its full-year outlook, closed Wednesday up 6.8% at $9.28 and weren't active after hours. The stock has declined 31% so far this year, a deeper drop than the wider market.