Companies that have ties to the construction industry have faced many challenges in recent years, and architectural glass and framing specialist Apogee Enterprises (NASDAQ:APOG) has seen considerable ups and downs in the pace of its growth over that time frame. Despite hopes that infrastructure spending might lead to a rise in business in 2018 for Apogee, many investors remain nervous about the company's ability to keep up what has in the past been an impressive trend of rising revenue.

Coming into Tuesday's fiscal third-quarter financial report, Apogee investors still wanted to see considerable gains in sales and profits, and they wanted reassurances that the future was bright. Instead, Apogee threw cold water on those hopes by cutting its guidance for the full fiscal year. Let's look more closely at Apogee Enterprises and what its latest results mean for the glass and framing company's future.

Blue glass ceiling with metal framing over a wide-open lobby space.

Image source: Apogee Enterprises.

Apogee is still growing

Apogee's fiscal third-quarter results showed the company still on an upward track, but the size of its gains lagged behind what more optimistic investors had hoped to see. Sales of $356.5 million were up 30% from year-ago levels, but that was still far slower than the 36% growth that those following the stock were hoping to see. Similarly, net income rose just 5% to $23.6 million, and even after making allowances for one-time items, adjusted earnings of $0.90 per share fell short of the consensus forecast among investors for $0.92 per share.

Many of Apogee's businesses looked strong. Revenue in the architectural framing systems segment more than doubled from year-earlier figures, reflecting the acquisitions of Sotawall and EFCO over the past 12 months. Even on an organic basis, sales gains of 17% were solid, with conditions in the key North American market looking favorable. Segment operating income climbed more than 80% on an adjusted basis, while backlogs remained healthy but slightly lower from where they were at the end of the previous quarter. The large-scale optical technology segment also did well, with an 18% top-line gain translating to a 14% boost in operating income.

However, some segments weighed on Apogee's growth. In architectural glass, revenue fell 9%, due largely to delays from hurricanes in Florida and a smaller number of large-scale projects. Segment operating income dropped by more than a fifth as improved productivity couldn't offset the loss of business. Architectural services performed even worse, with a drop of nearly half in operating income coming from a 24% decline in revenue.

CEO Joseph Puishys pointed to some of the countervailing factors affecting the industry. "Although we expect our architectural glass segment to achieve the second-best revenue and income performance in its history in fiscal 2018," Puishys said, "competition in both large and mid-size projects is restraining top- and bottom-line growth." Still, the CEO pointed to impressive results in architectural framing as helping to pull the overall company's prospects higher.

What's ahead for Apogee?

Apogee is hopeful for the future. Puishys stated: "Our strategic moves against a backdrop of modest industry growth for U.S. commercial construction markets position Apogee to grow and deliver historically high levels of revenues and operating margins." Backlog levels in architectural framing and services point to continued growth in fiscal 2019.

Yet Apogee had to reduce its guidance for the current fiscal year due largely to weakness in the architectural glass area. The company now expects revenue growth of just 20%, down from a range of 24% to 26%, as $8 million to $10 million of revenue that Apogee initially thought would come in during fiscal 2018 will now be delayed due to Florida hurricane impacts. Adjusted earnings guidance for $3.04 to $3.14 per share was down more than $0.40 per share at its midpoint from previous projections. In response, Apogee will look to cut costs, both in terms of overhead expenses and on the capital expenditure line.

Apogee investors weren't happy with the news, and the stock plunged 17% in morning trading following the company's announcement. In order to regain investor confidence, Apogee will have to prove itself right that the challenges it faces are temporary in nature. Investors will likely remain wary until Apogee's future results confirm its optimistic view on the situation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.