Source: Apogee Enterprises.
Over the past three months, shares of Apogee Enterprises (APOG +7.59%) have performed extremely well, especially given the challenges that the rest of the market has faced over that time frame. The glassmaker has capitalized on strong demand for its architectural materials, and bullish shareholders counted on Apogee's success to continue in a strong U.S. market. On Wednesday afternoon, Apogee reported its fiscal third-quarter results, and investors got to find out whether the company's success would justify their high expectations. For the most part, Apogee delivered on its promise to shareholders, providing solid growth and signs of further gains for the foreseeable future. Let's examine Apogee's results to look for signs of just how well the company is doing right now.
Apogee's growth shines in the sun
Apogee has had a knack for outperforming the expectations of its investors, and this quarter was no exception. Revenue for the quarter soared 23% to $244.4 million, exceeding the roughly $239 million that most of those following the stock had expected from the company. Earnings per share posted even more impressive growth of 42%, although the $0.47 EPS figure was a penny less than what analysts projected. Perhaps most impressively, backlogs rose to nearly $494 million, up 65% from a year ago and showing just how strong the demand in the industry is right now.
Looking more closely at Apogee's major business segments, though, it was clear that the entire business was running strongly. Revenue in all four of Apogee's businesses grew, with architectural framing systems leading the way with a 36% jump coming from a roughly 50/50 split between organic growth and recent acquisition activity. The architectural glass segment, which is Apogee's largest division, jumped 23%, and operating income soared as margins almost tripled from year-ago levels. Growth in architectural services and large-scale optical technologies was slightly more muted but still came in with double-digit percentage gains.
Source: Apogee Enterprises.
For its part, Apogee was pleased with its results. CEO Joseph Puishys pointed to the success of its four divisions, noting that only the Architectural Services segment failed to produce strong earnings growth for the quarter. Puishys also bragged about Apogee's strong gains in efficiency, with operating margins reaching their highest level in five years.
What's in Apogee's future?
In response to its favorable results, Apogee boosted its guidance for the full 2015 fiscal year, now expecting earnings per share to fall within a range of $1.64 to $1.72 per share. That's in line with what most investors expect to see for the year, but it also reflects the company's expectation that it will finish the fiscal year on a strong note. On the revenue front, Apogee continues to believe it can see 20% or better growth for the fiscal year. As Puishys said, "The strength we are seeing in our architectural business combined with positive forecasts for our commercial construction markets give us continued confidence in sustained growth for Apogee."
In particular, Apogee's backlog gives it a considerable cushion against any potential slowdown in the future. Of the backlog, Apogee expects to complete less than 40% of the work during the current fiscal year, with $312 million in backlogged orders to be delivered in fiscal 2016 or beyond.
Apogee stock didn't react very strongly to the results, barely moving in after-hours trading after having posted a 5% gain in the market session before it announced its results. Even if traders balk at Apogee's slight earnings miss, the company looks well-poised to take advantage of strong conditions in its markets for the remainder of the year and beyond. That bodes well for long-term investors in the company.
