Image: Apogee Enterprises.

Niche applications in certain industries often go unnoticed, but some companies make the most of their opportunities and find ways to profit from them. Apogee Enterprises (NASDAQ:APOG) is a great example of this, with the company focusing on fabricating glass and other products that are used in architectural window work in buildings and in framing artworks. Coming into Wednesday afternoon's fiscal first-quarter financial report, investors had grown increasingly optimistic about Apogee's ability to sustain its strong growth; the company's results largely confirmed that optimistic assessment, with strong earnings and a favorable outlook for the future. Let's look more closely at Apogee's results to see whether the maker of architectural glass and framing systems can sustain its breakneck pace.

Apogee has a good view
Apogee's earnings growth actually accelerated from past quarters, with a solid business environment helping the company enter its 2016 fiscal year on a strong note. Revenue climbed 14% to $240 million, which was actually a slight disappointment to investors, who on the whole had hoped the company would match its 15% growth rate from the previous quarter. Yet the bottom line made up for any concerns about the sales shortfall, with net income nearly doubling to $12.1 million and earnings per share reaching $0.41, more than 10% higher than most had expected.

Apogee's results show considerable strength throughout the company. The backlog climbed 22% from the year-ago level to $470.8 million, although that was down about $20 million from the fiscal fourth quarter. All four of Apogee's business segments grew, with the key architectural glass division leading the way with the fastest revenue growth at 27% and a year-over-year tripling of operating income. Architectural services and architectural framing also posted solid sales gains of 8% and 12%, respectively, and even the sluggish large-scale optical technology segment managed a small rise in revenue. Vastly improved margins from all four divisions pushed up Apogee's overall operating margin by nearly 4 percentage points, doubling last year's performance.

In the earnings press release, CEO Joseph Puishys said "our results reflect our success in leveraging volume, increasing pricing, and improving productivity in our architectural businesses." At the same time, he explained the drop in backlog in a positive light, noting that "we added capacity and improved productivity in architectural glass to drive shorter lead times for customers, which has resulted in a faster backlog turn in that segment." Apogee can thank its efforts to serve customers faster for the division's strength and its contribution to the company's overall results.

Why Apogee expects even better times ahead
Apogee has strong hopes for its future. In detailing its overall strategic plan, Puishys said he believes the company's multifaceted approach that balances geographical expansion, product innovation, and new client opportunities is working. He also sees "continued strength of our backlog, commitments, and bidding and award activity, combined with industry forecasts for low double-digit growth for the commercial construction market sectors we serve."

Given that optimism, Apogee raised its guidance for fiscal 2016. The company boosted its projected earnings range by a nickel to $2.10 to $2.25 per share, reflecting the outperformance in fiscal first-quarter results. Yet the company still thinks revenue growth will remain in a range of 10% to 15% for the year. With expectations for more than $1 billion in revenue for fiscal 2016 and $1.3 billion in fiscal 2018, revenue growth in the mid-teens appears to be an ongoing target for Apogee, despite past growth rates that were faster.

Initially, investors didn't respond all that strongly to Apogee's news, as shares picked up less than half a percent in after-hours trading Wednesday night following the announcement. By Thursday morning's open, though, investors seemed disappointed with the results, sending the stock down more than 10% in the first half-hour of the regular trading session. With the stock already having doubled in just the past year, Apogee will clearly need to keep pushing forward to produce impressive results in order to drive future share-price growth. If its efforts to innovate and expand its reach are successful, Apogee Enterprises has a good chance of proving today's sellers wrong and posting strong returns well into the future.