Apogee Enterprises Inc. (APOG) earned a modest 1 cent in the fourth quarter of fiscal 2010, missing the Zacks Consensus Estimate of 11 cents. Reported earnings were negligible against last year’s 40 cents.
The Minneapolis-based leader in technology involving the design and development of value-added glass products and services reported a 26% year-over-year decline in quarterly revenues to $148.6 million. The company attributed the decline to a lower demand from the commercial construction market.
For fiscal 2010, Apogee earned $1.15 per share compared with earnings of $1.81 per share in the previous year. Revenue for the year was $697 million, down 25% compared with $925 million in fiscal 2009.
Segment Results
Architectural: Revenues of $130.5 million were down 30% year-over-year on lower demand from domestic commercial construction. The lower demand resulted in a reduced production in the segment, thereby leading to lower capacity utilization.
The segment reported an operating loss of $3.6 million, compared with an income of $15.0 million in the same period of the previous year. The segment is involved in designing, engineering, fabricating, installing and renovating windows and walls of glass that make up the outside of commercial buildings.
Large-Scale Optical Technologies: Revenues of $18.1 million in the segment were up 13% year over year. Apogee’s picture framing business maintained revenues and operating income despite weak retail market conditions. The company saw increased demand for its value-added product in the segment.
Operating income was $3.6 million, down 2% year over year. Under this segment, Apogee manufactures value-added glass and acrylic products for the custom framing market and produces optical thin film coatings for consumer electronic displays. Essentially, it provides coated glass and acrylic for use in picture framing applications.
Apogee’s cash and cash equivalents at the end of the quarter was $102.6 million, up from $83.1 million in the same period a year ago. Long-term debt remained the same at $8.4 million as of Feb 27, 2010.
Management’s Guidance
Management expects Architectural business to remain challenging in fiscal 2011. The company is likely to record another 10% to 15% decline in the top line. However, the company has a potential for positive earnings per share. To manage through the economic downturn, Apogee has implemented a number of cost-cutting initiatives and is evaluating further reductions in headcount and discretionary spending.
Estimates Revision Trend
Over the last 7 days and 30 days, one out of 3 analysts covering the stock has revised the estimate downwards for the upcoming quarter. The Zacks Consensus Estimate for the first quarter and full year 2010 are 9 cents per share and 63 cents per share, having a downside potential of 133.33% and 33.33% for the first quarter and full year 2010, respectively.
With respect to earnings surprises, Apogee has missed the Zacks Consensus Estimate only once in the trailing four quarters. This is reflected in the positive average earnings surprise of 24.02%.
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