Apogee Beats Q2 Earnings on Strong Architectural Market – Analyst Blog

Shares of Apogee Enterprises, Inc. ( APOG ) rose 1.8% as the company reported second-quarter fiscal 2015 adjusted earnings of 35 cents per share, which increased 67% from the prior-year quarter and also came ahead of the Zacks Consensus Estimate of 27 cents per share. The year-over-year growth mainly resulted from a strong architectural market. Earnings also benefited from an IRS 48C energy-efficiency investment tax credit, with startup and commercial production of coatings on the new architectural glass coater, as announced last month.

On a reported basis, earnings were 57 cents per share, improving a whopping 171% from 21 cents in the year-ago quarter. Apogee's earnings included a benefit of 22 cents from tax credit in the reported quarter, while the prior-year comparable quarter had no one-time items.

Total revenue increased 30% year over year to $231.9 million, beating the Zacks Consensus Estimate of $213 million.

Operational Update

Cost of goods sold increased 30.7% to $182.6 million in the quarter. Gross profit improved 28% year over year to $49 million. However, gross margin decreased 30 basis points (bps) to 21.6%. Selling, general and administrative (SG&A) expenses rose 16% year over year to $33.8 million. Operating income was $15.5 million, which grew 66% from $9.4 million earned in the year-ago quarter. Operating margin rose 140 bps to 6.7%.

Apogee Enterprises, Inc - Earnings Surprise | FindTheBest

Segment Performance

Revenues from the Architectural Glass segment increased 20% year over year to $84.2 million. Operating income in the quarter grew four-fold year over year to $3.3 million, aided by higher volume and improved pricing.

Revenues from the Architectural Services segment rose 41% year over year to $59.4 million on the back of strong project timing and cost flow. The segment reported an operating profit of $1.8 million, reversing the year-ago quarter loss of $0.8 million. Growth in bottom-line resulted from strong project timing, cost flow and improved project margins.

The Architectural Framing Systems segment's revenues increased 55% year over year to $76.7 million, with an organic growth of 28% excluding the Canadian acquisition. The three U.S. businesses in the segment reported double-digit growth, with strong performance from the window business. The segment's operating income grew 44% year over year to $7.4 million.

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Apogee Beats Q2 Earnings on Strong Architectural Market - Analyst Blog