Apogee(APOG) - 2024 Q4 - Annual Results

Financial Highlights & CEO Commentary Fiscal 2024 Performance Summary Apogee Enterprises reported a 5% increase in fourth-quarter net sales to $362 million, with adjusted diluted EPS growing 33% to $1.14, and full fiscal year 2024 net sales of $1.42 billion with record adjusted diluted EPS of $4.77 Fiscal 2024 Full Year Key Financial Metrics | Metric | FY 2024 | Change vs. FY 2023 | | :--- | :--- | :--- | | Net Sales | $1.42 billion | -1.6% | | Diluted EPS | $4.51 | -2.8% | | Adjusted Diluted EPS | $4.77 | +19.8% | | Operating Margin | 9.4% | +70 bps | | Adjusted Operating Margin | 10.3% | +160 bps | | Cash Flow from Operations | $204 million | +98.8% | Fiscal 2024 Fourth Quarter Key Financial Metrics | Metric | Q4 FY2024 | Change vs. Q4 FY2023 | | :--- | :--- | :--- | | Net Sales | $362 million | +5.2% | | Diluted EPS | $0.71 | -22.0% | | Adjusted Diluted EPS | $1.14 | +32.6% | | Operating Income | $21.9 million | -15.0% | | Adjusted Operating Income | $34.3 million | +33.1% | CEO Commentary CEO Ty R. Silberhorn praised fiscal 2024 as a highly successful year with record adjusted EPS and cash flow, attributing success to strategic execution and outlining a fiscal 2025 growth mindset focused on diversification and enhanced offerings - The company achieved a significant improvement in performance and profitability by executing its strategy, which included sustainable cost savings, better operational execution, and focusing on differentiated offerings[3] - The outlook for fiscal 2025 is centered on a "growth mindset," with plans to diversify the business, strengthen products and services, and invest for long-term profitable growth[3] Corporate Initiatives Project Fortify Apogee initiated Project Fortify in Q4 to streamline operations and improve cost structure, incurring $12.4 million in pre-tax charges with expected annualized savings of $12 million to $14 million Project Fortify Financial Impact | Metric | Amount | | :--- | :--- | | Q4 FY2024 Pre-tax Charges | $12.4 million | | Total Expected Pre-tax Charges | $16 million to $18 million | | Expected Annualized Cost Savings | $12 million to $14 million | - The majority of cost savings are expected to be realized in the Architectural Framing Systems Segment (~70%), followed by the Architectural Services Segment (~20%) and the Corporate Segment (~10%)[4] - The company expects to realize approximately 60% of the savings in fiscal 2025 and the remainder in fiscal 2026, with the project being substantially complete by Q3 FY2025[4] Financial Performance Analysis Consolidated Results Q4 fiscal 2024 net sales increased 5.2% to $361.8 million, with adjusted operating income growing 33.1% to $34.3 million, while full-year net sales were $1.42 billion and adjusted operating margin expanded 160 basis points to 10.3% - Q4 net sales growth was primarily driven by improved pricing and mix, which was partially offset by lower volumes[5] - Full-year adjusted diluted EPS grew 19.8% to a record $4.77, driven by higher adjusted operating income and lower interest expense[8] Full-Year FY2024 vs. FY2023 Consolidated Results | Metric | Fiscal 2024 | Fiscal 2023 | | :--- | :--- | :--- | | Net Sales | $1.42 billion | $1.44 billion | | Operating Margin | 9.4% | 8.7% | | Adjusted Operating Margin | 10.3% | 8.7% | | Diluted EPS | $4.51 | $4.64 | Segment Performance (Q4 FY2024) In Q4, Architectural Glass led with 18.2% net sales growth to $96.2 million and 19.7% operating margin, while Architectural Services grew 7.9%, and Architectural Framing Systems declined due to lower volume and restructuring charges Q4 FY2024 Segment Performance vs. Q4 FY2023 | Segment | Net Sales (Q4'24) | % Change YoY | Operating Income (Q4'24) | Operating Margin (Q4'24) | | :--- | :--- | :--- | :--- | :--- | | Architectural Framing Systems | $139.2M | -6.3% | $6.8M | 4.9% | | Architectural Glass | $96.2M | +18.2% | $18.9M | 19.7% | | Architectural Services | $106.3M | +7.9% | $3.6M | 3.4% | | Large-Scale Optical | $27.1M | -0.4% | $6.9M | 25.6% | - Architectural Framing Systems backlog increased 9.1% sequentially to $200.7 million[10] - Architectural Services backlog grew 4.0% sequentially to $807.8 million[12] Financial Condition and Cash Flow Fiscal 2024 saw significant financial strengthening, with record net cash from operating activities of $204.2 million, a reduction in long-term debt to $62.0 million, and an improved net leverage ratio of 0.1x - Full-year net cash provided by operating activities increased to a record $204.2 million, compared to $102.7 million in the prior year[15] Debt and Leverage Comparison (Year-End) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Long-Term Debt | $62.0 million | $169.8 million | | Net Leverage Ratio | 0.1x | 0.9x | - During fiscal 2024, the company returned $33.0 million of cash to shareholders through share repurchases and dividend payments[16] Fiscal 2025 Outlook Guidance Apogee projects a fiscal 2025 net sales decline of 4% to 7%, with diluted EPS between $4.25 and $4.55, and capital expenditures of $40 million to $50 million Fiscal 2025 Full-Year Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales Decline | 4% to 7% | | Diluted EPS | $4.25 to $4.55 | | Adjusted Diluted EPS | $4.35 to $4.75 | | Capital Expenditures | $40 million to $50 million | - The reversion to a 52-week fiscal year is expected to reduce adjusted diluted EPS by approximately $0.20 compared to fiscal 2024[17] - The outlook assumes an adjusted effective tax rate of approximately 24.5%[17] Appendix: Financial Statements and Reconciliations Use of Non-GAAP Financial Measures The company uses non-GAAP measures like adjusted operating income and diluted EPS to evaluate performance, determine compensation, and provide clearer investor insights by excluding non-core operational items - Management uses non-GAAP measures to assess historical and future performance, measure operational profitability consistently, and enhance transparency for investors[20] - Key non-GAAP measures include Adjusted operating income, adjusted diluted EPS, Adjusted EBITDA, Free cash flow, Adjusted ROIC, Net debt, and Net leverage ratio[20][21] - Effective Q1 FY2025, the company will cease reporting backlog for the Architectural Framing Segment as Project Fortify actions will shorten project cycles, making the metric less effective for that segment[23] Consolidated Financial Statements This section presents Apogee Enterprises' detailed unaudited financial statements, including Consolidated Condensed Statements of Income, Balance Sheets, and Cash Flows, along with segment net sales and operating income breakdowns - The Consolidated Condensed Statements of Income show a year-over-year decrease in full-year net earnings from $104.1 million in FY2023 to $99.6 million in FY2024, primarily due to a significantly higher income tax expense in FY2024[27][28] - The Consolidated Condensed Balance Sheets indicate a reduction in total assets from $915.4 million to $884.1 million and a significant decrease in long-term debt from $169.8 million to $62.0 million year-over-year[30] - The Consolidated Condensed Statements of Cash Flows highlight a record $204.2 million in net cash from operating activities for FY2024, nearly double the $102.7 million generated in FY2023[31] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP to non-GAAP measures, including Adjusted Net Earnings, Diluted EPS, Operating Income, EBITDA, Net Leverage Ratio, and ROIC, adjusting for items like Project Fortify restructuring charges - Provides a reconciliation of GAAP Diluted EPS ($4.51) to Adjusted Diluted EPS ($4.77) for the full fiscal year 2024, detailing adjustments for restructuring charges and an NMTC settlement gain[33][35] - Details the reconciliation of GAAP Operating Income to Adjusted Operating Income for each business segment, showing the specific impact of Project Fortify restructuring charges[38][41] - Includes a reconciliation of the Fiscal 2025 outlook for Diluted EPS to Adjusted Diluted EPS, showing expected adjustments for future Project Fortify restructuring charges[52][53]