Apogee Reports Revenue Growth in Glass; Sotawall Transition Impacts Services Segment
Apogee Enterprises Inc. reports that its fourth quarter (Q4) 2023 revenue grew by 4.9% to $344 million due to double-digit growth in architectural framing systems and glass. Its full-year fiscal 2023 revenue grew by 9.6% to $1.44 billion, up from $1.31 billion in 2022.
Despite the growth in overall revenue, company officials say Apogee’s architectural services revenue dropped 14% in Q4 2023 to $98.5 million, compared to $114.9 million in Q4 2022.
The decline in architectural services revenue resulted from lower volume to “the time of projects in backlog,” says Mark Richard Augdahl, interim chief financial officer. Operating income was $3.7 million, compared to an operating loss of $41.2 million in the prior-year period. The decreased adjusted operating income in Q4 2023 reflects lower volume and higher costs for legacy Sotawall projects. Segment backlog at the end of the quarter was $727 million, compared to $741 million at the end of Q3 and $665 million one year ago.
Augdahl states Apogee has made progress in integrating Sotawall, which it acquired in 2016, into its services segment. The company has retired the Sotawall brand, and the entire segment is now transitioning into the Harmon brand and business model.
“We are no longer pursuing the type of work that Sotawall competed for in the past,” says Augdahl. “And going forward, we see significant opportunity to improve overall profitability in the services segment.”
Architectural Framing Systems
The architectural framing segment’s Q4 revenue increased by 13% to $148.6 million, up from $131.4 million in the prior-year quarter. This was driven by inflation-related pricing and an improved mix. Officials say operating income increased to $15.6 million, compared to $9.3 million in Q4 2022, which mitigated the impact of inflation.
Apogee’s architectural glass segment grew 12% to $81.4 million in Q4, up from $72.5 million in the prior-year quarter, primarily driven by improved pricing and mix. Operating income was $9.5 million, compared to $17.9 million in last year’s Q4, which included a $19.5 million gain on the sale of assets and $6.2 million in restructuring costs.
“Overall, results in our fourth quarter were largely as expected,” says CEO Ty R. Silberhorn. “We continue solid operational execution, effectively managing price and costs. As expected, holiday shutdowns and normal seasonality impacted sales volume, especially in framing systems. Architectural glass delivered another quarter of impressive progress, with an operating margin exceeding 11%. Results were softer than expected in architectural services as we continue to work through the Sotawall integration and the improvement of that business.”
Apogee officials predict that fiscal year 2024 will see a decline in revenue compared to 2023, with lower volume expected in its architectural services segments. Silberhorn told Q4 2023 earnings call attendees that a large services backlog should strengthen the company’s financial position in the fiscal year 2025.
Quanex Reports Q1 Results
In its financial results for the three months ending Jan. 31, 2023, Quanex Building Products Corp. reported a number of decreases when compared to last year.
Net sales were $261.9 million versus $267 million for the same period in 2022. The change marks a 1.9% decrease year over year; however, the company reports that it realized net sales growth of 4.3% for the first quarter of 2023 in its North American Fenestration segment, which was driven by contributions from LMI Custom Mixing LLC.
The company reported that excluding LMI, net sales in the North American Fenestration segment would have declined by approximately 7% year-over-year. The company’s gross margin was also down slightly, at $51.8 million in 2023, compared to $52 million last year, while its gross margin percentage was 19.8% in first-quarter 2023 and 20.7% in the same quarter last year.
Net income was $1.9 million—strikingly different from 1Q 2022’s $11.2 million, and diluted earnings per share (EPS) was $0.06 in 2023 to $0.34 last year. The adjusted diluted EPS closed the gap a little, with the first quarter of 2023 coming in at $0.18, while the first quarter of 2022 still registered at $0.34. Other numbers reflected the same slide seen previously, with an adjusted net income for the first quarter of $6.1 million in 2023 and $11.3 million for the same time frame in 2022. The first quarter adjusted EBITDA for 2023 is $20.5 million, while it was $24.4 million in 2022.
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