Apogee(APOG)2023-09-19 17:38Financial Data and Key Metrics Changes - Consolidated revenue decreased by 5% to 372 million last year, primarily due to lower volumes in Services and Framing, partially offset by a 22% increase in Glass revenue [10][12] - Adjusted diluted EPS grew by 28% to a record level of 17.5 million and operating margin improving to 18.5% [10][12][13] - Framing segment operating income grew by 3%, with operating margin expanding by 140 basis points to 13.3%, primarily due to improved mix and cost efficiencies [12][13] - Services segment experienced lower revenue recognition due to a higher mix of early-stage projects, impacting overall revenue [11] Market Data and Key Metrics Changes - Backlog for Framing decreased to 221 million in the previous quarter, driven by a decline in longer cycle business [15] - Services backlog also declined to 709 million, reflecting delays in award activity [15] Company Strategy and Development Direction - The company is focused on a three-pillar strategy: becoming an economic leader, actively managing the portfolio, and strengthening core capabilities [6][7] - Strategic investments are being made to enable organic growth, diversify project mix, and explore acquisition opportunities [9][20] - The company aims to shift focus towards driving profitable revenue growth after achieving improved margins and returns on invested capital [8][9] Management's Comments on Operating Environment and Future Outlook - Management noted signs of softening in the broader non-residential market but highlighted strong demand in premium Class A office space and mixed-use buildings [23] - The company expects to continue driving productivity gains and operational execution while monitoring macroeconomic trends for potential impacts [20][21] Other Important Information - The company recognized a 50 million and $60 million, with a focus on expanding capacity in higher-margin businesses [19][33] Q&A Session Summary Question: Can you elaborate on the framing operating margin and what mix means within Framing? - Management explained that stronger margins are seen in the shorter-cycle business, which has recovered service and lead time levels, while the team is being selective about project-related business to ensure sustainable margins [25][26] Question: What impact do you expect from aluminum pricing in the balance of '24? - Management indicated that there is no material impact expected from aluminum pricing in the back half of the year [27][28] Question: How do you view cash flow normalization and its relationship with net income? - Management acknowledged unique circumstances affecting cash flow last fiscal year and indicated opportunities for improvement in working capital moving forward [29][30] Question: What are the expected capital expenditures for fiscal '25? - Management stated that while fiscal '24 represents a step-up in CapEx, specific numbers for fiscal '25 have not yet been determined, but there will be a focus on organic growth initiatives [32][33] Question: Are you seeing more orders for mixed-use buildings? - Management confirmed an increase in mixed-use projects, which are being tracked in backlog analysis, indicating a positive trend for the company [36][37] Question: How much more runway is there for mix improvements in the Glass segment? - Management noted that the recent quarter represented an optimal scenario for mix and pricing, but they do not expect to maintain that level consistently [38][39] Question: What organic growth opportunities are being considered? - Management highlighted potential expansion into new geographies and capacity investments, while also considering acquisitions for diversification [42][43]