Apogee reports strong quarter as costs drop and building glass orders rise

As the Vikings stadium rises, so too have the profits of Apogee Enterprises Inc., the company that made the architectural building glass just installed on the ship-shaped structure on the eastern end of downtown Minneapolis.

Officials of Bloomington-based Apogee told Wall Street analysts Thursday that they will boost their forecast for 2016 after first-quarter profits doubled. Sales of the company's architectural glass surged 27 percent during the quarter while production costs plummeted.

The company has recently enjoyed pricing hikes, efficiency gains and much-needed manufacturing might from an expanded plant in Owatonna and a reopened factory in Utah.

Apogee temporarily closed the Utah plant in 2013 as the company wrestled with a then-slumping construction market and the need to revamp that facility to lower manufacturing costs.

Now its efficiency efforts in Minnesota and Utah are paying off. Operating margins doubled at the same time that its cash and investments grew.

First-quarter results were so strong, Apogee officials raised their earnings forecast for the full fiscal year. The company now expects earnings of $2.10 to $2.25 a share, up a nickel on both ends of the prior range.

"Apogee had an outstanding start to fiscal 2016, doubling earnings per share and again delivering double-digit revenue growth," said CEO Joseph Puishys. "We remain confident that Apogee will continue to achieve strong growth in fiscal 2016."

First-quarter revenue rose 14 percent to $240 million, and earnings rose 99 percent to $12.1 million. Revenue is expected to rise 10 to 15 percent for the full fiscal year. The report was released Wednesday after the markets closed.

"This outlook is based on the continued strength of our backlog, commitments, and bidding and award activity, combined with industry forecasts for low double-digit growth for the commercial construction market sectors we serve," Puishys said.

He added that annual revenue will surpass $1 billion for the first time in fiscal 2016. Revenue should reach $1.3 billion by the end of fiscal 2018.

Analysts on a conference call Thursday generally praised results and noted the company's improved margins and sales growth amid a buoyed construction market.

Puishys said his upbeat sales forecasts came after studying several "precursor" economic trends and reports that include indexes tracking architectural building rates, nonfarm payroll growth and consumer sentiment.

All indications signal a strong economy and a good time to expect company growth, he said. Working in the company's favor is that it has dramatically slashed the delivery times for its architectural glass.

"That was becoming an issue for our customers and that is now behind us," with help from Utah's restored production and Owatonna's expansion. "We are not working as much overtime, which frankly was important for our employees and important for our input costs," Puishys told Brent Thielman, a stock analyst at D.A. Davidson.

Apogee makes and installs building glass, glass storefronts, and picture and optical glass. The company's energy-efficient building glass covers iconic structures such as the Taipei 101, One World Trade Center, the University of Minnesota's TCF Bank Stadium, the San Francisco 49ers' stadium, plus the newly expanded Mall of America in Bloomington, the new Vikings stadium and two Wells Fargo towers being built in Minneapolis.

Apogee struggled during and after the recession as construction lagged and big building projects were delayed. That market roared back to life last year, and Apogee is busy manufacturing exterior glass panels in its Owatonna, Georgia and Utah factories.

Apogee's stock is trading 70 percent higher than a year ago and hit its 52-week high this week. It fell $1.33 to $58.73 in trading Thursday.

Dee DePass • 612-673-7725