Volume 41,   Issue 3                             March 2006

Financial Flash

Apogee Enterprises Provides Guidance for '07 and Reaffirms Guidance for '06

Apogee Enterprises Inc. of Minneapolis expects stronger earnings growth for the fiscal year of 2007 than was reported for the fiscal year of 2006, which ended February 25. 

Margins By Segment
• Architectural, 4.4 to 4.6 percent;
• Large-scale optical, approximately 14 percent; 
• Auto glass, slightly better than breakeven.

“We are looking forward to another year of improved performance, as commercial construction markets continue to improve and we execute our updated five-year strategic plan for growth,” said Russell Huffer, chairperson and chief executive officer. “We are anticipating earnings of 88 cents to 94 cents per share for fiscal 2007, which includes the required expensing of options. This is strong earnings growth compared to fiscal 2006, which includes the impact of one-time net tax benefits. The anticipated earnings are based on expected revenue growth of 5 to 9 percent.”

Huffer continued, “We are focused on delivering results in the top half of our fiscal 2006 guidance range of 81 cents to 87 cents per share. As we stated at the end of the third quarter, timing of project flow as we finish the year could impact our performance within this guidance range.”

Huffer says that the company’s architectural markets continue to improve, and that he expects to gain further share through strong sales of products and services, including energy-efficient, and hurricane- and blast-resistant products and systems. He also anticipates a solid performance in its large-scale optical segment, as sales and earnings normalize after strategic changes that led to significant growth in revenues and earnings the prior two years. 

The company continues to focus on expanding its markets for architectural and picture framing glass products.

“Our longer-term goals of 8 percent annual growth in revenues and 20 percent growth in earnings per share support our objective of being a great $1 billion company within five years. Our strategic plan supports our vision: Distinctive solutions by Apogee . . . for enclosing commercial buildings and framing art,” said Huffer.

Apogee Financial Highlights 

Overall fiscal 2007 revenues for the year are expected to increase 5 to 9 percent;

• Architectural segment revenues are expected to increase 6 to 9 percent for the year; growth is expected due to market improvement and share gain as increased architectural glass capacity added during fiscal 2006 is fully utilized;

• Large-scale optical segment revenues are expected to be up 3 to 5 percent, with continued mix shift in picture framing glazing products;

• Annual gross margins are expected to be up in fiscal 2007 from fiscal 2006 as operational improvements and cost reductions more than offset higher costs for wages, energy, materials and freight;

• Selling, general and administrative expenses as a percent of sales are projected to be slightly less than 14 percent;

• Capital expenditures are projected to be $40 million to $45 million, including an estimated $20 million related to building a new architectural glass plant;

• Debt is expected to be approximately $50 million to $60 million at year end; and

• Earnings per share from continuing operations are expected to range from 88 cents to 94 cents, including .05 cents per share impact of expensing options. 

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