Apogee Enterprises Inc (NASDAQ:APOG) Q4 2019 Earnings Conference Call Transcript

Apr 11, 2019 • 09:00 am ET

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Apogee Enterprises Inc (NASDAQ:APOG) Q4 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) And our first question will come from the line of Chris Moore with CJS Securities. Your line is open.

Analyst
Christopher Moore

Thanks. Hey, good morning, guys. Yeah, maybe we could -- (multiple speakers)

Executive
Joseph F. Puishys

Good morning.

Analyst
Christopher Moore

Good morning. Just start with Framing. Obviously, EFCO is still struggling. Can you kind of talk a little bit about the core framing business versus EFCO in terms of kind of the margin performance on the core framing?

Executive
James S. Porter

Sure, Chris. This is Jim. I'll cover that. I mean our kind of core businesses, when we look at that legacy businesses that have been in our portfolio for another -- for a long time, we continue to see nice growth and margin expansion across those businesses in fiscal '19 and see that going forward as well.

Analyst
Christopher Moore

The -- it sounds like by Q3 of this year most of the troubles -- troubled EFCO contracts will be completed. So, reasonable to assume that, I don't know, from your remarks, last quarter and then forward in terms of improved EFCO margin -- improved Framing margins is reasonable.

Executive
Joseph F. Puishys

Yes. Chris, this is Joe. I also want to comment. EFCO is -- the core business of EFCO is performing better. We are starting to see productivity. I mentioned orders were very strong. I put a new sales leader in place in the second half of last year. He was our -- one of our top guys here at Apogee. He had -- has had experience at our Harmon installation business at our Wausau Window and Wall and he is the fellow that I charge with creating and developing our retrofit business. We moved him down to join the team at EFCO.

We are starting to see really good rewards from that. The orders have to come first. Q4 was strong on orders. Q1 has remained very strong, only 5.5 weeks into a new year, but it's still important. And so the core EFCO business is starting to look good.

The overhang from these legacy projects one in particular has been substantial and the distraction of that goes away. We're almost done with manufacturing the product, and we're more than halfway through the installation, we should be substantially complete by August with the installation at the field site at the project site and then after we get through that I can focus on some recovery efforts that I mentioned on the call.

Executive
James S. Porter

And, Chris, within specifically within Framing Systems, that legacy work should really kind of be through there in the first half of the year. So, our expectation is to see that margin improvement is really starting in Q3, carrying over into Q4 and knowing that we have a little bit of seasonality where Q3 is stronger than Q4 in Framing Systems.

Analyst
Christopher Moore

Got it. That's helpful. Jim you had mentioned anticipated increased corporate costs from higher legal and advisory, can you maybe just talk to that a little bit?

Executive
James S. Porter

Yeah, I mean, I think really the bottom line is on our