Apogee Enterprises Inc (NASDAQ:APOG) Q2 2021 Earnings Conference Call - Final Transcript
Sep 17, 2020 • 09:00 am ET
Joseph F. Puishys
are successfully managing what we can control, the economic and end market conditions are clearly top of mind for all of us. Let me share a few perspectives on what we are seeing.
First, in all cases, projects in our backlog and pipeline are moving forward, although we are seeing some projects progressing slower than expected, particularly due to several large cities like Boston, New York and San Francisco to name a few, which shut down temporarily all construction due to government regulations. All of these cities are back up and running again. Forward indicators like employment growth, the architectural billing index and the Dodge Momentum Index have rebounded from their April lows but are still well below pre-pandemic levels.
It is obvious the US is in an economic downturn. It's just unclear at this point how long or how severe. We are preparing for this decline by maintaining our focus on cost, execution and cash flow. Pre-COVID, the fundamentals in our end markets were very healthy, with strong demand for new constructions and no signs of overbuilding. So we are optimistic that we will see a brief downturn followed by the return to end market growth sometime next fiscal year or calendar year 2022. Regardless of what lies ahead for our end markets, Apogee is a much stronger and more resilient company today than when we entered the last recession.
Over the past several years, we've pursued a purposeful strategy to diversify our business mix and expand our customer offerings. We've reduced our concentration in high-rise buildings, moving to a more balanced customer offering with broader exposure to segments of the market which are historically less volatile. This includes our recent expansion into small projects for Architectural Glass and our growing renovation business.
Let me emphasize a very critical point here regarding our transition. When I joined Apogee in fiscal 2012, our Glass segment under the Viracon brand was over 50% of our total Company revenues. Of that, 60% of their revenues went towards monumental office towers. We define that roughly as buildings greater than 20 stories. Today, Viracon, our Glass segment, is approximately 22% of our revenue, and only 20% of that is in this monumental category. This is a very important transition that will bode well for our future of being less dependent on these towers.
We have pursued a growth strategy which included geographic expansion and new product innovation. And today we have a portfolio of market-leading brands and innovative products that are well positioned to take advantage of a market rebound. As we move forward, I'm challenging my team to continue to drive innovation and keep Apogee at the forefront of our industry and unlock new growth opportunities.
We have significantly improved productivity in our operations. We've invested in factory automation and built a continued improvement culture through all of Apogee via our lean enterprise system which has taken root in our Company and is contributing to our recent factory improvement across all our segments.