Apogee Enterprises Inc (NASDAQ:APOG) Q2 2021 Earnings Conference Call - Final Transcript

Sep 17, 2020 • 09:00 am ET

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Apogee Enterprises Inc (NASDAQ:APOG) Q2 2021 Earnings Conference Call - Final Transcript

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Presentation
Executive
Joseph F. Puishys

for the entire month of April and May as nearly all our retail customers were closed due to COVID and government regulations, and our factories were closed until late July, two-thirds of the way into the second quarter. Going into this shutdown, we built inventory and maintained close contact with our customers so that when the governments allowed retailers to reopen, we were ready.

Late in the second quarter, nearly all of Large-Scale Optical's retail and independent customers reopened and our order volume steadily increased through the quarter. In late July, we resumed normal operations at our two factories, restarting without any hiccups. Revenue for the quarter came in at 81% of the prior year level, a particularly significant improvement from the first quarter when we were at only 30% of the comparable prior year. The strong recovery is a testament to the resilience of our team and the reputation of the brand and product in the marketplace. My hats off to our Large-Scale Optical team.

Architectural Services continued to achieve premier performance. Not only did we see solid sequential growth, the segment also delivered double-digit year-over-year growth on both the top and bottom lines. Over the past year, Services had had great success, winning new business and building a record backlog. We had a step function change in backlog, growing from around $500 million last year to approximately $700 million in the first quarter of this year. We are now executing projects in our backlog with visibility out more than two years. Our Services business is arguably the leader in the industry, and even as current market conditions have softened, we still have a strong pipeline of opportunities to win additional projects in the coming quarters.

In Architectural Framing Systems and Architectural Glass, we saw impact from the current disruptions in our end markets. These two segments saw many project delays and schedule changes which impacted revenue. Both segments did a terrific job managing their costs and execution in the quarter, which helped offset the volume reduction.

Finally, our team did a particularly extraordinary job of managing working capital and cash flow. Year-to-date, cash from operations is up more than 375%. We've generated more cash in the first half of fiscal '21 than we did in all of last year, with year-to-date free cash flow at $71 million and operating cash flow at over $85 million. With continued economic uncertainty, we are taking a conservative approach to capital deployment, focused on paying down debt and building liquidity. Over the past 12 months, we have reduced our total debt by $105 million. As we move through the rest of the fiscal year, we will seek to further strengthen our financial position to provide dry powder so that we can invest to accelerate growth going into an economic recovery.

So overall, it was a very strong quarter and we're pleased with the results given the current economic environment in the United States. Regarding the market conditions and outlook, even as we