Photo: 250 West 55th Street (left) New York Greg West. distinctive solutions by apogee

Transcription

1 Photo: 250 West 55th Street (left) New York Greg West distinctive solutions by apogee June 22, 2016

2 Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements are based on current expectations and the current economic environment and are, of course, subject to risks and uncertainties, which are beyond the control of management. These statements are not guarantees of future performance, and actual results may differ materially. Important risk and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are described in the Company s annual report on Form 10-K for the fiscal year ended February 27,

3 Investment highlights Sustainable growth Growth markets; APOG driving via new geographies, products, market sectors Margin improvement Operations productivity and project selection Strong balance sheet Net cash, positive cash flow Creating value FY18: $1.2-$1.3 billion in revenues, exceeding 12% operating margin Q1 FY17 Revenues +3% ; +4% constant currency Operating income +44% EPS $0.61 Backlog +8%; >$0.5B, for 4 quarters FY17 OUTLOOK Revenues ~10% growth EPS increased to $2.70-$2.85 Operating margin of at least 11% 3

4 Apogee: Record FY16 results leading, value-added brands ARCHITECTURAL GLASS $ % million ARCHITECTURAL SERVICES $ % million op. margin op. margin Apogee FY16 REVENUES, OPERATING MARGIN $ % million op. margin ARCHITECTURAL FRAMING SYSTEMS $ % million LARGE-SCALE OPTICAL $ % million op. margin op. margin 4

5 Industry-leading architectural products and services Apogee participation* in ~$200 million/~20-story office building Glass Architectural Glass Segment Metal Architectural Framing Systems Segment Installation Architectural Services Segment GLASS Viracon $2-3 million* Coats raw glass to provide colors, energy efficiency; offers silk-screen or digital designs Fabricates glass into insulating units and/or laminated products for hurricane or security protection, sound control Wausau Window & Wall Systems Designs, engineers aluminum systems Cuts, machines aluminum for assembly Builds aluminum windows, curtainwall systems Installs glass in frames Tubelite and Alumicor $3-4 million* $20-25 million* (includes glass, metal) Fabricate aluminum storefront, entrance, curtainwall products Harmon Union glaziers install windows, curtainwall and related components on mid-size to smaller buildings Quality glazing (installation) contributes to buildings completed on time; ensures exterior glass system meets architectural look and is weather tight Linetec and Alumicor Coat (paint or anodize) aluminum framing 5

6 U.S. architectural market growing United States Canada Brazil Dodge/Apogee: growth through FY20 Growth: Class A offices, institutional recovery Sustained employment growth CBRE: Q1 vacancy rate 13.2% Currency impact risk ~4% of FY16 revenues Economy improving with calendar 2016 expansion Export strength supporting recovery New government to provide stimulus Energy sector risk ~2% of FY16 revenues Contraction projected at least through calendar 2016, impacting near-term construction Long-term potential remains positive 6

7 Backlog (+ macro drivers) positions Apogee for architectural growth Backlog, bidding support revenue growth goals $491 $508 $510 $298 $330 Office Institutional (Dollars in millions) FY13 FY14 FY15 FY16 Q1 FY17 Multi-family Hotel/Ent./Trans. Other 7

8 Large-Scale Optical utilizes same technology as architectural glass business $ Tru Vue picture framing glass and acrylic business is profitable with strong market sector position Growing international and new market sectors with new products Driving conversion to best value-added products Sells directly to retail chains, through distributors to independent framers Provides majority of value-added picture framing products in U.S. Product value continuum Clear Etch UV Coating Anti-reflective Coating UV & Anti-reflective Anti-reflective Acrylic 8

9 Growing beyond $1 billion Backlog, bidding support FY18 revenue goal $ % $ % $934 $1.2-$1.3B** FY13 FY14 FY15 FY16 FY17 FY18 Revenue dollars in millions 6.8% $ % ~$1.08B* ~11% >12% Operating margin (Prior peak of 8.4% in FY09) GROWTH THRU FY20 U.S. non-residential markets projected to grow at least through FY20 GROWTH DRIVERS Top line: Increase penetration, new geographies, new products, new market sectors, retrofit Bottom line: Project selection, product mix, pricing, capacity utilization, productivity * FY17 guidance ** FY18 goals 9

10 Strong earnings growth Q1 FY17 % CHANGE * FY16 FY15 Revenues $ % $981.2 $933.9 Operating income $ % $97.4 $63.6 Operating margin 10.6% +300 bps 9.9% 6.8% FY17 Q1 HIGHLIGHTS Revenues up 4% in constant currency Cash, short-term investments of $67.5 million EPS ** $ % $2.22 $1.50 ** ROIC 13.6% +350 bps 12.7% 8.8% Consolidated backlog $ % $508.0 $490.8 (Dollars in millions, except per share amounts) *Compared to prior-year period **FY15 excludes $0.22/share tax credit income benefit 10

11 Segment results ARCHITECTURAL GLASS Q1 FY17 % CHANGE * FY16 FY15 Revenues $93.4-8% $377.7 $346.5 Operating income $ % $35.5 $16.4 Operating margin 10.2% +200 bps 9.4% 4.7% FY17 Q1 ARCH. GLASS HIGHLIGHTS Revenues down on project schedules Operating income up on pricing, mix, ops performance ARCHITECTURAL SERVICES Q1 FY17 % CHANGE * FY16 FY15 Revenues $ % $245.9 $230.7 Operating income $ % $11.7 $7.4 Operating margin 5.1% +340 bps 4.8% 3.2% (Dollars in millions, except per share amounts) *Compared to prior year FY17 Q1 ARCH. SERVICES HIGHLIGHTS Revenues up on project schedules Operating income up on project execution, volume at better margins 11

12 Segment results continued ARCHITECTURAL FRAMING SYSTEMS Q1 FY17 % CHANGE * FY16 FY15 Revenues $ % $308.6 $298.4 Operating income $ % $31.9 $21.8 Operating margin 12.6% +530 bps 10.3% 7.3% FY17 Q1 ARCH. FRAMING SYSTEMS HIGHLIGHTS Revenues up on volume Operating income up on ops performance, volume growth LARGE-SCALE OPTICAL Q1 FY17 % CHANGE * FY16 FY15 Revenues $20.0-1% $88.5 $87.7 Operating income $4.7-4% $23.0 $22.0 FY17 Q1 LARGE-SCALE OPTICAL HIGHLIGHTS Operating income down on new market investments, mix Operating margin 23.2% -90 bps 25.9% 25.0% (Dollars in millions, except per share amounts) *Compared to prior year 12

13 Q1: Use cash for seasonal WC needs Investing cash in business: growth, productivity, capabilities, dividend Net cash (used in) provided by operating activities Q1 FY17 FY16 FY15 ($0.9) $124.0 $68.6 Capital expenditures ($17.8) ($42.0) ($27.2) Free cash flow ($18.6) $82.0 $41.4 Cash and short-term investments $67.5 $90.6 $52.5 Debt $22.3 $20.4 $20.6 (Dollars in millions) 13

14 drivers of demand Solid U.S. employment growth Office vacancy rate down Hotel occupancy growth Building codes re: energy efficiency, hurricane Government mandates re: energy efficiency, blast Demographics (urbanization, aging population, education) Improving retrofit activity demand/supply constraints Financing available Flat glass supply tight but adequate Stable aluminum prices Labor availability affecting smaller projects Appendix: Apogee market outlook inputs Support growth through fiscal 2020 $ internal visibility Apogee backlog up 8% vs prior Q1 Commitments, bidding strong Frequent meetings with architects, building owners/developers/managers Work with general and glazing contractors Positive for U.S. GDP growth, inflation Corporate profits Interest rates Survey of bank lending officers Consumer sentiment Government fiscal health market metrics ABI above 50 Dodge U.S. non-res forecast: mid-single digit growth Dodge starts for sectors served CMD construction starts Canada improving FMI construction outlook Census put in place macroeconomic indicators Improving in Canada GDP growth, inflation, unemployment Brazil remains difficult GDP growth, inflation, unemployment 14

15 Appendix: Leading architectural businesses custom products for commercial markets Architectural Glass FY16 Revenues: $378 million Architectural Services FY16 Revenues: $246 million Architectural Framing Systems FY16 Revenues: $309 million Viracon Harmon Wausau Tubelite Alumicor Linetec Products/Services Coated high-performance architectural glass: energy efficient, digital printing, silk-screening; insulated and/or laminated for hurricane or security protection, sound control Major U.S. projects, some smaller U.S. projects and international projects, including in Brazil with facility there $1.5-$2.0 billion North American segment; 60-70% share of demand in targeted high-profile projects - buildings >10 stories Glazing contractors, window companies Installation of glass/metal framing systems for new construction and renovation; engineer and fabricate aluminum framing systems for majority of installation projects Mid-size to smaller complex U.S. projects; offices and satellite offices in 11 U.S. cities serving multiple markets $8-$15 billion U.S. segment; 3-10% share of demand in targeted sectors General contractors, building owners, property managers Engineered aluminum window and curtainwall systems, standard windows; energy efficient Aluminum storefront, entrance, curtainwall systems Market Sectors Office, government, education, health care, hotel, condos Target U.S. education, health care, government, tall office/condo projects Smaller projects in U.S. Midwest, East, South Segment Size Over a Construction Cycle, Share of Demand (Apogee estimates) 5-15% share of demand in targeted sectors $2.8-$5.1 billion segment Customers Architects, building owners influence decisions 10-20% share of demand in targeted sectors Aluminum storefront, entrance, window, curtainwall systems Mid-size to smaller Canadian projects C$0.3-$0.4 billion segment; 15-25% share of demand in targeted sectors Glazing contractors Glazing contractors Glazing contractors Competitors Painted and anodized aluminum window frames; painted plastic interior shutters Toll-coating finishing in U.S. and Canada $0.1-$0.4 billion U.S. segment; 15-25% share of demand in targeted sectors Window companies, aluminum extruders, glazing contractors U.S. regional fabricators (i.e. Oldcastle (CRH)); European, Asian fabricators on larger projects Local/regional glaziers primarily; occasionally national glaziers National companies (Kawneer (Alcoa), Efco (Pella), Oldcastle (CRH)), regionals National companies (Kawneer, Efco, YKK, Oldcastle, CR Laurence, Trulite), regionals Kawneer (Alcoa), Oldcastle (CRH) Regional finishers/ fabricators

16 Appendix: North American architectural glass market Apogee estimates market for commercial exterior architectural glass will range from $1.5-$2 billion during current construction cycle Large projects Small projects Viracon share of <10%, usually with loyal customers doing smaller projects Competitors: local, regional fabricators Key buying factors: lead time, price, quality Typically use generic products Less architect influence Small <5 stories Large >10 stories Mid-size 5-10 stories Viracon has 60-70% share of demand for targeted high-profile projects Competitors: primarily imports Viracon top 50 customers Key buying factors: specification, quality, capability, price, service High architect influence Mid-size projects Viracon share of ~30-40% Competitors: higher-quality regional fabricators Key buying factors: specification, quality, lead time, price Moderate architect influence 16 16