Apogee shares fall 10.9 percent on forecast of profit shortfall

Apogee Enterprises Inc., citing profit pressures in two of its three business segments, said Wednesday that earnings for the fourth quarter ending March 1 will be significantly lower than expected.

That means more cost-cutting measures, including an undetermined number of layoffs, are underway, the company said.

The Bloomington-based glassmaker's stock dropped more than 10 percent to close Wednesday at $8.48, down $1.04.

Apogee said it now expects earnings from continuing operations of 10 to 12 cents a share for the quarter, down from its December estimate of 18 to 20 cents a share. Analysts' consensus estimate was 18 cents, according to Thomson First Call.

Apogee said its architectural glass business, which supplies glass for skyscrapers and other commercial buildings, has been hurt by a sluggish economy that is causing some customers to delay planned proj ects. In addition, heavy competition has led to pricing pressure in the replacement auto-glass business, the company said. The optical business is meeting expectations and continuing to improve.

CEO Russ Huffer said the company is implementing cost-cutting measures in the architectural glass unit to offset the slowdown in the current quarter and first half of fiscal 2004. Apogee spokeswoman Mary Ann Jackson said there have been some layoffs in that unit and there will be more, although she couldn't say how many. Employment in that segment fell by about 100 jobs in January, including layoffs and attrition, she said. Apogee has about 5,300 employees companywide.

Analyst Eric Martinuzzi of Craig-Hallum Capital said he is maintaining his "buy" recommendation on Apogee despite the earnings shortfall. The architectural glass unit, Apogee's largest business, is in a highly cyclical industry that has been hurt by the poor economy, he said.

"Apogee still dominates the high-end architectural market," he said. "Management has done a solid job of running the business and taking costs out."

Shane Glenn, an analyst with Dougherty & Co., said that Apogee is "facing conditions beyond its control" and that he too is maintaining a "buy" on the stock.

"Apogee continues to maintain a lead in its categories," Glenn said. "I believe when the market does improve, the stock will perform quite well."

600450 Apogee shares fall 10.9 percent on forecast of profit shortfall glassonweb.com
Date: 21 February 2003
Source: Startribune.com

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