Apogee Architectural Backlog Increases Despite Down Markets
November 8, 2012

by Kaitlan Mitchell, kmitchell@glass.com

During Apogee Enterprises Inc.'s Analyst and Investor Day in New York City today, senior management attributed the company's return of profitably in a down market to the increase of its architectural backlog. Jim Porter, chief financial officer, noted positive architectural trends in the second quarter with a segment backlog of $299 million from $267 million in the first quarter of the 2013 fiscal year, a 32-percent rise from the previous quarter.

"This is the highest backlog we've seen in 12 quarters," said Porter.

Joe Puishys, CEO, added that over the past year, the company has made strategic investments in its businesses to drive growth productivity. Some of the investments highlighted in the presentation were Viracon-Statesboro's Georgia upgrade, Harmon's expansion into Texas, Tru Vue's international expansion and Tubelite's acquisition of Benada's extrusion equipment.

John Klein, Apogee's new senior vice president, added that another key investment is to continue lean manufacturing training for all Tubelite offices and factory employees.

"We are now positioned for growth when the market recovers," Puishys added.

Kelly Schuller, president of Viracon estimated the company's total market for commercial exterior architectural glass was $1 billion to $1.75 billion during the current construction cycle. The cycle is broken down into small-scale projects, middle market projects, which encompass performance products, and large, highly complex projects.

Schuller also noted Viracon's core tall buildings segment is showing some improvement from off-record low levels and stated the company's competitive landscape remained largely unchanged in the recession. He said the company is beginning to see major architectural firms slowly re-hiring, the reviving of large projects that were previously shelved and early signs of backlog growth.

"Our primary market segment was hit hard by the recession but is now poised for strong cyclical recovery," said Schuller.
Brad Austin, president of Harmon, added that achieving profitable growth requires continued geographic expansion and building strong customer relations in current markets.
"We have fairly good coverage in the U.S.," said Austin. "The places we are not currently in are five of the ten largest construction markets."

The company plans to open an office in Houston by the end of fiscal 2013 year. Austin's strategy for paying dividends is to go to where the work is. The company anticipates continuing to travel to where the projects are despite not having an office in certain locations.