Apogee Plans Restructuring, To Shut Down Viracon Glass Plant

Apogee Enterprises, Inc. APOG recently announced details of the planned restructuring which was referred to in the third-quarter fiscal 2018 earnings release. Per the plan, the company will close its Viracon architectural glass plant in St. George, UT, to counter the headwinds of the glass business.

The company remains confident that despite the closure, given the capacity additions and productivity investments made over the past five years, the company will have adequate glass capacity to cater to the peak commercial construction market demand.

In the fiscal third-quarter earnings release, Apogee lowered the fiscal 2018 guidance due to lower-than-expected volume and pricing in the Architectural Glass segment. In the recently-reported quarter, the segment's revenues fell 9% year over year, largely due to delays resulting from hurricanes in Florida and a smaller number of large-scale projects. Further, the segment's operating income dropped as improved productivity couldn't offset the loss of business.

Apogee Enterprises, Inc. Price

 

Apogee Enterprises, Inc. Price | Apogee Enterprises, Inc. Quote

However, Apogee has been making significant investments in its Viracon architectural glass business, weakness in the architectural glass area remains a major concern for the business. Apogee expects that the Architectural Glass segment will be adversely affected by the intensifying competition in both large- and mid-sized projects, in turn putting more pressure on top- and bottom-line growth.

Thus, the company has decided to close the Viracon-St. George facility in March 2018. Apogee will incur a restructuring charge of approximately $4.5 million, or 11 cents per share in the fiscal 2018 fourth quarter, primarily related to the plant closure. This was reflected in the fiscal 2018 outlook. It expects a payback period of one year and the glass business will be beneficial as reduced cost will result in savings in fiscal 2019.

Moreover, Apogee has underperformed the industry with respect to price performance over the past year. The stock has lost around 15.3%, while the industry has recorded growth of 10.2% during the same time frame.

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