Apogee Enterprises managed to eke out a first-quarter profit despite significant coronavirus-related challenges, including an outbreak at one of its factories, markets that nearly dried up and furloughs of some of its workers.
"We navigated our way through a very challenging quarter, with several significant COVID-19 related headwinds across our business," said Apogee Chief Executive Joseph Puishys.
The Edina-based maker of architectural glass, installation systems and high-performance glass framing products earned $2.9 million, or 11 cents per share, in the quarter ended May 30, but it was an 81% decline from the same quarter last year.
First-quarter revenue for the company — which has provided glass for high-visibility projects such as U.S. Bank Stadium — was down 19% to $289 million as construction projects were delayed or disrupted by the pandemic.
Sales in the company's Large-Scale Optical (LSO) segment were down 70% from $21.3 million in its first quarter last year to just $6.3 million. The segment makes high-performance glazing products for picture framers, museums and other technical glass markets, but most of those end markets were closed for much of the quarter.
In response to that dramatic drop, the company closed the LSO manufacturing operations and furloughed those workers, Puishys told analysts during the company's earnings call on Friday.
The company also had to deal with customers delaying construction projects that used their architectural glass and installation systems and its own production delays caused by an outbreak of COVID-19 at the Viracon architectural glass factory in Owatonna that has affected more than 130 workers as of the beginning of the week.
At the peak of the disruption, Puishys told analysts nearly 25% of its architectural glass manufacturing workforce in southern Minnesota was on quarantine. Puishys noted that the factory now is nearly back to full employment.
While Puishys sounded a confident note that business was beginning to pick up, Apogee is not offering financial guidance for the rest of the year due to continued uncertainties around the coronavirus impact. He also cautioned there might be a long-term downturn in some end markets, the degree and length of which are uncertain.
Due to strategic initiatives and a diversification of end markets that the company has instituted since the 2008-09 recession, Apogee has broader exposure to a range of project types and sizes, Puishys told analysts.
Eric Stine, an analyst with Craig-Hallum Capital Group in Minneapolis, wrote in a note to investors on Friday: "We think ultimately the driver of results [and the stock price] will be the overall health/outlook for non-res[idential] construction markets, and think it is still too early to tell what the timing and magnitude of a recovery looks like for APOG and its architectural segments."
Apogee shares closed Friday at $20.83 per share, down 7.3%. Shares are down more than a third since the start of the year.