Apogee Enterprises Stock

Apogee Enterprises, Inc. provides architectural products and services for enclosing buildings, and high-performance glass and acrylic products used in applications for preservation, protection and enhanced viewing.

Segments

The company operates through four segments, with three of the segments serving the commercial construction market, such as Architectural Framing Systems, Architectural Services, Architectural Glass and Large-Scale Optical Technologies (LSO).

The Architectural Framing Systems segment designs, engineers, fabricates and finishes aluminum window, curtainwall, storefront and entrance systems for the exterior of buildings. In fiscal 2023, this segment accounted for approximately 45 percent of the company’s net sales.

The Architectural Services segment integrates technical services, project management, and field installation services to design, engineer, fabricate, and install building glass and curtainwall systems. In fiscal 2023, this segment accounted for approximately 29 percent of the company’s net sales.

The Architectural Glass segment coats and fabricates high-performance glass used in custom window and wall systems on commercial buildings. In fiscal 2023, this segment accounted for approximately 19 percent of the company’s net sales.

The Large-Scale Optical Technologies (LSO) segment manufactures high-performance glazing products for the custom framing, fine art, and engineered optics markets. In fiscal 2023, this segment accounted for approximately 7 percent of the company’s net sales.

Strategy

In fiscal 2022, the company conducted a holistic strategic review of its business and the markets it serves. The company analyzed its portfolio of products, services, and capabilities to identify the best areas for future growth. The company also evaluated its operating model to ensure it has the organizational structure and capabilities needed to deliver consistent profitable growth. The key elements of the company’s strategy are to become the economic leader in its target markets; and strengthen its core capabilities. The company plans to continue to execute this strategy over the next several years.

Products and Services

Architectural Framing Systems, Architectural Services and Architectural Glass segments

These three segments primarily serve the construction industry and participate in various phases of the value stream to design, engineer, fabricate and install custom glass and aluminum window, curtainwall, storefront and entrance systems for the exterior of buildings, primarily in the commercial, institutional, and multi-family residential construction sectors.

The company’s product and service offerings across these architectural segments allow architects to create distinctive looks for buildings, such as health care facilities, government buildings, office towers, hotels, education and athletic facilities, retail centers, transportation centers, mixed use and multi-family residential buildings. The company’s solutions also help meet functional requirements, such as energy efficiency, hurricane, blast and other impact resistance and/or sound control.

Many of the company’s architectural products and services help architects, developers, and building owners achieve their energy-efficiency and sustainability goals by improving energy performance, reducing greenhouse gas emissions, providing daylight and natural ventilation, and increasing comfort and safety for occupants. These products include high-performance thermal framing systems, energy efficient glass coatings, and sun control products, such as sunshades and light shelves. Many of the company’s framing systems products can be specified with recycled aluminum content and utilize environmentally friendly anodize and paint finishes. In addition, the company offers a wide range of renovation solutions to help modernize aging buildings, providing significantly improved energy performance, while preserving historically accurate aesthetics.

Architectural Framing Systems

Architectural Framing Systems segment designs, engineers and fabricates aluminum window, curtainwall, storefront and entrance systems. The company also extrudes aluminum and provide finishing services for metal components used in a variety of building materials applications, as well as plastic components for other markets.

Architectural Services

Architectural Services segment delivers value by integrating technical capabilities, project management skills and field installation services, to provide design, engineering, fabrication and installation for the exteriors of commercial buildings. The company’s ability to efficiently design high-quality window and curtainwall systems and effectively manage the installation of building façades enables its customers to meet schedule and cost requirements of their projects.

Architectural Glass

Architectural Glass segment provides a wide range of high-performance glass products, offering customized solutions that enable architects and building owners to meet their design, aesthetic, and performance goals. The company fabricates insulating, laminated, and monolithic glass units that are used in windows, curtainwall, storefront, and entrance systems. The company provides premium glass solutions to meet its customers’ design and energy-performance requirements. These include propriety, high-performance coatings, digital and silkscreen printing, heat soaking of tempered glass, and thermal spacers.

LSO

The LSO segment provides coated glass and acrylic primarily for use in custom picture framing, museum framing, wall decor and technical glass for other display applications. Products vary based on size and coatings to provide conservation-grade UV protection, anti-reflective and anti-static properties and/or security features.

Product Demand and Distribution Channels

Architectural Framing Systems, Architectural Services and Architectural Glass segments

Demand for the products and services offered by the company’s architectural segments is affected by changes in the North American commercial construction industry, as well as by changes in general economic conditions. Additionally, the Architectural Glass segment has Brazilian operations which are impacted by Brazil's commercial construction industry and general economic conditions.

The company looks at several external indicators to analyze potential demand for its products and services, such as the U.S. and Canadian job growth, office vacancy rates, credit and interest rates, architectural billing statistics, and material costs. The company also relies on internal indicators to analyze demand, including its sales pipeline, which is made up of contracts in review, projects awarded or committed, and bidding activity. The company’s sales pipeline, together with ongoing feedback, analysis and data from its customers, architects and building owners, provide visibility into near- and medium-term demand. Additionally, the company evaluates data on U.S. and Canadian non-residential construction market activity, industry analysis and longer-term trends provided by external data sources.

The company’s architectural products and services are used in subsets of the construction industry differentiated by the following types of factors:

Building type - The company’s products and services are primarily used in commercial buildings (office buildings, hotels and retail centers), institutional buildings (education facilities, health care facilities and government buildings), and multi-family residential buildings (a subset of residential construction).

Level of Customization - Many of the company’s projects involve a high degree of customization, as the product or service is designed to meet customer-specified requirements for aesthetics, performance and size, and local building codes.

Customers and Distribution Channels - The company’s customers are mainly glazing subcontractors and general contractors, with project design being influenced by architects and building owners. The company’s window, curtainwall, storefront and entrance systems are sold using a combination of direct sales forces, independent sales representatives and distributors. The company’s installation services are sold by a direct sales force in certain metropolitan areas in the U.S and Canada. The company’s high-performance architectural glass is primarily sold using both a direct sales force and independent sales representatives.

Geographic Location – The company primarily supplies architectural glass products and aluminum framing systems, including window, curtainwall, storefront and entrance systems, to customers in North America. The company is one of only a few architectural glass installation service companies in the U.S. to have a national presence and it has the ability to provide installation project management throughout the U.S. and Canada. The company’s Architectural Glass segment also supplies architectural glass products to customers in Brazil and certain other international locations.

LSO segment

In its LSO segment, the company has a leading brand of value-added coated glass and acrylic used in the custom picture-framing market, museum market, and various technical glass applications. Under the Tru Vue brand, products are sold primarily in North America through national and regional retail chains using a direct sales force, as well as to local retailers through an independent distribution network. The company has a global distribution network and also supplies its products to museums, galleries and other customers in Europe, Asia and other international locations.

Warranties

The company offers product and service warranties that are competitive for the markets in which its products and services are sold. The nature and extent of these warranties depend upon the product or service, the market and, in some cases, the customer being served.

Seasonality

Activity in the construction industry is impacted by the seasonal impact of weather and weather events in the company’s operating locations, with activity in some markets reduced in winter due to inclement weather.

Research and development

The company’s research and development costs were $25.5 million for the year ended February 25, 2023.

History

Apogee Enterprises, Inc. was founded in 1949. The company was incorporated under the laws of the state of Minnesota in 1949.