Apogee Enterprises, Inc.

Welcome to the Q4 2023 Apigee Enterprises Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeff Hepchen, Investor Relations. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome to Apogee Enterprises Fiscal 2023 Fourth Quarter Earnings Call. With me today are Ty Silberhorn, Apogee's Chief Executive Officer, and Mark Ogdahl, Interim Financial Officer. I'd like to remind everyone that there are slides to accompany today's remarks, and these are available in the Investor Relations section of Apogee's website. During this call, we will reference certain non-GAAP financial measures. Definitions of these measures and a reconciliation to the nearest GAAP measures are provided in the earnings release and slide deck that we issued this morning. I'd also like to remind everyone that our call will contain forward-looking statements. These reflect management's expectations based on currently available information. Actual results may differ materially. More information about factors that could affect Apogee's business and financial results can be found in today's press release and in our SEC filings. And with that, I'll turn the call over to you, Ty.

Thanks, Jeff. Well, the fourth quarter was a solid finish to a terrific year for Apogee. We continued to improve execution across the company And we built momentum executing our strategy, leading to a record full year revenue and earnings per share. I'd like to congratulate the entire Apigee team for these terrific results. This morning, I'll touch on the highlights from the quarter and the year, how our strategy is driving sustainable improvements in our business, and our priorities as we continue to execute that strategy in fiscal 24. Then I'll turn it over to Mark for more details on the quarter and our outlook. Overall, results in our fourth quarter were largely as expected. We continued to have solid operational execution, effectively managing price and costs. As we expected, Holiday shutdowns and normal seasonality impacted sales volume, especially in framing systems. Architectural glass delivered another quarter of impressive progress, with operating margin exceeding 11%. Results were softer than expected in architectural services as we continued to work through the soda wall integration and the improvement of that business. Finally, cash flow in the quarter was very strong, bringing full-year cash from operations above last year's level. These strong fourth quarter results continued the positive trends established throughout fiscal 23. By executing our strategy, we have made sustainable improvements in our business. As a reminder, An overview of our strategy is shown on page four of today's presentation. This year, we made great progress advancing each pillar of our strategy. Some of the highlights are listed on page five. We advanced our lean and continuous improvement initiatives, which significant productivity gains, especially in architectural glass. We improved our overall approach to pricing, and we maintained a strong focus on cost management. Together, these allowed us to more than offset the continued impact of inflation. We worked to increase our mix of differentiated products and services. In architectural glass, we continued to shift our selling strategies toward premium, higher value-added products. In framing systems, we rationalized offerings moving away from lower margin products. And in large-scale optical, we continued to emphasize our highest performing differentiated products. To support the second pillar of our strategy, active portfolio management, we've strengthened our M&A capabilities, improving our selection and execution processes for future acquisitions. We also made significant progress with integrating SOTAWALL into architectural services. Finally, we improved our talent development programs, which is a key enabler for all three pillars of our strategy. This work was evident in our financial results for the year. Full year revenue grew 10% to a record $1.44 billion. Adjusted operating income increased more than 50% compared to last year. And adjusted earnings grew 60% to a record $3.98 per share. Full year results in framing systems and architectural glass were particularly impressive. At our investor day, we acknowledged that these two segments were underperforming their potential. Most of our focus the past six quarters has been to better position framing and glass for long-term success. Page six shows the margin progression for both segments. Framing margins improved by 530 basis points compared to last year, and glass improved by 600 basis points. Both segments are now performing within their targeted margin ranges, and we expect continued strong performance in fiscal 24 and beyond. At our investor day in November of 2021, we also established three-year financial targets for return on invested capital, operating margin, and revenue growth. We are well on our way to reaching each of these objectives, as reflected on page seven. ROIC in fiscal 23 reached 13.8%, exceeding our goal of greater than 12. In fact, all four segments were above 12% ROIC, a first for the company in many years. Operating margin improved to 8.7%. great progress toward our 10% plus target after just one year of our three-year plan. And our revenue growth surpassed the growth rate in non-residential construction. This was an especially strong result as we moved away from some lower margin volume as part of fiscal 22 restructuring and new strategic direction we set for the company. As we move into fiscal 2024, our strategic framework remains well positioned to drive further progress toward our financial targets. We will do this even in a challenging market environment. While lower, inflation will remain an issue for the foreseeable future. We expect continued tight labor markets and higher interest rates combined with overall economic uncertainty will likely impact construction activity at some level. However, through our team's efforts, we are transforming Apogee into a higher-performing, more resilient company, and I'm confident that we will drive further performance gains in the year ahead. Page 8 outlines our priorities for the new fiscal year, and let me go into more detail on two of these. starting with the Apogee Management System, or AMS, on page nine. We first introduced AMS at our investor day. We view this as a multi-year effort to build an operating framework with supporting tools that define how we run our business. AMS is based on the principles of lean and continuous improvement. These have been a part of Apigee's culture for several years, but the program needed to be reinvigorated. We started small, focusing heavily on just one part of our business, architectural glass. And we brought in key talent from other world-class manufacturing companies to support our efforts. Our goal was to move quickly to generate near-term improvements to the bottom line. We experimented and learned, making changes that delivered real results. From there, we began to broaden our approach deeper into the organization. In fiscal 24, we will continue to expand the scope of AMS. We will move beyond the initial deployment in Glass, going deeper into other parts of the company. And we will expand our toolkit beyond the foundation of Lean. We've challenged the organization to build pipelines of projects designed to drive continued productivity improvements. Through the deployment of AMS, we see the potential to drive meaningful productivity gains and continued margin improvement for the next several years. And this muscle will strengthen our ability to achieve synergies with future acquisitions. which is the next priority area I'd like to discuss, outlined on page 10. We see M&A as an important part of our growth strategy going forward. To generate value from acquisitions, we needed to strengthen our foundation. We accomplished much of this work the past year and will continue to build our capabilities in fiscal 24. We've added key talent, defined a clear strategy, and established a disciplined approach for screening and evaluating potential target companies. From this work, our team has developed a pipeline of opportunities and a plan for proactive engagement. Importantly, we have also developed a detailed approach to integration. In any deal, we will leverage Apigee's core capabilities to drive value from synergies. The chart on page 10 outlines some characteristics we will look for in potential deals. We will seek acquisitions that support our strategy of becoming an economic leader. This means adding differentiated solutions that either strengthen our existing core business or help us expand into attractive adjacencies and further diversify our construction project mix. We will also apply a rigorous financial lens to potential deals to ensure acquisitions are accretive to our long-term financial performance. As we focus on our priorities for the new year, I'm confident we will advance our strategy and move closer to achieving our 10% margin goal while sustaining our ROIC and growth objectives. We are proud of the progress we made over the past year. But we know our work is not done. Our entire team is aligned to become the economic leader in our target markets and drive continued performance gains. With that, let me turn the call over to Mark for more details on the quarter and our guidance.