Apogee First Quarter Earnings from Continuing Operations Increase; Fiscal 2009 Earnings Guidance Reconfirmed

FIRST QUARTER HIGHLIGHTS



-- Revenues of $238.5 million were up 14 percent from the

prior-year period.



-- Operating income was $16.6 million, up 11 percent from the

prior-year period.



-- Earnings from continuing operations were $0.36 per share

versus $0.34 per share a year earlier.



-- Architectural segment revenues grew 17 percent, and operating

income increased 28 percent versus the prior-year period.



-- Large-scale optical segment revenues declined 18 percent,

while operating income decreased 17 percent versus the

prior-year period, as expected.



-- Net earnings were $0.36 per share versus $0.40 per share in

the prior-year period when there was non-cash income in

discontinued operations.



-- Fiscal 2009 guidance reconfirmed: earnings from continuing

operations are expected to range from $1.82 to $1.94 per

share.



Commentary



We feel good about our first quarter results, which met Apogee's expectations for improvement in architectural segment revenues and earnings as all businesses performed well, said Russell Huffer, Apogee chairman and chief executive officer. The architectural segment operating margin was slightly lower than we had expected due to project and product mix, and productivity. He noted that the company tends to experience slightly lower first quarter seasonal revenues.



Our large-scale optical segment operating margin remained high and met our expectations, as our best value-added products were more than 50 percent of segment sales for the third consecutive quarter, said Huffer. We continue to convert customers to our best glass and acrylic framing products, even though elimination of less-profitable product lines and soft picture framing market conditions impacted revenues.



With the ongoing strength in our architectural segment, we remain optimistic about Apogee's outlook and are reconfirming our earnings per share guidance for fiscal 2009, said Huffer. We have strong visibility for fiscal 2009 and into fiscal 2010 due to our backlog, project commitments, solid bidding activity, and the construction levels and green building trends in markets we serve.



SEGMENT AND OPERATING HIGHLIGHTS



Architectural Products and Services



-- Revenues of $220.7 million were up 17 percent over the prior-year

period.

-- The continued ramp-up of new architectural glass capacity in the

Utah and converted Minnesota facilities, as well as the addition

of the storefront and entrance business contributed to revenue

growth.

-- Operating income was $14.8 million, up 28 percent from a year ago.

-- Operating margin was 6.7 percent, compared to 6.2 percent in the

prior-year period. It was slightly below company expectations for

the quarter due to project and product mix, and productivity. The

mix shift and ramp up of new capacity led to higher than expected

first-quarter labor costs, which are expected to return to normal

levels.

-- Segment backlog was maintained at high levels, reflecting normal

quarter-to-quarter variation rather than a change in Apogee's market

conditions.

-- Backlog was $491.0 million, up 19 percent from $413.7 million in

the prior-year period; backlog was $510.9 million at the end of

fiscal 2008.

-- Backlog continues to be balanced across all segments, with

growth in office projects.

-- Approximately $350 million, or 71 percent, of the backlog is to

be delivered in fiscal 2009; approximately $120 million, or 25

percent, in fiscal 2010; and approximately $20 million, or 4

percent, in fiscal 2011.



Large-Scale Optical Technologies



-- Revenues of $17.7 million declined 18 percent compared to the

prior-year period.

-- Elimination of less-profitable product lines, along with soft

picture framing market conditions led to the decrease.

-- Operating income was $3.3 million, down 17 percent from the prior-

year period as expected.

-- Operating margin was 18.4 percent, compared to 18.1 percent in

the prior-year period.

-- Our best value-added framing glass products exceeded 50 percent

of revenues for the third consecutive quarter.



Equity in Affiliates



-- There was a loss of $0.4 million from the PPG Auto Glass, LLC

joint venture, compared to break-even results in the

prior-year period.



Discontinued Operations



-- In the prior-year period, there was non-cash income of $2.0

million, net of tax, due to favorable resolution of an

international curtainwall project legal matter.



Financial Condition



-- Long-term debt was $73.4 million, compared to $43.4 million in

the prior-year period and $58.2 million at the end of fiscal

2008. Debt grew as expected, with increases in capital

expenditures and working capital, along with share

repurchases.



-- Non-cash working capital (current assets, excluding cash, less

current liabilities) was $83.5 million, compared to

$69.7 million at the end of fiscal 2008. Seasonal cash flow

resulted in higher working capital requirements.



-- Depreciation and amortization were $6.6 million, up 17 percent

from the prior year, due to new capacity depreciation and

acquisition amortization.



-- Capital expenditures were $23.3 million, compared to $14.0

million in the prior year period. There was spending on

productivity improvements and capacity expansions in both

operating segments.



-- First-quarter share repurchases totaled approximately 156,000

shares at an average price of $20.27 per share, for a total of

$3.2 million.



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