Apogee Enterprises Inc (APOG) 2012 Q3 法說會逐字稿

Great day, ladies and gentlemen, and welcome to the third quarter 2012 Apogee Enterprises conference call. My name is Catena, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the presentation. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Ms. Mary Ann Jackson. Please proceed.

Thank you, Catena. Good morning and welcome to the Apogee Enterprises fiscal 2012 third quarter conference call on Thursday, December 15, 2011. With us on the line today are Joe Puishys, CEO, and Jim Porter, CFO. Their remarks will focus on our fiscal 2012 third quarter results and the outlook for fiscal 2012.

During the course of this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment and are, of course, subject to risks and uncertainties which are beyond the control of management.

These statements are not guarantees of future performance, and actual results may differ materially. Important risk and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are described in the Company's annual report on Form 10-K for the fiscal year ended February 26, 2011, and in our press release issued last night and filed on Form 8-K. Joe will now give you a brief overview of the results, and then Jim will cover the financials. After they conclude, Joe and Jim will answer your questions. Joe?

Thank you, Mary Ann. Well, good morning, everyone, and welcome to our conference call here at Apogee. By now, you have all read our earnings release, so let's get right to it. I am obviously very pleased to report strong, positive results for -- at the end of my first quarter as Apogee's CEO. I've had a terrific introduction to the Company. I have visited virtually every operation in the United States and Brazil. I have met most of our employees, and I have been meeting with key customers, which will continue to be a priority moving forward. And I've met with many of you that are on this call.

In the third quarter, we obviously returned to quarterly earnings, and our revenues grew significantly. I was pleased we maintained a very strong backlog in our Architectural segment. We generated nice cash flow from operations, and we held a very strong cash and short-term investment position. I was really encouraged to have our core Large-Scale Optical segment get back to profitability after several quarters of operating losses. Both Architectural and Large-Scale Optical segments had excellent top line growth and particularly excellent given current market conditions out there.

In the quarter, Apogee grew 19% in revenues, 2/3 of that resulting from organic growth, combining volume and mix and pricing. And I would point out that if you look at the 19%, it is close to 1/3 driven by Brazil acquisition, 1/3 volume and mix and 1/3 price, a little bit more weighted to volume and mix than price. So, very pleased with the makeup and the mix of our growth.

Operating income, $7.2 million, a $9 million swing from a reported loss of $1.8 million last year in the same quarter that resulted in $0.20 per share, compared to a prior year loss of $0.08 a share. I was particularly pleased with our conversion on incremental revenue, something I have always tracked and have brought here to Apogee. Our conversion was greater than 30%, meaning our income conversion on that incremental revenue in almost all of our businesses showed what I would say is nice conversion on the revenue, something we will continue to improve.

We did have solid balance sheet performance as well. We were able to increase a nice cash and short-term investment position from the second quarter, including the use of $2.4 million in cash to repurchase shares, which we did in the third quarter, about 275,000 shares. I consider this a very strong working capital performance, considering the working capital headwinds you should normally get with 19% growth. The results showed true progress at a time when market conditions have yet to show real improvement. I'm happy to take questions on my position on where I think the market is going later on.

Our businesses are performing well, and operational improvements are really starting to make a difference. We are seeing progress on the things we can control like productivity, which we're improving, delivering better quality products on time and complete, selectively increasing prices, controlling our costs, flexing our manufacturing with our volume, and continuing to evaluate capacity.

If you look at our segments, the Architectural business grew revenues 21% through organic growth as well as the Brazilian operation. Similar comments to what I said for the Apogee, meaning we had nice volume mix combined with price and combined with the Brazilian acquisition. The segment was profitable in the quarter on strong revenues, and the Architectural segment maintained a very nice backlog and increased order flow, meaning we did not dip into our backlog to achieve these revenue numbers we're talking about.

I am encouraged by the positive level of our segment backlog. We continue to also have about $60 million in work that's been awarded to us that is awaiting final contract signing. This is a significantly higher number than traditional and equal to what we came out of the second quarter. Jim will take you through details of the backlog. I would simply like to say that we are significantly higher in backlog going into our next fiscal year than we were at this time going into our current fiscal year. So, Jim will give you the details on that, but it's a nice position to be in.

Regarding Large-Scale Optical, the third quarter is seasonally our largest quarter. The picture framing business did not let us down. They delivered strong results again in challenging markets. Our revenues grew 6%, largely through increased sales to our independent framers. The operating margins in this business remain high. There was a slight decline, quarter over quarter, due to new market investments in mix that we are making in this business.

As I look forward to the rest of the year and the outlook, with this strong third quarter performance, we've obviously increased our outlook for fiscal '12 for the full year. We now anticipate revenues growing 14% for the year, up from our prior expectation of 10% growth. I also expect that our full-year earnings will be at least $0.07 a share, based on our year-to-date performance and an expectation that we will be slightly profitable in the fourth quarter.

We anticipate fourth quarter revenues will be down sequentially from the third quarter, due to Architectural project timing and mix and the Large-Scale Optical seasonality. But let me be clear, we will have double-digit year over year growth in the quarter. In addition, I expect we will generate positive cash flow from operations in fiscal '12.

We continue to see good bidding activity in the short-term. We are focusing running our business better. We are seeing the results of that. Clearly, I would like to see a sustained economic recovery, and we clearly would like to have some tailwinds from the market, but we are seeing robust activity in our projects business right now and improved margins, and we are seeing nice orders in revenue in our shorter-cycle businesses.

I am very optimistic about the longer-term opportunities at Apogee. We are working to develop and execute strategies to grow our business in the US and internationally. I'll come back on the phone after Jim has provided you more details on the financials and wrap up and take your questions. So, Jim?

Thanks, Joe. We had a great third quarter, given market conditions that remain challenging. I'm especially encouraged by the Architectural segment revenue growth and profitability for the quarter as our commercial construction markets bounce along the bottom. I'm also pleased that we continued to book significant new orders and that we maintained the second quarter level of both backlog and the approximately $60 million in contracts that have been awarded but await final signatures. In addition, our Large-Scale Optical segment continued to make attractive contributions to revenues and earnings in what is their pre-holiday, strong third quarter.

We had positive free cash flow of $7.4 million during the third quarter, compared to approximately $1 million negative free cash flow in the prior year period. We define free cash flow as net cash flow provided by operating activities minus capital expenditures. Apogee earned $0.20 per share in the third quarter, compared to a loss of $0.08 per share last year, on revenues of $174.9 million, which grew 19%.

The $0.28 per share turnaround from the prior year period was driven primarily by the Architectural segment, with higher Architectural glass pricing and leverage on segment volume growth that was partially offset by the expected lower-margin project work in our installation business. The Brazilian Architectural glass business was slightly accretive in the quarter, as we had expected.

Third quarter Architectural segment capacity utilization increased to just over 60% from approximately 50% in the prior year period. Our Architectural segment backlog, which held at the second quarter level of $231 million, is made up of the following mix. The institutional sector, government, education, and healthcare projects, is 50% to 55% of the backlog. Office is 30% to 35%; multi-family residential, including high-end condos and apartments, are approximately 10%; and hotel, entertainment, transportation, and retail represent approximately 5% of the backlog. With one quarter remaining in fiscal 2012, about $96 million or 41% of our backlog is expected to be delivered in the fourth quarter and $135 million or 59% in fiscal 2013, with a small amount that will likely carry over into fiscal 2014.

Our Large-Scale Optical segment turned in a strong quarter, growing revenue 6% in soft retail markets. We had increased sales among independent framers, which is encouraging, since this sector has been slower to show any signs of recovery. On higher revenues, operating income held at $7.4 million from the prior year period, leading to an operating margin of 32.5%, compared to 34.5% last year. Sales of value-added products continue to be strong, with the bottom-line impact of growth offset by some increased spending for marketing, promotions, and new business development.

The third quarter included a roughly $0.03 per share benefit on the tax line from finalization of previous tax positions taken. At low levels of quarterly profit or losses over the past several quarters, we continue to see significant variation in our tax rate. We would expect to return to a normalized rate of 35%, looking into fiscal 2013.

At the end of our third quarter, our cash and short-term investments totaled $46.4 million, compared to $45.3 million at the end of the second quarter. As Joe mentioned, during the third quarter, we used $2.4 million to buy back 275,000 shares. We have stated in the past that our share buybacks are generally done to reduce dilution from compensation-related items. During the quarter, we felt our cash position and share price presented an opportunity to repurchase shares for this purpose. Non-cash working capital was $70.8 million, compared to $68.2 million at the end of the second quarter, up slightly with growth in our business. Our overall days sales outstanding level increased three days to 53 days. This was primarily due to customer project mix, rather than a sign of weakening market conditions. We continue to closely monitor our accounts. We define non-cash working capital as current investments excluding cash and short-term investments plus current liabilities.

I'll turn to our outlook. We've increased our outlook for fiscal 2012 based on our third quarter performance. We now expect revenue growth of approximately 14% for the full year and that our earnings per share will be at least $0.07 per share. As we had previously communicated, we expect the fourth quarter revenues and margin to be lower than in the third quarter, due to scheduled Architectural segment project mix and lower expected capacity utilization in the segment, along with the seasonal return to normal fourth quarter levels for our Large-Scale Optical segment. We continue to expect the full year gross margin to be between 17% and 18%.

We also expect to generate positive free cash flow for the fiscal 2012 full year. Capital spending is expected to be less than $15 million for the year. Depreciation and amortization should be approximately $28 million.

In the third quarter, we began to again show the leverage and impact of volume growth and improved pricing. As we close fiscal 2012, we remain focused on effectively managing through still challenging commercial construction markets and emerging stronger when the market rebound benefits Apogee. We're well-positioned financially, continue to provide leading products and services, and are pursuing operational and strategic initiatives to strengthen and to grow all of our businesses. Joe?

Thank you, Jim. Now, I would like to open up for your questions. After your questions and our answers, I will close the call with a few more comments. So Catena, if you could please open the call for questions.

Thank you. (Operator Instructions). Your first question comes from the line of Eric Stine representing Northland Capital Markets. Please proceed.

Hi, everyone. Nice quarter.

Hi, Eric.

Wondering if we could start with the pending order level. I know that has persisted for a few quarters. Is this something that is typical of what has happened, coming off the bottom on the last cycle? And any thoughts on how long until you see that normalizing?

Jim, I will start, and you can add in, if you'd like. So, Eric, you are referring to the backlog, as well as the comment we've made around the amount of business we've won, not yet entered into backlog?

Yes. That $60 million number.

Sure. The $60 million is higher than it's traditionally been. Remember, a lot of that comes from our projects business at Harmon and can be very lumpy, depending on when an order comes into award status. We could have a $20 million project awarded to us today and go into that category, and when the contract is signed, it comes out of that category and goes into the backlog. So we try not to overemphasize any individual quarter.

I think you were getting at the trend. The trend is clearly improving. I would tell you that we are seeing robustness in the market, and particularly in some regions in the United States that we haven't seen in some time. I expect that number to continue to stay in that category. But I simply warn you that once a contract is signed, we could have a $20 million reduction in that category in a day if we have a massive project like that. But the trend will continue to be up from the activity we're looking at now.

The trend in backlog continuing to be up, but that $60 million number, just higher than it is typically. Is that just indicative of markets starting to pick up a little bit? And the projects at least coming off the bottom are a little slow to get to where you finalize the award?

Eric, it's Jim. First of all, it is higher than if we look at coming off the last drop and I think both explain the difference and just the current position. I would attribute it more to our current strategy that we went after. And again, this is -- the biggest chunk of this is really related to our installation business to Harmon. And it's really -- as we have talked, our strategy in that business has been, going into the downturn, more focus on the institutional sector. And then also really looking more aggressively across the country, not just where we had shops, and looking for the best projects.

And so, I think the discipline from those initiatives has translated into the discipline of being selective on picking projects. And then there is some factor, I would say, attributable to the current market, which is that in the current market, I think GCs have obviously tried to flex their position a little bit in terms of contract terms and conditions.

And so that's just required the whole process, in terms of negotiating final terms and conditions on contracts, to take longer than it has in the past. And so, hopefully as the market improves and that rebound takes place, then maybe that leverage on contract terms and negotiation will come back and the process will speed up.

Okay. That's helpful. Then, last question for me. Just on the fourth quarter, kind of fourth quarter implied in guidance, I guess specific to the EPS of at least $0.07, just curious to get your thoughts. That seems like a pretty low hurdle, given the third quarter and just how we should think about that, specifically kind of the project mix. Is this more installation business which you're still working off low-margin projects?

Eric, I would -- clearly you heard my words, at least $0.07, which reflects slight profitability in Q4. Clearly, I wouldn't say at least if I wasn't confident. Let me do point out that even at that projection, the fourth quarter will be a $0.17 improvement versus the same period the prior year.

I enter the quarter with an open backlog of shippable product in fiscal '12, our current fourth quarter, where it should be. But we still need to fill the quarter with book-to-bill orders in our short-cycle businesses. And I am comfortable that we will beat that number, and so when we say at least $0.01 in the fourth quarter, I hope we will be at least that much, and we will see how it goes.

Okay. Thanks a lot.

Your next question comes from the line of Brent Thielman representing D.A. Davidson. Please proceed.

Hi. Good morning, guys.

Good morning, Brent.

Just on the Architectural business, I think last quarter you talked about particularly at Harmon, the projects that you were putting into the backlog were going to be incremental to margins. I was just trying to get a sense of when you expect sort of the installation contributions to start to reach sort of breakeven levels here. And I know you don't break it down, but if I thought about the last several quarters, is it fair to say installation losses represented half or was more than half, less than half, in terms of the losses at Architectural?

I'll let Jim comment on the latter part of your question. The first part, the Architectural, the backlog -- the margins and backlog are improving. And every project we are reviewing will be accretive to the backlog when they enter. I think it will be the May, June time frame, meaning our second quarter of fiscal '13, before we start to see it in the revenue that we record. But clearly, the forward indicators are showing improved margin and backlog.

And Brent, I'll just kind of add to your question, which is -- I think we talked earlier that as we go through this year, we're seeing the improved pricing in the glass business, in Viracon's business, come through and then starting to see that benefit offset from Harmon. And so the point is, in the first half of this fiscal year, we were still pretty significantly impacted negatively by the pricing at Viracon and then starting to see the feathering in of the lower margins during the first half of this year.

So, we've really kind of started to see that shift in the second half, which is the more impact of the installation business, lower margins in their second half kind of offsetting the overall segment. And then when we do get to the fourth quarter from the prior question, which is -- the biggest variable is really kind of the specific timing of project activity.

And so it's both the uncertainty of mix within our businesses. We're currently projected to see more of our fourth quarter revenue attributed to the installation business as a percentage of the total segment than in Q3 and then projects within all the businesses.

Okay, thanks. That's helpful. And then just on the Large-Scale Optical, you mentioned some of the growth and marketing initiatives there. Are you expecting those to continue going forward? Is that sort of isolated to the quarter?

Some of it in that business -- some of it is driven by retailer and promotional activity that moves around. But I think we are still coming off of soft retail market conditions, and as we -- if and as we continue to see some slight improved economic conditions. And I think what was positive in the quarter is probably the first time in a while that we at least started to see a little bit of improvement in the independent framer segment. And so we are hopeful that we will continue to see that, as well as some of the new initiatives in terms of new products and the museum sector and fine art museum and a little bit in international as well.

Brent, it's a business I plan to continue to invest in. There's more we can do to grow that business. There will be some more investment.

Okay. And then, just lastly if I could, you obviously are going to generate positive cash from operations this year. The balance sheet is obviously in great shape, but just a question regarding the dividend. Obviously, the obligation here relative to the cash you're generating is still somewhat significant. Just in terms of priorities, can you talk about the need to maintain the dividend at current levels versus maybe retaining more of that cash as you look to potentially expand the Company into new markets or new verticals?

Well, Brent, I don't plan to sit on our balance sheet and do nothing. I would like to grow this business domestically and internationally, and when the right opportunities come up, I'd like to make investments. So we do not plan to sit on it. I don't have any comments regarding dividends. I think our current dividend policy is correct, but I really don't want to comment on what we plan to do going forward. But I think we can continue to pay dividends and invest in this business. As you say, we've got a strong balance sheet. I plan to exercise it for the right opportunities.

And Brent, I will just point out that if we look at the history of dividends in this Company, as we've actually slightly increased dividends I think almost every year, except for a couple up until about four years ago. And in the last three years, we have maintained dividends constant, particularly for some of the reasons that you are saying is that while we think paying our dividend continues to be important, we're really looking at how we overall utilize our cash in the business.

Okay. Thanks, guys.

Thanks, Brent.

Your next question comes from the line of Robert Kelly representing Sidoti. Please proceed.

Good morning, everyone.

Hi, Robert.

Just a question, if you could. Could you help us bridge the profit improvement or the profit reversal in Architectural compared to the year-ago period? If you could give explicit terms, volume, what Architectural pricing installation, how we got from an $8.4 million loss to a mild profit here, utilization, even if you could order -- order of magnitude list out, I think that would be helpful.

Bob, it's Jim. And I think really it's balanced in terms of just the year on year Architectural segment improvement in the operating income is probably going to be a little bit more than half related to volume, which is just the leverage both in terms of SG&A but also capacity utilization and those kinds of things. And a little bit less than half really related to pricing. Because as we had talked last year and early this year, the pricing that we had in Viracon Architectural glass business was really pulling the Company down. And most significantly in the second half of last year is kind of when that was at its worst point. So when we look at overall year on year comparison, it was pretty balanced between volume across the segment and pricing specifically within Viracon.

For Bob, I would also throw in, and it's not insignificant, the productivity improvements in the Architectural segment factories has been pretty impressive and particularly this quarter. Complete and on-time shipments are now consistently between 95% and 98% in almost every one of our factories. And I would say the businesses are now flexing the workforce and the capacities with the order requirements, which we weren't doing as well. Still room for improvement there, but productivity improvements are also in that equation, not quite as significant as price, but not that much. So I would say it's a little bit of the three things, price and productivity and the volume and a good mix across the businesses.

Some of our architectural businesses are winning share. Others are getting a little more price. And others are producing a little bit better.

I also want to make sure to remind you that when we do talk price in Viracon's business, mix comes into play there too. And that's in terms of the complexity of projects, more differentiation in terms of the product types that gives Viracon the differentiated position in the higher complexity, the higher value-added tends to drive to higher price and better competitive positions.

Okay, great. Joe, you had made a comment about the conversion of the incremental revenue being around 30% for every dollar. Are there steps -- levers you can pull, steps you can take to get that number higher? 30% is kind of where the business has been historically. Do you foresee a period of time where you could be north of 30% on incremental margins?

Absolutely. All -- Bob I'm going to mention this in my closing comments, so if you can hold off a few seconds. But I will tell you, without question, I think we've just scratched the surface on improving our conversion in our factories. I'm pleased with this quarter, it's just a start. The answer is yes.

Okay, fair enough. And then just quickly on LSO, the growth spending initiative. What is that exactly? Is that just a marketing -- a bigger marketing push?

Yes. I want to be careful. I don't want to give away my marketing strategy to my competitors, Bob. Happy to kind of talk off-line. But it is more marketing than manufacturing. I think Jim highlighted, we're doing promotions, especially I think we could do more at the independent picture framer. We've got some -- amping up our programs with our major retailers. So I would simply use the word marketing, investments.

And then also, Bob, as we've talked in terms of new business development, I think they have made some great progress and have some initiatives as they are expanding their presence in the museum and fine art market, tend to be niche markets but attractive markets. And then we've also increased a little bit of distribution in Europe to just get a presence there. So those are kind of where some of the new business initiatives are. Keep in mind, a couple of margin points in that segment is pretty small actual dollars.

Right. Okay. Thanks, guys.

Thanks, Bob.

Your next question comes from the line of Tyson Bauer representing Wealth Monitors. Please proceed.

Good morning, Joe and Jim.

Hey, Tyson.

Good morning, Tyson.

A couple of quick questions. Have we gotten to a good balancing point with the manufacturing sites where we're not going to see those extended shutdowns as we get into the latter part of this quarter? Or are we still kind of in that mode of massaging the order flow and the deliveries?

I think we are pretty stable with regards to manufacturing, certainly for this quarter. We're entering now fiscal fourth quarter. When you look at the coming calendar year, 2012, which will be mostly our fiscal '13, we don't know. If you look at the latest McGraw-Hill data, one of the data points we use, construction outlook, it's certainly showing a delayed recovery. I think we all know that. We're expecting now something flattish in the construction market. But the non-residential, some forecasts are still a small, single-digit increase, and the mix within that should be attractive, moving a little bit away from institutional, a little bit stronger in commercial, and that certainly will help us.

If the market -- if we go into another recession then all bets are off with regards to our manufacturing footprint. As I speak today, I am pretty confident with our current footprint. I think Jim mentioned in his comments, our factory utilization and capacity utilization increased in the quarter. Personally, I expect that trend to continue. But I can't obviously guarantee what's going to happen with the economy. So short of something in a more significant downturn, I'm comfortable with our current footprint.

Tyson, I also think that all of our businesses have actually improved in terms of [variablizing] their labor. And one of the challenges in the business that we are in is it's project oriented, and so even when we talk about capacity utilization, that could change a lot, one week versus another week. So I think our businesses have done a nice job, where we might have a week or two where the volume is lower and we'll adjust our staffing for that but then ramp up for the weeks where it's needed.

Positive though on that, Jim and Tyson, is we have pretty good visibility to those spikes and valleys in advance. And I would say the team is improving their ability to plan according to those -- what we can see in the long-term horizon. And they are doing a nice job flexing the factory, better than we've done before, and still some room for improvement.

One of the issues, at least on our end, is try to gain some investor conviction here as we go in the intermediate and the longer-term outlook. Can we gain, either from yourselves or from the investment community, can we get that? And if we don't have the office participation in that market coming with us to kind of give us the numbers we've had historically in that industry.

Well, yes, I think if you look at our results for this year, clearly our organic growth is better than the end markets. The business folks are doing a nice job of segmenting the customer base and segmenting the market, improving their win rates by going after the projects that we've had historically better opportunities to win. And so, even in a flat market, if you are segmenting your customers, segmenting your market, going after the right projects, you can increase your win rate and gain share and grow. And as you've seen for us this year, we will grow well above the market rates organically. So I do not see that changing. We are primarily a US and Brazil operation in sales today, while we do have some export. It's a big world out there, and we have plenty of opportunities to participate, beyond what we are doing today.

And last topic from me. Given your background, Joe, it doesn't seem like you have the mentality to really sit on your hands, I guess is one way to say it. You mentioned if you had the right opportunities, you're going to go and try to capture that. Does that imply that we really don't need to see an improvement in your base business? You can still maintain kind of a bunker mentality while achieving some of these or pursuing other growth initiatives? So, it's a 100% go for you at this point in achieving those growth initiatives?

Absolutely.

That's good to hear. Thanks a lot, gentlemen.

Thank you, Tyson.

(Operator Instructions). Your next question comes from the line of Mark Rogers representing Gagnon. Please proceed.

Thank you for taking the question. Typically, architectural glass has always been thought of as a new construction item. Joe, you come from Honeywell, where a lot of your business was done in retrofits. Is there any way to sort of combine the product offering at Apogee and perhaps push it more into the retrofit cycle versus waiting for a large, new construction cycle to begin? And then I have a question on margin expansion throughout the different segments.

Okay, so hold your question for margin expansion, and Jim can jump on that. Let me respond, Mark, and by the way thanks for your question. Again, I want to be careful I don't share my strategy with my competitors here. But obviously, I did come from a business at Honeywell that the team there managed to do a remarkably good job of changing their portfolio to be less dependent on commercial new construction. They did it through retrofit and energy-related products.

Well, we have the same opportunity to do that here. We have a product that saves a significant amount of energy. The retrofit market is not as easy when you're talking about replacing glass, but there is a market for it. We are going to participate in that market, and I plan to win more than our fair share.

I am already working with people in that industry to move the needle and get us to be less dependent on new construction and enjoy more of the aftermarket and the retrofit business. And again, that does not necessarily have to be only in the United States. So the answer is yes, I do plan to -- I'm not sitting on my hands with regards to that market.

Great. Thank you. And then on margin, you have four or, excuse me, maybe five divisions within the architectural glass segment. How are the divisions working together today? What are the opportunities for margin expansion for Viracon to be working closely with Harmon, working closer with Wausau and Linetec, and Tubelite, such that business won by one division isn't necessarily lost by another?

Let me -- so I was going to have Jim, and Jim can jump in here, but you have kind of hit one of my cornerstones. When I came here, I came from an environment where there was quite a bit of oversight over related businesses. Between the corporate entity and the business units, there was a management structure overlaying the related businesses. We're not going to add a layer like that here at Apogee, but I do want the businesses to work together more so than they ever have. We're already underway on that.

We will not go to market as one entity. That's not right for the markets we are in. But I do want my businesses sharing best practices, especially on manufacturing operations and marketing excellence. We are doing more and more of that. So, it is a pet peeve of mine. I want my businesses working together, not going after jobs as one entity, that we will not do, but managing to run this business better as a team. And we are already seeing some improvements in that.

Thank you very much. Great call.

Thanks, Mark.

With no further questions at this time, I would now like to turn the call back to Joe Puishys for closing remarks.

Okay, terrific. So team, thank you. Listen, I won't deny that I am pleased with the most recent performance of the business. I feel, though, we've only scratched the surface with regards to operating improvements in our factories and our line of business marketing efforts. We have huge opportunity. I think the team here, as I hope, showing you that we can perform well in what I think is a weak or stagnant marketplace, if we get a little bit of tailwinds with the market, combined with the focus we have on the improvement that we can make and the things we control, and moving our markets into new arenas and new geographies, I think we can continue to please you going forward.

I look forward to meeting some of you over the course of the quarter, as I have over the last 3.5 months. And I certainly look forward to having a call with you when we wrap up our fourth quarter. Have a great day, everyone. We will talk to you soon. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.