Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 Apogee Enterprises, Incorporated Results Conference Call. My name is Larry, and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Mary Ann Jackson. Please proceed.

Thank you, Larry. Good morning, and welcome to the Apogee Enterprises Fiscal 2012 Fourth Quarter and Full Year Conference Call on Thursday, April 12, 2012. With us on the line today are Joe Puishys, CEO; and Jim Porter, CFO. Their remarks will focus on our fiscal 2012 fourth quarter and full year results and our outlook for fiscal 2013. 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. Go ahead, Joe.

Thank you, Mary Ann. Good morning, team, and I look forward to your questions after my comments and Jim's. Welcome to our fourth quarter fiscal '12 conference call. I'm very pleased that we delivered a very strong fourth quarter and fiscal year. We, again, achieved double-digit revenue growth in the quarter, significant earnings improvement, very positive cash flow and a continued increase in our backlog. Apogee's revenues grew 14% for the full year, with organic growth in both the architectural and Large-Scale Optical segments. In spite of flat commercial construction market conditions, our architectural segment revenues for the year grew 15% due to share gains, geographic growth, pricing and the acquisition of the Brazilian architectural glass business, which contributed 5 points of that growth, leaving 10 points of organic growth. At the same time, Large-Scale Optical business for fiscal '12 grew 4% in extremely weak consumer markets. So for fiscal '12, our earnings per share from continuing ops improved $0.68 from the prior year and I'd like to point out, each quarter reflected year-over-year improvement. The fourth quarter improvement alone was $0.23 a share, mirroring a similar third quarter improvement of $0.28 of share improvement year-over-year. For our fourth quarter, we had 40% conversion rates on the incremental revenues. That's operating income, conversion over the incremental revenue. These strong conversion rates underscore the improvement that's happening in our business and our potential. And this was one of my initial focus points in the business. The performance in the third and fourth quarter brought our full year conversion over 30%. We continue to strengthen our balance sheet. Our cash and short-term investments grew approximately $20 million in the year. Looking at our fourth quarter, our architectural segment results improved by more than $9 million year-on-year, for an operating loss a year ago of $9.9 million to a loss in the fiscal fourth quarter of fiscal '12 of only $500,000. Comparing the current performance to the fourth quarter last year, better architectural glass pricing, improved value-added mix, leverage on the volume growth were partially offset by lower margin work from the installation business. And Jim and I will talk more on that in a -- throughout this morning. The architectural segment results declined sequentially as expected, and as we discussed last quarter, with lower revenues, therefore some lower capacity utilization, mainly as a result of project timing. The Brazilian architectural business that we acquired over a year ago was accretive in the quarter and for the fiscal year. It's been fully integrated with our domestic architectural glass businesses and is performing quite nicely. I was most pleased with the increase in architectural segment backlog, now up to $242 million, giving us strong position as we enter fiscal '13. I'd like to point out over the last 5 quarters, that backlog has increased over $75 million and over 45%. We're experiencing good bidding activity. The work we're booking is at better margins, and that will begin to be delivered in 2 to 4 quarters. The Picture Framing business, or Large-Scale Optical as we call it, continued strong in the fourth quarter. The core earning power of this segment remains very solid. We had increased spending of about $1.5 million on sales, marketing, new market development initiatives, including our new International business, where we opened operation and some timing-related expenses. For the full year, the Large-Scale Optical operating margin was 25%. This compares to 27% last year. But I'll point out, our gross margins for fiscal '12 remain extremely healthy and virtually unchanged from a year ago. The investment was in sales and marketing. This is a great business with great products, and I am investing in initiatives that will grow this business. Apogee's fourth quarter and full year results showed true progress at a time when the market conditions have yet to show real improvement. Our businesses are performing well. The operational improvements we're focusing on are certainly starting to make a difference. We're making progress on things within our control like improved productivity, delivering quality products, on-time performance, selective price increases and cost controls. As I turn to our outlook, we're expecting continued revenue and earnings growth in fiscal '13. Our architectural business has maintained prior year share gains, and we continue to gain share in the new year. Economic and market indicators seem to be moving in the right direction. Jim and I will talk about this more today. It certainly feels as if we're off the bottom. During fiscal '13, we'll be focused on operational improvements, new product introductions and international opportunities, that I believe will benefit Apogee this year and in the future. I continue to be very optimistic about the long-term opportunities for Apogee. Regarding our guidance for fiscal '13, we're anticipating mid-single digit growth on revenue and earnings per share of $0.40 to $0.50. We are anticipating that we will grow and show improvement year-over-year in every quarter in fiscal '13, as we did in fiscal '14. Growth in the mid-single digits is the basis of this plan, and it is assuming flat nonresidential construction end markets. Jim and I will talk more about the opportunities, should the markets be better than that assumption. We have a solid architectural backlog starting the year. I'm encouraged by the level and quality of bidding activity, as fiscal '12 or fiscal '13 calls for the second half of the year to be stronger than the first half. In the second half, we expect to benefit from improved commercial construction market conditions and project margins from our margins and backlog. During the first half, we're also investing in domestic geographic growth and in upgrading equipment and facilities, particularly as you've read in our Georgia architectural glass factory, which started a 6-month renovation project in February. We expect to see improved productivity from the Georgia factory as a result of upgrades when production resumes in the middle of this fiscal year. I am looking for revenue and income growth from all businesses in fiscal '13. On the top line, the strongest growth will come from our installation and storefront businesses, as they continue to expand their geographic presence within the United States. As an example, Texas is a new market for both the architectural installation and storefront businesses. And in March, we opened a new office in Texas as we hired a great team and gained an initial book of business, when a competitor suddenly closed its doors. Our earnings per share outlook is based on the expectation that we'll benefit from a full year of improved glass pricing, higher installation margins beginning to flow in the second half and the ongoing strong performance of our Picture Framing Glass business. If commercial construction markets improve sooner than anticipated, we certainly have the potential to do better than our current guidance, as we gain additional volume and market share. We are also projecting good conversion on this single-digit growth given our track record in the second half of the year. As I said, we had 40% conversion at the operating level in our fourth quarter. We're projecting to be better than that in fiscal '13. We're expecting continued positive free cash flow in fiscal '13 after spending approximately $25 million for investing in new products, capacity, productivity improvements and international expansion, as well as our required maintenance investments. A focus that I'm bringing to Apogee is greater attention to new product development or NPI, so we'll be increasing our resources in this effort which should yield benefit in years to come. With the outlook for healthy free cash flow, we are frequently asked, how will we be spending this cash? Our first priority is investing to grow this business, including internationally. We'll also continue to fund our dividend, which we and I strongly view as very important to our shareholders. Apogee is gaining momentum as the performance improves, and we begin to implement the strategies to grow our business, both at home and internationally. I'm extremely optimistic about the longer-term opportunities for my business at Apogee. Jim will now cover the financials. Jim, thanks.

Thanks, Joe. We're pleased that our fourth quarter performance came in at the upper end of our internal expectations in market conditions that remain challenging. Apogee earned $0.11 per share from continuing operations in the fourth quarter, compared to a loss of $0.12 per share last year on revenues of $168.7 million, which grew 14%. Our fourth quarter earnings per share improved by $0.23, with all the operating improvement coming from our architectural segment. We benefited from much stronger pricing and mix in architectural glass, as well as increased volume across the other segment manufacturing businesses, which drove improved capacity utilization. These improvements were somewhat offset by lower installation margins, as we expected. Fourth quarter architectural segment capacity utilization was approximately 56%, compared to about 50% in the prior year period. In the third quarter, capacity utilization was a little more than 60%. Our architectural backlog increased to $242 million in the fourth quarter. This sector mix of our backlog remains essentially unchanged from the third quarter. The institutional sector represents 50% to 50% of the backlog, with some shift this quarter to health care projects from government and education. Office is 30% to 35% of our backlog; multi-family residential, including high-end condos and apartments, is approximately 10%; and hotel, entertainment, transportation and retail are less than 5% of the backlog. Regarding the timing of the backlog, approximately $183 million or 76% of our backlog is expected to be delivered in fiscal 2013 and approximately $59 million or 24% in fiscal 2014. I'll just provide a reminder of what's included in our backlog. For all the architectural businesses, except our domestic architectural glass business, Viracon, we capture the full contract value in our backlog once we have a signed contract or purchase order. For the Viracon domestic business, full projects receive what we refer to as a commitment, but only the approved production phase of the project, where we have a signed purchase order, is included in our backlog. The point here is that for our largest business, we have significant visibility beyond what is in our reported backlog. Our position entering the year, with backlog and visibility of commitments, is the basis for our fiscal 2013 outlook. We're also feeling good about the fact that we're now bidding on more private work, which contributes to our expectation of a market recovery later. Our Large-Scale Optical segment continued to make significant contributions to revenues and earnings. Its year-on-year earnings decline was largely from expense timing and increased investment in sales, marketing and international activities. As Joe noted, the core performance of this segment remains solid. We have a bit of this impact of small numbers going on, where for this segment, an incremental $1 million of spend in the quarter equals roughly 5 basis points of segment operating margin impact. Segment revenues grew 7% in the fourth quarter, as we experienced increased sales to independent framers, a portion of the market that has been slower to recover. The fourth quarter Apogee gross margin of 19.4% was up 370 basis points from 15.7% in the prior year period. The gross margin did come down slightly from the third quarter, as we had expected, due to lower capacity utilization as well as mix of business in the quarter. The full year gross margin of 17.7% was within our guidance of 17% to 18% for fiscal 2012. This compares to a gross margin of 14.3% in fiscal 2011. I'll provide just a bit of color on the fourth quarter tax line. Deductions, primarily the normal manufacturing deduction as well as reserve reductions resulting from finalization of previous tax positions, were worth approximately $1.5 million. At low levels of quarterly profit, we see a significant variation in our tax rate from this. We do expect to return to more of a normalized rate of about 35% in fiscal 2013. We had free cash flow of $29.3 million during the fourth quarter, compared to $15.6 million in the prior year period. Free cash flow for the full year was $18.3 million, compared to negative $17.1 million in fiscal 2011. We define free cash flow as net cash flow provided by operating activities minus capital expenditures. Noncash working capital was $44.4 million, down from $70.9 million in the third quarter. The decline resulted primarily from the timing of receivables and receipt of tax refunds. Noncash working capital was $39.4 million at the end of fiscal 2011. Our overall days sales outstanding level decreased 4 days to 49 days in the fourth quarter. The decline is a result of our focus on collections in tough market conditions. We monitor our accounts closely, while continuing to bond and lean our work as the recession is impacting some of our customers. We define noncash working capital as current assets, excluding cash and short-term investments, plus current liabilities. I'll turn to the outlook. We're expecting another year of improvement in fiscal 2013 with mid-single digit revenue growth, as our architectural businesses continue to gain share and our installation and storefront businesses expand into new U.S. markets. That said, the full year outlook for our architectural end markets is to be flat or slightly down for fiscal 2013. We're encouraged, though, that the external metrics we pay attention to, including job growth, the Architecture Billings Index, the McGraw-Hill Construction forecast and consumer confidence, point to improving markets for Apogee in the future. We are anticipating that markets will start to strengthen for us in the second half of our fiscal year, since our architectural products generally follow projects starts by about 6 to 9 months. Our outlook for earnings per share of $0.40 to $0.50 in fiscal 2013 should result from having a full year of improved architectural glass pricing and operational improvements, along with higher installation margins that should begin to flow in the second half of the year. We're expecting full year gross margins of just over 20%, with second half margins stronger than the first half. A key point that affects our full year outlook is that we'll start at a lower level in the first quarter. We are seeing lower volumes with excess capacity for the architectural glass and window manufacturing businesses due to project timing, which we expect to fill in late in the first quarter or early in the second quarter. In addition, we have first half investment activity for domestic geographic growth in installation and storefront, as well as equipment upgrades for our Southeast architectural glass plant. We anticipate that gross margins will improve as the year progresses, allowing us to achieve the full year gross margin above 20%. We also expect SG&A will be slightly as our business grows. We expect to generate positive free cash flow for fiscal 2013, after increasing our capital spending to approximately $25 million for several new projects. We intend to invest in new products, capacity, productivity improvements and international. Depreciation and amortization should be approximately $28 million in fiscal 2013. I'm encouraged by the profitable growth we achieved and expect continued improvement in fiscal 2013. I also look forward to future opportunities that will leverage Apogee's strong financial position, leading products and services and operational and strategic initiatives. Joe?

Thank you. I'd like now go ahead and open the call for questions. Larry, I'll turn it over to you to open up for questions from my audience, please.

[Operator Instructions] And our first question comes from the line of Eric Stine of Northland Capital Market.

First, just wanted to clarify something you said at the end, Jim, the line kind of cut out. So an SG&A, just what are the expectations for the year? Did you say modest increases from current levels?

Correct.

Okay. And I'm wondering if you can just talk about the gap in the first quarter. Is that something that you see there is a chance that, that could be filled by some short-cycle work? Or, I mean, are we too late in the quarter for that to be the case?

It's pretty much too late. I mean, there's a little bit that could fill in but we really -- there could be some variation with it. But we definitely look at sequentially down first quarter just really based on the backlog that we have and the work that's available.

Okay. And sequentially down revenues, obviously, also margins?

Yes.

Okay. Maybe just turning to backlog. The last few quarters, you've had kind of an abnormally high level of pending orders. Just curious where you ended the fourth quarter on the pending order line.

This is Joe. The pending orders has remained consistent since we started talking about it, as evidenced by our strong finish in the fourth quarter compared to the third quarter when we talked about it. And I really don't want to get into projecting first quarter fiscal '13, but our one month into the new year, the trend in increased backlog continued. So we're continuing to see a very robust backlog at improved margins. And I'm confident that -- and our backlog, as I said earlier in my discussion, is up significantly over the last 5 quarters. So we've been able to hold the gains to that number.

Yes, I was just getting at -- I mean, so you grew backlog nicely this quarter, but that pending number is still kind of in that $60 million range. Is that how I should think about it or -- I mean, it's above historical levels still?

It's consistent with that, yes.

Okay, that's helpful. And then maybe this last thing. You mentioned some planned investments in international markets, if you can just give a little more detail there, Joe, that'd be helpful.

Sure. I'll talk about what we have done. I'm more comfortable with that than sharing my strategy, but -- with my competitors. But we did begin our international operations in our Large-Scale Optical business. And we do have plans for revenue growth in Europe in our Picture Framing Glass business. And we're very excited about that. They are a extremely strong competitor in the U.S., and I'd like to flex that prowess in other -- in Europe as well. We continue to reap the benefits of our investment in Brazil. And we, being in the strongest position in Brazil, I expect as that market continues to mature to more value-added glass, we will continue to invest in sales investment in that region. So those are the 2 areas we've accomplished in the last year. We, obviously, have further plans to expand our -- some of our businesses internationally.

Our next question comes from the line of Brent Thielman of D.A. Davidson.

Yes. Joe or Jim, I guess just on the architectural side, what kind of gives you that confidence in getting margins back up at Harmon in the second half? Is it a function of you guys sort of changing the mix of work there that you're pursuing or something else?

Well, a couple things are going on there, Brent. First off, there had been some competitors that had shut their doors. Of course, when the market was so depressed in '09, a lot of people were taking on work at lower margins. Our business, of course, ended up taking business at lower margins. We're starting to see a retreat from that phenomenon. Some of it's due to competitive shakeout, and businesses cannot sustain doing that for a long time. Being backed by a strong public company as we are, our installation business is seeing even more inquiries as some of the private firms have closed their doors. Our -- the proof, though, is in the numbers, and our margins on book projects going into our backlog are at a couple hundred basis points better than what was -- that we're revenue-ing right now. Hence, Jim and my comments that as those -- as that improve backlog, both dollars and margin begin to revenue in the second half of the year and into fiscal '14. It certainly gives us tailwinds on our second half operating margins. And as I repeated earlier, I was particularly focused on our conversion on revenues, when I entered this business, and was really pleased that we broke the 40% hurdle, which I thought was certainly our entitlement with the mix of our businesses. And our fiscal '13 conversion will be higher than that, partly due to the improved margins coming out of the installation business.

So Brent, it's Jim. Just to add, as Joe said, we have the visibility in the backlog. And the second half comment is based on really when that work is scheduled. The one thing, as you know, we have the least amount of control over is what the actual timing of those projects are. But the way the work is currently scheduled, that leads us to our comment.

Okay. That's helpful, guys. And then, on the -- I guess the business down in Brazil, I mean, can you sort of talk qualitatively or quantitatively about the backlog growth there? And I guess kind of just, in general, that the growth you're seeing in that business as a stand-alone, just kind of a feel there.

The business grew double digit. The backlog was also up 10%. So we're comfortable the business is going to continue to perform at double-digit growth. And as I said, they were accretive in the first year. I was -- my hats off to Jim and team for finding that business. It's a very attractive business run by a team that's very, let's say, focused on U.S. tight controls and growth. So double digit, both in growth and backlog, right now.

Okay, that's helpful. And then just lastly, if I could on the LSO segment, you, obviously, talked about the growth initiatives there. How do we think about the impact, kind of going forward, both in terms of, I guess, near-term margin implications with any additional potential spending? And then also thinking about kind of the growth opportunity from these initiatives. I mean, you talked about kind of expanding in Europe. This doesn't, I assume, change the future profit margin profile but maybe just a scale of the business, maybe a little more color there.

Well, the future of the business -- it's an awesome business and we have -- had, had some new product introductions around acrylic products. We have a really nice pipeline of NPI, new product introduction, in that business that I'm pleased with. And some of that will launch in the domestic market and some internationally. We have a couple points of growth for international expansion. I hope we're being conservative there. I challenged my business leader to push for more growth in Europe. And I believe the margins are going to continue to remain strong that they are in that business. As Jim mentioned, the below-the-line investment, we added some headcount in sales, marketing and business development in that business. It's the right thing to do. It's an extremely attractive business. The margins remained unchanged, and I believe again, with operational improvements we're doing in our factories, we certainly have some opportunity to increase margins on the manufacturing shop floor, and we'll continue to drive that. But we'll continue to grow that business. It's an extremely attractive ROI for us, and I do not expect any significant movement on margins.

Okay. Sorry, just as a follow-up, I mean, do you expect that kind of same level of marketing spending? Or that $1.5 million going forward?

I do. I do. Certainly, the investment we made, some of it is promotional activity that can or it may or may not continue depending on result. But some of it's also headcount investment and feet on the street to sell and deliver our products in other parts of geographies we're not in. And yes, that will, of course, continue. Will it -- will I do a similar incremental spend? To be determined. I'm very bullish on that business.

Our next question comes from the line of Robert Kelly of Sidoti.

Question on, if you could, the drag from the installation margins that you're booking right now and you expect to book in the first half of '13. What is the drag? Are those money-losing projects? How do we think about, if you were to strip out the lower margin work, where the margin in architectural is on a run-rate basis or extrapolating what's going on today into the future?

Bob, this is Joe. I'll let Jim address some numbers. But let me just simply say, we had don't have loss projects in that business. The business is performing well. The margins we're experiencing on the business were revenue-ing in this past fiscal year we just ended. Actually, on a project-by-project basis, we performed better than the booked-in gross margin. So they're actually executing well. There were no surprises. The business -- the backlog was known coming into the year. As they close out projects, they have generally overperformed on delivery. So it's a fairly good story. So we didn't have any surprises. We knew what we booked 2 years ago with revenue, and that's what we got and actually a little bit better than that. As we look forward, the margin and backlog is known. Do I hope we continue to perform better than booked-in? Of course we do. We are generally conservative as we book these. So the couple hundred basis point improvement in margin that we're seeing and that we're seeing improvement in that trend itself, tells us pretty much how we can look forward to the second of this year and then fiscal '14.

So an installation project booked or held in backlog or booked today is a couple hundred basis points higher than what you're revenue-ing in the first half of '13. Is that what you're thinking about?

Absolutely. Absolutely.

And Bob, this is Jim. I'll just add one point. We talked over the past 18 months or so about the fact that in some of our businesses, including our installation business, that we were intentionally maintaining some cost and some resources for when the market picked up. And so, particularly in our installation business, we had maintained some key project management talent. And, in fact, over the past year, we've selectively added to that organization as we were able to really pick some great talent out of the marketplace. And so some of it is also that we've got an organization. Joe talked about the fact that installation is going to be one of our strongest growing businesses this year, and we're going to be able to start to flow in the work to take advantage of the resources that we maintain.

Okay, great. And then you talked about -- sure; go ahead.

Bob, I'd like to expand on something. The -- I'm all about growth. And when we went through our installation business plans right about the turn of the calendar year here as we wrapped up our -- or were in the fourth quarter fiscal '12, we discussed geographic growth opportunities for that business. And for that business, we're talking really the United States. And one of the markets we planned to grow in was in Texas, and I highlighted that in my comments. Did we expect to make that investment in people, in one fell swoop over the course of a month? No. But was I going to turn back on an opportunity to drive long-term growth in that business, when that opportunity presented itself? Of course, I moved forward with that. So that -- when Jim talked about, that was a slight cost headwind in the first quarter, but it was the right thing to do. And, in fact, the booked-in business already, from that move, will make us accretive on that investment in fiscal '13.

Excellent. No one would accuse you of sitting on your hands, Joe. The -- speaking of accretion, Brazil was accretive in 4Q as well as fiscal '12. Can you just help us with the exact numbers that Brazil is giving you in those periods?

Yes, Bob, it was pretty nominal because, of course, you got the amortization cost and those kind of things but the point is, it did contribute positively. But pretty nominal levels of contribution.

Okay. Do the conversion levels that you talked about, the 40% at the EBIT line for the incremental dollar of sales -- your comps get significantly tougher in the second half of '13. Does that conversion rate hold as we move into the second half of the coming fiscal year?

Sure. Let me talk about it and Jim can add if he'd like. I'm confident in -- this is a metric I look at every month, and my team gets tortured by me on conversion rates. And -- so we looked at fiscal '13, our conversion rate is an appropriate number. It's aggressive and extremely achievable. This -- a couple points on the first half and the second half. I would say that in the first half, we have some favorable comps due to pricing. And in the second half, we have favorable comps due to the margin and the installation business. And I think, when you put the year in total perspective, it gives me great confidence in the comment Jim and I made that our earnings per share will show improvement year-over-year in every quarter. And we've got the dynamics of our backlog in order book to back that up.

Okay, great. And then just on the F '13 outlook, the base assumption is end markets are flat. The mid-single digit revenue growth rate is all coming from share gains and pricing.

Correct. So a couple things. The mid-single digits -- listen, some of you will think we're being too conservative. I'm being very clear here. Our plan is based on flat to slightly below flat end markets. Jim highlighted what's going on in the industry. The market indicators we look at, whether it's McGraw-Hill data, Architecture Billing Index, the Consumer Price Index is now back to around 70-ish, I think everyone that watches the economy feels better. Clearly, we're not performing like we're bouncing along the bottom. We are doing much better than that. But it's a thin-ice economy right now. I think everybody's continues to be nervous. If the markets are better than flat to slightly negative, I would expect that we will perform better than the guidance we've given you here. This plain fact is our mid-single digit margin -- mid-single digit growth is based on the share gains we've experienced in the past, that we will continue some pricing and improved margins, which are coming from better pricing in our installation business. So hopefully, the markets will perform better than the flatness. And there are certainly indications out there that, that assumption is conservative.

So I mean, just if market -- the calculus is if the market is up x, Apogee expects to be up plus 5 on whatever the market is doing, something along those lines.

Yes. Bob, this is Jim. Historically, we've outperformed the market, and I think we've positioned ourselves to do a little bit better than that. And that's kind of what our current guidance is. Just the one caveat to Joe's comment is timing. I mean, a lot of work is long lead time work, and even with the recovery, depending on when that recovery hits, it will flow in to F '13 or F '14. But yes, we expect to continue to outperform the market.

Our next question comes from the line of Jon Braatz of Kansas City Capital.

A couple questions. Joe, you talked quite a bit about the growth opportunities out there. You're spending $25 million this year in CapEx. Do you see that as a number that might be -- you might continue to see going forward in 2014, '15 and so on?

Probably, that's on the high side to be considering that kind of investment going forward. We clearly have some opportunities to invest in growth and also in productivity. So an example, I'm going to spend a lot of money on the Georgia factory this year. When that factory comes back online, our coating equipment uptime will increase significantly, and that will translate to a better clock and hence, better margins in the architectural glass business. That's not a recurring investment. Some of that $25 million is in introducing new products like new coatings, blast hurricane-force front products. Some of -- I want that to be recurring. I expect a robust annual introduction of new products to our marketplace coming from the Apogee businesses. So do I expect that $25 million to continue? Probably not. But we have the capacity to invest in growth and productivity, and that will be my focus.

Okay. This is sort of -- I've been asking a lot of CEOs this question and it looks like, depending on who gets elected, there is certainly the chance that the tax rate on dividends will be going up rather significantly. When you think about returning cash to shareholders, if you're so inclined, given maybe the change in tax nature of dividends, would you look more at returning cash via dividends or maybe shareholder stock repurchases?

We are -- Jon, I would simply say, we're very aware of those comments you just made. We've been talking to -- with our board. My board and I are meeting later this month, and this is one of the things we'll discuss. I repeat what I said earlier, I believe our dividend is very important to our shareholders, and I do believe it's an important aspect of investments in Apogee. So I have to leave it at that. And just allow me to say we're very aware of those comments, and we want to do what is right for our investors with regards to shareholder return, and the dividend is one aspect of that.

Okay. And one last question, when you look at the growth in Brazil and maybe the opportunities in Brazil, are they -- I don't know if you can sort everything out. But are they more related to what's going on with the Olympics and activity associated with that or other, let's say, more permanent projects if you want to call it that?

Well, the Olympics and the World Cup are certainly are goodness as a general backdrop, but most of our business does not involve that. It's general infrastructure upgrades. The most important point is their value-added product in this industry or in that business is insulated glass units. And that market is just beginning its conversion from laminated glass to what we call IGs. And we're really the supplier in-region that has insulated glass production capabilities. And so between that capability and Viracon domestic help with that business, we expect to enjoy some tailwinds from that conversion. So sure, we're happy with the Olympics and that will help infrastructure, but we're really not seeing much of that in our business today.

And Jon also -- and actually, the core office market is mid to even low single-digit vacancy rates in the 3 primary cities in Brazil. And so office vacancy rates continue to drive demand for office projects kind of independent of those activities.

[Operator Instructions] And our next question comes from the line of Alan Brochstein of AB Analytical Services.

Joe, I wanted to congratulate you. You haven't had a very friendly market, but you've really hit the ground running. I just had a few questions. The first one is, clearly, you're making some operational improvements. And I'm just trying to figure out, just from an outsider coming in as you did, what has been the low-hanging fruit and kind of where are you in that whole process of bringing new eyes to the company and doing things better? Where are you in that process?

Well, I'm really just at the beginning of maturity. I told you, I -- as I walked the factories, I came from a company that had extremely strong operational foundation. And I found that, that existed here as well at our Apogee businesses. But I thought there was a lot of opportunity on our shop floors to be better. And the businesses, certainly long before I arrived were -- began a process of improving what was wrong in the conversion. And there's been great improvement. Our on-time delivery in our biggest business, as an example, in the last half of last year, was generally in excess of 95% in every factory, something that was far from the truth earlier in the year. And they did that by getting back to the basics and applying some of the Six Sigma learnings that we've had. I plan to bring in some help. I'm very close to accomplishing that. So that's why I say I'm in the beginning of my maturity in driving operational improvements in this business. An example is the bold move we're making in our Georgia factory to spend the proper amount of money so that place operates more effectively with reduced downtime. I still feel very bullish that -- when I say there's a couple hundred basis points of margins on our cost line by operating more effectively. And bringing in some outside eyes is always beneficial. If you step over the same piece of debris every day, you stop seeing it. And I think it's very beneficial for outside eyes to come in, and I plan to continue down that road.

Excellent. Also thank you for sharing your outlook on the dividend and on investment. I'm just curious, you said that you like the Brazil acquisition and you praised the company for doing that in advance of your arrival. But what do you think going forward about further international expansion in your architectural business?

Yes, I told -- I've said this before. I thought the Apogee leadership team, Russ and Jim and Kelly [ph] and others that found that property, did an outstanding job and paid the right price. We got a great business with great people. I would like to do -- I would like to find more deals like that. They're not easy. You have to look at 100 properties to due diligence on 10 to find one right deal. It takes a lot of work, and I didn't think we had a robust pipeline of M&A targets here, and that's what we've been focusing on. So as I said it before, I'd rather walk away from 10 good deals than do one bad one. So we will be very selective. But I would like to find other Glassec -- that's our Brazilian business -- other Glassec opportunities out there in the architectural business. So when I talked about an appetite for M&A, it's not limited to the Picture Framing business, of course. It's, obviously, the architectural businesses as well.

Okay. And then one last question, on the Large-Scale Optical, can you -- I'm not that familiar with that one as closely as the architectural business. What is the competitive environment in the United States? And how do you contrast that or compare it to the competitive environment in Europe?

Well, the competitive -- the market in the United States for value-added glass which is treated glass, whether it be anti-reflective, UV protection, static protection, acrylic versus glass for big pictures, so for weight reasons, we had a very strong position in the value-added glass. We don't try to nor intend to compete on non-value-added, off-the-shelf pictures that come from picture glass that you might get in a retail store for a 5 by 7 picture. That's not our market. For value-added, we have a very strong position. And in Europe, it's not as developed in value-added. So we would like to penetrate that business and grow as the market inevitably will convert to value-added glass. That will take some assistance on our part through marketing communications, but the market will eventually convert to value-added. And we've got just an awesome business team that knows how to drive customer intimacy with great products. So I think it's upside. I don't want to be overly -- it's not going to double our business in the next fiscal year or 2, but it's certainly a great opportunity for us to grow. As I said, we grew 4% in that business in a market where consumer confidence has been very low. And we're doing that through our value-added product offerings.

With no further questions, I would like to turn the call back over to Joe Puishys for closing remarks.

Okay. Again, thank you, operator Larry. Again, thanks, team, for your time today. I'm certainly pleased with our fourth quarter performance. I'm certainly optimistic about our longer-term opportunities. I hope you understood our story of our assumptions for our outlook for F '13, and I look forward to talking to all of you again at the end of this first quarter. And I look forward to seeing some of you over the next couple of weeks, as I continue to meet with analysts and our investment community. Have a terrific day. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may disconnect at this time. Have a great day.