PGT Innovations
Feb 25, 2016

PGT Reports 2015 Fourth Quarter and Fiscal Year Results

Fourth quarter net sales increased 10 percent to $93.0 million 

Full year net sales increased 27 percent to $389.8 million

VENICE, Fla., Feb. 25, 2016 (GLOBE NEWSWIRE) -- PGT, Inc. (NASDAQ:PGTI), the leading U.S. manufacturer and supplier of impact-resistant windows and doors, announced financial results for its fourth quarter and fiscal year ended January 2, 2016.

"The revenue achieved in fiscal 2015 is a company record, and a level we have not seen since 2006, the peak of the housing market before the downturn," said PGT's Chairman of the Board and Chief Executive Officer, Rod Hershberger. "We continued to outgrow the housing market in Florida as our sales increased $83.4 million, or 27 percent, for 2015, compared to single-family housing starts, which grew 16 percent for the year, to more than 65,000, a very substantial improvement over the 4 percent growth recorded in 2014. The underlying drivers of population expansion, rational pricing, low interest rates and tight inventory is leading to a steady market recovery for both new construction and repair and remodeling activities. Entering 2016, we expect to continue the solid execution of our long-term strategy to drive organic growth and augment it with selective and accretive acquisitions." 

"As we previously announced, our Board of Directors approved a $20 million share repurchase program," Mr. Hershberger continued. "In January, we began to repurchase shares of our common stock in open market transactions which, to-date, have aggregated 238,756 shares for a total cost of $2.3 million. Our share repurchase program demonstrates our confidence in the strength of our business and our markets."

Jeff Jackson, PGT's President and Chief Operating Officer, stated, "On February 16, we closed our previously announced acquisition of WinDoor, Incorporated. We could not be more pleased with adding another recognized brand to our growing portfolio of premium product offerings, and we welcome the WinDoor team to our family. WinDoor contributes top-line sales at accretive EBITDA margins, expands our addressable market into new product categories and geographies and provides us with opportunities to create jobs while over time capturing cost-saving synergies. We estimate that WinDoor's annualized sales for 2016 will be approximately $46 million with an annual EBITDA margin of approximately 20 percent."

Fourth Quarter 2015 Financial Highlights Versus the Prior Year Period

Fiscal Year 2015 Financial Highlights Versus the Prior Year Period

Brad West, PGT's Chief Financial Officer, stated, "Our financial performance in the fourth quarter remained strong, as we leveraged higher sales to improve our adjusted gross margin. We continued to advance our Enterprise Resource Planning (ERP) systems conversion during the quarter and we experienced substantial improvement in on-time delivery, which increased to approximately 98 percent by the end of 2015, from less than 90 percent in late October."

ERP System Update

Other Recent Developments

First Quarter and Fiscal Year 2016 Outlook

Our 2016 outlook is based on a market growth assumption of approximately 10 percent in combined new construction and repair and remodeling activity for the year, and our expectation that we will continue to outperform the market. However, while our quoting activity remains strong, first quarter residential building activity has been soft, both nationally and in Florida. We believe market conditions will remain soft through the remainder of the quarter, but strengthen along with quotes turning into orders beginning in the second quarter.

For the first quarter of 2016, we expect sales will be approximately $99 million. We expect sales at this level will result in an EBITDA margin of approximately 14.5 percent. Our first quarter 2016 sales estimate includes WinDoor sales from the date of the acquisition, which we estimate will be approximately $3.5 million. Historically, WinDoor's first quarter operating results are impacted by lower seasonal sales, usually beginning in December, and the need to cover fixed costs which results in downward pressure on WinDoor's first quarter EBITDA margins. Rebounding sales, which typically begin late in the first quarter, usually results in improved quarterly EBITDA margins for the remainder of the year.

We expect 2016 full-year sales, including the estimated sales of WinDoor from the acquisition date of approximately $42 million, to range between $460 and $475 million, representing an increase of between 18 and 22 percent, which we expect will generate consolidated EBITDA of between $80 and $90 million.

Conference Call

As previously announced, PGT will hold a conference call Thursday, February 25, 2016, at 8:30 a.m. eastern time and will simultaneously broadcast the call live over the Internet. To participate in the teleconference, kindly dial into the call a few minutes before the start time: 877-769-6798 (U.S. and Canada) and 678-894-3060 (international). A replay of the call will be available beginning February 25, 2016, at 11:30 a.m. eastern time through March 3, 2016, at 11:30 a.m. To access the replay, dial 855-859-2056 (U.S. and Canada) and 404-537-3406 (international) and refer to pass code 36876493.

The webcast will also be available on the Investor Relations section of the PGT, Inc. website, http://ir.pgtindustries.com/events.cfm.

About PGT, Inc.

PGT, INC. (NASDAQ:PGTI), headquartered in North Venice, Florida, through its wholly-owned subsidiaries, creates products which focus on protecting and enhancing the beauty and functionality of homes and businesses. The Company's trusted brands include PGT Windows & Doors, CGI Windows & Doors and WinDoor. PGT, Inc. holds the leadership position in its primary market and is part of the S&P SmallCap 400 Index. For additional information, visit http://ir.pgtindustries.com.

Forward-Looking Statements

From time to time, we have made or will make forward-looking statements within the meaning of Section 21E of the Exchange Act. These statements do not relate strictly to historical or current facts. Forward-looking statements usually can be identified by the use of words such as "goal", "objective", "plan", "expect", "anticipate", "intend", "project", "believe", "estimate", "may", "could", or other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, results, circumstances or aspirations. Our disclosures in this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission and in oral presentations. Forward-looking statements are based on assumptions and by their nature are subject to risks and uncertainties, many of which are outside of our control. Our actual results may differ materially from those set forth in our forward-looking statements. There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause actual results to differ materially from those described in our forward-looking statements include, but are not limited to:

Any forward-looking statements made by us or on our behalf speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement to reflect the impact of subsequent events or circumstances. Before making any investment decision, you should carefully consider all risks and uncertainties disclosed in all our SEC filings, including our reports on Forms 8-K, 10-Q, and 10-K and our registration statements under the Securities Act of 1933, as amended, all of which are accessible on the SEC's website at www.sec.gov and  http://www.pgtindustries.com.

Use of Non-GAAP Financial Measures

This Press Release and the financial schedules include financial measures and terms not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe that presentation of non-GAAP measures such as adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA provides investors and analysts with an alternative method for assessing our operating results in a manner that enables investors and analysts to more thoroughly evaluate our current performance compared to past performance. We also believe these non-GAAP measures provide investors with a better baseline for assessing our future earnings potential. The non-GAAP measures included in this release are provided to give investors access to types of measures that we use in analyzing our results.

Adjusted net income consists of GAAP net income adjusted for the items included in the accompanying reconciliation. Adjusted net income per share consists of GAAP net income per share adjusted for the items included in the accompanying reconciliation. We believe these measures enable investors and analysts to more thoroughly evaluate our current performance as compared to the past performance and provide a better baseline for assessing the Company's future earnings potential. However, these measures do not provide a complete picture of our operations.

EBITDA consists of GAAP net income adjusted for the items included in the accompanying reconciliation. Adjusted EBITDA consists of EBITDA adjusted for the items included in the accompanying reconciliation. We believe that EBITDA and adjusted EBITDA provide useful information to investors and analysts about the Company's performance because they eliminate the effects of period-to-period changes in taxes, costs associated with capital investments and interest expense. EBITDA and adjusted EBITDA do not give effect to the cash the Company must use to service its debt or pay its income taxes and thus do not reflect the funds generated from operations or actually available for capital investments.

Our calculations of adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA are not necessarily comparable to calculations performed by other companies and reported as similarly titled measures. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP measures. Schedules that reconcile adjusted net income, adjusted net income per share, EBITDA and adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release.

PGT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - in thousands, except per share amounts)
         
  Three Months Ended Year Ended
  January 2, January 3, January 2, January 3,
   2016   2015   2016   2015 
         
Net sales $  93,008  $  84,722  $  389,810  $  306,388 
Cost of sales     67,283     61,031     270,678     213,596 
Gross profit    25,725     23,691     119,132     92,792 
Selling, general and administrative expenses    17,386     15,758     68,190      56,377 
Income from operations    8,339     7,933      50,942     36,415 
Interest expense, net    2,918     3,151     11,705     5,960 
Debt extinguishment costs    -     (204)    -     2,625 
Other expenses, net    31      832     388     1,750 
Income before income taxes    5,390     4,154     38,849     26,080 
Income tax expense    1,616     1,233     15,297     9,675 
Net income $  3,774  $  2,921  $  23,552  $  16,405 
                 
Basic net income per common share $  0.08  $  0.06  $  0.49  $  0.35 
                 
Diluted net income per common share  $  0.07  $  0.06  $  0.47  $  0.33 
                 
Weighted average common shares outstanding:                 
Basic     48,695     47,667     48,272     47,376 
                 
Diluted     50,613     49,941     50,368     49,777 

 

PGT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited - in thousands)
 
      
   January 2, January 3,
    2016   2015 
ASSETS     
Current assets:     
Cash and cash equivalents  $  61,493  $  42,469 
Accounts receivable, net     31,783     25,374 
Inventories      23,053     19,970 
Prepaid expenses and other current assets     10,660      6,464 
Total current assets     126,989     94,277 
          
Property, plant and equipment, net      71,503     60,898 
Intangible assets, net     79,311     82,724 
Goodwill     65,635     66,580 
Other assets, net     2,291     2,110 
  Total assets  $  345,729  $  306,589 
          
LIABILITIES AND SHAREHOLDERS' EQUITY         
Current liabilities:         
Accounts payable and accrued expenses  $  19,578  $  17,328 
Current portion of long-term debt     1,966     1,962 
Total current liabilities     21,544     19,290 
          
Long-term debt     190,502      191,792 
Deferred income taxes, net     25,894     20,796 
Other liabilities     828     735 
Total liabilities     238,768     232,613 
          
Total shareholders' equity     106,961     73,976 
Total liabilities and shareholders' equity  $  345,729  $  306,589 

 

PGT, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS
(unaudited - in thousands, except per share amounts)
         
  Three Months Ended Year Ended
   January 2, January 3, January 2, January 3,
   2016   2015   2016   2015 
Reconciliation to Adjusted Net Income and          
Adjusted Net Income per share (1):        
Net income $  3,774  $  2,921  $  23,552  $  16,405 
Reconciling items:                
System conversion costs (2)    2,241     -     3,863     - 
New product launch costs (3)    242     402     1,440     402 
Laminated glass line installation costs (4)    -     -     141     - 
Other corporate costs (5)    686     -     958     - 
Debt extinguishment costs (6)    -     (204)    -     2,625 
De-designated interest rate swap (7)    -     832     -     2,020 
CGI acquisition costs (8)    -     167     -     1,700 
Addition of new glass processing facility (9)    -     1,160     -     1,491 
Tax effect of reconciling items    (1,118)    (1,036)    (2,259)    (3,042)
Discrete item in income tax expense (10)    -     -     1,595     - 
Adjusted net income $  5,825  $  4,242  $  29,290  $  21,601 
                  
Weighted average shares outstanding:                
Diluted    50,613     49,941     50,368      49,777 
                 
Adjusted net income per share - diluted $  0.12  $  0.08  $  0.58  $  0.43 
                 
Reconciliation to EBITDA and Adjusted EBITDA:                
Net income $  3,774  $  2,921  $  23,552  $   16,405 
Reconciling items:                
Depreciation and amortization expense    2,876     2,396     10,421     5,980 
Interest expense, net    2,918     3,151     11,705     5,960 
Income tax expense    1,616     1,233     15,297     9,675 
EBITDA    11,184     9,701     60,975     38,020 
Add-backs:                
System conversion costs (2)    2,241     -     3,863     - 
New product launch costs (3)    242     402     1,440     402 
Laminated glass line installation costs (4)    -     -     141     - 
Other corporate costs (5)     686     -     958      - 
Debt extinguishment costs (6)    -     (204)    -     2,625 
De-designated interest rate swap (7)    -     832     -     2,020 
CGI acquisition costs (8)    -     167     -     1,700 
Addition of new glass processing facility (9)    -     1,160     -     1,491 
Adjusted EBITDA $  14,353  $  12,058  $  67,377   $  46,258 
Adjusted EBITDA as percentage of net sales  15.4%  14.2%  17.3%  15.1%
                  
(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed February 25, 2016.
         
(2) Operating costs and inefficiencies associated with conversion to new ERP system, of which $2.2 million is included in cost of goods sold in the three months ended January 2, 2016, and $3.8 million is included in cost of goods sold and $47 thousand is included in selling, general and administrative expenses in the year ended January 2, 2016.  Of the $2.2 million, $1.5 million relates to incremental insulated glass purchase costs, $430 thousand relates to additional material costs and $350 thousand relates to labor inefficiencies.  Of the $3.8 million, $1.9 million relates to incremental insulated glass purchase costs, $826 thousand relates to additional material costs and $1.1 million relates to labor inefficiencies.
         
(3) Costs associated with new product launches, of which $242 thousand and $235 thousand is included in cost of goods sold in the three months ended January 2, 2016, and January 3, 2015, respectively, $1.1 million and $235 thousand is included in cost of goods sold in the years ended January 2, 2016, and January 3, 2015, respectively, and $304 thousand and $167 thousand is included in selling, general and administrative expenses in the years ended January 2, 2016, and January 3, 2015, respectively.
         
(4) Costs associated with start-up of the laminated glass line, of which $141 thousand is included in cost of goods sold in the year ended January 2, 2016.
         
(5) Costs associated with acquisition target due diligence of $553 thousand in the three months and year ended January 2, 2016, included in selling, general and administrative expenses, other corporate costs of $133 thousand in the three months ended and $274 thousand in the year ended January 2, 2016, included in selling, general and administrative expenses, and fair value adjustments due to losses on non-hedge commodity-related contracts of $131 thousand, included in other expenses, net, in the year ended January 2, 2016.
          
(6) Costs and deferred financing costs write-off charges associated with the September 2014 refinancing of our then existing credit facility, which included certain estimates in the 2014 third quarter that were finalized in the fourth quarter of 2014.
         
(7) Charges associated with our then existing interest rate swap of $1.6 million, including $429 thousand in the 2014 fourth quarter, that was de-designated for accounting purposes in September 2014 in connection with the refinancing of our then existing credit facility, included in other expenses, net, in the three months and year ended January 3, 2015, and charges for ineffective aluminum hedges of $403 thousand in the three months ended January 3, 2015.
         
(8) Costs associated with the CGI Windows and Doors, Inc. acquisition, completed on September 22, 2014, included in selling, general and administrative expenses in the three months and year ended January 3, 2015.
         
(9) Start-up costs incurred in connection with our new glass processing facility, which began production in September 2014, included in cost of goods sold.
         
(10) Represents income tax expense previously classified within accumulated other comprehensive losses, relating to the intraperiod income taxes on our effective aluminum hedges. This amount, previously allocated to other comprehensive income, was reversed in the second quarter of 2015.

 

PGT, INC.
Combined Sales and Adjusted EBITDA 2015
(unaudited - in millions)
     
  Combined Results
    Adjusted
  Sales  EBITDA
         
Q1 2015 historical $  95.3  $  16.2 
WinDoor (1)    6.5     0.3 
  Combined Q1 2015    101.8     16.5 
         
Q2 2015 historical    100.8     18.9 
WinDoor (1)    12.2     3.1 
  Combined Q2 2015    113.0     22.0 
         
Q3 2015 historical    100.7     17.9 
WinDoor (1)    11.5     2.6 
  Combined Q3 2015    112.2   20.5 
         
Q4 2015 historical    93.0     14.4 
WinDoor (1)    10.6     2.5 
  Combined Q4 2015    103.6     16.9 
         
2015 historical    389.8      67.4 
WinDoor (1)    40.8     8.5 
  Combined 2015 $  430.6  $  75.9 
         
 
(1) - WinDoor's 2015 quarterly and annual sales and adjusted EBITDA were derived from WinDoor's internally-prepared, unaudited financial statements, which were developed from its books and records and do not contain adjustments as may be needed to reflect the effects of our acquisition of WinDoor or synergies that may result from the combination of WinDoor's operations with ours, if any. The above quarterly WinDoor sales and adjusted EBITDA may not agree with the audited, historical financial statements or proforma financial statements as required pursuant to Article 11 of Regulation S-X required to be provided in the amendment of our Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 17, 2016, to be filed within 75 days of the acquisition date of February 16, 2016.

 

CONTACT: PGT, Inc.

Brad West, Senior Vice President and CFO

941-480-1600

bwest@pgtindustries.com

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Source: PGT Industries, Inc

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