VENICE, Fla.–(BUSINESS WIRE)– PGT Innovations, Inc. (NYSE: PGTI), a national leader in premium windows and doors, including impact-resistant products and products designed to unify indoor/outdoor living spaces, today announced financial results for its second quarter and first half ended June 29, 2019.
Financial Highlights for Second Quarter 2019 versus Second Quarter 2018
- Net sales increased 17 percent, to $199 million, including $37 million from Western Window Systems
- Gross profit grew 22 percent, to $73 million
- Net income decreased 24 percent, to $17 million
- Net income per diluted share decreased to $0.29, and adjusted net income per diluted share decreased to $0.32; both affected by the higher number of shares outstanding resulting from the 2018 equity offering
- Strong EBITDA growth driven by Western Window Systems and diligent cost control in legacy business
Financial Highlights for First Half 2019 versus First Half 2018
- Net sales increased 20 percent, to $372 million, including $69 million from Western Window Systems
- Gross profit grew 28 percent, to $134 million
- Net income decreased 15 percent, to $25 million
- Net income per diluted share decreased to $0.43, and adjusted net income per diluted share decreased to $0.47; both affected by the higher number of shares outstanding resulting from the 2018 equity offering
“In our Florida market, new construction remains steady, and we continue to benefit from increased adoption of our innovative PGT products by corporate builders,” stated Jeff Jackson, President and Chief Executive Officer of PGT Innovations. “In the repair and remodel channel for our legacy business, we saw an 8 percent decline in sales, as compared to the record-setting second quarter of 2018, which experienced a significant lift from heightened awareness in the aftermath of Hurricane Irma.”
“In our Western business unit, we are beginning to see sequential improvement in the overall California market versus the first quarter, when the region experienced a significant decline in housing starts. Importantly, we are seeing growth in our non-core markets as well as multi-family and commercial projects. We are pleased with the continued growth in Western’s overall net sales, as it delivered approximately 10 percent improvement in the second quarter, as compared to the prior year period,” added Jackson.
“In the second quarter, we grew our Adjusted EBITDA margin as a result of the strong financial results of Western Window Systems and our ongoing efforts to increase operational efficiency across our product lines,” stated Sherri Baker, Senior Vice President and Chief Financial Officer of PGT Innovations. “Additionally, we continue to focus on maintaining a strong balance sheet, finishing the second quarter with cash of $85 million and a trailing-twelve-month net debt-to-Adjusted EBITDA ratio of 2.0 times.”
“We are lowering our full-year 2019 guidance as outlined in the table below. The adjustment is primarily a result of market demand in the repair and remodel market being lighter than expected in 2019. We remain focused on driving net sales outside of our core markets and expanding our product portfolio to offset these recent market trends in addition to continuing our strong execution on controlling costs,” concluded Baker.
About PGT Innovations, Inc.
PGT Innovations manufactures and supplies premium windows and doors. Its highly-engineered and technically-advanced products can withstand some of the toughest weather conditions on earth and unify indoor/outdoor living spaces.
PGT Innovations creates value through deep customer relationships, understanding the unstated needs of the markets it serves and a drive to develop category-defining products. PGT Innovations is also the nation’s largest manufacturer of impact-resistant windows and doors, holds the leadership position in its primary markets, and is part of the S&P SmallCap 400 Index.
The PGT Innovations’ family of brands include CGI®, PGT® Custom Windows & Doors, WinDoor®, Western Window Systems®, CGI Commercial® and Eze-Breeze®. The Company’s brands, in their respective markets, are a preferred choice of architects, builders, and homeowners throughout North America and the Caribbean. The Company’s high-quality products are available in custom and standard sizes with multiple dimensions that allow for greater design possibilities in residential, multi-family, and commercial projects. For additional information, visit www.pgtinnovations.com.
Forward-Looking Statements
Statements in this press release regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “expect,” “expectations,” “outlook,” “forecast,” “guidance,” “intend,” “believe,” “could,” “project,” “estimate,” “anticipate,” “should,” “plan” and similar terminology. These risks and uncertainties include factors such as:
- adverse changes in new home starts and home repair and remodeling trends, especially in the state of Florida, where the substantial portion of our sales are currently generated, and in the western United States, where the substantial portion of the sales of Western Window Systems’ operations are generated, and in the U.S. generally;
- macroeconomic conditions in Florida, where the substantial portion of our sales are generated, and in California, Texas, Arizona, Nevada, Colorado, Oregon, Washington and Hawaii, where the substantial portion of the sales of Western Window Systems are currently generated, and in the U.S. generally;
- our level of indebtedness, which increased in connection with our acquisition of Western Window Systems;
- the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, the Western Window Systems Acquisition;
- the risk that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from the Western Window Systems Acquisition may not be fully realized or may take longer to realize than expected or that our actual integration costs may exceed our estimates;
- raw material prices, especially for aluminum, glass and vinyl, including, price increases due to the implementation of tariffs and other trade-related restrictions;
- our dependence on a limited number of suppliers for certain of our key materials;
- sales fluctuations to and changes in our relationships with key customers;
- increases in bad debt owed to us by our customers in the event of a downturn in the home repair and remodeling or new home construction channels in our core markets and our inability to collect such debt;
- in addition to the Western Window Systems Acquisition, our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we acquired it;
- increases in transportation costs, including due to increases in fuel prices;
- our dependence on our impact-resistant product lines and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products;
- product liability and warranty claims brought against us;
- federal, state and local laws and regulations, including unfavorable changes in local building codes and environmental and energy code regulations;
- our dependence on our limited number of geographically concentrated manufacturing facilities;
- risks associated with our information technology systems, including cybersecurity-related risks, such as unauthorized intrusions into our systems by “hackers” and theft of data and information from our systems, and the risks that our information technology systems do not function as intended or experience temporary or long-term failures to perform as intended; and
- the risks and uncertainties discussed under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018.
Statements in this press release that are forward-looking statements include, without limitation, our expectations regarding: (1) demand for our products going forward, including the demand for our impact-resistant products and the products of Western Window Systems; (2) the rate of new construction of residential properties in Florida and California; (3) new housing starts in Florida and California; (4) the growth of our sales in our non-core markets and in multi-family and commercial markets; (5) the strength of our balance sheet; (6) our ability to expand our product portfolio; (7) our ability to increase operational and other efficiencies across our product lines; and (8) the updated 2019 financial performance guidance described in this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances from the date of this press release.
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, 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 press 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.
Adjusted EBITDA consists of net income, adjusted for the items included in the accompanying reconciliation. We believe that adjusted EBITDA provides 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. Adjusted EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the actual funds generated from operations or available for capital investments.
Our calculation of adjusted net income, adjusted net income per share, 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, and adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release.
Adjusted EBITDA as used in the calculation of the net debt-to-Adjusted EBITDA ratio, consists of our adjusted EBITDA as described above, but for the trailing twelve-month period, adjusted pursuant to the covenants contained in the 2016 Credit Agreement due 2022 for the acquisition of Western Window Systems.
Click here to view the condensed consolidated statements of operations and balance sheets.
