OREANDA-NEWS. PGT, Inc. (NASDAQ:PGTI), the leading U.S. manufacturer and supplier of impact-resistant windows and doors, announced financial results for its second quarter and six months ended July 2, 2016.

“I am pleased with our team’s strong second quarter financial and operating performance,” commented PGTI’s Chairman of the Board and Chief Executive Officer, Rod Hershberger. “The quarter had record-breaking sales of $119 million and $20.8 million in EBITDA. The acquisitions of CGI and WinDoor were key factors in executing on our stated strategy, and we are already starting to see the combined power of our three brands as they are performing well, strengthening our capabilities and furthering our market reach. Our focus on delivering an unparalleled customer experience, combined with optimizing our three brands and operational capabilities, has us well positioned to take advantage of the growth in our core markets and execute against our long-term strategies.”

Selected Second Quarter 2016 Financial Results Versus the Prior Year Period

  • Net sales of $119.0 million, an increase of $18.2 million, or 18 percent;
  • Gross margin of 31.5 percent, compared to 32.7 percent;
  • Net income of $7.4 million, compared to $6.8 million;
  • Net income per diluted share of $0.15, compared to $0.13;
  • Net income, as adjusted, of $7.4 million, compared to $8.6 million;
  • Adjusted net income per diluted share of $0.15, compared to $0.17;
  • EBITDA of $20.8 million, compared to adjusted EBITDA of $18.9 million;              

“We are encouraged by market conditions and continue to see demand increase across all of our brands and market segments. Our backlog is a reflection of this demand and has grown to nearly $60 million,” commented Brad West, PGTI’s Chief Financial Officer. “This dynamic environment sets us up for a strong second half as we continue to increase capacity to meet growing demand.”

Selected Six Months 2016 Financial Results Versus the Prior Year Period

  • Net sales of $219.2 million, an increase of $23.1 million, or 12 percent;
  • Gross margin of 30.8 percent, compared to 32.6 percent;
  • Net income of $8.8 million, compared to $13.4 million;
  • Net income per diluted share of $0.17, compared to $0.27;
  • Net income, as adjusted, of $11.8 million, compared to $15.6 million;
  • Adjusted net income per diluted share of $0.23, compared to $0.31;
  • EBITDA, as adjusted, of $35.4 million, compared to $35.2 million;

Fiscal Year 2016 Outlook

The Company’s outlook for the remainder of the year continues to be in line with market consensus.  

“Our steadfast focus remains on executing our overall financial and operational objectives. We remain confident in our ability to leverage our brands, increase operational efficiencies, create innovative new products and increase geographic reach,” stated Jeff Jackson, PGTI’s President and Chief Operating Officer. “In the short-term, our primary goal is to increase capacity to better serve our customers. The fundamental drivers of our business continue to align to our advantage and we are diligently working to capitalize on this momentum. Our strategies for profitable growth, combined with our strong balance sheet and disciplined approach to capital allocation, will continue to create shareholder value in 2016.”

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.

PGT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - in thousands, except per share amounts)
                 
    Three Months Ended   Six Months Ended
    July 2,   July 4,   July 2,   July 4,
      2016       2015       2016       2015  
                 
Net sales   $   119,033     $   100,833     $   219,239     $   196,134  
Cost of sales       81,563         67,894         151,786         132,148  
Gross profit       37,470         32,939         67,453         63,986  
Selling, general and administrative expenses       20,615         16,776         40,676         34,440  
Income from operations       16,855         16,163         26,777         29,546  
Interest expense, net       5,282         2,940         9,440         5,853  
Debt extinguishment costs       -         -         3,431         -  
Other expenses, net       -         127         -         226  
Income before income taxes       11,573         13,096         13,906         23,467  
Income tax expense       4,223         6,316         5,077         10,035  
Net income   $   7,350     $   6,780     $   8,829     $   13,432  
                                 
Basic net income per common share   $   0.15     $   0.14     $   0.18     $   0.28  
                                 
Diluted net income per common share   $   0.15     $   0.13     $   0.17     $   0.27  
                                 
Weighted average common shares outstanding:                                
Basic       48,710         48,077         48,702         47,899  
                                 
Diluted       50,473         50,283         50,465         50,155  
                                 
PGT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited - in thousands)
 
         
    July 2,   January 2,
      2016       2016  
ASSETS        
Current assets:        
Cash and cash equivalents   $ 29,506     $ 61,493  
Accounts receivable, net     46,179       31,783  
Inventories     30,397       23,053  
Prepaid expenses and other current assets     7,680       10,643  
Total current assets     113,762       126,972  
                 
Property, plant and equipment, net     79,740       71,503  
Intangible assets, net     123,533       79,311  
Goodwill     108,179       65,635  
Other assets, net     751       607  
Total assets   $ 425,965     $ 344,028  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
Accounts payable and accrued expenses   $ 33,177     $ 19,578  
Current portion of long-term debt     2,613       1,949  
Total current liabilities     35,790       21,527  
             
Long-term debt, less current portion     248,357       188,818  
Deferred income taxes, net     25,894       25,894  
Other liabilities     1,131       828  
Total liabilities     311,172       237,067  
         
Total shareholders' equity     114,793       106,961  
Total liabilities and shareholders' equity   $ 425,965     $ 344,028  
                 
PGT, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS
(unaudited - in thousands, except per share amounts)
                 
    Three Months Ended
     Six Months Ended
  
    July 2,
     July 4,
     July 2,
     July 4,
  
     2016      2015      2016      2015  
Reconciliation to Adjusted Net Income and                                 
Adjusted Net Income per share (1):                                
Net income   $ 7,350     $ 6,780     $ 8,829     $ 13,432  
Reconciling items:                                
Acquisition and refinancing costs (2)     -       -       4,333       -  
Product line termination costs (3)     -       -       275       -  
New product launch and glass lines start-up costs (4)     -       349       -       914  
Tax effect of reconciling items     -       (135 )     (1,626 )     (354 )
Discrete item in income tax expense (5)     -       1,595       -       1,595  
Adjusted net income   $ 7,350     $ 8,589     $ 11,811     $ 15,587  
                                 
Weighted average shares outstanding:                                
Diluted     50,473       50,283       50,465       50,155  
                                 
Adjusted net income per share - diluted   $ 0.15     $ 0.17     $ 0.23     $ 0.31  
                                 
Reconciliation to EBITDA and Adjusted EBITDA:                                
Net income   $ 7,350     $ 6,780     $ 8,829     $ 13,432  
Reconciling items:                                
Depreciation and amortization expense     3,966       2,557       7,418       4,925  
Interest expense, net     5,282       2,940       9,440       5,853  
Income tax expense     4,223       6,316       5,077       10,035  
EBITDA     20,821       18,593       30,764       34,245  
Add-backs:                                
Acquisition and refinancing costs (2)     -       -       4,333       -  
Product line termination costs (3)     -       -       275       -  
New product launch and glass lines start-up costs (4)     -       349       -       914  
Adjusted EBITDA   $ 20,821     $ 18,942     $ 35,372     $ 35,159  
Adjusted EBITDA as percentage of net sales     17.5 %     18.8 %     16.1 %     17.9 %
                                 
(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed August 4, 2016.
                 
(2) Represents costs and expenses relating to our February 16, 2016 acquisition of WinDoor, Inc., and simultaneous refinancing of our then existing credit facility into the 2016 Credit Agreement. Of the $4.3 million, $3.4 million represents and is classified as debt extinguishment costs for the six months ended July 2, 2016. The remaining $0.9 million represents transaction- and refinancing-related costs and expenses classified within selling, general and administrative expenses.
                 
(3) Represents estimated charge relating to the wind-down of our PremierVue product category, classified within selling, general and administrative costs in the six months ended July 2, 2016.
                 
(4) Costs associated with new product launch and the insulated and laminated glass lines start-up costs, of which $119 thousand is included in selling, general and administrative expenses and $230 thousand is included in cost of goods sold in the three months ended July 4, 2015, and $304 thousand is included in selling, general and administrative expenses and $610 thousand is included in cost of goods sold in the six months ended July 4, 2015.
                 
(5) 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 three months ended July 4, 2015.