VENICE, Fla., Oct. 31, 2007 (PRIME NEWSWIRE) -- PGT, Inc. (Nasdaq:PGTI), the leading U.S. manufacturer and supplier of residential impact-resistant windows and doors, today announced financial results for its third quarter ended September 29, 2007.
"During the third quarter of 2007, new housing starts continued to decline, and housing inventory levels continued to rise," said Rod Hershberger, PGT's President and Chief Executive Officer. "Starts in the third quarter of 2007 were down 53% compared to the third quarter of 2006 and down 29% from the second quarter of 2007. Our revenues declined 26.5% compared to the third quarter of 2006. To offset the impact of the housing market, we are continuing to execute strategies designed to generate sales growth in new and existing markets. In addition, we have recently announced several reductions in our cost structure to align our operations with the reduced sales levels."
Third Quarter 2007 Financial Results ------------------------------------ (See accompanying financial schedules for full financial details and reconciliations of adjusted (non-GAAP) financial measures to their GAAP equivalents.) * Total revenues for the third quarter were $72.2 million, a decrease of $7.5 million or 9.4% from the second quarter of 2007, and a decrease of $26.1 million or 26.5% versus the same period in 2006. The decrease from 2006 is largely due to the market conditions described above which impacted most of our product lines. * Gross margin percentage was 31.9%, compared to 39.9% in the same quarter of 2006. Gross margin decreased as a result of declining operating leverage due to lower overall sales volumes and an increase in aluminum costs when compared to 2006, offset in part by lower overhead spending. * SG&A spending decreased by $4.2 million from the prior year quarter mainly due to lower distribution costs associated with lower sales volumes. As a percentage of sales, SG&A was 25.5% for the third quarter compared to 27.2% in the second quarter of 2007 and 23.1% in the third quarter of 2006. The increase in percentage as compared to 2006 is mainly due to the decrease in sales volumes. * Third quarter net income was $1.1 million compared to net income of $5.1 million and adjusted net income of $8.0 million for the same period in 2006. * Net income per diluted share for the third quarter was $0.04 compared to net income per diluted share of $0.18 and pro forma adjusted net income per diluted share of $0.28 for the comparable period of 2006. * EBITDA for the third quarter was $8.4 million versus $20.0 million for the comparable period of 2006.
Commenting on the third quarter results, Jeff Jackson, PGT's Chief Financial Officer, stated, "The reduction in sales of 9.4% compared to the second quarter of 2007 resulted in a decrease in operating leverage. Accordingly, our margins decreased 4.5% from the second quarter of 2007 to 31.9%. We prepaid $10.5 million of long-term debt during the third quarter, bringing our year-to-date repayments to $35.5 million and total long-term debt to $130 million."
Year-To-Date 2007 Financial Results ----------------------------------- (See accompanying financial schedules for full financial details and reconciliations of adjusted (non-GAAP) financial measures to their GAAP equivalents.) * Total revenues for the first nine months were $224.6 million, a decrease of 26.0%, versus $303.4 million for the same period in 2006. The decrease from 2006 is largely due to the market conditions previously described which impacted most of our product lines. * Gross margin percentage for the first nine months was 34.2%, compared to 40.2% in the first nine months of 2006. Gross margin decreased as a result of declining operating leverage due to lower overall sales volumes and an increase in aluminum costs when compared to 2006, offset in part by lower overhead spending. * SG&A spending decreased by $8.0 million from the first nine months of 2006 due mainly to lower distribution costs associated with lower sales volumes and lower management fees, partially offset by the impact of an impairment charge totaling $0.8 million on our Lexington, North Carolina facility. As a percentage of sales, SG&A was 26.9% for the first nine months of 2007 compared to 27.5% in the 2007 first half and 22.5% in the first nine months of 2006. The increase in percentage as compared to 2006 is mainly due to the decrease in sales volumes. * First nine months net income was $4.7 million compared to $1.0 million for the same period in 2006. On an adjusted basis, first nine months net income was $5.2 million versus $27.6 million in the first nine months of 2006. * Net income per diluted share for the first nine months was $0.16 compared to $0.05 for the comparable period of 2006. On an adjusted basis, net income per pro forma diluted share was $0.18, compared to $0.99 for the prior year period. * EBITDA for the first nine months was $27.8 million versus $38.6 million for the comparable period of 2006. On an adjusted basis, EBITDA for the first nine months was $28.7 million versus $67.0 million for the comparable period of 2006.
Recent Development
On October 25, 2007, we announced a restructuring of the Company as a result of in-depth analysis of the Company's target markets, internal structure, projected run-rate, and efficiency. The restructuring resulted in a decrease in indirect workforce (overhead) of approximately 17%, which equates to approximately 8% of the Company's overall employee population, and included employees at both its Venice, Florida and Salisbury, North Carolina locations. The Company believes this restructuring is essential to streamline operations as well as improve processes to drive new product development and sales. As a result of the restructuring, the Company expects to record an estimated restructuring charge between $2.0 million and $2.5 million in the fourth quarter of 2007. No amounts related to this restructuring have been accrued in the accompanying condensed consolidated financial statements.
Conference Call
As previously announced, PGT will hold a conference call Thursday, November 1, 2007, at 10:30 a.m. Eastern Time and will simultaneously broadcast it live over the Internet. To participate in the teleconference, please dial into the call a few minutes before the start time: 888-680-0879 (U.S. and Canada) and 617-213-4856 (international). Refer to passcode 21108985. A replay of the call will be available beginning November 1, 2007, at 12:30 p.m. Eastern Time through November 15, 2007. To access the replay, dial 888-286-8010 (U.S. and Canada) or 617-801-6888 (international) and refer to passcode 29530175. To access the webcast, go to www.pgtinc.com and click "Investor Relations."
About PGT
PGT(r) pioneered the U.S. impact-resistant window and door industry and today is the nation's leading manufacturer and supplier of residential impact-resistant windows and doors. PGT is also one of the largest window and door manufacturers in the United States. In its 26th year, the company employs approximately 2,000 at its manufacturing, glass laminating and tempering plants, and delivery fleet facilities in Venice, FL and Salisbury, NC. Sold through a network of over 1,300 independent distributors, the Company's total line of custom windows and doors is now available throughout the eastern United States, the Gulf Coast and in a growing international market that includes the Caribbean, South America and Australia. PGT's product line includes PGT(r) Aluminum and Vinyl Windows and Doors; WinGuard(r) Impact-Resistant Windows and Doors; PGT(r) Architectural Systems; and Eze-Breeze(r) Sliding Panels. PGT Industries, Inc. is a wholly owned subsidiary of PGT, Inc. (NASDAQ:PGTI).
Forward-Looking Statements
Statements in this news release and the schedules hereto which are not purely historical facts or which necessarily depend upon future events, including statements about forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to PGT, Inc. on the date this release was submitted. PGT, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks or uncertainties related to the Company's revenues and operating results being highly dependent on, among other things, the homebuilding industry, aluminum prices, and the economy. PGT, Inc. may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of PGT, Inc.'s most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.
PGT, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited - in thousands, except per share amounts) 3 Months Ended 9 Months Ended ------------------- ------------------- Sept. 29, Sept. 30, Sept. 29, Sept. 30, 2007 2006 2007 2006 -------- -------- -------- -------- Net sales $ 72,229 $ 98,324 $224,611 $303,369 Cost of sales 49,177 59,089 147,765 181,301 -------- -------- -------- -------- Gross margin 23,052 39,235 76,846 122,068 Stock compensation expense related to dividends paid -- -- -- 26,898 Selling, general and administrative expenses 18,447 22,691 60,411 68,355 -------- -------- -------- -------- Income from operations 4,605 16,544 16,435 26,815 Interest expense 2,772 7,791 8,697 25,432 Other expenses (income), net 198 439 428 (325) -------- -------- -------- -------- Income before income taxes 1,635 8,314 7,310 1,708 Income tax expense 566 3,240 2,656 686 -------- -------- -------- -------- Net income $ 1,069 $ 5,074 $ 4,654 $ 1,022 ======== ======== ======== ======== Basic net income per common share $ 0.04 $ 0.20 $ 0.17 $ 0.05 ======== ======== ======== ======== Diluted net income per common share $ 0.04 $ 0.18 $ 0.16 $ 0.05 ======== ======== ======== ======== Weighted average common shares outstanding: Basic 27,484 25,920 27,202 19,273 ======== ======== ======== ======== Diluted 28,425 27,748 28,370 21,207 ======== ======== ======== ======== PGT, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) September 29, December 30, 2007 2006 -------- -------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 19,654 $ 36,981 Accounts receivable, net 24,863 25,244 Inventories, net 9,951 11,161 Deferred income taxes 7,087 5,231 Other current assets 7,925 13,041 -------- -------- Total current assets 69,480 91,658 Property, plant and equipment, net 78,954 78,802 Other intangible assets, net 97,741 101,918 Goodwill 169,648 169,648 Other assets, net 1,320 1,968 -------- -------- Total assets $417,143 $443,994 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 17,417 $ 17,807 Current portion of long-term debt -- 420 -------- -------- Total current liabilities 17,417 18,227 Long-term debt 130,000 165,068 Deferred income taxes 52,417 52,417 Other liabilities 3,192 3,076 -------- -------- Total liabilities 203,026 238,788 Total shareholders' equity 214,117 205,206 -------- -------- Total liabilities and shareholders' equity $417,143 $443,994 ======== ======== PGT, INC. AND SUBSIDIARY RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS (unaudited - in thousands, except per share amounts) Three Months Ended Nine Months Ended ------------------ ------------------- Sept. 29, Sept. 30, Sept. 29, Sept. 30, 2007 2006 2007 2006 ------- ------- ------- -------- Reconciliation to Adjusted Net Income and Adjusted Net Income per pro forma share (1): Net income $ 1,069 $ 5,074 $ 4,654 $ 1,022 Reconciling items: Cash payment to stock option holders (2) -- -- -- 26,898 Write-off of unamortized debt issuance costs in connection with the February 2006 refinancing and prepayment of debt in Q3 2006 (3) -- 2,009 -- 6,626 Reduction in interest expense assuming February 2006 debt refinancing and repay- ment of debt with IPO proceeds were completed at the beginning of the period (3) -- 414 -- 6,355 Prepayment penalty resulting from debt repayment in July 2006 (3) -- 2,300 -- 2,300 Impairment of property held for sale (4) -- -- 826 -- Management fee (5) -- -- -- 1,434 Tax effect of reconciling items -- (1,842) (322) (17,009) ------- ------- ------- -------- Adjusted net income $ 1,069 $ 7,955 $ 5,158 $ 27,626 ======= ======= ======= ======== Weighted average shares outstanding: Diluted shares 28,425 27,748 28,370 21,207 Incremental shares for IPO (6) -- 451 -- 6,786 ------- ------- ------- -------- Pro forma diluted shares 28,425 28,199 28,370 27,993 ======= ======= ======= ======== Adjusted net income per pro forma share - diluted $ 0.04 $ 0.28 $ 0.18 $ 0.99 ======= ======= ======= ======== Reconciliation to EBITDA and Adjusted EBITDA: Net income $ 1,069 $ 5,074 $ 4,654 $ 1,022 Reconciling items: Depreciation and amortization expense 4,032 3,890 11,833 11,481 Interest expense 2,772 7,791 8,697 25,432 Income tax expense 566 3,240 2,656 686 ------- ------- ------- -------- EBITDA 8,439 19,995 27,840 38,621 Add: Cash payment to stock option holders (2) -- -- -- 26,898 Impairment of property held for sale (4) -- -- 826 -- Management fee (5) -- -- -- 1,434 ------- ------- ------- -------- Adjusted EBITDA $ 8,439 $19,995 $28,666 $ 66,953 ======= ======= ======= ======== Adjusted EBITDA as percentage of sales 11.7% 20.3% 12.8% 22.1% ======= ======= ======= ======== (1) The company provided detailed explanations of its non-GAAP financial measures in its Form 8-K filed October 31, 2007. (2) Represents cash payments made to stock option holders (including applicable payroll taxes) in lieu of adjusting exercise prices in conjunction with the payment of dividends to our shareholders. This amount is included as a separate line item in the consolidated statement of operations of which $5,069 and $21,829 related to cost of sales and selling, general and administrative expenses, respectively, for 2006. (3) This amount is included in interest expense. (4) Represents the write-down of the value of the Lexington, North Carolina property which has been classified as an asset held for sale due to the relocation of our plant to Salisbury, North Carolina and related exit costs. These expenses are included in selling, general, and administrative expenses. (5) Represents management fees paid to our majority stockholder. Since consummating the initial public offering, these fees are no longer paid. The fees are included in selling, general and administrative expenses. (6) Represents incremental shares related to the company's IPO assuming 10,147 shares sold by the company (including the over-allotment option of 1,324 shares) were issued at the beginning of the respective periods.