VENICE, Fla., July 30, 2008 (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 second quarter and first half ended June 28, 2008.
"We continue our pattern of outperforming a weakening housing market, this quarter by nearly 30%, with starts down 54% in our core market in the second quarter of 2008 compared to 2007 and our sales down only 24.3%," said Rod Hershberger, PGT's President and Chief Executive Officer. "In the fourth quarter of 2007 and again in the first quarter of 2008, we reduced our cost structure to better align our operations with reduced sales levels. By streamlining our processes and reducing expenses, we positioned ourselves favorably during these challenging market conditions. The benefits from these actions are apparent in our 2008 second quarter results as adjusted EBITDA significantly improved compared to the first quarter of 2008. In addition, we experienced sequential quarter sales growth of 9.6%."
Mr. Hershberger continued, "Also in the quarter, the Company took a non-cash impairment charge to write down goodwill. However, we believe that the long-term outlook for the housing industry is positive and that we can grow organically by gaining market share while we continue to focus on controlling our operational cost structure."
Highlights of the Second Quarter and First Half Financial Results include:
(See accompanying financial schedules for full financial details and reconciliations of adjusted (non-GAAP) financial measures to their GAAP equivalents.)
* Total net sales were $60.1 million in the second quarter of 2008, a decrease of $19.3 million or 24.3%, compared to the second quarter of 2007. For the first half of 2008, net sales were $114.9 million, a decrease of $37.1 million or 24.4%, compared to the first half of 2007. * Gross margin percentage in the second quarter of 2008 was 35.8%, compared to 36.2% in the second quarter of 2007, and was 32.7% for the 2008 first half, compared to 35.1% in the 2007 first half. Gross margin in both periods of 2008 compared to the same periods in 2007 decreased due mainly to declining operating leverage due to lower overall sales volumes. * There was an estimated non-cash impairment charge in the 2008 second quarter and first half of $92 million related to the impairment of goodwill. The Company expects to update this estimate in the 2008 third quarter upon finalization of its goodwill impairment analyses. In the 2007 second quarter and first half there was a non-cash impairment charge of $0.8 million related to a then idle manufacturing facility. * SG&A was $16.2 million in the second quarter of 2008, a decrease of $4.4 million from the 2007 second quarter. SG&A was $32.4 million for the first half of 2008, a decrease of $8.3 million from the 2007 first half. In both the second quarter and first half of 2008, the decreases as compared to 2007 were due mainly to lower personnel-related costs from cost-alignment initiatives taken in the fourth quarter of 2007 and first quarter of 2008, and lower distribution and selling costs associated with lower sales volumes. As a percentage of sales, SG&A was 26.9% for the second quarter of 2008 compared to 25.9% in the second quarter of 2007 and 28.2% for the first half of 2008 compared to 26.8% in the first half of 2007. * Restructuring costs in the first half of 2008 totaled $1.8 million, of which $1.1 million was included in cost of goods sold and $0.7 million was included in SG&A. Adjusted for restructuring costs, gross margin percentage for the first half of 2008 was 33.6% of sales and SG&A was 27.6% of sales. * Driven by the $92 million estimated non-cash goodwill impairment charge, net loss in the second quarter of 2008 was $76.6 million, compared to net income of $2.8 million for the second quarter of 2007. On an adjusted basis, net income for the second quarter of 2008 was $1.9 million compared to $3.3 million in the second quarter of 2007. The net loss in the first half of 2008 was $78.4 million, compared to net income of $3.6 million in the first half of 2007. Adjusted net income was $1.1 million for the first half of 2008 compared to adjusted net income of $4.1 million for the first half of 2007. * Net loss per diluted share for the second quarter of 2008 was $2.75 compared to net income per diluted share of $0.10 for the second quarter of 2007. On an adjusted basis, net income per diluted share for the second quarter of 2008 was $0.07 compared to $0.12 in the second quarter of 2007. Net loss per diluted share in the first half of 2008 was $2.83, compared to net income per diluted share of $0.13 in the first half of 2007. On an adjusted basis, net income per diluted share was $0.04 for the first half of 2008 compared to adjusted net income per diluted share of $0.14 for the first half of 2007. * Adjusted EBITDA for the second quarter of 2008 was $9.5 million compared to an adjusted EBITDA of $11.9 million for the second quarter of 2007. Adjusted EBITDA for the first half of 2008 was $15.4 million compared to an adjusted EBITDA of $20.2 million for the first half of 2007.
Commenting on the second quarter and first half results, Jeff Jackson, PGT's Chief Financial Officer, stated, "Although the markets we serve remain weak, we saw some encouraging signs in the second quarter, including an increase in sequential quarter sales from $54.8 million in the first quarter to $60.1 million in the second. Additionally, in the second quarter we saw the full benefits from the actions taken in 2007 and 2008 to reduce our operating expenses. These benefits had a positive impact on our ability to generate cash in the second quarter as adjusted EBITDA was $9.5 million, or 15.9% of sales, compared to $5.8 million, or 10.7% of sales, for the first quarter of 2008. This internally generated cash, coupled with effective management of working capital, enabled us to prepay $10 million of outstanding bank debt in June."
Mr. Jackson continued, "While we are pleased with the results of our second quarter, as required by accounting rules, we updated our testing of goodwill, given the decline in our market capitalization versus our book value, and recorded an estimated $92 million non-cash impairment. We are still in the process of finalizing our fair value analysis of certain assets and liabilities and any adjustment to our estimate, which we believe will not be material, will be recorded in the third quarter."
Conference Call
As previously announced, PGT will hold a conference call Thursday, July 31, 2008, 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: 877-440-5807 (U.S. and Canada) and 719-325-4862 (international). A replay of the call will be available beginning July 31, 2008, at 1:30 p.m. Eastern Time through August 14, 2008. To access the replay, dial 888-203-1112 (U.S. and Canada) or 719-457-0820 (international) and refer to passcode 7482894. The webcast will also be available through the Investor Relations section of the PGT, Inc. website, http://www.pgtinc.com.
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. Founded in 1980, the Company employs approximately 1,500 at its manufacturing, glass laminating and tempering plants, and delivery fleet facilities in Venice, FL, Salisbury, NC and Lexington, 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, which 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).
The PGT, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4199
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)
Second Quarter Ended First Half Ended
------------------- -------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Net sales $ 60,100 $ 79,403 $114,936 $152,005
Cost of sales 38,609 50,685 77,374 98,588
-------- -------- -------- --------
Gross margin 21,491 28,718 37,562 53,417
Goodwill impairment charge 92,000 -- 92,000 --
Asset impairment charge -- 826 -- 826
Selling, general and
administrative expenses 16,165 20,588 32,434 40,761
-------- -------- -------- --------
(Loss) income from
operations (86,674) 7,304 (86,872) 11,830
Interest expense 2,190 2,801 4,917 5,925
Other expense (income), net 51 98 (56) 230
-------- -------- -------- --------
(Loss) income before
income taxes (88,915) 4,405 (91,733) 5,675
Income tax (benefit) expense (12,266) 1,620 (13,297) 2,090
-------- -------- -------- --------
Net (loss) income $(76,649) $ 2,785 $(78,436) $ 3,585
======== ======== ======== ========
Basic net (loss) income per
common share $ (2.75) $ 0.10 $ (2.83) $ 0.13
======== ======== ======== ========
Diluted net (loss) income
per common share $ (2.75) $ 0.10 $ (2.83) $ 0.13
======== ======== ======== ========
Weighted average common
shares outstanding:
Basic 27,832 27,123 27,734 27,061
======== ======== ======== ========
Diluted 27,832 28,321 27,734 28,344
======== ======== ======== ========
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
June 28, Dec. 29,
2008 2007
-------- --------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 17,296 $ 19,479
Accounts receivable, net 23,561 20,956
Inventories, net 10,325 9,223
Deferred income taxes 3,802 3,683
Other current assets 4,837 7,080
-------- --------
Total current assets 59,821 60,421
Property, plant and equipment, net 76,412 80,184
Other intangible assets, net 93,563 96,348
Goodwill 77,648 169,648
Other assets, net 1,028 1,264
-------- --------
Total assets $308,472 $407,865
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,814 $ 15,235
Current portion of long-term debt 95 332
-------- --------
Total current liabilities 15,909 15,567
Long-term debt 120,322 129,668
Deferred income taxes 35,532 48,927
Other liabilities 3,113 3,231
-------- --------
Total liabilities 174,876 197,393
Total shareholders' equity 133,596 210,472
-------- --------
Total liabilities and shareholders' equity $308,472 $407,865
======== ========
PGT, INC. AND SUBSIDIARY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO THEIR GAAP EQUIVALENTS
(unaudited - in thousands, except per share amounts)
Second Quarter Ended First Half Ended
------------------- -------------------
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Reconciliation to Adjusted
Net (Loss) Income and
Adjusted Net Income per
share(1):
Net (loss) income $(76,649) $ 2,785 $(78,436) $ 3,585
Reconciling items:
Goodwill impairment
charge(2) 92,000 -- 92,000 --
Asset impairment charge(3) -- 826 -- 826
Restructuring charge(4) -- -- 1,752 --
Tax effect of reconciling
items (13,495) (322) (14,178) (322)
-------- -------- -------- --------
Adjusted net income $ 1,856 $ 3,289 $ 1,138 $ 4,089
======== ======== ======== ========
Weighted average common
shares outstanding:
Diluted 27,832 28,321 27,734 28,344
======== ======== ======== ========
Adjusted net income per
share - diluted $ 0.07 $ 0.12 $ 0.04 $ 0.14
======== ======== ======== ========
Reconciliation to EBITDA
and Adjusted EBITDA:
Net (loss) income $(76,649) $ 2,785 $(78,436) $ 3,585
Reconciling items:
Depreciation and
amortization expense 4,266 3,857 8,451 7,801
Interest expense 2,190 2,801 4,917 5,925
Income tax (benefit)
expense (12,266) 1,620 (13,297) 2,090
-------- -------- -------- --------
EBITDA (82,459) 11,063 (78,365) 19,401
Add: Goodwill impairment
charge(2) 92,000 -- 92,000 --
Long-lived asset impairment
charge(3) -- 826 -- 826
Restructuring charge(4) -- -- 1,752 --
-------- -------- -------- --------
Adjusted EBITDA $ 9,541 $ 11,889 $ 15,387 $ 20,227
======== ======== ======== ========
Adjusted EBITDA as
percentage of net sales 15.9% 15.0% 13.4% 13.3%
======== ======== ======== ========
(1) The company provided detailed explanations of its non-GAAP
financial measures in its Form 8-K filed July 30, 2008.
(2) Represents the write-down of the carrying value of goodwill,
consistent with the disclosure in the Company's Quarterly Report on
Form 10-Q for the first quarter ended March 29, 2008 wherein we
identified our goodwill as being at risk for future impairment due to
the prolonged weakness in the housing sector, the Company's primary
market, which the Company believes has resulted in its common stock
trading at prices below its per-share book value. The Company
considers the relationship between the trading price of its common
stock and its per-share book value, among other things, when reviewing
for indicators of impairment. During the second quarter of 2008, the
Company came to the conclusion that, more likely than not, the
weakness in the housing sector will persist longer than previously
anticipated by the Company. The $92.0 million goodwill impairment
charge is an estimate based on the results of preliminary impairment
tests that the Company expects to complete in the 2008 third quarter.
(3) Represents the write-down of the value of the Lexington, North
Carolina property which, until December 2007 when we reclassified the
real estate as held and used, had been classified as an asset held for
sale due to the relocation of our plant to Salisbury, North Carolina.
(4) Represents charge related to restructuring actions taken in the
first quarter of 2008 as announced on March 4, 2008 of which $1.1
million is included in cost of goods sold and $0.7 million is included
in selling, general and administrative expenses. This charge related
primarily to employee separation costs.