VENICE, Fla., Oct. 29, 2008 (GLOBE 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 and first nine months ended September 27, 2008.
"The availability of credit tightened significantly in the third quarter as the full scope of the mortgage crisis was felt, causing sharp drops in new home construction and applications for building permits. Builder confidence is at record lows, as they and their customers face much tougher lending standards. Housing starts were down 43% in our core market in the third quarter of 2008 compared to 2007, and our sales decreased 24.6%," said Rod Hershberger, PGT's President and Chief Executive Officer. "Keeping recent events in mind, we continue to move forward with new offerings in our architectural systems product line, expansion into unitized curtain wall systems and focus on out-of-state growth opportunities. We continue to believe that we can grow organically by gaining market share, but we also continue to focus on controlling costs and may take additional actions to streamline operations if the economy weakens further."
Highlights of the Third Quarter and First Nine Months Financial Results include:
(See accompanying financial schedules for full financial details and reconciliations of adjusted (non-GAAP) financial measures to their GAAP equivalents.)
* Net sales were $54.3 million in the third quarter of 2008, a
decrease of $17.7 million or 24.6%, compared to the third
quarter of 2007. For the first nine months of 2008, net sales
were $169.3 million, a decrease of $54.8 million or 24.5%,
compared to the first nine months of 2007.
* Gross margin percentage in the third quarter of 2008 was 29.8%,
compared to 31.7% in the third quarter of 2007, and was 31.8%
for the 2008 first nine months, compared to 34.1% in the 2007
first nine months. Gross margin in both periods decreased due
mainly to declining operating leverage from lower sales.
* Non-cash impairment charges totaling $1.6 million were recorded
in the 2008 third quarter as the Company completed its updated
impairment tests bringing total non-cash impairment charges to
$93.6 million in the first nine months of 2008. In 2007, there
was a non-cash impairment charge of $0.8 million related to a
then idle manufacturing facility.
* SG&A was $14.5 million in the third quarter of 2008, a decrease
of $3.8 million from the 2007 third quarter and $46.9 million
for the first nine months of 2008, a decrease of $12.1 million
from the 2007 first nine months. Lower personnel costs from
previously announced cost-alignment initiatives and lower
distribution and selling costs associated with lower sales
volumes contributed to the decreases. SG&A was 26.6% of sales
for the third quarter of 2008 compared to 25.4% in 2007 and
27.7% for the first nine months of 2008 compared to 26.3% in
2007.
* Restructuring costs of $1.1 million included in cost of goods
sold and $0.7 million included in SG&A were recorded in early
2008. Adjusted for restructuring costs, in the first nine
months of 2008 gross margin percentage was 32.4%, and SG&A was
27.3% of sales.
* Net loss in the 2008 third quarter was $1.6 million, compared to
net income of $1.1 million for the third quarter of 2007. Net
loss in the first nine months of 2008 was $80.0 million,
compared to net income of $4.7 million in the first nine months
of 2007. Non-cash impairment charges of $1.6 million in the
third quarter and $93.6 million in the first nine months drove
the net losses in 2008. Adjusting for these charges, there was
a net loss of $0.3 million in the third quarter and net income
of $0.8 million in the first nine months of 2008, compared to
net income of $1.1 million in the third quarter and adjusted net
income of $5.2 million for the first nine months of 2007.
* On an adjusted basis, net loss per diluted share for the third
quarter of 2008 was $0.01 compared to net income of $0.04 in the
third quarter of 2007 and an adjusted net income of $0.03 in the
first nine months of 2008 compared to $0.18 for the first nine
months of 2007.
* Adjusted EBITDA for the third quarter of 2008 was $6.0 million
compared to $8.4 million in 2007. Adjusted EBITDA for the first
nine months of 2008 was $21.4 million compared to $28.7 million
in 2007.
Commenting on the third quarter and first nine months results, Jeff Jackson, PGT's Executive Vice President and Chief Financial Officer, stated, "The fall-out from the widening mortgage crisis has triggered problems throughout the entire economy with one of the most adversely affected industries being home construction. Our sales continued to be impacted in the third quarter as sequential quarter sales fell to $54.3 million from $60.1 million in the second quarter. The resulting decrease in our ability to leverage fixed costs, coupled with operating inefficiencies experienced as we introduce new products into our architectural systems product line, negatively affected our results as adjusted EBITDA was $6.0 million, or 11.1% of sales compared to $9.5 million, or 15.9% of sales for the second quarter of 2008."
Mr. Jackson continued, "On a positive note, we completed our rights offering in the third quarter. This offering was fully subscribed and generated net cash proceeds of $29.3 million which enabled us to prepay $30 million of outstanding debt. Coupled with effective management of working capital and internally generated cash, since the beginning of the year we have prepaid $40 million of outstanding bank debt which has strengthened our balance sheet and provided us with increased financial flexibility in these difficult market conditions."
Conference Call
As previously announced, PGT will hold a conference call Thursday, October 30, 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: 877-879-6203 (U.S. and Canada) and 719-325-4801 (international). A replay of the call will be available beginning October 30, 2008, at 1:30 p.m. Eastern Time through November 13, 2008. To access the replay, dial 888-203-1112 (U.S. and Canada) or 719-457-0820 (international) and refer to passcode 5308041. 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.globenewswire.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)
Third Quarter Ended Nine Months Ended
-------------------- --------------------
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
--------- --------- --------- ---------
Net sales $ 54,330 $ 72,054 $ 169,266 $ 224,059
Cost of sales 38,132 49,177 115,506 147,765
--------- --------- --------- ---------
Gross margin 16,198 22,877 53,760 76,294
Goodwill and intangible
impairment charges 1,600 -- 93,600 --
Asset impairment charge -- -- -- 826
Selling, general and
administrative expenses 14,475 18,272 46,909 59,033
--------- --------- --------- ---------
Income (loss) from
operations 123 4,605 (86,749) 16,435
Interest expense 2,236 2,772 7,153 8,697
Other expense (income),
net 18 198 (38) 428
--------- --------- --------- ---------
(Loss) income before
income taxes (2,131) 1,635 (93,864) 7,310
Income tax (benefit)
expense (502) 566 (13,799) 2,656
--------- --------- --------- ---------
Net (loss) income $ (1,629) $ 1,069 $ (80,065) $ 4,654
========= ========= ========= =========
Basic net (loss) income
per common share $ (0.05) $ 0.04 $ (2.74) $ 0.16
========= ========= ========= =========
Diluted net (loss) income
per common share $ (0.05) $ 0.04 $ (2.74) $ 0.16
========= ========= ========= =========
Weighted average common
shares outstanding:
Basic 32,082 28,572 29,183 28,279
========= ========= ========= =========
Diluted 32,082 29,513 29,183 29,447
========= ========= ========= =========
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
Sept. 27, Dec. 29,
2008 2007
--------- ---------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 18,822 $ 19,479
Accounts receivable, net 21,387 20,956
Inventories, net 11,668 9,223
Deferred income taxes 4,036 3,683
Other current assets 5,338 7,080
--------- ---------
Total current assets 61,251 60,421
Property, plant and equipment, net 74,956 80,184
Other intangible assets, net 91,871 96,348
Goodwill 76,348 169,648
Other assets, net 1,273 1,264
--------- ---------
Total assets $ 305,699 $ 407,865
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,991 $ 15,235
Current portion of long-term debt 95 332
--------- ---------
Total current liabilities 16,086 15,567
Long-term debt 90,309 129,668
Deferred income taxes 35,224 48,927
Other liabilities 2,890 3,231
--------- ---------
Total liabilities 144,509 197,393
Total shareholders' equity 161,190 210,472
--------- ---------
Total liabilities and shareholders' equity $ 305,699 $ 407,865
========= =========
PGT, INC. AND SUBSIDIARY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP
EQUIVALENTS
(unaudited - in thousands, except per share amounts and percentages)
Third Quarter Ended Nine Months Ended
------------------- -------------------
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
-------- -------- -------- --------
Adjusted Net (Loss)
Income and Adjusted Net
(Loss) Income per
share (1):
Net (loss) income $ (1,629) $ 1,069 $(80,065) $ 4,654
Reconciling items:
Goodwill and intangible
impairment charges (2) 1,600 -- 93,600 --
Asset impairment charge
(3) -- -- -- 826
Restructuring charge (4) -- -- 1,752 --
Tax effect of
reconciling items (308) -- (14,486) (322)
-------- -------- -------- --------
Adjusted net (loss)
income $ (337) $ 1,069 $ 801 $ 5,158
======== ======== ======== ========
Weighted average common
shares outstanding:
Diluted (5) 32,082 29,513 29,183 29,447
Incremental shares for
stock awards (6) -- -- 396 --
-------- -------- -------- --------
Diluted - adjusted 32,082 29,513 29,579 29,447
======== ======== ======== ========
Adjusted net (loss)
income per diluted
share $ (0.01) $ 0.04 $ 0.03 $ 0.18
======== ======== ======== ========
Reconciliation to EBITDA
and Adjusted EBITDA:
Net (loss) income $ (1,629) $ 1,069 $(80,065) $ 4,654
Reconciling items:
Depreciation and
amortization expense 4,302 4,032 12,753 11,833
Interest expense 2,236 2,772 7,153 8,697
Income tax (benefit)
expense (502) 566 (13,799) 2,656
-------- -------- -------- --------
EBITDA 4,407 8,439 (73,958) 27,840
Add: Goodwill and
intangible
impairment
charges (2) 1,600 -- 93,600 --
Long-lived asset
impairment charge
(3) -- -- -- 826
Restructuring
charge (4) -- -- 1,752 --
-------- -------- -------- --------
Adjusted EBITDA $ 6,007 $ 8,439 $ 21,394 $ 28,666
======== ======== ======== ========
Adjusted EBITDA as
percentage of net
sales 11.1% 11.7% 12.6% 12.8%
======== ======== ======== ========
(1) The Company's non-GAAP financial measures are explained in
its Form 8-K filed October 29, 2008.
(2) Represents the write-down of the carrying value of goodwill and
a trademark. The Company recorded an estimated $92.0 million
non-cash goodwill impairment charge in the second quarter of
2008 based on the results of preliminary impairment tests at
that time. The Company completed its updated inpairment tests
in the 2008 third quarter which resulted in additional non-cash
impairment charges totaling $1.6 million, of which $1.3 million
relates to goodwill and $0.3 million relates to a trademark.
(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.
(5) Due to the net losses in each of the third quarter and first
nine months of 2008, the effect of equity compensation plans is
anti-dilutive. Weighted average common shares outstanding for
both periods in 2007 have been restated to give effect to the
bonus element contained in the rights offering.
(6) Represents incremental shares for stock options that were
excluded from the calculation of earnings per share for the nine
months ended September 27, 2008 because their effect would have
been anti-dilutive.