PGT Innovations, Inc. (NYSE: PGTI), a national leader in premium
windows and doors, including impact-resistant products, garage
doors, and products designed to unify indoor/outdoor living spaces,
today announced financial results for its fourth quarter ended
December 30, 2023.
Financial Highlights for Fourth Quarter 2023
(All results reflect comparison to prior-year period; Cash on
hand is compared to prior-year end)
- Net sales totaled $343 million, an increase of less than 1
percent.
- Net income was $5 million, a decrease of 38 percent.
- Adjusted net income* was $14 million, a decrease of 17
percent.
- Adjusted EBITDA* was $46 million, a decrease of 5 percent.
- Net income per common share attributable to common
shareholders, diluted, was $0.08, a decrease of 56 percent.
- Adjusted net income per diluted share* was $0.25, a decrease of
11 percent.
- Total liquidity* at the end of the fourth quarter was $229
million, including cash of $33 million and revolver availability of
$196 million.
Financial Highlights for Fiscal Year 2023
- Net sales totaled $1.50 billion, an increase of 1 percent.
- Net income was $110 million, a decrease of 12 percent.
- Adjusted net income* was $120 million, an increase of 4
percent.
- Adjusted EBITDA* was $268 million, an increase of 6
percent.
- Net income per common share attributable to common
shareholders, diluted, was $1.83, an increase of 12 percent.
- Adjusted net income per diluted share* was $2.05, an increase
of 7 percent.
- Cash flow from operations was $197 million, an increase of $1
million.
* Adjusted net income, Adjusted net income per diluted share,
Adjusted EBITDA, and Liquidity are non-GAAP measures. Please see
“Use of Non-GAAP Financial Measures” below for more
information.
“For the full year 2023, PGT Innovations delivered record
financial results, driven by operational execution, balanced
price/cost relationships, and strong cost discipline amid a
continued dynamic macroeconomic environment,” said Jeff Jackson,
President and Chief Executive Officer. “The performance is a
testament to the power of our product lines, our geographic
footprint, and the best team in the industry. We believe these
foundations provide a strong basis for future profitable growth,”
added Jackson.
“In the fourth quarter, we delivered net sales of $343 million,
a slight increase from the prior year quarter. Our sales growth was
driven by our Southeast region growing at six percent, partially
offset by a 13 percent decline in our Western region. The sales
growth was due primarily to prior price actions, as fourth-quarter
unit volumes were flat with the prior year quarter. We are seeing
positive signs of recovery in Western region demand trends, as well
as continued demand growth in our Southeast region,” concluded
Jackson.
“The Company delivered increasing profitability in the fourth
quarter, with gross margins of 36.7 percent, up 120 basis points
over the prior year quarter," said Craig Henderson, Senior Vice
President and Chief Financial Officer. “Our selling, general and
administrative expenses increased over the prior year quarter, as
we invested in marketing, sales and other spending to support our
2024 growth initiatives, as well as timing impact of incentive
compensation.”
“In the fourth quarter of 2023, we generated $57 million of
operating cash flow, which enabled a reduction in our revolver
borrowings of $20 million. Additionally, we returned $7 million of
capital to our shareholders through share repurchases, for
year-to-date repurchases of $82 million,” added Henderson.
“Due to the transaction with MITER Brands announced on January
17, 2024, we will not be holding a conference call or providing
2024 guidance. Refer to our proxy statement for additional
information,” concluded Henderson.
About PGT Innovations, Inc.
PGT Innovations manufactures and supplies premium windows,
doors, and garage doors. Its highly engineered and technically
advanced products can withstand some of the toughest weather
conditions on Earth and are revolutionizing the way people live by
unifying indoor and 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. Through
its brands, PGT Innovations is also the nation’s largest
manufacturer of impact-resistant windows and doors and holds the
leadership position in its primary market.
The PGT Innovations’ family of brands include CGI®, PGT® Custom
Windows and Doors, WinDoor®, Western Window Systems, Anlin Windows
& Doors, Eze-Breeze®, Eco Window Systems®, NewSouth Window
Solutions® and Martin Door®. The company’s brands, in their
respective markets, are a preferred choice of architects, builders,
and homeowners throughout North America and the Caribbean. Their
high-quality products are available in custom and standard sizes
with massive dimensions that allow for unlimited design
possibilities in residential, multi-family, and commercial
projects. For additional information, visit
https://pgtinnovations.com/.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: "assume," "believe,"
"could," "estimate," "expect," "guidance," "intend," "many,"
"positioned," "potential," "project," "think," "should," "target,"
"will," "would" and similar references to future periods. Examples
of forward-looking statements include, among others, statements we
make regarding future profitable growth and demand trends.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
current beliefs, expectations and assumptions regarding the future
of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the following:
- adverse effects on our business and financial condition that
may result if we fail to complete the merger;
- unpredictable weather and macroeconomic factors that may
negatively impact the repair and remodel and new construction
markets and the construction industry generally, especially in the
state of Florida and the western United States, where the
substantial portion of our sales are currently generated, and in
the U.S. generally;
- changes in raw material prices, especially for aluminum, glass,
vinyl, and steel, including, price increases due to the
implementation of tariffs and other trade-related restrictions,
Pandemic-related supply chain interruptions, or interruptions from
the conflict in Ukraine;
- our dependence on a limited number of suppliers for certain of
our key materials;
- our dependence on our impact-resistant product lines, which
increased with the acquisition of Eco Enterprises, LLC ("Eco"), and
contemporary indoor/outdoor window and door systems, and on
consumer preferences for those types and styles of products;
- the effects of increased expenses or unanticipated liabilities
incurred as a result of, or due to activities related to, our
recent acquisitions, including our acquisitions of Martin Door
Holdings, Inc. ("Martin") and Anlin Windows & Doors
("Anlin");
- our level of indebtedness, which increased in connection with
our recent acquisitions, including our acquisitions of Martin and
Anlin;
- increases in credit losses from obligations owed to us by our
customers in the event of a downturn in the home repair and remodel
or new home construction channels in our core markets and our
inability to collect such obligations from such customers;
- the risks that the anticipated cost savings, synergies, revenue
enhancement strategies and other benefits expected from our
acquisitions of Martin and Anlin may not be fully realized or may
take longer to realize than expected or that our actual integration
costs may exceed our estimates;
- increases in transportation costs, including increases in fuel
prices;
- our dependence on our limited number of geographically
concentrated manufacturing facilities, which increased further due
to our acquisition of Eco;
- sales fluctuations to and changes in our relationships with key
customers;
- federal, state and local laws and regulations, including
unfavorable changes in local building codes and environmental and
energy code regulations;
- 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;
- product liability and warranty claims brought against us;
- in addition to our acquisitions of Martin and Anlin, our
ability to successfully integrate businesses we may acquire in the
future, or that any business we acquire may not perform as we
expected when we acquired it; and
- the other risks and uncertainties discussed under “Risk
Factors” in Part I, Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2022, and our other filings with the
Securities and Exchange Commission.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. We undertake no obligation
to publicly update any forward-looking statement, whether written
or oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
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). Management believes 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. However, these measures do not provide a complete
picture of our operations. Management also believes 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, and for internal
planning and forecasting purposes.
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.
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.
Liquidity consists of net revolver capacity plus cash and cash
equivalents. Net revolver capacity is calculated as total revolver
capacity, less revolver borrowings and off-balance-sheet
outstanding letter-of-credit commitments.
Our calculations of Adjusted net income and Adjusted net income
per share, Adjusted EBITDA and Liquidity 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, Adjusted EBITDA and Liquidity to
GAAP net income are included in the financial schedules
accompanying this release.
We are not able to provide a reconciliation of projected
Adjusted EBITDA to the most directly comparable expected GAAP
results due to the unknown effect, timing and potential
significance of the effects of legal matters, tax considerations,
and income and expense from changes in fair value of contingent
consideration from acquisitions. Expenses associated with legal
matters, tax consequences, and income and expense from changes in
fair value of contingent consideration from acquisitions have in
the past, and may in the future, significantly affect GAAP results
in a particular period.
PGT INNOVATIONS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited - in thousands,
except per share amounts)
Three Months Ended
Year Ended
Dec. 30,
Dec. 31,
Dec. 30,
Dec. 31,
2023
2022
2023
2022
Net sales
$
342,547
$
340,934
$
1,504,241
$
1,491,954
Cost of sales
216,860
219,790
913,600
921,285
Gross profit
125,687
121,144
590,641
570,669
Selling, general and administrative
expenses
106,403
95,100
404,193
402,886
Impairment of trade name
5,500
7,423
5,500
7,423
Restructuring costs and charges, net
—
—
1,722
—
Income from operations
13,784
18,621
179,226
160,360
Interest expense, net
7,435
7,755
31,077
28,879
Debt extinguishment costs
—
410
—
410
Income before income taxes
6,349
10,456
148,149
131,071
Income tax expense
1,598
2,756
38,010
32,666
Net income
4,751
7,700
110,139
98,405
Less: Net income attributable to
redeemable non-controlling interest
—
(189
)
(1,101
)
(1,523
)
Net income attributable to the Company
$
4,751
$
7,511
$
109,038
$
96,882
Calculation of net income per common share
attributable to PGT Innovations, Inc. common shareholders:
Net income attributable to the Company
$
4,751
$
7,511
$
109,038
$
96,882
Change in redemption value of redeemable
non-controlling interest
—
3,514
(1,637
)
2,000
Net income attributable to PGT
Innovations, Inc. common shareholders
$
4,751
$
11,025
$
107,401
$
98,882
Net income per common share attributable
to PGT Innovations, Inc. common shareholders:
Basic
$
0.08
$
0.18
$
1.84
$
1.65
Diluted
$
0.08
$
0.18
$
1.83
$
1.64
Weighted average number of common shares
outstanding:
Basic
57,062
59,980
58,363
59,926
Diluted
57,507
60,441
58,700
60,319
PGT INNOVATIONS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited - in
thousands)
December 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
32,708
$
66,548
Accounts receivable, net
117,617
160,107
Inventories
111,781
112,672
Contract assets, net
37,733
47,919
Prepaid expenses and other current
assets
28,446
28,295
Total current assets
328,285
415,541
Property, plant and equipment, net
238,126
208,354
Operating lease right-of-use asset,
net
124,012
104,121
Intangible assets, net
415,245
447,052
Goodwill
462,630
460,415
Other assets, net
9,581
4,766
Total assets
$
1,577,879
$
1,640,249
LIABILITIES, REDEEMABLE NON-CONTROLLING
INTEREST,
AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
113,820
$
168,961
Current portion of operating lease
liability
20,368
16,393
Total current liabilities
134,188
185,354
Long-term debt
612,102
642,134
Operating lease liability, less current
portion
114,030
95,159
Deferred income taxes, net
52,685
47,407
Other liabilities
5,007
7,459
Total liabilities
918,012
977,513
Commitments and contingencies
Redeemable non-controlling interest
—
34,721
Total shareholders' equity
659,867
628,015
Total liabilities, redeemable
non-controlling interest and shareholders' equity
$
1,577,879
$
1,640,249
PGT INNOVATIONS, INC.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(unaudited - in
thousands)
Year Ended
December 30,
December 31,
2023
2022
(unaudited)
Cash flows from operating
activities:
Net income
$
110,139
$
98,405
Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation
35,991
34,048
Amortization
26,307
26,150
Impairment of trade name
5,500
7,423
Other asset impairments
—
2,131
Non-cash portion of restructuring costs
and charges
1,679
—
Provision for allowance for credit
losses
3,132
10,979
Stock-based compensation
12,240
9,670
Amortization of deferred financing costs,
debt discount and premium
1,320
1,242
Debt extinguishment costs
—
410
Deferred income taxes
6,752
(11,340
)
Loss (gain) on sales of assets
406
(240
)
Change in operating assets and liabilities
(net of effects of acquisitions):
Accounts receivable
37,452
(20,622
)
Inventories
527
(12,017
)
Contract assets, net, prepaid expenses,
other current and other assets
26,158
12,826
Accounts payable, accrued and other
liabilities
(70,717
)
37,309
Net cash provided by operating
activities
196,886
196,374
Cash flows from investing
activities:
Purchases of property, plant and
equipment
(69,509
)
(45,377
)
Investment in and acquisition of
business
(744
)
(188,580
)
Proceeds from sales of assets
1,167
37
Net cash used in investing activities
(69,086
)
(233,920
)
Cash flows from financing
activities:
Payment of fair value of contingent
consideration in Anlin Acquisition
(4,348
)
(2,362
)
Redemption of redeemable non-controlling
interest
(37,459
)
—
Proceeds from amounts drawn under
revolving credit facility
50,000
160,000
Payments of borrowing under revolving
credit facility
(81,352
)
(83,648
)
Payments of term loan debt
—
(60,000
)
Payments of financing costs
—
(1,526
)
Purchases of treasury stock under
repurchase program
(82,349
)
(1,565
)
Income taxes paid from stock withheld
relating to vesting of equity awards
(7,240
)
(1,888
)
Distribution to redeemable non-controlling
interest
—
(1,665
)
Proceeds from issuance of common stock
under ESPP
1,108
602
Net cash (used in) provided by financing
activities
(161,640
)
7,948
Net decrease in cash and cash
equivalents
(33,840
)
(29,598
)
Cash and cash equivalents at beginning of
period
66,548
96,146
Cash and cash equivalents at end of
period
$
32,708
$
66,548
PGT INNOVATIONS, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES TO THEIR
MOST DIRECTLY COMPARABLE GAAP
EQUIVALENTS
(unaudited - in thousands,
except per share amounts and percentages)
Three Months Ended
Year Ended
Dec. 30,
Dec. 31,
Dec. 30,
Dec. 31,
2023
2022
2023
2022
Reconciliation to Adjusted Net Income
and
Adjusted Net Income per share -
diluted:
Net income
$
4,751
$
7,700
$
110,139
$
98,405
Reconciling items:
Insurance recovery of business wind-down
costs (1)
-
-
(2,897
)
-
Restructuring costs and charges, net
(2)
-
-
1,722
-
Acquisition- and merger-related costs
(3)
5,687
3,523
6,738
4,773
Executive severance costs (4)
-
-
942
-
Cyberattack recovery costs (5)
-
415
206
415
Trade name impairment charges (6)
5,500
7,423
5,500
7,423
Triple Diamond Glass start-up costs
(7)
1,386
-
1,386
-
Other corporate costs (8)
321
-
321
-
Asset impairment charges (9)
-
-
-
2,131
Adjustments to contingent consideration
(10)
-
381
-
5,432
Hurricane Ian-related costs (11)
-
20
-
1,868
Tax gross-up payment (12)
-
(59
)
-
368
CGI Commercial relocation costs (13)
-
-
-
277
Debt extinguishment costs (14)
-
410
-
410
Product line rationalization and
transition costs (15)
-
682
-
682
Tax effect of reconciling items
(3,399
)
(3,339
)
(3,669
)
(6,194
)
Adjusted net income
$
14,246
$
17,156
$
120,388
$
115,990
Weighted-average diluted shares
57,507
60,441
58,700
60,319
Adjusted net income per share -
diluted
$
0.25
$
0.28
$
2.05
$
1.92
Reconciliation to Adjusted
EBITDA:
Depreciation and amortization expense
$
15,889
$
15,114
$
62,298
$
60,198
Interest expense, net
7,435
7,755
31,077
28,879
Income tax expense
1,598
2,756
38,010
32,666
Reversal of tax effect of reconciling
items for adjusted net income above
3,399
3,339
3,669
6,194
Stock-based compensation expense
3,186
2,032
12,240
9,670
Adjusted EBITDA
$
45,753
$
48,152
$
267,682
$
253,597
Adjusted EBITDA as percentage of net
sales
13.4%
14.1%
17.8%
17.0%
(1) Represents an insurance recovery gain
relating to the wind-down of the commercial portion of our New
South acquisition. Proceeds from the insurance recovery totaled
$5.0 million. We previously recorded an other receivable of $2.1
million, representing the low end of our range of estimated
recovery amounts, resulting in a gain of $2.9 million, classified
within selling, general and administrative expenses in the
accompanying consolidated statement of operations for the year
ended December 30, 2023.
(2) Represents net costs and charges
relating to our management-approved plan to exit the North Carolina
market relating to our NewSouth brand. As a result, we determined
to close our NewSouth showrooms in Raleigh-Durham and Charlotte,
North Carolina, which resulted in net restructuring costs and
charges, net, totaling $1.7 million, including $2.5 million in the
second quarter of 2023, partially offset by a gain of $0.8 million
in the third quarter of 2023 relating to the forgiveness of a
portion of the operating lease liability by the landlord of the
Charlotte, NC location, which we satisfied in the third quarter of
2023. Of the $2.5 million in restructuring costs and charges in the
second quarter of 2023, $2.0 million represents the total
impairments of the right-of-use assets of the leases of the
Raleigh-Durham and Charlotte, North Carolina showroom facilities,
and $0.4 relates to write-offs of the related leasehold
improvements. The remainder represents personnel-related costs,
which were paid by the end of the 2023 second quarter.
(3) In 2023, represents
acquisition-related costs, including expenses totaling $5.6 million
relating to the terminated merger agreement with Masonite, transfer
taxes assessed to the Company in 2023 relating to the Anlin
acquisition in the first quarter of 2023, and costs relating to the
redemption of the 25% non-controlling interest in Eco, classified
within selling, general and administrative expenses in the
accompanying consolidated statement of operations for the year
ended December 30, 2023. In 2022, represents costs relating to the
Martin acquisition.
(4) Represents severance costs relating to
the termination of the employment of our former Chief Financial
Officer, which was effective close of business February 27, 2023.
These costs were paid in and are classified as selling, general and
administrative expenses in the accompanying consolidated statement
of operations for the year ended December 30, 2023.
(5) In 2023, represents additional
cyberattack recovery costs incurred in the second quarter of 2023,
classified as selling, general and administrative expense in the
accompanying consolidated statement of operations for the year
ended December 30, 2023. In 2022, represents cyberattack recovery
costs, classified as selling, general and administrative expense in
the accompanying condensed statement of operations for the
three-months and year ended December 31, 2022. We previously
disclosed this event by Current Report on Form 8-K, filed with the
SEC on November 7, 2022, and updated the status of this event by
Current Report on Form 8-K, filed with the SEC on April 6,
2023.
(6) In 2023, represents impairment charge
relating to our Martin trade name classified as impairment of trade
name in the accompanying consolidated statements of operations for
the three-months and year ended December 30, 2023. In 2022,
represents impairment charge relating to our WinDoor trade name
classified as impairment of trade name in the accompanying
consolidated statements of operations for the three-months and year
ended December 31, 2022.
(7) Represents start-up costs relating to
our previously announced Diamond Glass Thin Triple glass
fabrication facility in Prince George County, Virginia, classified
as selling, general and administrative expenses in the accompanying
consolidated statements of operations for the three-months and year
ended December 30, 2023.
(8) Represents third-party consulting
costs relating to addressing certain personnel matters at our ECO
facility in Medley, FL, classified as selling, general and
administrative expenses in the accompanying consolidated statements
of operations for the three-months and year ended December 30,
2023.
(9) Represents write-offs of property,
equipment and other impaired assets, classified as selling, general
and administrative expense in the accompanying consolidated
statements of operations for the three-months and year ended
December 31, 2022.
(10) Represents adjustments to contingent
consideration associated with our Anlin Acquisition, classified as
selling, general and administrative expenses in the accompanying
consolidated statement of operations for the three-months and year
ended December 31, 2022.
(11) Represents disruption and recovery
costs caused by Hurricane Ian in late-September 2022, of which $1.1
million is classified within cost of sales, and $747 thousand is
classified within selling, general and administrative expenses in
the accompanying consolidated statements of operations for the year
ended December 31, 2022.
(12) Represents tax gross-up payment
required to be made to the non-controlling interest relating to our
acquisition of Eco, which we initially estimated to be $1.5
million, but which was ultimately determined to be $1.8 million, a
difference of $368 thousand, which is classified within selling,
general and administrative expenses in the accompanying
consolidated statements of operations for the year ended December
31, 2022.
(13) Represents additional costs relating
to the relocation of our CGI Commercial business to a new location
in the Miami, FL area, being shared with our Eco Enterprises
entity, classified as cost of sales in the accompanying
consolidated statement of operations for the year ended December
31, 2022.
(14) In 2022, represents debt
extinguishment costs relating to the refinancing of our 2016 Credit
Agreement and repayment, in full, of the then existing term loan,
classified as debt extinguishment costs in the accompanying
consolidated statement of operations for the year ended December
31, 2022.
(15) Represents costs relating to product
line rationalizations and transitions, classified within cost of
sales in the accompanying consolidated statement of operations for
the year ended December 31, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240219248919/en/
PGT Innovations Contacts:
Investor Relations: Craig Henderson, 941-480-1600 Senior
Vice President and CFO CHenderson@PGTInnovations.com
Media Relations: Stephanie Cz, 941-480-1600 Corporate
Communications Manager
PGT (NYSE:PGTI)
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PGT (NYSE:PGTI)
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