CURRENT REPORT
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Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (date of earliest event reported): November 4, 2015
PGT, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
000-52059 20-0634715
(Commission File Number) (IRS Employer Identification No.)
1070 Technology Drive, North Venice, Florida 34275
(Address of Principal Executive Offices, Including Zip Code)
(941) 480-1600
(Registrant's Telephone Number, Including Area Code)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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§
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Changes in new home starts and home remodeling trends
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§
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The economy in the U.S. generally or in Florida where the substantial portion of our sales are generated
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§
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Raw material prices, especially aluminum
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§
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Transportation costs
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§
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Level of indebtedness
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§
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Dependence on WinGuard and certain other branded product lines
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§
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Integration of acquisition(s)
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§
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Product liability and warranty claims
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§
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Federal and state regulations, and
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§
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Dependence on our manufacturing facilities
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Exhibit No.
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Description
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99
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Press release of PGT, Inc., dated November 4, 2015.
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Net sales of $100.7 million, an increase of $23.3 million, or 30.2%, including organic growth of 8.1%;
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Gross margin of 29.2%, compared to 30.0%;
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Gross margin, as adjusted, of 31.2%, up from 30.4%;
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Selling, general and administrative expense as a percentage of net sales was 16.3%, compared to 18.5%;
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Net income of $6.3 million, compared to $2.3 million;
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Net income, as adjusted, of $7.9 million, compared to $6.2 million;
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Adjusted net income per diluted share of $0.16, compared to $0.12;
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EBITDA, as adjusted, of $17.9 million, compared to $12.1 million;
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Net sales of $296.8 million, an increase of $75.1 million, or 33.9%, including organic growth of 12.9%;
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Gross margin of 31.5%, compared to 31.2%;
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Gross margin, as adjusted, of 32.4%, up from 31.3%;
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Selling, general and administrative expense as a percentage of net sales was 17.1%, compared to 18.3%;
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Net income of $19.8 million, compared to $13.5 million;
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Net income, as adjusted, of $23.5 million, compared to $17.4 million;
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Adjusted net income per diluted share of $0.47, compared to $0.35;
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EBITDA, as adjusted, was $53.0 million, compared to $34.2 million;
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·
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Changes in new home starts and home remodeling trends
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·
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The economy in the U.S. generally or in Florida where the substantial portion of our sales are generated
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·
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Raw material prices, especially aluminum
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·
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Transportation costs
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·
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Level of indebtedness
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·
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Dependence on our WinGuard and certain other branded product lines
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·
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Integration of acquisition(s)
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·
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Product liability and warranty claims
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·
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Federal and state regulations, and
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·
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Dependence on our manufacturing facilities
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PGT, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited - in thousands, except per share amounts)
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Three Months Ended
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Nine Months Ended
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October 3,
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September 27,
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October 3,
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September 27,
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2015
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2014
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2015
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2014
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Net sales
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$ | 100,668 | $ | 77,320 | $ | 296,802 | $ | 221,666 | ||||||||
Cost of sales
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71,247 | 54,136 | 203,395 | 152,565 | ||||||||||||
Gross profit
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29,421 | 23,184 | 93,407 | 69,101 | ||||||||||||
Selling, general and administrative expenses
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16,364 | 14,290 | 50,804 | 40,619 | ||||||||||||
Income from operations
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13,057 | 8,894 | 42,603 | 28,482 | ||||||||||||
Interest expense, net
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2,934 | 1,020 | 8,787 | 2,809 | ||||||||||||
Debt extinguishment costs
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- | 2,829 | - | 2,829 | ||||||||||||
Other expenses, net
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131 | 1,019 | 357 | 918 | ||||||||||||
Income before income taxes
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9,992 | 4,026 | 33,459 | 21,926 | ||||||||||||
Income tax expense
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3,646 | 1,695 | 13,681 | 8,442 | ||||||||||||
Net income
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$ | 6,346 | $ | 2,331 | $ | 19,778 | $ | 13,484 | ||||||||
Basic net income per common share
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$ | 0.13 | $ | 0.05 | $ | 0.41 | $ | 0.29 | ||||||||
Diluted net income per common share
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$ | 0.13 | $ | 0.05 | $ | 0.39 | $ | 0.27 | ||||||||
Weighted average common shares outstanding:
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Basic
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48,596 | 47,399 | 48,131 | 47,271 | ||||||||||||
Diluted
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50,563 | 49,792 | 50,290 | 49,728 |
PGT, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited - in thousands)
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October 3,
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January 3,
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|||||||
2015
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2015
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 54,792 | $ | 42,469 | ||||
Accounts receivable, net
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38,957 | 25,374 | ||||||
Inventories
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22,992 | 19,970 | ||||||
Prepaid expenses and other current assets
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6,458 | 6,464 | ||||||
Deferred income taxes
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5,110 | 5,160 | ||||||
Total current assets
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128,309 | 99,437 | ||||||
Property, plant and equipment, net
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69,344 | 60,898 | ||||||
Intangible assets, net
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80,176 | 82,724 | ||||||
Goodwill
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66,580 | 66,580 | ||||||
Other assets, net
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2,370 | 2,110 | ||||||
Total assets
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$ | 346,779 | $ | 311,749 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 24,414 | $ | 17,328 | ||||
Current portion of long-term debt
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1,965 | 1,962 | ||||||
Total current liabilities
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26,379 | 19,290 | ||||||
Long-term debt
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190,813 | 191,792 | ||||||
Deferred income taxes
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25,956 | 25,956 | ||||||
Other liabilities
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960 | 735 | ||||||
Total liabilities
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244,108 | 237,773 | ||||||
Total shareholders' equity
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102,671 | 73,976 | ||||||
Total liabilities and shareholders' equity
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$ | 346,779 | $ | 311,749 |
PGT, INC.
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS
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(unaudited - in thousands, except per share amounts)
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Three Months Ended
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Nine Months Ended
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October 3,
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September 27,
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October 3,
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September 27,
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2015
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2014
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2015
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2014
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Reconciliation to Adjusted Net Income and
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Adjusted Net Income per share (1):
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Net income
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$ | 6,346 | $ | 2,331 | $ | 19,778 | $ | 13,484 | ||||||||
Reconciling items:
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System conversion costs (2)
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1,622 | - | 1,622 | - | ||||||||||||
New product launch costs (3)
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284 | - | 1,198 | - | ||||||||||||
Laminated glass line installation costs (4)
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141 | - | 141 | - | ||||||||||||
Other corporate costs (5)
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272 | - | 272 | - | ||||||||||||
Debt extinguishment costs (6)
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- | 2,829 | - | 2,829 | ||||||||||||
De-designated interest rate swap (7)
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- | 1,188 | - | 1,188 | ||||||||||||
CGI acquisition costs (8)
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- | 1,533 | - | 1,533 | ||||||||||||
Addition of new glass processing facility (9)
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- | 331 | - | 331 | ||||||||||||
Tax effect of reconciling items
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(787 | ) | (2,006 | ) | (1,141 | ) | (2,006 | ) | ||||||||
Discrete item in income tax expense (10)
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- | - | 1,595 | - | ||||||||||||
Adjusted net income
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$ | 7,878 | $ | 6,206 | $ | 23,465 | $ | 17,359 | ||||||||
Weighted average shares outstanding:
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Diluted
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50,563 | 49,792 | 50,290 | 49,728 | ||||||||||||
Adjusted net income per share - diluted
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$ | 0.16 | $ | 0.12 | $ | 0.47 | $ | 0.35 | ||||||||
Reconciliation to EBITDA and Adjusted EBITDA:
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Net income
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$ | 6,346 | $ | 2,331 | $ | 19,778 | $ | 13,484 | ||||||||
Reconciling items:
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Depreciation and amortization expense
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2,620 | 1,141 | 7,545 | 3,584 | ||||||||||||
Interest expense, net
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2,934 | 1,020 | 8,787 | 2,809 | ||||||||||||
Income tax expense
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3,646 | 1,695 | 13,681 | 8,442 | ||||||||||||
EBITDA
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15,546 | 6,187 | 49,791 | 28,319 | ||||||||||||
Add-backs:
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System conversion costs (2)
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1,622 | - | 1,622 | - | ||||||||||||
New product launch costs (3)
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284 | - | 1,198 | - | ||||||||||||
Laminated glass line installation costs (4)
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141 | - | 141 | - | ||||||||||||
Other corporate costs (5)
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272 | - | 272 | - | ||||||||||||
Debt extinguishment costs (6)
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- | 2,829 | - | 2,829 | ||||||||||||
De-designated interest rate swap (7)
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- | 1,188 | - | 1,188 | ||||||||||||
CGI acquisition costs (8)
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- | 1,533 | - | 1,533 | ||||||||||||
Addition of new glass processing facility (9)
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- | 331 | - | 331 | ||||||||||||
Adjusted EBITDA
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$ | 17,865 | $ | 12,068 | $ | 53,024 | $ | 34,200 | ||||||||
Adjusted EBITDA as percentage of net sales
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17.7% | 15.6% | 17.9% | 15.4% |
(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed November 4, 2015.
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(2) Costs associated with conversion to new ERP system, of which $1.6 million is included in cost of goods sold and $47 thousand is included in selling, general and administrative expenses in the three and nine months ended October 3, 2015.
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(3) Costs associated with new product launches, of which $284 thousand is included in cost of goods sold in the three months ended October 3, 2015, and $894 thousand is included in cost of goods sold and $304 thousand is included in selling, general and administrative expenses in the nine months ended October 3, 2015.
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(4) Costs associated with start-up of the laminated glass line, of which $141 thousand is included in cost of goods sold in the three and nine months ended October 3, 2015.
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(5) Costs associated with legal settlement of $100 thousand and other corporate costs of $41 thousand, all of which are included in selling, general and administrative expenses, and fair value adjustments due to losses on non-hedge commodity-related contracts of $131 thousand, included in other expenses, net, in the three and nine months ended October 3, 2015.
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(6) Costs and deferred financing costs write-off charges associated with the September 2014 refinancing of our then existing credit facility.
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(7) Charges associated with our then existing interest rate swap that was de-designated for accounting purposes in September 2014 in connection with the refinancing of our then existing credit facility, included in other expenses, net, in the three and nine months ended September 27, 2014.
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(8) Costs associated with the September 22, 2014 acquisition of CGI Windows and Doors, Inc., included in selling, general and administrative expenses in the three and nine months ended September 27, 2014.
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(9) Start-up costs incurred in connection with our new glass processing facility, which began production in September 2014, included in cost of goods sold in the three and nine months ended September 27, 2014.
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(10) 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 second quarter of 2015.
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