[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ] |
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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ITEM 9.01.
|
FINANCIAL STATEMENTS AND EXHIBITS
|
(d)
|
Exhibits
|
Exhibit No.
|
|
Description
|
99.1
|
|
Press release of PGT Innovations, Inc., dated July 30, 2018
|
99.2
|
|
Earnings presentation dated July 30, 2018
|
Exhibit No.
|
|
Description
|
99.1
|
|
Press release of PGT Innovations, Inc., dated July 30, 2018
|
99.2
|
|
Earnings presentation dated July 30, 2018
|
● |
Net sales of $169 million, an increase of $32 million, or 23 percent
|
● |
Gross margin of 35.4 percent, compared to 32.4 percent
|
● |
Net income of $22.5 million, compared to $10.3 million
|
● |
Adjusted net income of $21.4 million, compared to $10.3 million
|
● |
Net income per diluted share of $0.43, compared to $0.20
|
● |
Adjusted net income per diluted share of $0.41, compared to $0.20
|
● |
Net sales of $310 million, an increase of $59 million, or 24 percent
|
● |
Gross margin of 33.8 percent, compared to 30.5 percent
|
● |
Net income of $29.9 million, compared to $13.3 million
|
● |
Adjusted net income of $31.3 million, compared to $14.1 million
|
● |
Net income per diluted share of $0.57, compared to $0.26
|
● |
Adjusted net income per diluted share of $0.60, compared to $0.27
|
● |
Net sales of $580 million to $600 million, increasing 13 percent to 17 percent;
|
● |
Adjusted EBITDA of $100 million to $110 million, increasing 19 percent to 31 percent;
|
● |
Net income per diluted share of $0.95 to $1.10; and
|
● |
Free cash flow of $62 million to $72 million
|
• |
unfavorable changes in new home starts and home remodeling trends, especially in the State of Florida, where the substantial portion of our sales are generated;
|
• |
unfavorable changes in the economy in the United States in general and in the State of Florida, where the substantial portion of our sales are generated;
|
• |
increases in our cost of raw materials, including aluminum, glass and vinyl, including, without limitation, due to the implementation of tariffs and other trade-related restrictions;
|
• |
our dependence on a limited number of suppliers for certain of our key materials;
|
• |
increases in our transportation costs;
|
• |
our level of indebtedness;
|
• |
our dependence on our impact-resistant product lines;
|
• |
our ability to successfully integrate businesses we may acquire;
|
• |
product liability and warranty claims brought against us;
|
• |
federal, state and local laws and regulations, including unfavorable changes in local building codes;
|
• |
our dependence on a limited number of manufacturing facilities;
|
• |
the continuing post-storm impact of Hurricane Irma on our customers and markets, demand for our products, and our financial and operational performance related thereto;
|
• |
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 other risks and uncertainties discussed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 30, 2017.
|
PGT INNOVATIONS, INC.
|
|||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||||||||
(unaudited - in thousands, except per share amounts)
|
|||||||||||||
|
|||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||
|
June 30,
|
July 1,
|
June 30,
|
July 1,
|
|||||||||
|
2018
|
2017
|
2018
|
2017
|
|||||||||
|
|||||||||||||
Net sales
|
$
|
169,269
|
$
|
137,384
|
$
|
309,522
|
$
|
250,105
|
|||||
Cost of sales
|
109,322
|
92,831
|
204,802
|
173,813
|
|||||||||
Gross profit
|
59,947
|
44,553
|
104,720
|
76,292
|
|||||||||
Selling, general and administrative expenses
|
32,581
|
24,650
|
61,238
|
47,435
|
|||||||||
Gains on transfers of assets (1)
|
(2,551
|
)
|
-
|
(2,551
|
)
|
-
|
|||||||
Income from operations
|
29,917
|
19,903
|
46,033
|
28,857
|
|||||||||
Interest expense, net
|
3,609
|
4,568
|
7,652
|
9,478
|
|||||||||
Debt extinguishment costs
|
-
|
-
|
3,079
|
-
|
|||||||||
Income before income taxes
|
26,308
|
15,335
|
35,302
|
19,379
|
|||||||||
Income tax expense
|
3,760
|
5,080
|
5,414
|
6,125
|
|||||||||
Net income
|
$
|
22,548
|
$
|
10,255
|
$
|
29,888
|
$
|
13,254
|
|||||
|
|||||||||||||
Basic net income per common share
|
$
|
0.45
|
$
|
0.21
|
$
|
0.60
|
$
|
0.27
|
|||||
|
|||||||||||||
Diluted net income per common share
|
$
|
0.43
|
$
|
0.20
|
$
|
0.57
|
$
|
0.26
|
|||||
|
|||||||||||||
Weighted average common shares outstanding:
|
|||||||||||||
Basic
|
50,317
|
49,473
|
50,087
|
49,368
|
|||||||||
|
|||||||||||||
Diluted
|
52,056
|
51,664
|
52,023
|
51,607
|
|||||||||
|
|||||||||||||
(1) Gains on transfers of assets of $2.6 million in the three- and six-month periods ended June 30, 2018, relate to the transfers of machinery and equipment to Cardinal Glass Industries under the asset purchase agreement.
|
PGT INNOVATIONS, INC.
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||
(unaudited - in thousands)
|
|||||||
|
|||||||
|
|||||||
|
June 30,
|
December 30,
|
|||||
|
2018
|
2017
|
|||||
ASSETS
|
|||||||
Current assets:
|
|||||||
Cash and cash equivalents
|
$
|
63,923
|
$
|
34,029
|
|||
Accounts receivable, net
|
74,970
|
60,308
|
|||||
Inventories
|
35,326
|
37,816
|
|||||
Contract assets, net
|
11,012
|
-
|
|||||
Prepaid expenses, other current assets and assets held for sale (1)
|
10,656
|
12,363
|
|||||
Total current assets
|
195,887
|
144,516
|
|||||
|
|||||||
Property, plant and equipment, net
|
93,433
|
84,133
|
|||||
Intangible assets, net
|
111,725
|
115,043
|
|||||
Goodwill
|
108,060
|
108,060
|
|||||
Other assets, net
|
1,336
|
1,367
|
|||||
Total assets
|
$
|
510,441
|
$
|
453,119
|
|||
|
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
|||||||
Accounts payable and accrued expenses (2)
|
$
|
45,911
|
$
|
41,085
|
|||
Current portion of long-term debt
|
303
|
294
|
|||||
Total current liabilities
|
46,214
|
41,379
|
|||||
|
|||||||
Long-term debt, less current portion
|
215,081
|
212,679
|
|||||
Deferred income taxes, net
|
23,287
|
22,772
|
|||||
Other liabilities (2)
|
17,015
|
964
|
|||||
Total liabilities
|
301,597
|
277,794
|
|||||
|
|||||||
Total shareholders' equity
|
208,844
|
175,325
|
|||||
Total liabilities and shareholders' equity
|
$
|
510,441
|
$
|
453,119
|
|||
|
|||||||
(1) At December 30, 2017, includes $3.2 million of assets held for sale related to the machinery and equipment to be transferred to Cardinal Glass Industries under the asset purchase agreement.
|
|||||||
|
|||||||
(2) At June 30, 2018, includes $2.8 million within accrued expenses and $15.3 million within other liabilities of deferred trade discount related to the supply agreement with Cardinal Glass Industries being amortized through 2024.
|
PGT INNOVATIONS, INC.
|
||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR GAAP EQUIVALENTS
|
||||||||||||
(unaudited - in thousands, except per share amounts)
|
||||||||||||
|
||||||||||||
|
Three Months Ended
|
Six Months Ended
|
||||||||||
|
June 30,
|
July 1,
|
June 30,
|
July 1,
|
||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||
Reconciliation to Adjusted Net Income and
|
||||||||||||
Adjusted Net Income per share (1):
|
||||||||||||
Net income (2)
|
$
|
22,548
|
$
|
10,255
|
$
|
29,888
|
$
|
13,254
|
||||
Reconciling items:
|
||||||||||||
Debt extinguishment costs (2)
|
-
|
-
|
3,079
|
-
|
||||||||
Facility and equipment relocation costs (3)
|
-
|
-
|
435
|
-
|
||||||||
Gains on transfers of assets
|
||||||||||||
under Cardinal APA (4)
|
(2,551
|
)
|
-
|
(2,551
|
)
|
-
|
||||||
Transaction-related costs (5)
|
999
|
-
|
999
|
-
|
||||||||
Management reorganization costs (6)
|
-
|
-
|
-
|
715
|
||||||||
Thermal Plastic System start-up costs (7)
|
-
|
-
|
-
|
517
|
||||||||
Tax effect of reconciling items
|
403
|
-
|
(503
|
)
|
(435
|
)
|
||||||
Adjusted net income
|
$
|
21,399
|
$
|
10,255
|
$
|
31,347
|
$
|
14,051
|
||||
Weighted-average diluted shares (2)
|
52,056
|
51,664
|
52,023
|
51,607
|
||||||||
Adjusted net income per share - diluted
|
$
|
0.41
|
$
|
0.20
|
$
|
0.60
|
$
|
0.27
|
||||
Reconciliation to Adjusted EBITDA (1):
|
||||||||||||
Depreciation and amortization expense
|
4,829
|
4,669
|
9,449
|
9,266
|
||||||||
Interest expense, net
|
3,609
|
4,568
|
7,652
|
9,478
|
||||||||
Income tax expense
|
3,760
|
5,080
|
5,414
|
6,125
|
||||||||
Reversal of tax effect of reconciling items for
|
||||||||||||
adjusted net income above
|
(403
|
)
|
-
|
503
|
435
|
|||||||
Stock-based compensation expense (8)
|
684
|
579
|
1,198
|
1,037
|
||||||||
Adjusted EBITDA
|
$
|
33,878
|
$
|
25,151
|
$
|
55,563
|
$
|
40,392
|
||||
Adjusted EBITDA as percentage of net sales
|
20.0%
|
|
18.3%
|
|
18.0%
|
|
16.2%
|
|
||||
|
||||||||||||
(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed July 30, 2018.
|
||||||||||||
|
||||||||||||
(2) Represents debt extinguishment costs recognized in the first quarter of 2018 relating to the Company's second refinancing and second amendment of the 2016 Credit Agreement on March 16, 2018. We repriced and amended our 2016 Credit Agreement for the first time on February 17, 2017. However, because there were no changes in lender positions in the first action, it did not result in any lender positions being considered as modified or extinguished. Therefore, there was no charge for debt extinguishment costs in the three or six months ended July 1, 2017.
|
||||||||||||
|
||||||||||||
(3) Represents costs associated with planned relocation of the CGI Windows & Doors manufacturing operations to its new facility in Miami, FL, and costs associated with machinery and equipment relocations within our glass plant operations in Venice, FL as the result of our planned disposal of certain glass manufacturing assets to Cardinal Glass Industries. Of the $435 thousand, $416 thousand is classified within cost of sales during the six months ended June 30, 2018, with the remainder classified within selling, general and administrative expenses.
|
||||||||||||
|
||||||||||||
(4) Represents gains on sales of assets to Cardinal LG Company (Cardinal) under an Asset Purchase Agreement (APA) dated September 22, 2017. Pursuant to the terms of the APA, during the three months ended June 30, 2018, we transferred assets to Cardinal which had a net book value of $3.2 million and fair value of $5.8 million, resulting in the recognition of gains on disposals totaling $2.6 million.
|
||||||||||||
|
||||||||||||
(5) Represents costs relating to our acquisition of Western Window Systems, which we announced on July 24, 2018, classified within selling, general and administrative expenses in the three and six months ended June 30, 2018.
|
||||||||||||
|
||||||||||||
(6) Represents costs associated with planned changes in our management structure in the first quarter of 2017, directed towards maximizing the effectiveness and efficiency of the Company's leadership team, classified within selling, general and administrative expenses in the six months ended July 1, 2017.
|
||||||||||||
|
||||||||||||
(7) Represents costs incurred in January and February 2017 associated with the start-up of our second Thermal Plastic Spacer system insulated glass line, all of which is classified within cost of sales in the six months ended July 1, 2017.
|
||||||||||||
|
||||||||||||
(8) Beginning in 2018, we updated our reporting of adjusted EBITDA to exclude non-cash stock-based compensation expense. Prior periods have been revised to reflect this change for consistency of comparisons.
|
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