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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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ddress of Principal Executive Offices)
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(Zip 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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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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ITEM 9.01.
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FINANCIAL STATEMENTS AND EXHIBITS
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(d)
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Exhibits
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Exhibit No.
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Description
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Exhibit No.
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Description
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● |
Net sales increased 27 percent, to
$220 million, including $16 million from our NewSouth acquisition
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● |
Net income increased 89 percent,
to $16 million
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● |
Net income per diluted share increased 86 percent, to $0.26, and adjusted net income per diluted share increased 75 percent, to $0.28
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● |
Adjusted EBITDA increased 39 percent, to $39 million
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•
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the impact of the COVID-19 pandemic and related measures taken by governmental or regulatory authorities to combat the pandemic, including the impact of the pandemic and these measures on the
economies and demand for our products in the states where we sell them, and on our customers, suppliers, labor force, business, operations and financial performance;
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•
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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;
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•
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changes in raw material prices, especially for aluminum, glass and vinyl, including, price increases due to the implementation of tariffs and other trade-related restrictions;
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•
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our dependence on a limited number of suppliers for certain of our key materials;
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•
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our dependence on our impact-resistant product lines and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products;
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•
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the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, our acquisitions of NewSouth and Western Window Systems;
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•
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our level of indebtedness, which increased in connection with our acquisition of Western Window Systems, and increased further in connection with our acquisition of NewSouth;
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•
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increases in bad debt 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
debt;
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•
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the risks that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from our acquisitions of NewSouth and Western Window Systems may not be fully
realized or may take longer to realize than expected or that our actual integration costs may exceed our estimates;
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•
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increases in transportation costs, including increases in fuel prices;
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•
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our dependence on our limited number of geographically concentrated manufacturing facilities;
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•
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sales fluctuations to and changes in our relationships with key customers;
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•
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federal, state and local laws and regulations, including unfavorable changes in local building codes and environmental and energy code regulations;
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•
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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;
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•
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product liability and warranty claims brought against us;
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•
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in addition to the acquisitions of NewSouth and Western Window Systems, our ability to successfully integrate businesses we may acquire in the future, or that any business we acquire may not
perform as we expected at the time we acquired it; and
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•
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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 28, 2019 and our other SEC filings.
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PGT INNOVATIONS, INC.
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||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(unaudited - in thousands, except per share amounts)
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||||||||
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||||||||
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Three Months Ended
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|||||||
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April 4,
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March 30,
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||||||
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2020
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2019
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||||||
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||||||||
Net sales
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$
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220,204
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$
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173,737
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||||
Cost of sales
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139,077
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112,467
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||||||
Gross profit
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81,127
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61,270
|
||||||
Selling, general and administrative expenses
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54,220
|
44,014
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||||||
Income from operations
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26,907
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17,256
|
||||||
Interest expense, net
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7,169
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6,714
|
||||||
Income before income taxes
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19,738
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10,542
|
||||||
Income tax expense
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4,138
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2,285
|
||||||
Net income
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$
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15,600
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$
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8,257
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||||
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||||||||
Basic net income per common share
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$
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0.27
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$
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0.14
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||||
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||||||||
Diluted net income per common share
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$
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0.26
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$
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0.14
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||||
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||||||||
Weighted average common shares outstanding:
|
||||||||
Basic
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58,668
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58,134
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||||||
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||||||||
Diluted
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59,121
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59,220
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PGT INNOVATIONS, INC.
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
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||||||||
(unaudited - in thousands)
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||||||||
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||||||||
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||||||||
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April 4,
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December 28,
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||||||
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2020
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2019
|
||||||
ASSETS
|
||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$
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67,552
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$
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97,243
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||||
Accounts receivable, net
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96,234
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68,091
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||||||
Inventories
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51,647
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43,851
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||||||
Contract assets, net
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16,491
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10,547
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||||||
Prepaid expenses and other current assets
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17,275
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13,878
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||||||
Total current assets
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249,199
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233,610
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||||||
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||||||||
Property, plant and equipment, net
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132,401
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128,199
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||||||
Operating lease right-of-use asset, net
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39,448
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26,390
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||||||
Intangible assets, net
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279,890
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255,962
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||||||
Goodwill
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323,800
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277,600
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||||||
Other assets, net
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893
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972
|
||||||
Total assets
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$
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1,025,631
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$
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922,733
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||||
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||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
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||||||||
Accounts payable and accrued expenses
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$
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76,108
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$
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51,394
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Current portion of operating lease liability
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6,325
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4,703
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||||||
Total current liabilities
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82,433
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56,097
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||||||
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||||||||
Long-term debt, less current portion
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421,203
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368,971
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||||||
Operating lease liability, less current portion
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35,571
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24,040
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||||||
Deferred income taxes, net
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26,794
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27,945
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||||||
Other liabilities
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14,549
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14,132
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||||||
Total liabilities
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580,550
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491,185
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||||||
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||||||||
Total shareholders' equity
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445,081
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431,548
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||||||
Total liabilities and shareholders' equity
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$
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1,025,631
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$
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922,733
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||||
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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)
|
||||||||
|
||||||||
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Three Months Ended
|
|||||||
|
April 4,
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March 30,
|
||||||
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2020
|
2019
|
||||||
Reconciliation to Adjusted Net Income and
|
||||||||
Adjusted Net Income per share (1):
|
||||||||
Net income
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$
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15,600
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$
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8,257
|
||||
Reconciling items:
|
||||||||
Product line transition costs (2)
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382
|
641
|
||||||
Acquisition-related costs (3)
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543
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650
|
||||||
Pandemic-related costs (4)
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85
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-
|
||||||
Tax effect of reconciling items
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(253
|
)
|
(332
|
)
|
||||
Adjusted net income
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$
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16,357
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$
|
9,216
|
||||
Weighted-average diluted shares
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59,121
|
59,220
|
||||||
Adjusted net income per share - diluted
|
|
$0.28
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$0.16
|
||||
Reconciliation to Adjusted EBITDA (1):
|
||||||||
Depreciation and amortization expense
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$
|
9,928
|
$
|
8,512
|
||||
Interest expense, net
|
7,169
|
6,714
|
||||||
Income tax expense
|
4,138
|
2,285
|
||||||
Reversal of tax effect of reconciling items for
|
||||||||
adjusted net income above
|
253
|
332
|
||||||
Stock-based compensation expense
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1,530
|
1,198
|
||||||
Adjusted EBITDA
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$
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39,375
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$
|
28,257
|
||||
Adjusted EBITDA as percentage of net sales
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17.9%
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16.3%
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|
||||
|
||||||||
Net debt-to-Adjusted EBITDA ratio (5)
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2.4x
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|
||||||
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(1) The Company's non-GAAP financial measures were explained in its Form 8-K filed May 13, 2020.
|
||||
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(2) Represents costs relating to product line transitions, classified within cost of sales for the three months ended April 4, 2020 and March 30, 2019.
|
||||
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(3) In 2020, represents costs relating to the acquisition of NewSouth Window Solutions, and in 2019, relating to the acquisition of Western Window Systems, classified within selling, general and
administrative expenses for the three months ended April 4, 2020 and March 30, 2019.
|
||||
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(4) Represents incremental costs incurred relating to the coronavirus pandemic, including cleaning and sanitizing costs for the protection of the health of our employees and safety of our
facilities, classified within selling, general and administrative expenses for the three months ended April 4, 2020.
|
||||
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(5) Calculated using an adjusted EBITDA amount pursuant to the covenants included in our 2016 Credit Agreement due 2022 which includes the EBITDA of our NewSouth acquisition on a proforma
trailing twelve-month basis.
|
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