UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. Results of Operations and Financial Condition
On May 13, 2021, PGT Innovations, Inc. (the “Company”) issued a press release announcing its financial results for its first quarter ended April 3, 2021.
On the same date, the Company posted an earnings presentation on its investor relations website at http://ir.pgtinnovations.com. The earnings presentation is being made available in connection with the Company’s earnings conference call and audio webcast on May 13, 2021 at 10:30 a.m. E.T. The press release and the earnings presentation are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are hereby incorporated herein by reference.
ITEM 7.01. Regulation FD Disclosure
The information set forth above under Item 2.02 is hereby incorporated herein by reference.
Also, on May 13, 2021, the Company posted an earnings presentation on its investor relations website at http://ir.pgtinnovations.com. The earnings presentation is being made available in connection with the Company’s earnings conference call and audio webcast on May 13, 2021 at 10:30 a.m. E.T. The press release and the earnings presentation are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K. The information on the Company’s investor relations website is not incorporated by reference into this Form 8-K.
The information furnished in this Form 8-K, as well as Exhibit 99.1 and Exhibit 99.2 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, or the Exchange Act, except as expressly set forth in such a filing.
ITEM 9.01. |
Financial Statements and Exhibits |
(d) |
Exhibits |
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Exhibit No. |
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Description |
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99.1 |
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99.2 |
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104 |
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Cover Page Interactive Date File - the cover page XBRL tags are embedded within the Inline XBRL document |
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PGT INNOVATIONS, INC.
By: /s/ Brad West
Name: Brad West
Title: Interim Chief Financial Officer and Senior Vice President
of Corporate Development and Treasurer
Dated: May 13, 2021
-3-
EXHIBIT 99.1
NEWS RELEASE
PGTI Reports 2021 First Quarter Growth
and Raises Fiscal 2021 Guidance
VENICE, Fla., May 13, 2021 – PGT Innovations, Inc. (NYSE: PGTI), a national leader in premium windows and doors, including impact-resistant products and products designed to unify indoor/outdoor living spaces, today announced financial results for its first quarter ended April 3, 2021.
Financial Highlights for First Quarter 2021 compared to First Quarter 2020
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Net sales increased 23 percent, to $271 million, which includes $16 million from consolidation of Eco Enterprises (f/k/a Eco Windows Systems) |
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Gross profit increased 16 percent, to $94 million |
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Net income per diluted share attributable to common shareholders decreased 19 percent, to $0.21 |
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Adjusted net income per diluted share decreased 4 percent, to $0.27 |
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Adjusted EBITDA increased 7 percent, to $42 million |
Full-Year 2021 Guidance Increased (includes results for Eco from date of acquisition at 100% of its sales)
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Net sales in the range of $1.050 billion to $1.125 billion |
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EBITDA in the range of $175 million to $200 million |
“PGT Innovations’ sales increased 23 percent for a record quarter, including 15 percent organic growth, and during the quarter we completed the acquisition of a majority ownership stake in Eco Enterprises, which also contributed $18 million of sales,” said Jeff Jackson, President and Chief Executive Officer. “Reflecting strength in the housing sector across our key markets, our legacy business grew orders 31 percent. This includes orders from NewSouth in the first quarter of $35 million, up 42 percent over the prior-year quarter.”
“We recently announced price increases to help offset inflationary pressures on rising material costs and labor rates in the quarter which contributed a decline in gross margins of 220 basis-points to 34.7 percent,” added Jackson. “Going forward, we expect recently announced price increases will begin to offset these cost impacts beginning in the last month of the second quarter. Additionally, we remain focused on cost controls, strategic markets and operational excellence improvements as evidenced by the enhancements to our Western Phoenix operations, supporting their growing demand as the economy reopens.”
“Our results for the quarter included $4.2 million of costs related to our exit from the commercial business included in the New South acquisition. Adjusting for these charges, our adjusted EBITDA was $42 million, a 7% increase versus the prior-year quarter. Our net debt-to-trailing-twelve-month Adjusted EBITDA ratio ended the quarter at 2.6 times, near the midpoint of our targeted range,” said Brad West, Interim Chief Financial Officer and Senior Vice President of Corporate Development and Treasurer. “As we think about capital allocation, we continue to prioritize acquisitions and investing in internal projects that we expect to drive margin growth or further improve our operational efficiency.”
"Looking to the remainder of 2021, we expect continued sales growth, though margin pressures may continue into the second quarter longer than initially anticipated due to timing of price increases and our significant backlog now totaling $343 million,” added West.
“The health and well-being of our team members, customers and communities continues to be our greatest focus. In support of this commitment, we are making available COVID-19 vaccinations for employees at our Venice, Florida facility,” concluded Jackson.
Updated 2021 Guidance
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Prior Guidance* (as of 02/24/2021) |
Updated 2021 Guidance* (as of 05/13/2021) |
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Net sales (in billions) |
$1.0 |
$1.075 |
$1.050 |
$1.125 |
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% growth |
13% |
22% |
19% |
27% |
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EBITDA (in millions) |
$175 |
$194 |
$175 |
$200 |
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% growth |
17% |
29% |
17% |
33% |
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* 2021 guidance includes Eco at 100% contribution for the post-acquisition period. |
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Conference Call
PGT Innovations will host a conference call today at 10:30 a.m. The conference call will be available at the same time through the Investor Relations section of the PGT Innovations, Inc. website, http://ir.pgtinnovations.com/events.cfm.
To participate in the teleconference, kindly dial into the call about 10 minutes before the start time: 833-316-0547 (U.S. toll-free) and 412-317-5728 (International). A replay of the call will be available within approximately one hour after the scheduled end of the call on May 13, 2021, through approximately 12:30 p.m. on May 20, 2021. To access the replay, dial 877-344-7529 (U.S. Only toll-free), 855-669-9658 (Canada Only toll-free) and 412-317-0088 (International) and refer to pass code 10155679. Other international replay dial-in numbers can be obtained at:
https://services.choruscall.com/ccforms/replay.html
You may join the conference online by using the following link:
https://services.choruscall.com/links/pgti210513FDso7Ns5.html
The webcast will also be available through the Investors section of the PGT Innovations, Inc. website:
http://ir.pgtinnovations.com/events.cfm.
About PGT Innovations, Inc.
PGT Innovations manufactures and supplies premium windows and doors. Its highly-engineered and technically-advanced products can withstand some of the toughest weather conditions on earth and unify indoor/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. PGT Innovations is also the nation’s largest manufacturer of impact-resistant windows and doors, holds the leadership position in its primary markets, and is part of the S&P SmallCap 400 Index.
The PGT Innovations’ family of brands include CGI®, PGT® Custom Windows & Doors, WinDoor®, Western Window Systems®, CGI Commercial®, Eze-Breeze®, NewSouth Window Solutions®, and Eco Enterprises®. The Company’s brands, in their respective markets, are a preferred choice of architects, builders, and homeowners throughout North America and the Caribbean. The Company’s high-quality products are available in custom and standard sizes with multiple dimensions that allow for greater design possibilities in residential, multi-family, and commercial projects. For additional information, visit www.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 demand in our Western business recovering; price increases offsetting cost impacts; our prioritization of capital; and our Sales and EBITDA guidance.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are used 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:
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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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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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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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our dependence on a limited number of suppliers for certain of our key materials; |
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our dependence on our impact-resistant product lines, which increased with our acquisition of a 75% ownership stake in Eco Enterprises and its related companies (collectively, the “Eco Acquisition”), and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products; |
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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 our investment in Eco; |
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our level of indebtedness, which increased in connection with our acquisition of NewSouth, and increased further in connection with our investment in Eco; |
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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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the risks that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from our acquisition of NewSouth, and from |
our investment in Eco, 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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increases in transportation costs, including increases in fuel prices; |
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our dependence on our limited number of geographically concentrated manufacturing facilities, which increased further due to our Eco Acquisition; |
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sales fluctuations to and changes in our relationships with key customers; |
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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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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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product liability and warranty claims brought against us; |
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in addition to our acquisitions of NewSouth, and our investment in Eco, 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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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 January 1, 2021 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. 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. We believe these measures enable investors and analysts to more thoroughly evaluate our current performance as compared to past performance and provide a better baseline for assessing the Company's future earnings potential. However, these measures do not provide a complete picture of our operations.
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.
Our calculations of Adjusted net income and Adjusted net income per share, and Adjusted EBITDA 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, and Adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release.
Adjusted EBITDA as used in the calculation of the net debt-to-Adjusted EBITDA ratio, consists of our Adjusted EBITDA as described above, but for the trailing twelve-month period, adjusted pursuant to the covenants contained in the 2016 Credit Agreement due 2022.
SOURCE: PGT Innovations, Inc.
Investor Relations:Media Relations:
Brad West, 941-480-1600 Stephanie Cz, 941-480-1600
Senior Vice President and Interim CFO Corporate Communications Manager
BWest@PGTInnovations.com
PGT INNOVATIONS, 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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April 3, |
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April 4, |
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2021 |
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2020 |
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Net sales |
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$ |
271,092 |
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$ |
220,204 |
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Cost of sales |
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177,130 |
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139,077 |
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Gross profit |
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93,962 |
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81,127 |
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Selling, general and administrative expenses |
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69,766 |
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54,220 |
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Income from operations |
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24,196 |
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26,907 |
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Interest expense, net |
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7,457 |
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7,169 |
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Income before income taxes |
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16,739 |
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19,738 |
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Income tax expense |
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3,944 |
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4,138 |
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Net income |
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12,795 |
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15,600 |
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Less: Net income attributable to redeemable non-controlling interest |
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411 |
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— |
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Net income attributable to the Company |
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12,384 |
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15,600 |
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Change in redemption value of redeemable non-controlling interest |
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— |
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— |
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Net income attributable to common shareholders |
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$ |
12,384 |
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$ |
15,600 |
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Net income per common share attributable to common shareholders: |
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Basic |
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$ |
0.21 |
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$ |
0.27 |
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Diluted |
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$ |
0.21 |
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$ |
0.26 |
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Weighted average number of common shares outstanding: |
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Basic |
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59,286 |
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58,668 |
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Diluted |
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59,894 |
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59,121 |
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PGT INNOVATIONS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(unaudited - in thousands) |
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April 3, |
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January 2, |
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2021 |
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2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
58,979 |
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$ |
100,320 |
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Accounts receivable, net |
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117,239 |
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92,844 |
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Inventories |
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72,352 |
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60,317 |
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Contract assets, net |
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49,225 |
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28,723 |
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Prepaid expenses and other current assets |
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28,543 |
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19,468 |
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Total current assets |
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326,338 |
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301,672 |
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Property, plant and equipment, net |
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160,129 |
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135,155 |
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Operating lease right-of-use asset, net |
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65,763 |
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38,567 |
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Intangible assets, net |
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324,458 |
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256,507 |
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Goodwill |
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359,746 |
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329,695 |
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Other assets, net |
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3,224 |
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925 |
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Total assets |
$ |
1,239,658 |
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$ |
1,062,521 |
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LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, |
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AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ |
111,892 |
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$ |
84,344 |
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Current portion of operating lease liability |
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8,682 |
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6,132 |
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Total current liabilities |
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120,574 |
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90,476 |
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Long-term debt, less current portion |
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474,265 |
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412,098 |
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Operating lease liability, less current portion |
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60,140 |
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35,130 |
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Deferred income taxes, net |
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29,947 |
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28,329 |
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Other liabilities |
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10,971 |
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11,354 |
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Total liabilities |
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695,897 |
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577,387 |
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Redeemable non-controlling interest |
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34,495 |
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— |
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Total shareholders' equity |
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509,266 |
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485,134 |
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Total liabilities, redeemable non-controlling interest and shareholders' equity |
$ |
1,239,658 |
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$ |
1,062,521 |
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PGT INNOVATIONS, INC. |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THEIR |
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MOST DIRECTLY COMPARABLE GAAP EQUIVALENTS |
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(unaudited - in thousands, except per share amounts and percentages) |
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Three Months Ended |
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April 3, |
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April 4, |
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2021 |
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2020 |
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Reconciliation to Adjusted Net Income and Adjusted Net Income |
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per share - diluted - attributable to common shareholders: |
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Net income attributable to common shareholders |
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$ |
12,384 |
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$ |
15,600 |
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Add: Net income of redeemable non-controlling interest |
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|
411 |
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- |
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Net income |
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12,795 |
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|
15,600 |
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Reconciling items: |
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Acquisition-related costs (1) |
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672 |
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|
543 |
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Business wind-down costs (2) |
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4,197 |
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- |
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Product line transition costs (3) |
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- |
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|
382 |
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Pandemic-related costs (4) |
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- |
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|
85 |
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Tax effect of reconciling items |
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(1,205 |
) |
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(253 |
) |
Adjusted net income |
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$ |
16,459 |
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$ |
16,357 |
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Weighted-average diluted shares |
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|
59,894 |
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|
59,121 |
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Adjusted net income per share - diluted |
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$ |
0.27 |
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$ |
0.28 |
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Reconciliation to Adjusted EBITDA: |
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Depreciation and amortization expense |
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$ |
11,446 |
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$ |
9,928 |
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Interest expense, net |
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7,457 |
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|
7,169 |
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Income tax expense |
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|
3,944 |
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4,138 |
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Reversal of tax effect of reconciling items for |
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adjusted net income above |
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1,205 |
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253 |
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Stock-based compensation expense |
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|
1,750 |
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|
1,530 |
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Adjusted EBITDA |
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$ |
42,261 |
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$ |
39,375 |
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Adjusted EBITDA as percentage of net sales |
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15.6 |
% |
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|
17.9 |
% |
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Net debt-to-Adjusted EBITDA ratio (5) |
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2.6 |
x |
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(1) In 2021, represents costs relating to our investment in Eco. In 2020, relates to the acquisition of NewSouth Window Solutions. |
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(2) Represents incremental costs related to the wind-down of our commercial business acquired in the New South acquisition. Of the $4.2 million of these costs, $2.7 million are classified as cost of sales, and $1.5 million are classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three months ended April 3, 2021. A portion of these costs may be recoverable through insurance. We completed this wind-down during the first quarter of 2021. |
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(3) Represents costs relating to product line transitions, classified within cost of sales for the three months ended April 4, 2020. |
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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 investment in Eco on a proforma trailing twelve-month basis. |
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Q1 2021 Financial results May 13, 2021 EXHIBIT 99.2
FORWARD LOOKING STATEMENTS This presentation 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,” “may,” “outlook,” “forecast,” “intend,” “project,” “anticipate,” “should,” “plan” and similar references to future periods. 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: 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; 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 and vinyl, including, price increases 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; our dependence on our impact-resistant product lines, which increased with our acquisition of a 75% ownership stake in Eco Enterprises, LLC (the “Eco Acquisition”), 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 acquisition of NewSouth and our Eco Acquisition; our level of indebtedness, which increased in connection with our acquisition of NewSouth, and increased further in connection with our Eco Acquisition; 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; the risks that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits expected from our acquisition of NewSouth and from our Eco Acquisition 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 Eco Acquisition; 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 acquisition of NewSouth, and our Eco Acquisition, 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 January 2, 2021, and our other filings with the Securities and Exchange Commission. Any forward-looking statement made by us in this presentation 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. 2
Use of Non-GAAP Financial Measures This presentation and the financial schedules include financial measures and terms not calculated in accordance with U.S. generally accepted accounting principles (GAAP). We believe 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. We also believe these non-GAAP measures provide investors with a better baseline for assessing our future earnings potential. The non-GAAP measures included in this release are provided to give investors access to types of measures that we use in analyzing our results. 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. We believe these measures enable investors and analysts to more thoroughly evaluate our current performance as compared to the past performance and provide a better baseline for assessing the Company's future earnings potential. However, these measures do not provide a complete picture of our operations. 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. Our calculations of adjusted net income and adjusted net income per share, and adjusted EBITDA 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, and adjusted EBITDA to GAAP net income are included in the financial schedules accompanying this release. Adjusted EBITDA as used in the calculation of the net debt-to-Adjusted EBITDA ratio, consists of our adjusted EBITDA as described above, but for the trailing twelve-month period, adjusted pursuant to the covenants contained in our credit agreements. 3
key Messages 4 Highlights Strong sales contribution of $34M from NewSouth driven by strong growth in the Florida residential market Eco contributed $16 million of sales Florida sales growth momentum expected to continue Operational improvements at Western and accretion from Eco Cost headwinds from labor and materials Pricing increases to take effect the last month of the 2021 second quarter 1. Refer to reconciliation to GAAP.
Market Performance: LEGACY BUSINESS (SEBU1 & WEBU2) Commentary Q1’21 total legacy orders up 31% YoY; order entry up 34% in legacy SEBU and 7% in WEBU Q1’21 total legacy backlog up 253% YoY driven by 261% increase in legacy SEBU 191% increase in WEBU NewSouth retail orders increased 42% YoY in Q1’21; retail backlog of $49M at end of Q1’21, up over 197% YoY Legacy Backlog3 ($M) 5 YoY Order Growth, by Month SEBU1 YoY Order Growth, by Month WEBU2 1. Southeastern Business Unit, excluding Eco; 2. Western Business Unit; 3. Excludes Eco.
Strategic Framework for Profitable Growth 01. Drive brand recognition, loyalty and growth with customer-centric innovation 02. Attract and retain talented, dedicated leaders to drive our business 03. Invest in our business and scale our operations to capture increasing long-term demand 04. Strategically allocate free cash flow primarily to support profitable growth 6
Q1 2021 RESULTS Highlights NewSouth sales contribution of $34M Organic sales increased 15% YoY: up 17% in legacy SEBU and up 2% in WEBU Organic growth of 19% YoY in Repair & Remodel and 10% YoY in New Construction Margin challenged by inflation headwinds in labor and materials, partially offset by improved performance at Western Focusing on increasing manufacturing capacities to meet robust demand 7 1. Refer to reconciliation to GAAP.
Balance sheet and Liquidity Update ( as of 4/3/21) Term Loan Senior Notes COMMENTARY Strong balance sheet positions the Company for flexibility and growth Net debt to adjusted EBITDA1 ratio of 2.6x 8 1. Refer to reconciliation to GAAP. 2. Shown at principal value. 3. Net debt is total consolidated funded indebtedness calculated on an all-cash netted basis.
Strong balance sheet Highlights Ended Q1 2021 with net debt of $420 million In Q1 2021, issued $60 million of 6.75% senior notes due in 2026 at 105.5% of principal amount Net debt to trailing 12-month adjusted EBITDA1 ratio approximately 2.6x Proven track record of deleveraging by EBITDA accretion and prepaying debt following acquisitions Net Debt1 and Leverage Ratio2 9 1. Net debt is total consolidated funded indebtedness as of the end of the respective quarter, calculated on an all-cash netted basis. Adjusted EBITDA is calculated in accordance with our credit agreement; refer to reconciliation to GAAP; 2. Leverage ratio defined as net debt divided by trailing-twelve-month adjusted EBITDA; refer to reconciliation to GAAP.
Long-Term Capital Allocation priorities 10
Modeling Assumptions and Guidance for 2021 11 1. Assumes Eco Enterprises at 100% contribution for 11 months; includes estimate for Eco Enterprises non-cash amortization and depreciation which will be updated after valuation complete; 2. Includes issuance of $60M of 6.75% senior notes. 3. Represents our 2020 Adjusted EBITDA from our earnings for 2020 as released on February 24, 2021, which differs from Adjusted EBITDA per our bank covenants used to calculate leverage ratios herein. Refer to reconciliation to GAAP.
12 Why Invest in PGT Innovations
Q&A
Appendix Reconciliation to Adjusted Net Income, Adjusted Net Income per Share-diluted, Adjusted EBITDA, and Adjusted EBITDA per our bank covenants
Reconciliation of GAAP to NON-gaap MEASURES (unaudited - in thousands, except per share amounts) 15
(1) In 2021, represents costs relating to our investment in ECO. In 2020, relates to the acquisition of NewSouth Window Solutions. (2) Represents incremental costs related to the wind-down of our commercial business acquired in the New South acquisition. Of the $4.2 million of these costs, $2.7 million are classified as cost of sales, and $1.5 million are classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three months ended April 3, 2021. A portion of these costs may be recoverable through insurance. We completed this wind-down during the first quarter of 2021. (3) Represents costs relating to product line transitions, classified within cost of sales for the three months ended April 4, 2020. (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. (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 investment in Eco on a proforma trailing twelve-month basis. 16 Reconciliation of GAAP to NON-gaap MEASURES (unaudited - in thousands, except per share amounts) THREE MONTHS ENDED April 3, 2021 AND April 4, 2020
Reconciliation of GAAP to NON-gaap MEASURES (in MILLIONS) 17
Reconciliation of GAAP to NON-gaap MEASURES 18 Represents the total of the adjustments consistent with previously published and publicly available earnings releases as issued by the Company relating to the period for which the total adjustments is presented. Beginning in 2018, the Company updated its reporting of adjusted EBITDA for its publicly issued earnings to exclude non-cash stock-based compensation expense. As such, the total of the adjustments per previously published earnings as presented herein will not agree to the total adjustments as previously issued for periods prior to 2018, as they have been revised as a result of this change in presentation. Calculated in accordance with covenants pursuant to the Company’s then existing credit agreements, which includes adjustments for expected cost savings, operating expense reductions and synergies related to acquisitions, as well as the earnings of acquired entities on a pro forma basis for any pre-acquisition period within the trailing twelve-months relating to the period of the calculation.
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