Deutsche Bank Leverage Finance Conference September 30, 2015
2 Forward-Looking Statements Cautionary Note Regarding Forward-Looking Statements All statements (other than statements of historical facts) included in this document regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, there cannot be assurance that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. The following factors are among those that may cause actual results to differ materially from the forward-looking statements: declines in remodeling and home building industries, economic conditions and changes in interest rates, foreign currency exchange rates and other conditions; deteriorations in availability of consumer credit, employment trends, levels of consumer confidence and spending and consumer preferences; increases in competition from other manufacturers of vinyl and metal exterior residential building products as well as alternative building products; our substantial fixed costs; delays in the development of new or improved products or our inability to successfully develop new or improved products; changes in raw material costs and availability of raw materials and finished goods; consolidation of our customers; our substantial level of indebtedness; increases in union organizing activity; our ability to continuously improve organizational productivity and global supply chain efficiency and flexibility; changes in weather conditions; our history of operating losses; limitations on our NOLs and payments under the tax receivable agreement to our current stockholders; our ability to attract and retain qualified personnel; increases in our indebtedness; our ability to comply with certain financial covenants in the Indenture and ABL facilities and the restrictions such indentures impose on our ability to operate our business; any impairment of goodwill or other intangible assets; future recognition of our deferred tax assets; increases in mortgage rates, changes in mortgage interest deductions and the reduced availability of financing; our exposure to foreign currency exchange risk; our control by the H&F Investors; and the other factors discussed under the “Risk Factors” in our 2014 Form 10-K, filed with the SEC on March 23, 2015 (our “Annual Report”). All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this document. These forward-looking statements speak only as of the date of this document. We do not intend to update or revise these forward- looking statements, whether as a result of new information, future events or otherwise, unless the securities laws require us to do so. Use of Non-GAAP Financial Measures We have included non-GAAP financial measures in this document, including, for example, EBITDA and Adjusted EBITDA, that may not comply with the SEC rules governing the presentation of non-GAAP financial measures. For example, some of the adjustments to EBITDA that comprise Adjusted EBITDA as included in this document may not be permitted under the SEC’s rules. See the Appendix of this presentation for a reconciliation of our net loss calculated under GAAP to our EBITDA and Adjusted EBITDA. Our measurements of EBITDA and Adjusted EBITDA are based on definitions of EBITDA included in our debt agreements and may not be comparable to those of other companies.
3 Introduction Scott Stephens Executive Vice President and Chief Financial Officer Bill Horvath Treasurer Today’s Presenters
4 Associated Materials at a Glance Integrated manufactured products are vinyl windows, vinyl siding, aluminum and steel siding and related accessories – Third-party manufactured products include roofing, insulation and other products Full-service product installation services for vinyl siding and vinyl window products through our Installed Sales Solutions (“ISS”) group Primarily focused on repair and remodel market, with targeted focus on select new construction markets Dual-distribution network – 125 company-operated supply centers (74% of 2014 net sales) – >275 independent distributors and dealers (26% of 2014 net sales) – Serving over 50,000 professional contractors across the U.S. and Canada – Highly fragmented market; targeting market share growth AMI is a leading, vertically integrated manufacturer and distributor of exterior residential building products in the U.S. and Canada Highlights
5 Product and Market Overview Sales by Product End-Market Channel Breakdown Third-party manufactured products 25% Other products & services 10% Metal products 13% Vinyl siding 18% Vinyl windows 34% New construction 30% Repair & remodeling 70% Independent distributors and dealers 26% Company-operated supply centers 74% Note: Data as of 1/3/2015 Third party products/other 35% Integrated or manufactured products 65% Sales by Product
6 Competitive Strengths Entrenched Customer Relationships Differentiated Dual-Distribution Network Comprehensive Product and Service Offering Experienced Management Team Leading Market Position Leading market positions within the North American exterior residential building products market Top 5 positions in the vinyl windows and vinyl siding segments Utilize our scale to service larger regional and national accounts that many of our competitors cannot cover Our distribution strategy successfully combines a network of 125 company-operated supply centers with a complementary network of 275 independent distributors Offer a superior distribution channel compared to tradition third party providers Our direct distribution provides us operational flexibility to further penetrate markets and expand our geographic reach Deeply integrated partner to our customers Provide marketing support, sales training, fulfillment, lead generation and, for larger customers, private label marketing services Long standing relationships, high “share of wallet” and strong customer retention One stop solution for our contractor customers Manufacture a diverse mix of vinyl windows, vinyl siding, aluminum trim coil and aluminum and steel siding and accessories Utilize our supply centers to sell third-party manufactured products that compliment our core window and siding product offerings
7 Third Party Manufactured Products Differentiated Dual-Distribution Network Overview Overview of AMI Dual-Distribution 125 company-operated supply centers (~74% of 2014 sales) – 102 locations in U.S., 23 in Canada – Cover 30+% of Metropolitan Statistical Areas (MSAs) – 7 Regions – 14 districts – 160 sales territories – ~27,000 sq. ft. average store size – Modern fleet of last mile delivery equipment Over 275 independent distributors (~26% of 2014 sales) Network services over 50,000 contractors – Owner/Operator – Showroom Dealer – Builder Over 1,000 ship-to locations Distribution Model Our distribution strategy successfully combines a network of company-operated supply centers with a complementary network of independent distributors and dealers AMI Manufactured Products Independent Distributor AMI Supply Center Showroom Dealer Owner/Operator Builder Showroom Dealer Owner/Operator Builder Repair/Remodel Homeowner New Home Buyer Homeowner New Construction Home
8 Differentiated Dual-Distribution Network Geographic Coverage 125 Company-Owned Supply Centers… Significant market penetration throughout the U.S. and Canada with market capacity to add more than 200 locations to existing supply center network over time¹ ¹ Based on a Company commissioned study …Dual-Distribution Network servicing 50,000+ customer locations U.S. Supply Centers Canadian Supply Centers U.S. Supply Centers Canadian Supply Centers Independent Distribution Network Independent distributors complement AMI’s geographic footprint and enhance access to additional key markets AMI’s supply centers cover an estimated 30+% of MSAs
9 ’14 Sales (%) Description / Comments Mezzo and Fusion platforms launched in 2014 Complete offering of repair/remodel and new construction windows Vinyl siding and related accessories Leading market share position for vinyl siding in the exterior cladding market Recent trends include insulated siding, darker colors, and special shapes (shakes / scallops) and mixed material usage Aluminum trim coil and flatstock, as well as aluminum and steel siding and accessories Aluminum soffit, trim coil and accessories are complimentary to vinyl siding and other cladding products Outside purchased products include roofing materials, insulation, exterior doors, installation equipment, and vinyl siding in a shake and scallop design Complementary products to deliver “one-stop” shopping and increased share of wallet Full-service product installation of our vinyl siding and window products and select third party manufactured products Available through the supply centers Comprehensive Product and Service Offering 34% 18% 13% 25% WINDOWS Broad product line, ranging from entry-level economy to premium products, including many that have earned the ENERGY STAR® ratings 10% SIDING METAL OPP OTHER Product
10 Strong Brand Portfolio Strong Brand Portfolio AMI Product Recognitions The Company received the Consumer Digest Best Buy award in 2008 and 2009.
11 Experienced Management Team Scott Stephens Executive Vice President & CFO Bill Topper Executive Vice President, Operations Curtis Dobler Executive Vice President, Human Resources David King Senior Vice President and Chief Commercial Officer, Direct Sales Stephan DeMay Senior Vice President, US Distribution Segment Brian Strauss President & CEO Experienced management team with strong pedigrees and excellent track records, new to AMI and focused on improvement Philippe Bourbonniere Senior Vice President, Canadian Distribution Segment Adam Casebere Senior Vice President, US Supply Center Operations Bill Horvath Treasurer May 2014 Previously served as President and CEO of Henry Group, a manufacturer of building materials and performance additives. Prior to that held various leadership roles at Covalence Specialty Materials Corp, Tyco Plastics, Honeywell International, and Allied Signal October 2014 Previously served as Vice President and CFO of A.M. Castle & Company, a global distributor of specialty metal and plastic products. Prior to that served as CFO of Lawson Products, Inc. July 2014 Previously served as Senior Vice President, Operations of Goodman Global, Inc, a manufacturer of heating, ventilation and air conditioning products. Prior to that served in various leadership roles at Electrolux August 2015 February 1997 July 2015 August 2013 February 1999 August 2012 Previously served in various leadership positions at Veyance Technologies, a global manufacturer of conveyor belt and industrial hose and former Carlyle portfolio company and at Oglebay Norton Company Previously served as Vice President, Human Resources for the global supply chain organization in Honeywell’s Automation & Control Solutions business group. Prior to that various roles with Northwest Airlines, Kelly Services, Allied Signal and Dow Chemical Has been with the Company for 17 years and held various leadership positions including Senior Vice President of Direct Sales, Senior Vice President AMI Sales and Vice President, National Credit Manager Previously served as Vice President of Sales for North American at Formica North America , a division of the Fletcher Building Group. Prior to that served in various sales roles at Lafarge, SA, Goodyear Tire and Rubber , Armstrong World and Dal-Tile and Florida Tile Industries Previously served as General Manager, Canada/US for MPS Micropaint Canada. Prior to that served as General Manager of Business Development with Noble (Rona) and various positions at Hilti Has been with the Company since 1999 and held various positions with in the Supply Center organization including most recently as Vice President, US Supply Center Operations Joined = New since May 2014
12 2014 Recap Began 2014 with the Company’s most significant product launch in history – Mezzo / Fusion window platform, representing approximately 50% of the Company’s annual window units sold Launch was commercially successful but caused significant operational issues New management brought in to stabilize the operations and drive change – CEO Brian Strauss (former CEO of Henry Group and Tyco plastics) joined in May 2014 – Hired Bill Topper (former SVP of Operations at Goodman Global) as EVP of Operations in July 2014 – Hired new EVP and CFO, Scott Stephens (former CFO of AM Castle and Lawson Products), in October 2014 Back half of 2014 priorities were met – Built out operations and remainder of broader management team – Met demand for the new window platform and restored customer service levels during the busy selling season – at significant cost to the business – Positioned the operations to take cost out of the platform in 2015 during the slow winter selling season – Restored top-line growth However, the financial performance suffered as a result of the incremental costs of the product launch, in addition to raw material cost increases and foreign exchange – Revenue up 1.5% (Windows up 8.6%) but Adjusted EBITDA1 down from $98.5mm in 2013 to $52.8mm in 2014 (1) Adjusted EBITDA excludes run-rate cost savings.
13 $282.9 $281.8 $243.6 $106.4 $122.9 24.8% 24.1% 20.5% 20.6% 22.3% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% $0 $100 $200 $300 2012 2013 2014 YTD Q214 YTD Q215 Gross Profit Margin Summary of Historical Financial Performance Net Sales Gross Profit Adjusted EBITDA¹ & Margin ¹ Adjusted EBITDA is calculated as net loss before interest, tax, depreciation and amortization and certain special items. See Appendix for a reconciliation of net loss to Adjusted EBITDA. Capital Expenditures $1,142.5 $1,169.6 $1,187.0 $516.5 $551.6 $0 $250 $500 $750 $1,000 $1,250 $1,500 2012 2013 2014 YTD Q214 YTD Q215 $96.4 $98.5 $52.8 $20.7 $24.1 8.4% 8.4% 4.4% 4.0% 4.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% $0 $20 $40 $60 $80 $100 $120 2012 2013 2014 YTD Q214 YTD Q215 Adjusted EBITDA Adjusted EBITDA Margin $5.4 $11.7 $12.8 $5.2 $9.9 $0 $3 $6 $9 $12 $15 2012 2013 2014 YTD Q214 YTD Q215
14 $98.5 $52.8 $1.7 $6.8 ($12.1) ($17.0) ($14.2) ($7.5) ($3.4) $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 2013 Adjusted EBITDA Volume Price/Mix Materials Operational Inefficiencies SG&A F/X Other 2014 Adjusted EBITDA 1 1 Reflects new window platform launch impacts Net sales of $1.187 billion for 2014, up 1.5% compared to prior year. Adjusted EBITDA of $52.8 million1 – The Company’s 2014 EBITDA performance was impacted by new window platform launch costs and ramp-up operational issues as well as raw material cost increases and foreign exchange – Operations performance in windows plants improved throughout the second half of 2014, with backorders and on-time delivery performance approaching normal levels by the end of 2014. However, the costs incurred for overtime, expedited freight costs and inefficient material yields impacted profit performance in 2014. – SG&A expenses increased in 2014 to $247.6 million and 20.9% of sales from $232.3 million and 19.9% of sales in 2013, primarily due to personnel added in the Supply Centers and the ISS sales function in order to improve service levels. (1) Adjusted EBITDA excludes run-rate cost savings. 2014 Performance
15 Q2 YTD 2015 Performance (1) Adjusted EBITDA excludes run-rate cost savings See Appendix for list of EBITDA adjustments $20.7 $24.1 $7.7 $15.5 ($3.3) $2.0 ($7.3) ($7.7) ($3.5) $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 YTD Q2 2014 Adjusted EBITDA Volume Price/Mix Materials Operational Inefficiencies SG&A F/X Other YTD Q2 2015 Adjusted EBITDA1 1 Business is seasonally weighted toward the back half of the year Raw material input costs for H1 2015 reflect higher aluminum and resin costs from 2014 Price/mix execution is on plan Targeted cost improvement actions are being executed in H2 2015 Foreign currency exchange and roofing de-emphasis represent headwinds in 2015 Excludes the one- time launch costs of Mezzo and Fusion Majority of the operational inefficiencies coming out of the Mezzo launch were experienced in 2H14 ($ in millions) Q2 2014 YTD Q2 2015 YTD % Change Net Sales 516.5$ 551.6$ 6.8% Cost of Sales 410.0 428.7 Gross Profit 106.4$ 122.9$ 15.5% Gross Margin % 20.6% 22.3% SG&A 118.9 120.6 1.4% EBIT (12.5) 2.3 Depreciation and Amortization 21.3 19.9 EBITDA 8.8$ 22.2$ Adjustments 11.9 1.9 Adjusted EBITDA 1 20.7$ 24.1$ 16.7%
16 Source: Management: 1) TTM Adjusted EBITDA excludes run-rate cost savings 2) Price as of September 25, 2015 - 100 200 300 400 500 600 700 800 900 2014 2015 2016 2017 ABL 9.125% Notes Current Capitalization Select Credit Statistics ($mm) TTM 7/4/15 TTM 1/3/15 Liquidity Analysis As of 7/4/15 Adjusted EBITDA 56.2 52.8 Revolver Capacity (i) $213.0 Interest Expense 83.3 82.5 Borrowing Base (ii) 192.8 Capital Expenditures 17.5 12.9 Less of (i) and (ii) 192.8 Net Debt / Adjusted EBITDA 16.8x 17.0x Amount Drawn 116.1 Adjusted EBITDA / Interest Expense 0.7x 0.6x L/Cs 12.4 (Adjusted EBITDA - CapEx) / Int Exp 0.5x 0.5x Revolver Availability 64.3$ Plus: Cash 4.0 Total Liquidity 68.4$ Maturity Profile $ in millions As of Q2 2015 xTTM Adjusted EBITDA 1 Maturity Rating Rate Price 2 YTW Cash & Cash Equivalents $4.0 ABL Revolving Credit Facility ($213mm) 116.1 2.1x Aug 2017 NR L+ 1.75-2.25 9.125% Senior Notes due 2017 833.4 14.8x Nov 2017 Caa3/B- 9.125% 82.500 19.743% Total Debt $949.5 16.9x Net Debt $945.4 16.8x Corp: Caa3/B- Book Value of Equity (194.2) Total Capitalization $7 1 13.4x TTM Adjusted EBITDA 56.2 52.8
17 Key Initiatives for 2015 Customer Service Manufacturing Operations Financial Performance Re-establish leading on-time delivery performance – On-time and compete delivery performance exceeding 98% in 2015 Focused execution on integrated products and ISS solutions Implement capital equipment upgrades in window operations “Claw-back” operational inefficiencies of 2014 windows launch: – Material yields – Labor efficiency – Freight inefficiency Improve organization talent Overall manufacturing improvements exceeding expectations in 2015 Implement price increases across the business Continue top-line growth – In Q2 2015, achieved fourth consecutive quarter of year over year revenue growth Working capital improvements – 1 to 3 day improvement targets in DSO, DPO and DIO Focus On Execution
18 New management team in place with focus on improving operational performance Significant progress in first half of 2015 Near-term focus – Growth focused on integrated products and ISS solutions – Manufacturing improvements and the elimination of the 2014 inefficiencies from the window platform launch – Targeted cost improvements – Working capital efficiency Conclusion
Appendix
20 Summary Balance Sheet ($ in 000s) 2012 2013 2014 Q2 2014 Q2 2015 Cash & Cash Equivalents 9,594$ 20,815$ 5,963$ 6,843$ 4,029$ Accounts Receivable 121,387 125,263 125,121 161,066 163,915 Inventory 117,965 133,469 145,532 180,543 164,578 Income Tax Receivable 2,690 792 144 722 135 Deferred Income Taxes 8,734 4,685 2,439 4,685 2,439 Prepaid Expenses & Other Current Assets 8,771 10,842 15,859 13,316 11,798 Total Current Assets 269,141 295,866 295,059 367,175 346,894 Property, Plant and Equipment 108,452 100,945 93,900 98,677 94,789 Goodwill & Other Intangible Assets 1,082,257 1,035,015 754,557 1,023,168 729,748 Other Assets 22,434 24,793 18,662 21,584 15,875 Total Assets 1,482,284$ 1,456,619$ 1,162,177$ 1,510,604$ 1,187,306$ Accounts Payable 74,311$ 96,974$ 94,768$ 132,275$ 140,421$ Accrued Liabilities 63,615 65,278 68,336 61,019 63,350 Accrued Interest 11,682 12,905 13,393 13,478 13,677 Deferred Tax Liability 3,469 2,441 1,292 3,707 2,116 Income Taxes Payable 5,697 2,139 1,786 3,689 1,779 Total Current Liabilities 158,774 179,736 179,576 214,168 221,343 Deferred Taxes 130,777 126,204 88,330 126,352 86,858 Other Liabilities 153,473 117,659 129,016 112,904 123,849 Long-term Debt 808,205 835,230 903,404 914,828 949,456 Total Liabilities 1,251,229 1,258,829 1,300,326 1,368,252 1,381,506 Equity 231,055 197,790 (138,149) 142,352 (194,200) Total Liabilities and Equity 1,482,284$ 1,456,619$ 1,162,177$ 1,510,604$ 1,187,306$
21 Summary Cash Flow Statement ($ in 000s) 2012 2013 2014 Q2 YTD 2014 Q2 YTD 2015 Operating Activities Net loss (38,367)$ (33,493)$ (293,689)$ (56,957)$ (43,460)$ Depreciation & amortization 50,678 43,041 42,744 21,267 19,927 Deferred income taxes (2,061) (1,503) (31,201) 1,256 905 Impairment of goodwill and other intangible assets - - 233,846 - - Provision for losses on accounts receivable 2,420 1,122 2,138 946 1,151 Amortization of deferred financing costs and premium on senior notes 4,479 4,451 3,719 1,874 1,805 Other 84 291 415 372 78 Changes in operating assets and liabilities: Accounts receivable (1,333) (7,142) (4,863) (36,287) (41,453) Inventories (1,647) (17,696) (15,309) (46,526) (21,253) Accounts payable and accrued liabilities (3,741) 27,791 5,137 30,511 42,651 Income taxes receivable/payable (4,158) (1,716) 555 1,593 151 Other assets and liabilities (6,943) (14,893) (14,457) (6,480) 819 Net cash (used in) provided by operating activities (589) 253 (70,965) (88,431) (38,679) Investing Activities Capital expenditures (5,371) (11,702) (12,852) (5,245) (9,901) Proceeds from the sale of assets 94 60 19 7 8 Other - (348) - Net cash used in investing activities (5,277) (11,990) (12,833) (5,238) (9,893) Financing Activities Borrowings (payments) under ABL facilities 4,300 (78,000) 69,412 80,114 46,678 Issuance of senior secured notes - 106,000 - - - Financing costs (225) (5,549) - - - Other 80 742 - - - Net cash provided by financing activities 4,155 23,193 69,412 80,114 46,678 Effect of exchange rate on cash & cash equivalents (69) (235) (466) (417) (40) (Decrease) increase in cash & cash equivalents (1,780) 11,221 (14,852) (13,972) (1,934) Cash and cash equivalents at beginning of the year 11,374 9,594 20,815 20,815 5,963 Cash and cash equivalents at end of the year 9,594$ 20,815$ 5,963$ 6,843$ 4,029$
22 Reconciliation of Non-GAAP Items (1) Adjusted EBITDA excludes run-rate cost savings. ($ in millions) 2012 2013 2014 Q2 2014 YTD Q2 2015 YTD Net Loss (38.4)$ (33.5)$ (293.7)$ (57.0)$ (43.5)$ Interest Expense 75.5 79.8 82.5 41.1 41.9 Income Tax Expense (Benefit) 5.6 2.5 (27.2) 2.8 2.8 Depreciation and Amortization 50.7 43.0 42.7 21.3 19.9 Impairment of Goodwill and Intangibles - - 233.8 - - Foreign Currency Loss 0.1 0.8 0.8 0.6 1.1 Merger Costs - - - - - Restructuring Costs - - - - Loss on Debt Extinguishment - - - - - EBITDA 93.6$ 92.6$ 39.0$ 8.8$ 22.2$ Adjustments 2.8 5.9 13.7 11.9 1.9 Adjusted EBITDA (1) 96.4$ 98.5$ 52.8$ 20.7$ 24.1$ Adjustments Purchase Accounting Related Adjustments (3.9) (3.9) (3.7) (1.9) (1.8) Executive Officer Separation and Hiring Costs 3.4 1.4 3.8 2.7 0.2 Non-cash (benefit) Expense Adjustments (3.3) (2.6) (1.4) - - Restructuring costs (0.3) (0.3) (Gain) Loss on Disposal or Write-off of Assets (0.0) 0.1 (0.0) 0.0 0.0 Bank Audit/Management Fees 0.1 0.1 0.1 0.0 0.1 Stock-based Compensation Expense 0.1 0.2 0.5 0.4 0.1 Foreign Currency Loss Other Normalizing and Unusual Items Professional Fees 1.3 8.6 11.7 9.5 1.9 Operating Lease Termination Penalty - - - - - Discontinued Inventory Expense - - - - - Accretion on Lease Liability 0.5 0.5 0.5 0.3 0.2 Excess Severance Cost 0.2 0.6 0.5 0.2 0.1 Excess legal Expense 4.0 0.2 0.1 0.1 1.2 Unusual Bad Debt Expense - - - - - Environmental Liability - 0.3 0.7 - - Payroll costs due to change of employment classification - - 1.1 0.9 - Other 0.3 0.4 0.3 0.1 - Total Other Normalizing and Unusual Items 6.4 10.6 14.9 11.0 3.4 Total Adjustments 2.8$ 5.9$ 13.7$ 11.9$ 1.9$