☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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 ~~Section13(a)~~Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Common Stock, $0.01 par value, outstanding was ~~49,660,699~~59,918,550 shares, as of ~~November 2, 2017.~~April 30, 2022.

~~Form10-Q~~ ~~for~~Securities registered pursuant to Section 12(b) of the ~~Three and Nine Months Ended September 30, 2017~~

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About PGT Innovations, Inc.

PGT Innovations, Inc. (“PGTI,” “we,” or the “Company”) is a leading manufacturer of impact-resistant aluminum and vinyl-framed windows and doors and offers a broad range of fully customizable window and door products. The ~~accompanying unaudited condensed~~majority of our sales are to customers in the state of Florida; however, we also sell products in many other states . Our acquisition of Eco Enterprises (“Eco Acquisition”) in February 2021 expands our range of product offerings in our major market of southeast Florida. We also have sales of products that are designed to unify indoor and outdoor living spaces, through our Western Windows Systems’ (“WWS”) division, and most of its sales are in the western United States. Our acquisition of Anlin Windows and Doors in October 2021 expands our presence in the west. Products are sold primarily through an authorized dealer and distributor network. However, with our acquisition of NewSouth Window Solutions in February 2020, we also began to sell window products in the direct-to-consumer channel through a “factory-direct” sales model.

We were incorporated in the state of Delaware on December 16, 2003, as JLL Window Holdings, Inc., with primary operations in North Venice, Florida. On February 15, 2006, our Company was renamed PGT, Inc. On December 14, 2016, we announced that we changed our name to PGT Innovations, Inc. and, effective on December 28, 2016, the listing of our common stock was transferred to the New York Stock Exchange (“NYSE”) from the NASDAQ Global Market, and began trading on the NYSE under its existing ticker symbol of “PGTI”. As of April 2, 2022, we had major manufacturing operations in Florida, in North Venice, Tampa, and in the greater Miami area. We also have manufacturing operations in Phoenix, Arizona and Clovis, California. Additionally, we have 2 glass tempering and laminating plants, 1 in North Venice, Florida and 1 in Medley, Florida, and 1 insulation glass plant located in North Venice, Florida.

All references to PGTI or our Company apply to the consolidated financial statements ~~include the accounts~~ of PGT Innovations, Inc. unless otherwise noted.

COVID-19 Pandemic

During March 2020, a global pandemic (the “Pandemic”) was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The Pandemic has resulted in a significant number of infections, hospitalizations and ~~its wholly-owned subsidiary, PGT Industries, Inc.,~~deaths around the world, including in the United States, and ~~its wholly-owned subsidiaries CGI Window~~in several of our key markets.

The extent to which the continuing circumstances around the Pandemic could affect our future business, operations and ~~Holdings, Inc. (“CGI”), which includes its wholly-owned subsidiary, CGI Commercial, Inc. (“CGIC”),~~financial results will depend upon numerous factors that we are not able to accurately predict. As such, we continue to be unable to accurately predict the impact the Pandemic and ~~WinDoor, Incorporated (collectively~~ the ~~“Company”), after elimination~~challenges it has created for the U.S. and global economies. The impact to our customers’ and suppliers’ businesses and other factors identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission on March 1, 2022. We will continue to evaluate the nature and extent of ~~intercompany accounts~~any changes relating to the Pandemic and ~~transactions.~~any impact those changes may have to our business, consolidated results of operations, and financial condition.

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with the instructions to Form10-Q and do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. InOur condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period isare not necessarily indicative of the results that may be expected for the remainder of the current year or for any future periods. ~~Each of our~~The Company’s fiscal ~~quarters~~first three months ended ~~September 30, 2017,~~April 2, 2022, and ~~October 1, 2016,~~April 3, 2021 consisted of 13 weeks.

The condensed consolidated balance sheet as of ~~December 31, 2016,~~January 1, 2022, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of ~~December 31, 2016,~~January 1, 2022, and the unaudited condensed consolidated financial statements as of and for the periods ended ~~September 30, 2017,~~April 2, 2022 and April 3, 2021, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended ~~December 31, 2016,~~January 1, 2022, included in the Company’s most recent Annual Report on Form10-K. ~~Except for the adoption of the guidance relating to the accounting for stock-based compensation expense discussed below, the~~ The accounting policies used in the preparation of these unaudited condensed

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consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s Annual Report onForm 10-K.

~~Recently Adopted Accounting Pronouncements~~

~~In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2016-09,~~ ~~“Compensation - Stock Compensation, Improvements to Employee Share-Based payment Accounting (Topic 718)”. This update is intended to provide simplification~~The preparation of ~~the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification~~financial statements in ~~the statement of cash flows. We adopted this update effective for our fiscal year beginning January 1, 2017. Impacts of the adoption of ASU2016-09~~ ~~are as follows:~~

~~ASU2016-09~~conformity with GAAP requires ~~employers~~management to make ~~a policy election as to whether they will continue to use previous generally accepted accounting principles, which required employers to recognize stock-based compensation expense on grants~~estimates and assumptions that affect the reported amounts of ~~equity awards net~~assets and liabilities and disclosure of an estimate of the amount that will be forfeited, or to recognize forfeitures on an actual basis in the period they occur. We have elected to change our method of accounting for forfeitures, from one of estimating forfeitures, to recognizing forfeitures on an actual basis in the period they occur, adopted on a modified-retrospective basis. This resulted in an adjustment to increase accumulated deficit for previously unrecognized stock compensation expense of approximately $0.1 million as of December 31, 2016, net of tax effect, with an offsetting increase in additional~~paid-in~~ ~~capital of approximately $0.2 million.~~

~~ASU2016-09~~ ~~requires that employee taxes paid when an employer withholds shares fortax-withholding~~ purposes be reported as a financing activity. The Company withholds shares of its common stock from employees to satisfy the employee’s tax withholding obligations in connection with the exercise of stock optionscontingent assets and ~~lapse of restrictions on stock awards, which are then immediately retired. We previously included these cash flows in financing activities, therefore, there was no impact upon adoption.~~

~~ASU2016-09~~ requires that excess tax benefits resulting from the exercise of stock options and lapse of restriction on stock awards be recognized as a discrete item in tax expense, where previously such tax effects had been recognized in additional~~paid-in-capital.~~ ~~See Note 10 for a discussion of the impacts of the adoption of ASU2016-09~~ ~~on the Company’s income tax expense for the three and nine months ended September 30, 2017.~~

~~ASU2016-09~~ requires previously unrecognized excess tax benefits to be recognized on a modified-retrospective basis, which results from taking a deduction for tax benefits relating to stock-based compensation that does not result in a reduction in taxes payable. Upon adoption, we recorded an adjustment to decrease the accumulated deficit for excess tax benefits that had not yet been recognized of approximately $0.3 million as of December 31, 2016, with an offsetting reduction in our net deferred tax liability resulting from the recognition of previously unrecorded deferred tax assets for tax credits in the state of Florida.

~~ASU2016-09~~ requires excess tax benefits to be presented as an operating activity on the statement of cash flows, either prospectively or on a full-retrospective basis, rather than as previously required as a financing activity. We have elected to present excess tax benefits in the operating section of the statement of cash flows on a prospective basis.

~~The effects on the Company’s consolidated balance sheet as of December 31, 2016, relating to the adoption of ASU2016-09~~ ~~is as follows (in thousands):~~

   Previously
Reported    After
Adoption
Deferred income taxes
   $ 32,171    $ 31,838




Total liabilities
   $ 304,129    $ 303,796




Additionalpaid-in-capital
   $ 249,469    $ 249,647




Accumulated deficit
   $ (104,710 )    $ (104,555 )




Shareholders’ equity
   $ 145,278    $ 145,611




Total shareholders’ equity
   $ 132,519    $ 132,852

~~In July 2015, the FASB issued ASUNo. 2015-11,~~ “Inventory (Topic 330) – Simplifying the Measurement of Inventory”. This guidance changed the subsequent measurement of inventory, excluding inventory accounted for under LIFO or the retail inventory method, to be at lower of cost and net realizable value. Topic 330, Inventory, previously required an entity to measure inventoryliabilities at the lower of cost or market. Market could have been replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. Under this ASU, an entity measures inventory within its scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU~~2015-11~~ ~~was effective for us as of January 1, 2017. We prospectively adopted ASU2015-11~~ ~~effective on January 1, 2017. The adoption of ASU2015-11~~ ~~had no impact on our financial statements.~~

~~Recently Issued Accounting Pronouncements~~

~~In addition to the pronouncements issued during 2017, ASU2016-02,~~ ~~“Leases (Topic 842), and ASU2014-09,~~ ~~“Revenue from Contracts with Customers”, presented below, see Note 3 to the consolidated financial statements included in our recently filed Annual Report on Form10-K~~ ~~for the year ended December 31, 2016.~~

~~In August 2017, the FASB issued ASU2017-12,~~ ~~“Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The amendments under ASU2017-12~~ refine and expand hedge accounting requirements for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the facedate of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

We have 2 reportable segments: the Southeast segment and the Western segment. The Southeast reporting segment, which is also an operating segment, is composed of sales from our facilities in Florida. The Western reporting segment, also an operating segment, is composed of sales from our facilities in Arizona and California. See Note 16 for segment disclosures.

Recently Adopted Accounting Pronouncements

Business Combinations - Contracts Assets and Liabilities

On October 28, 2021, the FASB issued ASU 2021-08, which amends ASC 805-20 to “require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.” Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. This standard was effective beginning January 1, 2022. Early adoption was permitted and was adopted by the Company in the ~~footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU2017-12~~ ~~becomes effective for us in the first quarter of 2019. We do not expect the~~period beginning January 3, 2021. The adoption of this ~~guidance to~~standard did not have ~~a significant effect~~any impact on ~~the Company’s~~our consolidated financial statements.

Recently Issued Accounting Pronouncements

Reference Rate Reform

In ~~February 2017,~~March 2020, the FASB issued ASU~~2017-05,~~ ~~“Other Income—Gain~~ 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ~~Losses from~~in March 2021, subsequent amendment to the ~~Derecognition~~initial guidance, ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of ~~Nonfinancial Assets.” ASU2017-05~~ ~~clarifies the scope of Subtopic610-20,~~ ~~Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets, and adds~~reference rate reform. The guidance ~~for partial sales of nonfinancial assets. Subtopic610-20,~~ ~~which was issued in May 2014 as a part of ASU2014-09,~~ ~~provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts withnon-customers.~~ ~~This update is effective at the same time as the amendments in ASU2014-09,~~ ~~therefore, for our fiscal year beginning after December 15, 2017, and may~~generally can be applied ~~either under a full- or modified-retrospective basis.~~from March 12, 2020 through December 31, 2022. We dohave not ~~expect the~~elected adoption of this optional guidance and do not intend to ~~have a significant effect~~elect this guidance before the sunset date of December 31, 2022, as there is no material impact on ~~the Company’s~~our consolidated financial statements.

NOTE 2. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Revenue Recognition Accounting Policy

~~In January 2017, the FASB issued ASU2017-04,~~ ~~“Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU2017-04~~ simplifies the subsequent measurement of goodwill by eliminating “Step 2” from the goodwill impairment test. The amendment also eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective for our fiscal year beginning after December 15, 2019, and shall be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of this guidance to have a significant effect on the Company’s consolidated financial statements.

~~In January 2017, the FASB issued ASU2017-01,~~ ~~“Business Combinations (Topic 805) – Clarifying the Definition of a Business.” ASU2017-01~~ affects all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU~~2017-01~~ provides a more robust framework to use in determining when a set of assets and activities is a business. It also provides more consistency in applying the guidance, reduces the costs of application, and makes the definition of a business more operable. This update is effective for our fiscal year beginning after December 15, 2017, including interim periods therein. We will apply the provisions of this guidance once it becomes effective.

~~In February 2016, the FASB issued ASU2016-02,~~ ~~“Leases (Topic 842)”. This guidance supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU2016-02~~ requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU~~2016-02~~ ~~requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief.~~ The Company ~~is continuing to evaluate the impact of this new standard on its consolidated financial statements.~~

~~Approaching Adoption of ASU2014-09,~~ ~~“Revenue from Contracts with Customers”~~

~~In May 2014, the FASB issued ASU2014-09,~~ ~~“Revenue from Contracts with Customers”. ASU2014-09~~ replaces the existing accounting standards for revenue recognition with a single comprehensive five-step model. The core principle is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. The FASB also issued ASU~~2015-14,~~ ~~“Deferral of Effective Date”. ASU2015-14~~ deferred the effective date for the new guidance until the annual reporting period beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted, but not before the original effective date (periods beginning after December 15, 2016). The standard permits the use of either the full-retrospective (restating all years presented in the Company’s financial statements), or modified-retrospective (recording the impact of adoption as an adjustment to retained earnings at the beginning of the year of adoption) transition methods. Since its issuance, the FASB has also amended several aspects of the new guidance, including; ASU~~2016-08,~~ “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; which clarifies the Topic 606 guidance on principal versus agent considerations, ASU~~2016-10,~~ “Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing”, which clarifies identification of a performance obligation and addresses revenue recognition associated with the licensing of intellectual property, ASU~~2016-12,~~ ~~“Revenue from Contracts with Customers (Topic 606), Narrow Scope Improvements and Practical Expedients”, which clarifies assessment of collectability criterion,non-cash~~ ~~consideration and other technical corrections, and ASU2016-20,~~ “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”, which is the result of the FASB Board decision to issue a separate Update for technical corrections and improvements. The Company currently plans to adopt the provisions of this new accounting standard at the beginning of fiscal year 2018, using the modified-retrospective method.

~~The Company completed its preliminary assessment of the impact of its upcoming adoption of ASU2014-09~~ on its consolidated financial statements. The Company recognizes revenue currently under existing generally accepted accounting principles, which is a model based on the transfer of the risks and rewards of ownership. Predominantly, for the Company, this has been at the point in time that possession of goods has transferred to the customer upon delivery. The model for recognizing revenue will change under ASU~~2014-09,~~ ~~to one based on the transfer of control of the product to the customer. Under ASU2014-09,~~ revenue is recognized when an entity satisfies its obligation by transferring control of the goods or services to the customer, and transfer of possession of the product is not required in order for transfer of control of the product to the customer to have occurred.

~~ASU2014-09~~ states that if any one of three defined criteria is met, it is likely that an entity will be required to recognize revenue over time, where previously the entity has recognized revenue at the point in time which possession of the goods or services pass to the customer. Pursuant to our preliminary assessment, we believe that, of these three criteria, the Company meets the criteria which states that revenue is recognized over time if an entity’s performance (i.e. creation of a good or service for the customer) does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed~~to-date.~~ ~~ASU2014-09~~ further states that, when evaluating whether or not the goods or services have an alternative use, an entity should consider the level of customization of the goods or services. A high level of customization is a strong indicator that the goods or services do not have an alternative use and, therefore, revenue would be recognized over time as an entity performs.

~~The Company is a manufacturer of fully-customized~~primarily manufactures fully customized windows and doors ~~and manufactures products~~ based on design specifications, measurements, colors, finishes, framing materials, glass-types, and other options selected by the customer at the point in time an order is ~~received from the customer.~~received. The ~~Company’s initial assessment is that its goods have no alternative use, as that term is defined in ASU2014-09,~~ and that control of the product passes to the customer no later than completion of the manufacturing of each or all of the products in an order, but before delivery of the products to the customer. Additionally, the Company has an enforceable right to payment at the time an order is received and accepted at the agreed-upon sales prices contained in our agreements with our customers for all manufacturing efforts expended ~~by the Company~~ on behalf of its customers.

Based on this initial assessment, the Company believes that it will be required to change its method of recognizing revenue, to one of potentially recognizing revenue as products are manufactured, but no later than completion of the manufacturing process, from its current method of recognizing revenue upon delivery of the product Due to the ~~customer. The Company~~customized build-to-order nature of these products, the Company’s assessment is ~~continuing to evaluate~~that the substantial portion of its ~~manufacturing processes in order to assess at what point the products~~finished goods and certain unused glass components have no alternative use, and that control of these products and components passes to the ~~recognition~~customer over time during the manufacturing of the products in an order, or upon our receipt of certain pre-cut glass components from our supplier attributed to specific customer orders.

Based on these factors, the Company recognizes a substantial portion of revenue ~~should begin. However, because~~over time during the manufacturing process once customization begins, and for certain unused glass components on hand, at the end of a reporting period. Revenue on work-in-process at the end of a reporting period is recognized in proportion to costs incurred to total estimated cost of the product being manufactured. Except for the Western segment’s volume products, discussed in the section titled Disaggregation of Revenue from Contracts with Customers below, revenue ~~will~~recognized at a point in time is immaterial.

Disaggregation of Revenue from Contracts with Customers

As discussed in Note 1, we have 2 reportable segments: our Southeast segment and our Western segment. See Note 16 for more information. The following table provides information about our net sales by reporting segment, product category and market for the three months ended April 2, 2022 and April 3, 2021:

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	Three Months Ended
	April 2,		April 3,
Disaggregation of revenue (in millions):	2022		2021
Reporting segment:
Southeast	$	271.8	$	233.6
Western		86.9		37.5

Total net sales	$	358.7	$	271.1

Product category:
Impact-resistant window and door products	$	217.8	$	191.4
Non-impact window and door products		140.9		79.7

Total net sales	$	358.7	$	271.1

Market:
New construction	$	150.1	$	120.0
Repair and remodel		208.6		151.1

Total net sales	$	358.7	$	271.1

The Company’s Western segment includes both custom and volume products. This segment’s volume products are not made-to-order and are of standardized sizes and design specifications. Therefore, the Company’s assessment is that the Western segment’s volume products have alternative uses, and that control of these products passes to the customer at a point in time, which is typically when the product has been delivered to the customer. For the three months ended April 2, 2022 and April 3, 2021, the Western segment’s net sales of its volume products were $26.3 million and $19.6 million, respectively.

Contract Balances

Contract assets represent sales recognized ~~on at least all products~~in excess of billings related to finished goods not yet shipped and certain unused glass components not yet placed into the production process for which ~~manufacturing has been completed,~~revenue is recognized over time as noted above. Contract liabilities relate to customer deposits at the ~~Company believes that upon adoption~~end of ~~ASU2014-09,~~ ~~inventories on its~~reporting periods. At April 2, 2022 and January 1, 2022, those contract liabilities totaled $43.8 million and $45.2 million, respectively, of which $34.3 million and $37.0 million, respectively, are classified within accrued liabilities, and $9.5 million and $8.2 million, respectively, are classified as a reduction to the contract assets to which they relate. Contract assets, net, totaled $51.2 million at April 2, 2022 and $55.2 million at January 1, 2022, in the accompanying condensed consolidated balance ~~sheets~~sheets.

Because of the short-term nature of our performance obligations, as discussed below, substantially all of our performance obligations are satisfied within the quarter following the end of a reporting period. As such, we expect substantially all of the contract liabilities at January 1, 2022 were satisfied in the first quarter of 2022, and contract assets at January 1, 2022 were transferred to accounts receivable in the first quarter of 2022. We expect substantially all of the contract liabilities at April 2, 2022 will ~~no longer~~be satisfied in the second quarter of 2022, and contract assets at April 2, 2022 will be transferred to accounts receivable in the second quarter of 2022. Contract liabilities at April 2, 2022 represents cash received during the three-month period ended April 2, 2022, excluding amounts recognized as revenue during that period. Contract assets at April 2, 2022 represents revenue recognized during the three-month period ended April 2, 2022, excluding amounts transferred to accounts receivable during that period. Contract liabilities at January 1, 2022 represents cash received during the three-month period ended January 1, 2022, excluding amounts recognized as revenue during that period. Contract assets at January 1, 2022 represents revenue recognized during the three-month period ended January 1, 2022, excluding amounts transferred to accounts receivable during that period.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligation is satisfied. Our contracts with our customers generally represent an approved purchase order together with our standard terms and conditions. Our custom product contracts include ~~finished goods.~~ distinct goods that are substantially the same and have the same pattern of transfer to the customer over time, and therefore represent a series of distinct goods accounted for as a single performance obligation. For volume products, we allocate the contract’s transaction price to each distinct performance obligation based on the estimated relative standalone selling price of each distinct good. Observable standalone sales are used to determine the standalone selling price. Certain customers are eligible for rebates based on their volume or purchases during an annual period. Rebates are recorded as a reduction to sales and were immaterial in all periods presented.

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Performance obligations are satisfied over time, generally for our custom products, and as of a point in time for our volume products. Performance obligations are supported by contracts with customers, and we have elected not to disclose our unsatisfied performance obligations as of April 2, 2022 under the short-term contract exemption as we expect such performance obligations will be satisfied within the quarter following the end of a reporting period.

Policies Regarding Shipping and Handling Costs and Commissions on Contract Assets

The Company ~~also believes that it will~~has made a policy election to continue to recognize ~~revenue at an earlier point than prior to the adoption of ASU2014-09,~~ but that such effect may not materially affect its consolidated statements of operations post-adoption due to the fact that such effects will exist at both the beginning and end of fiscal periods after the initial transition.

~~ASU2014-09~~ ~~also requires entities, primarily in the manufacturing segment, to make policy elections relating to~~ shipping and handling ~~charges. Entities may elect to treat shipping and handling~~costs as a ~~separate performance activity, and recognize revenue from shipping and handling as performance occurs. Conversely, entities may also elect to treat~~fulfillment activity. Treating shipping and handling as a fulfillment activity ~~which will require~~requires estimated shipping and handling costs for undelivered products and certain glass components on which we have recognized revenue and created a contract asset, to be accrued ~~in order~~ to match this cost with the ~~revenue previously~~ recognized ~~over time.~~ revenue. Sales taxes collected from customers are recorded on a net basis.

The Company ~~currently recognizes shipping and handling~~utilizes the practical expedient which permits the current expensing of costs to obtain a contract when the expected amortization period is one year or less, which typically results in expensing commissions paid to employees. We expense sales commissions paid to employees as ~~a fulfillment activity, and has preliminarily determined to continue to treat such costs~~sales are recognized, including sales from the creation of contract assets, as ~~a fulfillment activity.~~the expected amortization period is less than one year.

Allowance for Credit Losses

The Company ~~expects~~adoptedAccounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” (“Topic 326”) on December 29, 2019 (the first day of our 2020 fiscal year). Topic 326 requires us to ~~continue~~measure all expected credit losses for financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. In the ordinary course of business, we extend credit to ~~evaluate the impact~~qualified dealers and distributors, generally on a non-collateralized basis. The Company maintains an allowance for credit losses which is based on management’s assessments of the ~~adoption~~amount which may become uncollectible in the future and is determined through consideration of ~~ASU2014-09~~our write-off history, specific identification of uncollectible accounts based in part on ~~its consolidated financial statements,~~the customer’s past due balance (based on contractual terms), and ~~will provide updates~~consideration of prevailing economic and ~~additional information~~industry conditions, and may include anticipated unfavorable impacts of the COVID-19 pandemic on the businesses of our customers, such as ~~the effective date~~dealers and distributors. As of ~~adoption approaches.~~April 2, 2022 and January 1, 2022, we had gross accounts receivable of $184.4 million and $145.9 million, respectively, and an allowance for credit losses of $5.2 million and $4.7 million, respectively.

NOTE 6. ACQUISITIONS

ANLIN WINDOWS & DOORS

On October 25, 2021, we completed the acquisition of Anlin Windows & Doors. The acquisition was done by Western Window Holding LLC, a Delaware limited liability company, indirectly wholly-owned by PGT Innovations, Inc., which acquired substantially all of the assets, properties and rights owned, used or held for use in the business, as operated by Anlin Industries, a California corporation, of manufacturing vinyl windows and doors for the replacement market and the new construction market, and all activities conducted in connection therewith (the "Anlin Acquisition"), pursuant to that certain Asset Purchase Agreement dated as of September ~~30, 2017.~~1, 2021 (the “Anlin Purchase Agreement”), by and among the Company, and Anlin Industries. The fair value of consideration transferred in the Anlin Acquisition was $120.9 million, composed of $114.2 million in cash, including $113.5 million for purchase price and $0.7 million in estimated working capital adjustment, and estimated fair value of contingent consideration of $6.7 million, discussed in greater detail below.

The cash portion of the Anlin Acquisition of $114.2 million was financed with borrowings under the fourth amendment of our 2016 Credit Agreement due 2024 of $60.0 million, which resulted in net proceeds after fees of $59.4 million, with the remaining $54.8 million from cash on hand. Cash on hand for the Anlin Acquisition was ultimately provided by the issuance of senior notes due 2029 of $575.0 million of 4.375% and related transactions, further explained in Note 9, Long-Term Debt.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Anlin Acquisition, are as follows:


	Initial Allocation			Adjustments to Allocation			Preliminary Allocation
Accounts receivable	$	10,803		$	—		$	10,803
Inventories		7,633			(327	)		7,306
Contract assets, net		7,027			—			7,027
Prepaid expenses and other assets		1,626			(954	)		672
Property and equipment		22,800			1,509			24,309
Operating lease right-of-use asset		3,450			14			3,464
Intangible assets		77,800			(5,800	)		72,000
Goodwill		5,596			5,768			11,364
Total assets acquired		136,735			210			136,945
Accounts payable		(5,175	)		593			(4,582	)
Accrued and other liabilities		(7,993	)		—			(7,993	)
Operating lease liability		(3,450	)		(14	)		(3,464	)
Total liabilities assumed		(16,618	)		579			(16,039	)
Fair value of consideration transferred	$	120,117		$	789		$	120,906

Consideration:
Cash	$	114,196		$	—		$	114,196
Contingent consideration		5,921			789			6,710
Fair value of consideration transferred	$	120,117		$	789		$	120,906

The fair value of certain working capital related items, including Anlin’s accounts receivable, prepaid expenses and other assets, and accounts payable and accrued liabilities, approximated their book values at the date of the Anlin Acquisition. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Inventories at the acquisition date was primarily composed of raw materials. Further review during the first quarter of 2022 resulted in an adjustment to decrease the estimated net realizable value of inventory. The fair value of property and equipment and remaining useful lives were estimated by management, with the assistance of a third-party valuation firm, using the cost approach. During the first quarter of 2022, additional value was assigned to acquired property and equipment, primarily due to an increase in the estimate of the fair value of acquired land. Valuations of the intangible assets were done using income and royalty relief approaches based on projections provided by management, which we consider to be Level 3 inputs, with the assistance of a third-party valuations firm. During the first quarter of 2022, we made several adjustments to the estimated fair value of the initial valuation of certain intangible assets, given the preliminary nature of several of the valuation inputs. Additionally, we determined that a portion of the customer relationship asset we acquired related to Anlin's backlog, which had an estimated useful life of less than three months, resulting in its estimated fair value becoming fully amortized in the first quarter of 2022, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three-month period ended April 2, 2022.

We incurred acquisition costs totaling $1.8 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Anlin Acquisition, incurred during the year ended January 1, 2022, primarily during the third and fourth quarters.

- 13 -

The Anlin Purchase Agreement provides for the potential for an earn-out contingency payment to sellers should Anlin achieve a certain level of earnings before interest, taxes, depreciation and amortization, ("Anlin EBITDA"), as defined in the Anlin Purchase Agreement, for its fiscal years of 2021 and 2022, of up to $3.2 million to be paid out by March 31, 2022, and of up to $9.5 million to be paid out by March 31, 2023, respectively. We had recorded a preliminary earn-out contingent liability of $5.9 million as of our year ended January 1, 2022, which represented its then estimated fair value based on probability adjusted levels of estimated Anlin EBITDA. Estimated Anlin EBITDA is a significant input that is not observable in the market, which ASC 820 considers to be a Level 3 input. In the first quarter of 2022, we finalized the fair value of the earn-out contingency, which we adjusted by an additional $0.8 million, to a total of $6.7 million of estimated fair value of contingent consideration as of the effective date of the Anlin Acquisition, classified within accrued current liabilities in the accompanying condensed consolidated balance sheet as of April 2, 2022. This amount included $2.4 million for the contingent consideration relating to 2021 Anlin EBITDA and $4.3 million for the contingent consideration relating to the 2022 Anlin EBITDA.

By mutual agreement between seller and buyer, the deadline for the first payment of contingent consideration, which was March 31, 2022 as stated in the Anlin Purchase Agreement while both parties continued to negotiate the amount of the first contingent consideration payment, which was agreed to be $2.5 million, which we paid in April 2022. During the first quarter of 2022, we updated our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA, which was estimated to be $5.1 million. As such, we recognized an expense of approximately $1.0 million, representing the difference between the actual and estimated fair value of the contingent consideration relating to 2021 Anlin EBITDA, and the difference between the initial and updated estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three months ended April 2, 2022. We will continue to update our estimate of the fair value of the contingent consideration relating to 2022 Anlin EBITDA each reporting period, as required by ASC 805, and record any adjustments within operating income until finalized by March 31, 2022.

For tax purposes, contingent consideration does not become part of tax goodwill until paid. As such, the amount of goodwill deductible for tax purposes will not be finalized until the outcome of both earn-out contingency payments are known. As discussed, as of April 2, 2022, the estimated fair value of the earn-out contingency was $6.7 million, and goodwill according to the current allocation of consideration is $11.4 million, and is included as part of the Western reporting unit goodwill. As such, as of April 2, 2022, the amount of goodwill estimated to be tax deductible was the difference of $4.7 million. We believe goodwill relates to the expansion of our footprint in a key, strategic market we have identified as a geographic area of growth for our Company. Our estimate of the amount of tax deductible goodwill may change as we the amounts of the payments of contingent consideration are finalized.

As discussed above, we made changes to the initial estimated fair values of the trade name and customer relationships assets in the Anlin Acquisition, and we determined that a portion of our customer relationships intangible asset relates to the backlog acquired in the acquisition, which we estimated to be $2.2 million. Due to the short useful life of the customer-related backlog, its estimated fair value of $2.2 million was fully amortized by the end of the first quarter of 2022, which is classified within selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three-month period ended April 2, 2022. Our purchase price allocation is preliminary, and other items are subject to change.

The Anlin Purchase Agreement has a post-closing working capital calculation whereby we are required to prepare, and deliver to sellers, a final statement of purchase price. We expect to finalize this process during the second quarter of 2022.

Valuation of Identified Intangible Assets

The valuation of the identifiable intangible assets acquired in the Anlin Acquisition and our estimate of their respective useful lives are as follows:


								Initial
	Initial		Adjustment to			Preliminary		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade name	$	35,400	$	(3,700	)	$	31,700	indefinite
Customer relationships		42,100		(4,300	)		37,800	15
Customer-related backlog		—		2,200			2,200	<1
Developed technology		300		—			300	9

Intangible assets, net	$	77,800	$	(5,800	)	$	72,000

Pro Forma Financial Information

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include Anlin's actual results for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of Anlin adjusted for the following: amortization expense related to the intangible assets arising from the acquisition and interest expense to reflect the refinancing of the 2018 Senior Notes due 2026 and the third amendment of the 2016 Credit Agreement due 2024 into the 2021 Senior Notes due 2029 and the fourth amendment of the 2016 Credit Agreement due 2024. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the

- 14 -

acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.


	Three Months Ended
	April 3,
Pro Forma Results (unaudited)	2021
(in thousands, except per share amounts)	(unaudited)
Net sales	$	295,512

Net income attributable to common shareholders	$	12,745

Net income per common share attributable to common shareholders:
Basic	$	0.21
Diluted	$	0.21

Net sales of Anlin included in the condensed consolidated statement of operations for the three months ended April 2, 2022, was $32.4 million. The net income of Anlin in the condensed consolidated statement of operations for the three months ended April 2, 2022, was $2.9 million.

CRI SOCAL, INC.

On May 2, 2021, pursuant to an asset purchase agreement dated April 9, 2021, we acquired substantially all of the assets and assumed certain liabilities of CRi SoCal, Inc. (“CRi”), a California corporation doing business in California as Combined Resources (the “CRi Acquisition”). CRi is engaged in the sales, distribution and installation of window and door products, and related design services, to homebuilders in the residential new construction market from its leased facility in Rancho Santa Margarita, California. Until its acquisition by the Company, CRi was a customer of the Company’s western business unit.

The fair value of consideration transferred in the acquisition of CRi totaled $12.5 million, and included $12.1 million in cash, funded from cash on hand, and $0.4 million in accounts receivable owed by CRi to the Company’s western business unit relating to sales prior to the acquisition, which are considered settled as a result of the acquisition. The preliminary estimated fair value of assets acquired and liabilities assumed totaled $17.6 million and $5.1 million, respectively, which included offsetting operating lease right of use assets and operating lease liabilities totaling $2.6 million. The estimated fair value of assets acquired also included current assets totaling $4.1 million, primarily accounts receivable, identifiable intangible assets totaling $7.0 million, goodwill of $3.7 million, all of which we believe is tax deductible, and a small amount of property and equipment. Liabilities assumed included the aforementioned operating lease liability, as well as a total of $2.5 million in trade accounts payable and customer deposits. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm. We believe goodwill in the acquisition relates to the expansion of our footprint in an existing market, in a way that we believe will enhance our long-term profitability in that market of our Western business.

Sales from CRi included in the three-month period ended April 2, 2022 totaled $2.4 million. CRi’s effect on consolidated net income was immaterial in the three-month period ended April 2, 2022.

ECO WINDOW SYSTEMS

On February 1, 2021, we completed the acquisition of a 75% ownership stake in Eco Enterprises and its related companies, Eco Windows Systems, LLC, Eco Glass Production, LLC, and Unity Windows, LLC (together “Eco”). Eco is a manufacturer and installer of aluminum, impact-resistant windows and doors, serving the South Florida region since 2009. Eco is headquartered in Medley, Florida, near Miami, Florida, and has 3 manufacturing locations in the region, including a glass processing facility.

The fair value consideration for Eco was $100.5 million, including $94.4 million in cash, after favorable adjustments totaling $5.6 million relating to working capital and customer deposits which were agreed to and settled in the second quarter of 2021. The fair value of consideration also included PGT Innovations, Inc. common stock with a then estimated fair value of $6.1 million. The cash portion of the purchase price was financed by a second add-on issuance of $60.0 million aggregate principal amount of 6.75% senior notes to the 2018 Senior Notes due 2026 on January 25, 2021 (the “Second Additional Senior Notes”), issued at 105.5% of their principal amount, resulting in a premium to us of $3.3 million, together with cash on hand of $31.1 million.

The common stock portion of the purchase price was represented by the issuance of 357,797 shares of PGT Innovations, Inc. common stock on February 1, 2021, with a closing price value of $21.34 per share on that date, or approximately $7.6 million based on that price. However, the seller of Eco, who is also the holder of the 25% redeemable non-controlling interest in Eco Enterprises, is restricted from selling these shares for a three-year period from the date of the acquisition. As such, we estimated that there was an approximately 20% discount for the lack of marketability of the shares. The fair value of the redeemable non-controlling interest in the acquisition has been estimated to be $28.5 million, resulting in total fair value of the Eco business in the acquisition, including the

- 15 -

redeemable non-controlling interest, of $128.9 million. The fair value of the redeemable non-controlling interest has been calculated as 25% of the initial estimated fair value of the entity at the acquisition date, less a discount for seller’s lack of control in the new entity, estimated to be 5%, and a discount for the seller’s lack of marketability of the minority stake, estimated to be 10%. See Note 17 for more information regarding the redeemable non-controlling interest.

The estimated fair value of assets acquired, and liabilities assumed as of the closing date of the Eco Acquisition, are as follows:


	Initial Allocation			Adjustments to Allocation			Final Allocation
Accounts receivable	$	5,031		$	(241	)	$	4,790
Inventories		7,728			(684	)		7,044
Contract assets, net		4,312			(123	)		4,189
Prepaid expenses and other assets		1,706			(759	)		947
Property and equipment		24,009			(191	)		23,818
Operating lease right-of-use asset		27,864			(1,049	)		26,815
Intangible assets		72,700			1,600			74,300
Goodwill		30,051			(4,467	)		25,584
Total assets acquired		173,401			(5,914	)		167,487
Accounts payable		(6,809	)		(116	)		(6,925	)
Accrued and other liabilities, including customer deposits		(4,215	)		(604	)		(4,819	)
Operating lease liability		(27,864	)		1,049			(26,815	)
Total liabilities assumed		(38,888	)		329			(38,559	)
Net assets acquired		134,513			(5,585	)		128,928
Redeemable non-controlling interest		(34,084	)		5,620			(28,464	)
Fair value of consideration transferred	$	100,429		$	35		$	100,464

Consideration:
Cash	$	94,321		$	35		$	94,356
PGTI common stock		6,108			—			6,108
Fair value of consideration transferred	$	100,429		$	35		$	100,464

The fair value of certain working capital related items, including Eco’s accounts receivable, prepaid and other expenses, and accounts payable and accrued liabilities, approximated their book values at the date of the Eco Acquisition. Subsequent to our initial allocation, we adjusted the fair value of certain acquired commercial receivable accounts based on a further post-acquisition assessment of their collectability. The fair value of inventory was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale. Substantially all of inventories at the acquisition date was composed of raw materials. The fair value of property and equipment was estimated with the assistance of a third-party valuation firm, using the indirect cost approach, which we consider to be Level 3 in the fair value hierarchy. Valuations of the intangible assets have been estimated using income and royalty relief approaches based on projections, which we consider to be Level 3 inputs, with the assistance of a third-party valuation firm.

We incurred acquisition costs totaling $1.7 million relating to legal expenses, representations and warranties insurance, diligence, accounting and printing services in the Eco Acquisition, which includes $1.0 million in the fourth quarter of 2020, and $0.7 million in first three months of 2021, classified as selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the three months ended April 3, 2021.

The remaining consideration, after identified intangible assets and the net assets and liabilities recorded at fair value, has currently been estimated to be $25.6 million, classified as part of the Southeast reporting unit goodwill, which we expect the portion of goodwill relating to our 75% investment to be deductible for tax purposes.

We believe goodwill represents the strengthening of our supply chain for glass through faster glass production, as well as diversification and expansion of product offerings in the high-growth commercial market, and an expansion of our dealer network with minimal overlap with our existing deal network.

- 16 -

Valuation of Identified Intangible Assets in the Eco Acquisition

The valuation of the identifiable intangible assets acquired in the Eco Acquisition and our estimate of their respective useful lives are as follows:


								Initial
	Initial		Adjustment to			Preliminary		Useful Life
	Valuation		Valuation			Valuation		(in years)
(in thousands)
Trade names	$	36,000	$	(1,100	)	$	34,900	indefinite
Customer relationships		36,700		2,700			39,400	5 - 15

Intangible assets, net	$	72,700	$	1,600		$	74,300

Pro Forma Financial Information

The following unaudited pro forma financial information assumes the Eco Acquisition had occurred at the beginning of the earliest period presented that does not include Eco’s actual results for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of Eco adjusted for the following: amortization expense related to the estimated intangible assets arising from the acquisition; interest expense to reflect the Second Additional Senior Notes; net income attributable to redeemable non-controlling interest; and, change in redemption value of redeemable non-controlling interest. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.


	Three Months Ended
		April 3,
		2021
	(unaudited)
Net sales		$	279,044

Net income attributable to PGTI stockholders:		$	12,542

Net income per common share attributable to PGTI stockholders:
Basic		$	0.21
Diluted		$	0.21

Net sales of Eco included in the condensed consolidated statements of operations for the three months ended April 2, 2022, and April 3, 2021, was $21.5 million and $15.4 million, respectively, after eliminations of intercompany sales. The net income of Eco in the condensed consolidated statements of operations for the three months ended April 2, 2022, and April 3, 2021, was $2.6 million and $1.6 million, respectively, including the portions attributable to the redeemable non-controlling interest of $0.7 million and $0.4 million, respectively.

NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets are as follows:


							Initial
	April 2,			January 2,			Useful Life
	2022			2021			(in years)
	(in thousands)
Goodwill	$	370,366		$	364,598		indefinite

Other intangible assets:
Trade names (indefinite-lived)	$	208,441		$	212,141		indefinite

Customer relationships and customer-related assets		286,947			289,047		<1-15
Trade name (amortizable)		22,200			22,200		15
Developed technology		5,900			5,900		6-10
Non-compete agreement		3,338			3,338		2-5
Software license		590			590		2
Less: Accumulated amortization		(146,734	)		(138,691	)

Subtotal		172,241			182,384

Other intangible assets, net	$	380,682		$	394,525

Goodwill at January 1, 2022	$	364,598
Increase in contingent consideration in our Anlin Acquisition		789
Decrease in trade name in our Anlin Acquisition		3,700
Net decrease in customer-related assets in our Anlin Acquisition		2,100
Net decrease in other allocation changes in our Anlin Acquisition		(821	)

Goodwill at April 2, 2022	$	370,366

Trade names (indefinite-lived) at January 1, 2022	$	212,141
Decrease in value of trade name in our Anlin Acquisition		(3,700	)

Trade names (indefinite-lived) at April 2, 2022	$	208,441

- 18 -

Estimated amortization of our amortizable intangible assets for future years is as follows:


(in thousands)	Total
Remainder of 2022	$	16,844
2023		20,520
2024		20,474
2025		20,299
2026		16,906
Thereafter		77,198

Total	$	172,241

Amortization expense relating to amortizable intangible assets for the three months ended April 2, 2022 and April 3, 2021, was $8.0 million and $4.7 million, respectively. See Note 6 for discussion of the amortization of the customer-related backlog asset of $2.2 million during the three-month period ended April 2, 2022.

We perform our ~~Company:~~annual goodwill and indefinite-lived intangible asset impairment testing on the first day of our fiscal fourth quarter of each year, and at interim periods if needed based on occurrence of triggering events. During the three months ended April 2, 2022, we did not identify any events which we believe would trigger the need for tests for impairments of our indefinite-lived intangibles assets. As of April 2, 2022 and January 1, 2022, the carrying value of our Southeast reporting unit goodwill is $226.8 million and $226.8 million, respectively. As of April 2, 2022 and January 1, 2022, the carrying value of our Western reporting unit goodwill is $143.6 million and $137.8 million, respectively. Goodwill of our Southeast reporting unit includes the goodwill relating to Eco. Goodwill of our Western reporting unit includes the goodwill relating to both Anlin and CRi.

NOTE 9. LONG-TERM DEBT

   Three Months Ended    Nine Months Ended
   September 30,    October 1,    September 30,    October 1,
   2017    2016    2017    2016
   (in thousands, except per share amounts)
Net income
   $ 6,292    $ 10,796    $ 19,546    $ 19,625








Weighted-average common shares—Basic
   49,629    48,941    49,455    48,782
Add: Dilutive effect of stock compensation plans
   2,180    1,731    2,215    1,746








Weighted-average common shares—Diluted
   51,809    50,672    51,670    50,528








Net income per common share:

Basic
   $ 0.13    $ 0.22    $ 0.40    $ 0.40








Diluted
   $ 0.12    $ 0.21    $ 0.38    $ 0.39


	April 2,			January 1,
	2022			2022
	(in thousands)

2021 Senior Notes due 2029, maturing in October 2029	$	575,000		$	575,000

2016 Credit Agreement due 2024, maturing in October 2024		60,000			60,000

Long-term debt		635,000			635,000

Deferred financing costs		(9,041	)		(9,345	)

Long-term debt, net	$	625,959		$	625,655

~~Effective on January 1, 2017, we adopted ASU2016-09.~~ ~~ASU2016-09~~ changes the accounting for excess tax benefits by requiring that they be treated as discrete items of income tax expense in the period they occur. For the three and nine months ended September 30, 2017, income tax expense has been reduced by $347 thousand and $1.1 million, respectively, relating to excess tax benefits on the exercise of stock options and the lapse of restrictions on stock awards. ASU~~2016-09~~ also changed the treasury stock method of calculating diluted shares outstanding to exclude the presumption that common stock equivalents can be reduced by repurchasing shares using excess tax benefits. For the three and nine months ended September 30, 2017, diluted shares outstanding includes 724 thousand and 724 thousand shares, respectively, that prior to the adoption of ASU~~2016-09~~ would have been presumed to be bought-back, and therefore not outstanding, using the proceeds of excess tax benefits. For the three and nine months ended October 1, 2016, diluted shares outstanding would have increased by 826 thousand and 827 thousand shares, respectively, if we had adopted ASU~~2016-09~~ ~~at the beginning of our 2016 fiscal year.~~

~~NOTE 6. SALE OF ASSETS AND ACQUISITIONS~~2021 Senior Notes due 2029

~~Sale of Door Glass Processing Assets~~

On September ~~22, 2017,~~24, 2021, we ~~entered into an Asset Purchase Agreement (APA) with Cardinal LG Company (Cardinal) for~~completed the ~~sale to Cardinal~~issuance of ~~certain manufacturing equipment we used in processing glass components forPGT-branded~~ ~~doors for~~$575.0 million aggregate principal amount of 4.375% senior notes (“2021 Senior Notes due 2029”), issued at 100% of their principal amount. The 2021 Senior Notes due 2029 are jointly and severally and fully and unconditionally guaranteed on a ~~cash purchase price of $28 million. Contemporaneously with entering into the APA, we entered into a seven-year supply agreement (SA) with Cardinal for Cardinal to supply us with glass components forPGT-branded~~ doors. The Company determined to sell these assets, whose net book value at September 30, 2017 was $5.6 million, and enter into the SA in order to allow us to heighten our focus in our core areas of window and door manufacturing and, at the same time, strengthen our supply chain for high-quality door glass from a supplier with whom we have been doing business for many years.

The APA provides for the transfer of the assets from the Company to Cardinal in two phases, with the first date being on or about November 1, 2017, and the second date being on or about March 1, 2018. Under the APA, the cash purchase price of $28 million is to be paidsenior unsecured basis by Cardinal to the Company in three separate payments of $3 million at the time of the first transfer of the assets to Cardinal, $10 million on January 15, 2018, and $15 million at the time of the second transfer of assets to Cardinal.

~~The SA provides that the Company will purchase, and Cardinal will supply, all~~each of the Company’s ~~requirements for certain glass components used in PGT-branded doors through the end of 2024. The terms~~existing and future restricted subsidiaries, other than any restricted subsidiary of the ~~manufacture by Cardinal and purchase by~~Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof. The 2021 Senior Notes due 2029 are senior unsecured obligations of the Company and the guarantors, respectively, and rank pari passu in right of ~~such glass components as~~payment with all existing and future senior debt and senior to ~~purchase orders, forecasts~~all existing and future subordinated debt of ~~purchases, pricing, invoicing, delivery and payment terms and other terms, are all as described in the SA.~~

~~The Company has determined that, although the APA and SA are separate agreements, they were negotiated contemporaneously. Therefore,~~ the Company ~~has concluded that~~and the ~~$28 million~~guarantors. The 2021 Senior Notes due 2029 were offered under Rule 144A of ~~proceeds~~the Securities Act, and in transactions outside the United States under Regulation S of the Securities Act, and have not been, and will not be, registered under the ~~APA should be bifurcated between~~Securities Act.

The 2021 Senior Notes due 2029 mature on October 1, 2029. Interest on the ~~sale~~2021 Senior Notes due 2029 is payable semi-annually, in arrears, beginning on April 1, 2022, with interest accruing at a rate of 4.375% per annum from September 24, 2021. We incurred financing costs relating to bank fees and professional services costs relating to the offering and issuance of the ~~door glass manufacturing assets, and payment for the Company’s commitment to buy glass components forPGT-branded~~ ~~doors from Cardinal under the SA, and that such bifurcation is predicated~~2021 Senior Notes due 2029 totaling $8.7 million, which included a 1.25% lender spread on the ~~fair~~total principal value of the ~~door glass manufacturing assets~~2021 Senior Notes due 2029, or $7.2 million, and $1.5 million of other costs, all of which are being ~~sold~~amortized under the effective interest method. See “Deferred Financing Costs” below.

As of April 2, 2022, the face value of debt outstanding under the 2021 Senior Notes due 2029 was $575.0 million, and interest began accruing on ~~or about~~September 24, 2021. Proceeds from the ~~date~~2021 Senior Notes due 2029 were used, in part, to redeem in full the $425.0

- 19 -

million of ~~sale. The Company has engaged an independent machinery~~2018 Senior Notes due 2026, including the related fees, costs, and ~~equipment valuation specialist to provide a fair market value appraisal~~the prepayment call premium of $21.5 million, representing 5.063% of the ~~assets sold to Cardinal, which is currently in process. Accordingly, as~~$425.0 million face value then outstanding, prepay the ~~fair market value appraisal is not yet finalized, and there had been no exchanges of assets or cash under the APA as of September 30, 2017, and no purchases or sales of glass components forPGT-branded~~ doors under the SA as of September 30, 2017, no amounts relating to either the APA or SA have been recognized in the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2017.

~~WinDoor Acquisition~~

On February 16, 2016 (“closing date”), we completed the acquisition of WinDoor, which became a wholly-owned subsidiary of PGT Industries, Inc. The fair value of consideration transferred in the acquisition was $102.6 million, including the then estimated fair value of contingent consideration of $3.0 million, which has been allocated to the net assets acquired and liabilities assumed as of the acquisition date, in accordance with ASC 805, “Business Combinations”. The cash portion of the acquisition was financed withoutstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million and ~~with $43.5 million~~the related fees and costs, and finance the Anlin Acquisition in the fourth quarter of ~~cash on hand.~~

~~The estimated fair value of assets acquired and liabilities assumed as~~2021. See Note 6, Acquisitions, for a discussion of the ~~closing date, were~~Anlin Acquisition.

   Final
Allocation
Accounts and notes receivable
   $ 3,882
Inventories
   6,778
Prepaid expenses
   246
Property and equipment
   5,029
Intangible assets
   47,100
Goodwill
   41,856
Accounts payable and accrued liabilities
   (2,320 )


Purchase price
   $ 102,571


Consideration:

Cash
   $ 99,571
Earn-out contingency
   3,000


Total fair value of consideration
   $ 102,571

~~The fair value~~defined in the indenture, the Company is required to offer to repurchase the notes at 101% of ~~working capital related items, such as accounts receivable, inventories, prepaids,~~the aggregate principal amount thereof, plus accrued and ~~accounts payable and accrued liabilities, approximated their book values at~~unpaid interest, if any, to the date of ~~acquisition. Valuations of~~purchase. We also may make optional redemptions at various premiums including a make-whole call at the ~~intangible assets (See Note 7) were valued using income and royalty relief approaches based~~then current treasury rate plus 50 basis points prior to October 1, 2024, then 102.188% on ~~projections provided by management, which we consider to be Level 3 inputs.~~or after August 1, 2024, 101.094% on or after August 2025, then at 100.000% on or after August 1, 2026.

~~Acquisition costs totaling $0.9 million are included in selling, general, and administrative expenses on the condensed consolidated statement of comprehensive income~~The indenture for the ~~nine months ended October 1, 2016, and relate to legal expenses, representations and warranties insurance, diligence, and accounting services.~~

~~The remaining consideration, after identified intangible assets and~~2021 Senior Notes due 2029 includes certain covenants limiting the ~~net assets and liabilities recorded at fair value, was determined to be $41.9 million,~~ability of which $38.9 million is expected to be deductible for tax purposes. Goodwill represents the increased value of the combined entity through additional sales channel opportunities as well as operational efficiencies.

~~The stock purchase agreement for the acquisition of WinDoor (“SPA”) provided for the potential for anearn-out~~ contingency payment to sellers had WinDoor achieved a certain level of sales in the calendar year ended December 31, 2016. The potential undiscounted amount of all future payments that could be required to be paid under the contingent~~earn-out~~ ~~consideration arrangement was between $0 and $3.0 million. We had recorded anearn-out~~ contingency liability of $3.0 million on the closing date, which represented its then estimated fair value using undiscounted cash flows, based on probability adjusted level of revenues with a range whose minimum was $51.0 million. Based on revised estimates using actual sales through the end of the 2016 third quarter, we concluded the probability was remote that WinDoor’s actual sales for 2016 would reach the $46.0 million minimum level required for the minimum payment of $2.7 million possible under the~~earn-out~~ contingency arrangement and, therefore, determined that the entire initial estimated fair value of $3.0 million should be reversed. For tax purposes, contingent consideration does not become part of tax goodwill until paid. As such, the amount of goodwill deductible for tax purposes is $3.0 million less than the amount recorded for book purposes.

The SPA had a post-closing working capital calculation whereby we were required to prepare, and deliver to the sellers, a final statement of purchase price, including our calculation of the amount we find net working capital actually to have been as of the closing date. During the third quarter of 2016, the Company and any guarantors to, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the ~~sellers reached agreement~~Company’s assets; (vii) place restrictions on the ~~calculation~~ability of ~~net working capital, which resulted in a payment of $0.7 million~~subsidiaries to pay dividends or make other payments to the ~~Company from sellers, resulting in~~Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a ~~decrease in the purchase price which~~number of important exceptions and qualifications.

2016 Credit Agreement due 2024

On February 16, 2016, we ~~recorded as a reduction in goodwill.~~

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include WinDoor’s actual results for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of WinDoor adjusted for the following: amortization expense related to the intangible assets arising from the acquisition and interest expense to reflectentered into the 2016 Credit Agreement entered into in connection with the acquisition. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

   Nine Months Ended
   October 1, 2016
(in thousands, except per share amounts)
Pro Forma Results

Net sales
   $ 351,507


Net income
   $ 18,280


Net income per common share:

Basic
   $ 0.37


Diluted
   $ 0.36

~~US Impact Systems, Inc. Acquisition~~

On August 31, 2016, CGIC, a wholly-owned subsidiary of CGI, which is wholly-owned by PGT Industries, Inc., which, in turn, is wholly-owned by the Company, entered into an asset purchase agreement with US Impact Systems, Inc. (USI) and its stockholders whereby CGIC purchased the operations and certain assets of, and assumed certain liabilities of USI. USI was an established fabricator of storefront window and door products. The fair value of the consideration transferred in the acquisition was $1.9 million, which was allocated to current and other assets totaling $1.8 million and amortizable intangible assets totaling $0.6 million, and goodwill of $0.6 million, less the assumption of accounts payable and accrued liabilities with estimated fair values totaling $1.2 million, in accordance with ASC 805, “Business Combinations”. This transaction did not have a significant impact on our financial position or operating results for 2016.

~~NOTE 7. GOODWILL, TRADE NAMES, AND OTHER INTANGIBLE ASSETS~~

~~Goodwill, trade names, and other intangible assets, net, are as follows:~~

         Initial
   September 30,    December 31,    Useful Life
   2017    2016    (in years)
   (in thousands)
Goodwill
   $ 108,060    $ 108,060    indefinite





Trade names and other intangible assets:

Trade names
   $ 75,841    $ 75,841    indefinite





Customer relationships
   106,647    106,647    3-10
Developed technology
   3,000    3,000    9-10
Non-compete agreement
   1,668    1,668    2-5
Software license
   590    —      2
Less: Accumulated amortization
   (71,044 )    (66,226 )





Subtotal
   40,861    45,089





Other intangible assets, net
   $ 116,702    $ 120,930

~~Software License~~

In July 2017, we purchased an enterprise-wide software license relating to office productivity software. We estimated the then fair value of this software license to be $590 thousand, our purchase price. The software license is being amortized on a straight-line basis over its estimated useful life, which we have determined to be two years.

~~NOTE 8. LONG-TERM DEBT~~

   September 30,
2017    December 31,
2016
   (in thousands)
Term loan payable under the 2016 Credit Agreement
   $ 243,975    $ 263,975
Other debt
   529    —
Fees, costs and original issue discount
   (13,037 )    (16,102 )




Long-term debt
   231,467    247,873
Less current portion of long-term debt
   (290 )    —




Long-term debt, less current portion
   $ 231,177    $ 247,873

~~2016 Credit Agreement~~

~~On February 16, 2016, we entered into a Credit Agreement (“2016 Credit Agreement”),~~due 2024, among us, the lending institutions identified in the 2016 Credit Agreement due 2024, and ~~Deutsche Bank AG New York Branch,~~Truist Financial Corporation (formerly known as SunTrust Bank), as Administrative Agent and Collateral Agent. The 2016 Credit Agreement due 2024 establishes senior secured credit facilities in an aggregate amount of ~~$310.0~~$310.0 million, consisting of a ~~$270.0~~$270.0 million Term B term loan facility originally maturing in ~~six years~~February 2022 that ~~will amortize~~amortizes on a basis of 1%1% annually during ~~the~~its six-year term, and a ~~$40.0~~$40.0 million revolving credit facility originally maturing in ~~five years~~February 2021 that ~~includes~~included a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement due 2024 are, subject to exceptions, guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries that are restricted subsidiaries and secured by substantially all of our assets as well as our direct and indirect restricted subsidiaries’ assets.

On March 16, 2018, we entered into an amendment of our 2016 Credit Agreement due 2024 (the “Second Amendment”). The Second Amendment, among other things, decreased the applicable interest rate margins for the Initial Term Loans (as defined in the 2016 Credit Agreement due 2024) from (i) 3.75% to 2.50%, in the case of the Base Rate Loans (as defined in the 2016 Credit Agreement due 2024), and (ii) 4.75% to 3.50%, in the case of the Eurodollar Loans (as defined in the 2016 Credit Agreement due 2024). On February 17, 2017, we entered into the first amendment to our 2016 Credit Agreement due 2024, which also resulted in decreases in the applicable margins, but which, unlike the Second Amendment, did not include any changes in lender positions.

On October 31, 2019, we entered into an amendment of our 2016 Credit Agreement due 2024 (“Third Amendment”). The Third Amendment provided for, among other things, (i) a three-year Term A loan in the then aggregate principal amount of $64.0 million (the “Initial Term A Loan”), maturing in October 2022, which refinanced in full our existing Term B term loan facility under the 2016 Credit Agreement, and had no regularly scheduled amortization, and (ii) a new five-year revolving credit facility in an aggregate principal amount of up to $80.0 million (the “Revolving Facility”), maturing in October 2024, which replaced our then existing $40.0 million revolving credit facility under the 2016 Credit Agreement, and includes a swing-line facility and letter of credit facility. Our obligations under the 2016 Credit Agreement continue to be secured by substantially all of our assets, as well as our direct and indirect subsidiaries’ ~~assets. As~~assets, and is senior in position to the 2021 Senior Notes due 2029.

On October 25, 2021, we entered into an amendment of ~~September 30, 2017, there were $0.2 million of letters of credit outstanding and $39.8 million available on the revolver.~~

~~Interest on all loans under the~~our 2016 Credit Agreement is payable either quarterly or at the expiration of any LIBOR interest period applicable thereto. Prior to amending the 2016 Credit Agreement on February 17, 2017, as described below, borrowings under the term loans and the revolving credit facility accrued interest at("Fourth Amendment"). The Fourth Amendment provides for, among other things, a rate equal to, at our option, LIBOR (with a floor of 100 basis points in respect of the term loan), or a base rate (with a floor of 200 basis points in respect of the term loan) plus an applicable margin. The applicable margin was 575 basis pointsthree-year Term A loan in the ~~case~~aggregate maximum available amount of ~~LIBOR and 475 basis points in~~$60.0 million (the "Incremental Term A Loan"), proceeds from which were used to fund the ~~case of~~Anlin Acquisition. The Fourth Amendment does not change any terms relating to the ~~base rate. We will~~Revolving Facility, under which we pay quarterly fees on the unused portion of the revolving credit facility equal to ~~50 basis points per annum as well as~~ a ~~quarterly letter~~percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. As of April 2, 2022, there were $5.7 million in letters of credit ~~fee at 575 basis points per annum plus a 12.5 basis point facing fee per annum on~~outstanding and $74.3 million available under the ~~face amount of any outstanding letters of credit.~~ Revolving Facility.

The weighted averageall-in interest rate for borrowings under the term-loan portion of the 2016 Credit ~~agreement~~Agreement due 2024 was ~~6.02%~~2.46% as of ~~September 30, 2017,~~April 2, 2022, and was ~~5.75%~~2.10% at ~~December 31, 2016.~~January 1, 2022.

On February 17, 2017, we entered into an amendment of our 2016 Credit Agreement (“First Amendment”). The First Amendment, among other things, (a) decreases the applicable interest rate margins for the Initial Term Loans (as defined in the Credit Agreement) from (i) 4.75% to 3.75%, in the case of the Base Rate Loans (as defined in the Credit Agreement), and (ii) 5.75% to 4.75%, in the case of the Eurodollar Loans (as defined in the Credit Agreement), and (b) adds a soft call premium equal to 1.0% of the principal repaid or repriced if the Initial Term Loans are voluntarily refinanced or repriced pursuant to certain refinancing transactions within twelve months of the effective date of the First Amendment.- 20 -

The 2016 Credit Agreement contains a springing financial covenant, if we draw in excess of twenty percent (20%) of the revolving facility, which requires us to maintain a maximum total net leverage ratio (based on the ratio of total debt for borrowed money to trailing EBITDA, each as defined in the 2016 Credit Agreement), and will be tested quarterly based on the last four fiscal quarters and is set at levels as described in the 2016 Credit Agreement. As of September 30, 2017, no such test is required as we have not exceeded 20% of our revolving capacity. We believe that our total net leverage ratio during the third quarter of 2017 was in compliance with the 2016 Credit Agreement, and that we are in compliance with all covenants.Deferred Financing Costs

The 2016 Credit Agreement also contains a number of affirmative and restrictive covenants, including limitations on the incurrence of additional debt, liens on property, acquisitions and investments, loans and guarantees, mergers, consolidations, liquidations and dissolutions, asset sales, dividends and other payments in respect of our capital stock, prepayments of certain debt and transactions with affiliates. The 2016 Credit Agreement also contains customary events of default. Upon the occurrence of an event of default, the amounts outstanding under the 2016 Credit Agreement may be accelerated and may become immediately due and payable. As of September 30, 2017, we were in compliance with all affirmative and restrictive covenants.

In connection with entering into the 2016 Credit Agreement, on February 16, 2016, we terminated our prior credit agreement, dated as of September 22, 2014, among PGT Industries, Inc., as the borrower, the Company, as guarantor, the lenders from time to time party thereto and Deutsche Bank, as administrative agent and collateral agent (“2014 Credit Agreement”). Along with cash on hand, proceeds from the term loan facility under the 2016 Credit Agreement were used to repay amounts outstanding under the 2014 Credit Agreement, acquire WinDoor, and pay certain fees and expenses.

As of September 30, 2017, the face value of debt outstanding under the 2016 Credit Agreement was $244.0 million, and accrued interest was $0.4 million. During the third quarter of 2017, we made voluntary prepayments of outstanding borrowings under the term-loan portion of the 2016 Credit Agreement totaling $20.0 million, composed of a payment of $8.0 million made on September 29, 2017, and of $12.0 million made on July 7, 2017.

~~Other Debt~~

~~In July 2017, we entered into atwo-year~~ financing arrangement for the purchase of an enterprise-wide software license relating to office productivity software. This financing arrangement requires 24 monthly payments of $26 thousand each. We estimated the value of this financing arrangement to be $590 thousand, using an imputed annual interest rate of 6.00%, which approximates our borrowing rate under the 2016 Credit Agreement, a Level 3 input. At September 30, 2017, there was $529 thousand outstanding under this financing arrangement.

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, ~~and discount~~ for the three months ended ~~September 30, 2017,~~April 2, 2022, are as follows. As a result of the voluntary prepayments of debt discussed above, we accelerated the amortization of lenders fees and discount relating to the term-loan portion of the 2016 Credit Agreement of $1.0 million, which is included in interest expense in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2017. All ~~debt-related fees,~~deferred financing costs ~~and original issue discount~~ are classified as a reduction of the carrying value of long-term debt:

(in thousands)    Total
At beginning of year
   $ 16,102
Amortization expense through February 17, 2017
   (359 )


At time of repricing
   15,743
Less: Amortization expense after repricing
   (1,726 )
Less: Accelerated amortization relating to debt prepayments
   (980 )


At end of period
   $ 13,037


(in thousands)	Total
At beginning of year	$	9,345
Less: Amortization expense		(304	)
At end of period	$	9,041

Estimated amortization expense relating to ~~third-party fees and~~deferred financing costs ~~lender fees and discount~~ for the years indicated as of ~~September 30, 2017,~~April 2, 2022, is as follows:

(in thousands)    Total
Remainder of 2017
   $ 670
2018
   2,785
2019
   2,966
2020
   3,224
2021
   3,011
2022
   381


Total
   $ 13,037


(in thousands)	Total
Remainder of 2022	$	929
2023		1,282
2024		1,282
2025		1,083
2026		1,114
Thereafter		3,351

Total	$	9,041

~~As a result of the voluntary prepayments totaling $20.0 million we made during the third quarter of 2017, we~~We have no ~~future scheduled repayments under~~schedule payments of outstanding debt until the contractual maturity of the 2016 Credit Agreement ~~until the maturity of the facility on February 21, 2022. The~~in October 2024. Our contractual future maturities of long-term debt ~~outstanding, including the financing arrangement described as other debt, as of September 30, 2017,~~ are as follows (at face value):


(in thousands)
Remainder of 2022	$	0
2023		0
2024		60,000
2025		0
2026		0
Thereafter		575,000

Total	$	635,000

NOTE 10. LEASES

We lease certain of our manufacturing facilities under operating leases. We also lease production equipment, vehicles, computer equipment, storage units and office equipment under operating leases. Our leases have remaining lease terms of 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. All of our leases are operating leases. We did not recognize right-of-use assets or lease liabilities for certain short-term leases that are month-to-month leases. The lease expense relating to these leases is not significant.

   (in thousands)
Remainder of 2017
   $ 71
2018
   295
2019
   163
2020
   —
2021
   —
2022
   243,975


Total
   $ 244,504

The components of lease expense for the three months ended April 2, 2022 and April 3, 2021, are as follows (in thousands):


	Three Months Ended
	April 2,		April 3,
	2022		2021

Operating lease cost	$	4,839	$	2,879
Short-term lease cost		2,305		2,200
Total lease cost	$	7,144	$	5,079

- 21 -

Other information relating to leases for the three months ended April 2, 2022 and April 3, 2021, are as follows (in thousands, except years and percentages):


	Three Months Ended
	April 2,			April 3,
	2022			2021
Supplemental cash flows information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows relating to operating leases	$	(4,529	)	$	(2,764	)

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,324		$	29,490

Weighted average remaining lease term in years
Operating leases		6.57			7.23

Weighted average discount rate
Operating leases		5.5	%		5.6	%

Future maturities under operating leases were as follows at April 2, 2022 and January 1, 2022 (in thousands):


	April 2,			January 1,
	2022			2022
Remainder of 2022	$	-		$	17,929
2023		13,714			17,577
2024		17,947			16,990
2025		17,365			15,987
2026		16,240			15,025
2027		15,146			14,358
Thereafter		32,257			17,891

Total future minimum lease payments		112,669			115,757

Less: Imputed interest		(17,520	)		(18,674	)

Operating lease liability - total	$	95,149		$	97,083

Reported as of April 2, 2022 and January 1, 2022:
Current portion of operating lease liability	$	13,676		$	13,180
Operating lease liability, less current portion		81,473			83,903

Operating lease liability - total	$	95,149		$	97,083

As of April 2, 2022, we had no additional operating or finance leases that have not yet commenced. Our operating leases expire at various times through 2032. Lease expense was $7.1 million for the three months ended April 2, 2022 and was $5.1 million for the three months ended April 3, 2021. Of the $7.1 million for the three months ended April 2, 2022, $3.6 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $5.1 million for the three months ended April 3, 2021, $2.2 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses.

NOTE ~~11.~~13. FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The accounting guidance concerning fair value allows us to elect to measure financial instruments at fair value and report the changes in fair value through earnings. This election can only be made at certain specified dates and is irrevocable once made. We do not have a policy regarding specific assets or liabilities to elect to measure at fair value, but rather we make the election on aninstrument-by-instrument basis as they are acquired or incurred.

During the three months ended ~~September 30, 2017,~~April 2, 2022 or ~~October 1, 2016,~~April 3, 2021, we did ~~not~~0t make any transfers between Level 2 and Level 3 financial assets. We conduct reviews on a quarterly basis to verify pricing, assess liquidity, and determine if significant inputs have changed that would impact the fair value hierarchy disclosure.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, accounts and notes receivable, and accounts payable and accrued liabilities, whose carrying amounts approximate their fair values due to their short-term nature. Our financial instruments also include borrowings under our 2016 Credit Agreement, as well as the 2021 Senior Notes due 2029, all classified as long-term debt. The fair value of ~~our long-term debt~~borrowings under the 2016 Credit Agreement due 2024 approximated its carrying value due to its variable-rate nature, and was approximately $60.0 million as of April 2, 2022, and January 1, 2022, compared to a principal outstanding value of $60.0 million at those dates, respectively. The fair value of the 2021 Senior Notes due 2029 is based on debt with similar terms and characteristics and was approximately ~~$248.5~~$531.2 million as of ~~September 30, 2017,~~April 2, 2022, compared to a principal outstanding value of ~~$244.0~~$575.0 million, and ~~$264.6~~the fair value was approximately $578.2 million as of ~~December 31, 2016,~~January 1, 2022, compared to a principal outstanding value of ~~$264.0~~$575.0 million.

- 23 -

Items Measured at Fair Value

The following are measured in the condensed consolidated financial statements at fair value on a recurring basis and are categorized in the table below based upon the lowest level of significant input to the valuation (in thousands):


	Fair Value Measurements
	Assets (Liabilities)
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
April 2, 2022	Total		(Level 1)		(Level 2)		(Level 3)
Description
Aluminum contracts	$	9,058	$	—	$	9,058	$	—
MTP contracts		4,383		—		4,383		—

	$	13,441	$	—	$	13,441	$	—


	Fair Value Measurements
	Assets (Liabilities)
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
January 1, 2022	Total		(Level 1)		(Level 2)		(Level 3)
Description
Aluminum contracts	$	4,829	$	—	$	4,829	$	—
MTP contracts		4,599		—		4,599		—
	$	9,428	$	—	$	9,428	$	—

See Note 14 for a description of the methods and assumptions used in the determination of the fair values ~~were determined~~of our aluminum forward and Midwest Transaction Premium (“MTP”) contracts, as well as the basis for classifying these assets and liabilities as Level 2.

NOTE 14. DERIVATIVES

Aluminum Contracts and Midwest Transaction Premium

We enter into aluminum forward contracts to hedge the fluctuations in the purchase price of aluminum extrusion we use in production. In early 2020, we began entering into forward contracts to hedge the fluctuations in the price of the delivery component of our aluminum extrusion purchases, known as the Midwest Transaction Premium, or MTP. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted purchases of aluminum and the related MTP.

We record our aluminum hedge contracts at fair value, based on ~~observed~~ trading values for aluminum forward contracts. Aluminum forward contracts identical to those held by us trade on the London Metal Exchange (“LME”). The LME provides a transparent forum and is the world’s largest center for the trading of futures contracts for non-ferrous metals. The prices are used by the metals industry worldwide as the basis for contracts for the movement of physical material throughout the production cycle. Based on this high degree of volume and liquidity in the LME, we believe the valuation price at any measurement date for contracts with identical terms as to prompt date, trade date and trade price as those we hold at any time represents a contract’s exit price to be used for purposes of determining fair value.

We record our MTP hedge contracts at fair value, based on the Platts MW US Transaction price per pound assessment, which has been a benchmark for decades in the North American aluminum industry. Platts surveys the North American market daily to capture trades, bids and offers on a delivered Midwest basis. Data is normalized to reflect the typical price per pound between the largest number of market participants, for delivery within 7 to 30 days from date of publication, net-30-day payment terms, for typical order quantities, chemistries and freight allowances. The survey is extensive and encompasses both domestic and offshore producers, traders and brokers that are varied in scope. Based on the extensive nature of this pricing mechanism, we believe the Platts MW US Transaction price at any time represents a contract’s exit price to be used for purposes of determining fair value.

- 24 -

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings. We assess our risk of non-performance when measuring the fair value of our ~~debt~~financial instruments in a liability position by evaluating our credit ratings, our current liquidity including cash on hand and availability under our revolving credit facility as compared to the maturities of the financial liabilities. We do not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting arrangement.

At April 2, 2022, the fair value of our aluminum forward contracts was in an asset position of $9.1 million. We had 23 outstanding forward contracts for the purchase of 36.3 million pounds of aluminum through December 2022, at an average price of $1.32 per pound, which excludes the Midwest premium, with maturity dates of between ~~domestic~~two months and ten months. At April 2, 2022, the fair value of our MTP contracts was in an assetposition of $4.4 million. We had 7 outstanding MTP contracts to hedge the Platt US MW Transaction price per pound for the delivery of 17.0 million pounds of aluminum through December 2022, at an average price of $0.12 per pound, with maturity dates of between two months and ten months.We assessed the risk of non-performance of the Company and our counterparty to these contracts, as applicable, and determined it was immaterial and, therefore, did not record any adjustment to their fair values as of April 2, 2022.

We assess the effectiveness of our aluminum forward and MTP contracts by comparing the change in the fair value of the forward contract to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our aluminum forward contracts is reported as a component of accumulated other comprehensive income (loss) and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. The amount of income, net, recognized in the “accumulated other comprehensive income (loss)” line item in the accompanying condensed consolidated balance sheet as of April 2, 2022, that we expect will be reclassified to earnings within the next twelve months, is approximately $13.4 million.

The fair values of our aluminum hedges and MTP contracts are classified in the accompanying condensed consolidated balance sheets at April 2, 2022 and January 1, 2022, as follows (in thousands):

Derivative Assets

Derivative Liabilities

April 2, 2022

Derivatives designated as hedging

instruments under Subtopic 815-20:

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivative instruments:

Aluminum contracts

Other current assets

10,184

Accrued liabilities

(1,126

)

MTP contracts

Other current assets

4,383

Accrued liabilities

—

Aluminum contracts

Other assets

—

Other liabilities

—

MTP contracts

Other assets

—

Other liabilities

—

Total derivative instruments

Total derivative assets

14,567

Total derivative liabilities

(1,126

)

Derivative Assets

Derivative Liabilities

January 1, 2022

Derivatives designated as hedging

instruments under Subtopic 815-20:

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivative instruments:

Aluminum contracts

Other current assets

4,829

Accrued liabilities

—

MTP contracts

Other current assets

4,599

Accrued liabilities

—

Aluminum contracts

Other assets

—

Other liabilities

—

MTP contracts

Other assets

—

Other liabilities

—

Total derivative instruments

Total derivative assets

9,428

Total derivative liabilities

—

The ending accumulated balance for the aluminum forward and MTP contracts included in accumulated other comprehensive income (losses), net of tax, was an accumulated other comprehensive income of $10.0 million as of April 2, 2022, and was an accumulated other comprehensive income of $7.0 million at January 1, 2022. The income tax effects of accumulated comprehensive income (losses) are released as amounts are reclassified out of accumulated comprehensive income (losses) at the income tax rate used at the time those income tax effects were provided, which generally represents our blended statutory income tax rate.

- 25 -

The following represents the gains (losses) on derivative financial ~~institutions.~~

instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three months ended April 2, 2022 and April 3, 2021 (in thousands):


	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss) Recognized in OCI(L) on Derivatives				Location of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income
	Three Months Ended					Three Months Ended
	April 2,		April 3,			April 2,		April 3,
	2022		2021			2022		2021

Aluminum contracts	$	5,607	$	4,083	Cost of sales	$	1,378	$	1,388

MTP contracts	$	468	$	4,205	Cost of sales	$	684	$	387

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the ~~Management’s~~year ended January 1, 2022, as filed with the Securities and Exchange Commission. Management's Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements that reflect our plans, estimates, and beliefs, all of which are based on our current expectations and could be affected by certain uncertainties, risks, and other factors described under Cautionary Note Regarding Forward-Looking Statements and elsewhere throughout this Quarterly Report, as well as the ~~consolidated financial statements and notes thereto~~factors described in our Annual Report on Form 10-K for the year ended ~~December 31, 2016, included~~January 1, 2022, and subsequent periodic reports filed with the Securities and Exchange Commission, particularly under "Risk Factors." Our actual results could differ materially from those discussed in ~~our most recent Annual Report on Form10-K~~ ~~as well as our reports on Forms10-Q~~ ~~and8-K~~ ~~and other publicly available information. All amounts herein are unaudited.~~the forward-looking statements.

~~Except for historical information contained herein, the matters set forth in this~~

This Quarterly Report on Form10-Q ~~are forward-looking statements. These~~ 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 ~~are based on management’s current expectations and plans, which involve risks and uncertainties. Such forward-looking statements generally~~ can be identified by ~~the use of forward-looking terminology~~words such asas: “assume,” “believe,” “could,” “estimate,” “guidance,” “may,” ~~“will,”“believe,” “expect,~~“outlook,” “forecast,~~” “guidance,~~” “intend,” “could,” “project,” “estimate,” “anticipate,” “should,” “plan,” “will” and similar ~~terminology. You~~references to future periods.

Forward-looking statements are ~~cautioned~~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 ~~to place undue reliance~~rely on any of these forward-looking ~~statements, which speak only as of the filing date of this Quarterly Report and which involve risks and uncertainties~~statements. Important factors that ~~may~~could cause our actual results and financial condition to differ materially from those ~~set forth~~indicated in the ~~forward looking statements. Those risks and uncertainties that could cause actual results to differ materially from those described in our~~ forward-looking statements include, ~~but are not limited to:~~among others, the following:

Any forward-looking ~~statements~~statement made by us orin this Quarterly Report on ~~our behalf speak~~Form 10-Q is based only on information currently available to us and speaks only as of the date ~~they are made and, except as may be required by law, we do not~~on which it is made. We undertake ~~any~~no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to ~~reflect the impact~~time, whether as a result of ~~subsequent events~~new information, future developments or ~~circumstances.~~

~~We recorded~~During the first quarter of 2022, we experienced growth at both our Southeast and Western segments, as the momentum of growth we experienced over last year continued into 2022. Of our total net sales for the first quarter of ~~$126.9~~2022 of $358.7 million, ~~down 2.3 percent~~which increased 32.3% compared to the ~~third~~first quarter of ~~2016. Sales~~2021, from $271.1 million in the 2021 first quarter, included growth both organically, and from acquisitions in 2021. Our Southeast segment's net sales were ~~$377.0~~$271.8 million in the first quarter of 2022, compared to $233.6 million in the first quarter of 2021, an increase of $38.2 million, or 16.3%. This growth was largely organic, but for the ~~nine-month~~sales of Eco being included for the entire first quarter of 2022, versus only the post-acquisition period ~~ended September 30, 2017, up 8.0 percent~~in the first quarter of 2021 from February 1, 2021. Excluding Eco, our Southeast segment grew organically by 13.8%. Our Western segment's net sales were $86.9 million in the first quarter of 2022, compared to $37.5 million in the ~~same period last year.~~

~~Our third~~first quarter of ~~2017 started strong as sales in July~~2021, an increase of $49.4 million. Sales for the first quarter of 2022 of our Western segment includes acquisition growth from Anlin and ~~August were up over 5 percent~~CRi, but still grew organically by 39.1% compared to last ~~year, which benefitted operational performance. During this period,~~year's first quarter. We believe the organic growth we ~~were regularly recording order weeks of between $10 and $11 million, and daily order volumes remained steady during the early part of September.~~

~~On September 10th, Hurricane Irma (Irma), a Category 4 storm with sustained130-mph~~ ~~winds, made landfall~~had in the ~~Florida Keys, one~~first quarter of 2022 reflects the strength of our ~~primary markets. Impacts~~portfolio of brands across our entire geographic footprint.

Our gross profit increased to $134.6 million in the first quarter of 2022, producing a gross margin of 37.5%, compared to $94.0 million in the 2021 first quarter, and a gross margin of 34.7%, an improvement in gross margin of 280 basis points from ~~this400-mile-wide~~ ~~storm~~the first quarter of 2021 to the first quarter of 2022. We were able to produce this operational improvement despite headwinds of inflationary pressure being felt ~~over~~on material and labor costs, as well as supply-chain challenges we have experienced in obtaining the ~~entire state~~required volumes of ~~Florida,~~aluminum needed to meet demand. Our hedging programs have helped reduce the pricing impact of an extremely volatile commodity market, which ~~represents 90 percent~~we continue to monitor closely, and will take action needed to offset sharp increases in raw material spot prices, should any occur. Our Eco acquisition has provided additional glass manufacturing capacity, which has helped minimize the impacts of ~~our consolidated sales.~~

~~As Irma advanced towards Florida, our daily order levels began to decrease, dropping by as much as 50 percent at times during the month as many customers~~shortages of glass in our ~~key Florida markets suspended operations. Some of~~industry. During the ~~most severely impacted areas were~~2022 first quarter, we have been focused on improving our manufacturing processes in order to reduce lead-times to meet the continued growing demand. Recent investments in our ~~most important markets in southeast and southwest Florida, which represents approximately 70 percent~~team to help them achieve higher talent levels have also helped generate improved operational efficiencies across our entire portfolio of ~~our sales. When Irma arrived, we were forced to cease operations for a period of up to six days in certain locations, a period during~~brands, which we ~~did not ship or produce any products.~~

~~We estimate that Irma caused a negative sales impact of approximately $13 million~~believe will continue to benefit our 2017 third quarter. Irma also caused an added $1.1 million in operating costs, which included $345 thousand classified within cost of sales, and $746 thousand classified within selling, general and administrative expenses. We expect some portion of those sales to be recovered in the 2017 fourth quarter, with the remainder falling into 2018, as some of our customers are still workinggross margin through ~~their post-Irma recovery efforts. For the month of October 2017, sales finished up 5 percent compared to October 2016, which has driven solid operational performance.~~

One of the biggest events that occurred recently was the passage of Florida House Bill 7071, signed into law in early May 2022. This bill provides two-year tax relief to Florida residences who chose to "harden" their homes against the damaging effects of storms through investing in impact-resistant windows, doors, and other product categories. We're excited about this great benefit for Florida home owners which we ~~are making meaningful advertising investments~~believe will provide them with the incentive needed to ~~capture opportunities for growth we expect to see in 2018~~improve the safety and ~~beyond~~value of their homes, and that their materials of choice will include impact-resistant windows and doors from ~~the heighten awareness~~our Company's portfolio of ~~our~~Florida impact-resistant products following this active hurricane season. We are also looking forward to the opportunity we have to sharpen our focus on window and door manufacturing, having partnered with Cardinal for them to supply us with high-quality door glass. Our recently announced agreement for the sale of glass manufacturing assets to Cardinal, and the related~~7-yearPGT-~~ ~~branded door glass supply agreement for Cardinal to provide us withPGT-branded~~ door glass will benefit both parties. The $28 million in cash proceeds we expect to receive from the sales of these assets provides us with an added ability to continue to pay down debt, and further strengthen our already strong balance sheet.brands.

~~For the full year 2017, the Company expects to finish within the previous guidance range for consolidated sales of $490 to $500 million.~~- 30 -

The following table presents financial data derived from our unaudited condensed consolidated statements of ~~comprehensive income~~operations as a percentage of total net sales for the periods ~~indicated~~indicated. The three-month periods ended April 2, 2022 and April 3, 2021 are composed of 13 weeks (in thousands, except percentages):


	Three Months Ended									Three Months Ended
	September 30,				October 1,					April 2,				April 3,
	2017				2016					2022				2021
	(unaudited)									(unaudited)
Net sales	$	126,876	100.0	%	$	129,807		100.0	%	$	358,662		100.0 %	$	271,092		100.0 %
Cost of sales		87,128	68.7	%		88,721		68.3	%		224,069		62.5 %		177,130		65.3 %

Gross profit		39,748	31.3	%		41,086		31.7	%		134,593		37.5 %		93,962		34.7 %

Selling, general and administrative expenses		24,950	19.7	%		22,533		17.4	%		95,882		26.7 %		69,766		25.7 %
Fair value adjustment to contingent consideration		—	—			(3,000	)	(2.3	)%

Income from operations		14,798	11.7	%		21,553		16.6	%		38,711		10.8 %		24,196		8.9 %

Interest expense, net		5,514	4.3	%		5,495		4.2	%		7,080		2.0 %		7,457		2.8 %

Income before income taxes		9,284	7.3	%		16,058		12.4	%		31,631		8.8 %		16,739		6.2 %

Income tax expense		2,992	2.4	%		5,262		4.1	%		7,805		2.2 %		3,944		1.5 %

Net income	$	6,292	5.0	%	$	10,796		8.3	%		23,826		6.6 %		12,795		4.7 %

Less: Net income attributable to redeemable non-controlling interest											(657	)	(0.2)%		(411	)	(0.2)%

Net income attributable to the Company											23,169		6.5 %		12,384		4.6 %

Change in redemption value of redeemable non-controlling interest											(2,136	)	(0.6)%		—		-

Net income attributable to common shareholders										$	21,033		5.9 %	$	12,384		4.6 %

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~APRIL 2, 2022 AND ~~OCTOBER~~APRIL 3, 2021

The three-month periods ended April 2, 2022 and April 3, 2021 are composed of 13 weeks each.

Net sales for the first quarter of 2022 were $358.7 million, an $87.6 million, or 32.3%, increase in sales, from $271.1 million in the first quarter of the prior year.

During the first quarter of 2022, we experienced growth at both our Southeast and Western segments, as the momentum of growth we experienced over last year continued into 2022. Of our total net sales for the first quarter of 2022 of $358.7 million, which increased 32.3% compared to the first quarter of 2021, from $271.1 million in the 2021 first quarter, included growth both organically, and from acquisitions in 2021. Our Southeast segment's net sales were $271.8 million in the first quarter of 2022, compared to $233.6 million in the first quarter of 2021, an increase of $38.2 million, or 16.3%. This growth was largely organic, but for the sales of Eco being included for the entire first quarter of 2022, versus only the post-acquisition period in the first quarter of 2021 from February 1, ~~2016~~2021. Excluding Eco, our Southeast segment grew organically by 13.8%. Our Western segment's net sales were $86.9 million in the first quarter of 2022, compared to $37.5 million in the first quarter of 2021, an increase of $49.4 million. Sales for the first quarter of 2022 of our Western segment includes acquisition growth from Anlin and CRi, but still grew organically by 39.1% compared to last year's first quarter. We believe the organic growth we had in the first quarter of 2022 reflects the strength of our portfolio of brands across our entire geographic footprint.

Gross profit was $134.6 million in the first quarter of 2022, an increase of $40.6 million, or 43.2%, from $94.0 million in the first quarter of 2021. Our gross margin was 37.5% in the first quarter of 2022, compared to 34.7% in the prior year first quarter. The ~~following table represents total~~increases in gross profit and gross margin include the effects of price increase actions we took actions to offset the impacts of labor and material cost headwinds we have experienced for several quarters. During the first quarter of 2022, we continued to invest in our labor talent which helped generate operational efficiencies across all our businesses in response to increasing demand and believe these actions will continue to benefit our gross margin as we try to offset the impacts of rising costs for materials and labor, and will continue to grow our company with high-quality talent.

Selling, general and administrative (“SG&A”) expenses were $95.9 million in the first quarter of 2022, an increase of $26.1 million, from $69.8 million in the first quarter of 2021. SG&A in the first quarter of 2022 was 26.7% of net sales, compared to 25.7% of net sales in the first quarter of 2021. The increase in SG&A in the first quarter of 2022, compared to last year's first quarter is partially due to the inclusion of SG&A from our 2021 acquisition of Anlin, which added $9.2 million of SG&A in the 2022 first quarter, and included $2.8 million of non-cash amortization expense relating to its intangible assets. However, the year-over-year increase in SG&A was also driven by ~~product category~~increasing distribution and variable overhead costs due to the increase in sales. Increasing fuel costs and the inflationary conditions we have experienced over the last few quarters have also impacted SG&A year-over-year.

Income from operations was $38.7 million in the first quarter of 2022, an increase of $14.5 million, from $24.2 million in the first quarter of 2021. Income from operations in the first quarter of 2022 includes $25.6 million from our Southeast segment and nearly $13.2 million from our Western segment, compared to $18.7 million and $5.5 million from our Southeast and Western segments, respectively, in the first quarter of 2021, all after allocation of corporate operating costs in both periods.

The increase in income from operations was related to the benefit from the leverage from higher sales in the first quarter of 2022 compared to last year’s first quarter, as well as the benefits of the continued efficiency improvements at both our Southeast and Western segments, more than offsetting the rising costs for materials in aluminum and glass, including the increasing costs of distribution being passed onto us by our vendors, and the continuing costs of attracting, training and retaining an experienced labor force.

Interest expense was $7.1 million in the first quarter of 2022, a decrease of $0.4 million, or 5.1%, from $7.5 million in the first quarter of 2021. The redemption of the lower amount of $425.0 million of higher rate 6.75% 2018 Senior Notes due 2026, with the higher amount of $575.0 million of lower rate 4.375% 2021 Senior Notes due 2029 in 2021 primarily resulted in a slightly lower level of interest expense in the first quarter of 2022 compared to the first quarter of 2021.

We had an income tax expense of $7.8 million for the three months ended ~~September 30, 2017, and October 1, 2016 (in millions):~~

~~Total net sales during the third quarter~~April 2, 2022, compared with income tax expense of ~~2017 were $126.9~~$3.9 million a decrease of $2.9 million, or 2.3%, from $129.8 million in total net sales for the third quarter of 2016. Our primary market is the State of Florida, from which we derive approximately 90% of our sales. On September 10, 2017, Hurricane Irma made landfall in the Florida Keys and moved north over the entire state, affecting all areas of Florida. Irma caused disruption to our ability to manufacture and distribute our products, and required us to shut-down and cease operations for a period of up to six days at certain of our locations. Irma also affected our customers’ ability to accept deliveries of our products. We estimate that lost sales directly attributable to the disruption caused by Irma for the three months ended ~~September 30, 2017, totaled approximately $13 million.~~

Net sales of impact-resistant window and door products were $108.8 million for the third quarter of 2017, a decrease of $1.4 million, or 1.3%, from $110.2 million in net sales for the third quarter of 2016. Included in sales of our impact-resistant window and door products were $77.2 million of aluminum impact sales, a decrease of $4.3 million, or 5.3%, and $31.6 million of vinyl impact sales, an increase of $2.9 million, or 10.2%.

~~Net sales ofnon-impact~~ ~~window and door products were $18.1 million for the third quarter of 2017, a decrease of $1.5 million, or 7.7%, from $19.6 million in net sales for the third quarter of 2016.~~

Gross profit was $39.7 million in the third quarter of 2017, a decrease of $1.3 million, or 3.3%, from $41.1 million in the third quarter of 2016. The gross margin percentage was 31.3% in the third quarter of 2017, compared to 31.7% in the prior year third quarter, a decrease of 0.4%. Adjusting for costs relating to Hurricane Irma, and transition costs associated with WinDoor leadership and the glass supply-chain, which combined totaled $1.0 million in the 2017 three-month period, and product line termination costs totaling $0.8 million in the 2016 three-month period, the gross margin percentage was 32.1% in the third quarter of 2017, compared to 32.3% in the prior year third quarter, a decrease of 0.2%. Improvements in scrap rates and efficiencies, which benefitted gross margin by 0.5% during the third quarter of 2017, and a price increase, which benefitted gross margin by 0.7%, were more than offset by decreases of 0.6% due to the impact of higher depreciation on higher capital spending in recent years, 0.7% due to higher aluminum prices compared to last year’s third quarter, and 0.1% due to the combined effects of lower sales volume and mix of sales.

Selling, general and administrative expenses were $25.0 million in the third quarter of 2017, an increase of approximately $2.4 million, or 10.7%, from $22.5 million in the third quarter of 2016. As a percentage of sales, these costs increased to 19.7%, an increase of 2.3%, from 17.4% from the third quarter of 2016. Selling, general and administrative expenses increased in the third quarter of 2017, compared to the third quarter of last year, due to higher distribution costs due to disruptions caused by Irma. Selling, general and administrative expenses during the three months ended September 30, 2017, also increased due to our community outreach activities which we undertook to assist those affected by Irma locally.

We record warranty costs as a selling expense within selling, general and administrative expenses. During the three months ended September 30, 2017, we recorded warranty expense at a rate of 2.04% of sales, which decreased when compared to the rate in the second quarter of 2017 of 2.22%. During the three months ended October 1, 2016, we recorded warranty expense at a rate of 2.21% of sales. We believe the decrease in warranty expense as a percentage of sales was the result of our workforce becoming more seasoned through experience and training. We expect that, as our team members continue to gain in experience, and are exposed to improved training initiatives we have implemented, combined with the use of our new thermal plastic spacer system, an innovative technology for the production of insulated glass, warranty expense, as a percentage of sales, will further decline.

The stock purchase agreement for the acquisition of WinDoor provided for the potential for an earn-out contingency payment to sellers had WinDoor achieved a certain level of sales in the calendar year ended December 31, 2016. The potential undiscounted amount of all future payments that could be required to be paid under the contingent earn-out consideration arrangement was between $0 and $3.0 million. We had recorded an earn-out contingency liability of $3.0 million on the closing date, which represented its then estimated fair value using undiscounted cash flows, based on probability adjusted level of revenues with a range whose minimum was $51.0 million. Based on revised estimates using actual sales through the end of the 2016 third quarter, we concluded the probability was remote that WinDoor’s actual sales for 2016 would reach the $46.0 million minimum level required for the minimum payment of $2.7 million possible under the earn-out contingency arrangement and, therefore, determined that the entire initial estimated fair value of $3.0 million should be reversed.

Interest expense was $5.5 million in the third quarter of 2017, representing no change from $5.5 million in the third quarter of 2016. Interest expense decreased due to a decrease in the average level of outstanding debt during the third quarter of 2017, compared to the third quarter of 2016, as the result of a total of $20 million in voluntary prepayments made during the third quarter of 2017, offset by an increase in interest expense due to accelerated amortization of lenders fees and discount of $1.0 million, which is included in interest expense in the accompanying condensed consolidated comprehensive income for the three months ended September 30, 2017.

~~As a result of recent increases in LIBOR, the weighted averageall-in~~ ~~interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement was 6.02% as of September 30, 2017.~~

~~Our income tax expense was $3.0 million for the third quarter of 2017, compared with $5.3 million for the third quarter of 2016.~~April 3, 2021. Our effective tax rate for the ~~third quarter~~three months ended April 2, 2022, was an expense rate of ~~2017 was 32.2%~~24.7%, and was ~~32.8%~~an expense rate of 23.6% for the ~~third quarter~~three months ended April 3, 2021. Our income tax expense for the three-month periods ended April 2, 2022, and April 3, 2021, includes $505 thousand and $305 thousand, respectively, relating to our 75% share of ~~2016.~~ the pre-tax earnings of Eco.

Income tax expense in the ~~third quarter~~three months ended April 2, 2022 and April 3, 2021 include discrete items of ~~2017 is net of~~income tax benefit relating to excess tax benefits ~~relating to exercises of stock options and~~from the lapses of restrictions on stock awards, ~~treated as~~which totaled $136 thousand in the three months ended April 2, 2022, and $95 thousand in the three months ended April 3, 2021. The effect of these discrete items on our effective tax rates for these periods was not significant.

In September 2021, the state of Florida announced that the corporate income tax ~~upon our adoption~~rate for the 2021 tax year was being lowered from its then current level of ~~ASU2016-09~~ ~~effective on January 1, 2017, totaling $347 thousand. Excluding this discrete item of~~4.458% to 3.535%. However, for 2022, Florida's corporate income tax ~~expense,~~rate returned to its statutory level before the passage of the Tax Cuts and Jobs Act, which is 5.5%. As such, we adjusted our annual effective tax rate for ~~the third quarter~~2022 to include this increase in rate in Florida, where a substantial portion of ~~2017 would have been 36.0%.~~

~~The effective tax rates in all periods, excluding the effect of the discrete item relating~~our business is apportioned, to ~~the treatment of excess tax benefits as discussed above, were lower than our~~an estimated combined statutory federal and state ~~tax~~ rate of ~~38.8% primarily as the result~~25.7% from our estimate in 2021 of ~~the estimated impact of the section 199 domestic manufacturing deduction, partially offset by the 50% deductibility-disallowance of meals and entertainment expenses.~~

~~RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND OCTOBER 1, 2016~~

~~The following table represents total sales by product category for the nine months ended September 30, 2017, and October 1, 2016 (in millions):~~

~~Total net sales during~~24.2%. During the first ~~nine~~three months of ~~2017~~2022 or 2021, we were ~~$377.0 million, an increase~~not required to make any payments of ~~over $27.9 million,~~estimated federal or 8.0%, from $349.0 million in total net sales for the first nine months of 2016. Our primary market is the State of Florida, from which we derive approximately 90% of our sales. On September 10, 2017, Hurricane Irma made landfall in the Florida Keys and moved north over the entire state affecting all areas of Florida. Irma caused disruption to our ability to manufacture and distribute our products, and required us to shut-down and cease operations for a period of up to six days at certain of our locations. Irma also affected our customers’ ability to accept deliveries of our products. We estimate that lost sales directlyincome taxes.

Net income attributable to ~~the disruptions caused by Irma~~redeemable non-controlling interest

Net income attributable to redeemable non-controlling interest for the three months ended ~~and therefore the nine months ended, September 30, 2017, totaled approximately $13 million.~~

~~Net sales of impact-resistant window and door products were $320.2~~April 2, 2022, was $0.7 million, for the first nine months of 2017, an increase of $29.1 million, or 10.0%, from $291.1 million in net sales for the first nine months of 2016. Included in sales of our impact-resistant window and door products were $227.3 million of aluminum impact sales, an increase of $13.6 million, or 6.4%, and $93.0 million of vinyl impact sales, an increase of $15.5 million, or 20.0%.

~~Net sales ofnon-impact~~ ~~window and door products were $56.8 million for the first nine months of 2017, an decrease of $1.1 million, or 2.0%, from $57.9 million in net sales for the first nine months of 2016.~~

Gross profit was $116.0 million in the first nine months of 2017, an increase of $7.5 million, or 6.9%, from $108.5 million in the first nine months of 2016. The gross margin percentage was 30.8% in the first nine months of 2017, compared to ~~31.1% in the prior year first nine months, a decrease of 0.3%. Adjusting~~$0.4 million for ~~costs relating to Hurricane Irma, transition costs associated with WinDoor leadership and the glass supply-chain, and costs relating to thestart-up~~ of our Thermal Plastic Spacer system line totaling $1.5 million in the 2017 nine-month period, and product line termination costs totaling $0.8 million in the 2016 nine-month period, the gross margin percentage was 31.2% in the first nine-months of 2017, compared to 31.3% in the prior year first nine-months, a decrease of 0.1%. Gross margin in the first nine months of 2017 was negatively impacted by higher material costs, primarily related to aluminum costs, which lowered gross margin by 0.7%, and by higher depreciation on higher capital spending in recent years, which lowered gross margin by 0.6%. These decreases were partially offset by a benefit of 0.4% from improvements in scrap rates and efficiencies, a benefit of 0.5% from an improved mix of sales, to higher margin products in our repair and modeling markets, and a benefit of 0.3% due to a price increase.

Selling, general and administrative expenses were $72.4 million in the first nine months of 2017, an increase of $9.2 million, or 14.5%, from $63.2 million in the first nine months of 2016. As a percentage of sales, these costs increased to 19.2%, an increase of 1.1%, from 18.1% from the first nine months of 2016. The increase in selling, general and administrative expenses was primarily related to $3.1 million in higher accrued incentive costs as a result of the improved performance, $0.7 million of costs related to management reorganization actions, $0.9 million of costs from our attendance at and participation in the National Association of Home Builders’ International Builders Show in Orlando, Florida in January 2017, higher distribution costs on the higher level of sales, and added delivery costs due to disruptions caused by Irma, and $0.7 million in higher costs directly related to Irma. Selling, general and administrative expenses during the nine months ended September 30, 2017, also increased due to our community outreach activities which we undertook to assist those affected by Irma locally.

~~We record warranty costs as a selling expense within selling, general and administrative expenses. During~~ the three months ended ~~September 30, 2017, we recorded warranty expense at a rate~~April 3, 2021, and represents the share of ~~2.04%~~the net income of ~~sales, resulting in a rate of 2.30% of sales~~Eco for the ~~nine~~period, attributable to the 25% interest of Eco not acquired by the Company.

The change in the redemption value of the redeemable non-controlling interest for the three-month period ended April 2, 2022, was $2.1 million, compared to no adjustment in the three months ended ~~September 30, 2017. During~~April 3, 2021. See Note 17 in Part I, Item 1, for a further discussion of the nine months ended October 1, 2016, we recorded warranty expense at a rate of 2.32% of sales. We believe the decrease in warranty expense as a percentage of sales was the result of our workforce becoming more seasoned through experience and training. We expect that, as our team members continue to gain in experience, and are exposed to improved training initiatives we have implemented, combined with the use of our new thermal plastic spacer system, an innovative technology for the production of insulated glass, warranty expense, as a percentage of sales, will further decline.

~~The stock purchase agreement for the acquisition of WinDoor provided for the potential for an earn-out contingency payment to sellers had WinDoor achieved a certain level of sales~~change in the calendar year ended December 31, 2016. The potential undiscounted amount of all future payments that could be required to be paid under the contingent earn-out consideration arrangement was between $0 and $3.0 million. We had recorded an earn-out contingency liability of $3.0 million on the closing date, which represented its then estimated fairredemption value ~~using undiscounted cash flows, based on probability adjusted level of revenues with a range whose minimum was $51.0 million. Based on revised estimates using actual sales through the end~~ of the 2016 third quarter, we concluded the probability was remote that WinDoor’s actual sales for 2016 would reach the $46.0 million minimum level required for the minimum payment of $2.7 million possible under the earn-out contingency arrangement and, therefore, determined that the entire initial estimated fair value of $3.0 million should be reversed.redeemable non-controlling interest.

Interest expense was $15.0 million in the first nine months of 2017, an increase of $0.1 million, from $14.9 million in the first nine months of 2016. During 2016, concurrent with the acquisition of WinDoor in the middle of the first quarter of 2016, we refinanced our then existing credit agreement into the 2016 Credit Agreement, a $270 million senior secured credit facility, which increased our outstanding debt balance to $270 million, up from $197.5 million at the time of the refinancing. The increase in interest expense was due primarily to the increase in outstanding debt under the new credit facility and resulting increase in average outstanding debt balance during the first nine months of 2017, compared to the first nine months of 2016, but was partially offset by a decrease in the average level of outstanding debt as the result of a total of $20 million in voluntary prepayments made during the third quarter of 2017. Interest expense in the first nine months of 2017 also benefitted from the February 17, 2017 repricing of the 2016 Credit Agreement, which resulted in a~~one-percentage~~ point reduction in the interest rate under the term loan portion of the facility. This benefit was offset by the accelerated amortization of lenders fees and discount of $1.0 million relating to the third quarter 2017 voluntary prepayments of term loan borrowings, which is included in interest expense in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2017.

~~As a result of recent increases in LIBOR, the weighted averageall-in~~ ~~interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement was 6.02% as of September 30, 2017.~~- 33 -

~~Debt extinguishment costs were $3.4 million in the first nine months of 2016. These costs related to thewrite-off~~ of deferred financing costs and debt discount in connection with entering into the 2016 Credit Agreement effective on February 16, 2016, which resulted in certain then existing lenders exiting the facility, and certain continuing lenders being considered debt extinguishments in the refinancing. This resulted in the write-offs of portions of the deferred financing costs and original issue discount allocated to these lenders.

Our income tax expense was $9.1 million for the first nine months of 2017, compared with $10.3 million for the first nine months of 2016. Our effective tax rate for the first nine months of 2017 was 31.8%, and was 34.5% for the first nine months of 2016. Income tax expense in the first nine months of 2017 is net of excess tax benefits relating to exercises of stock options and lapses of restrictions on stock awards treated as discrete items of income tax upon our adoption of ASU~~2016-09~~ ~~effective on January 1, 2017, totaling $1.1 million. Excluding this discrete item of income tax expense, the effective tax rate for the first nine months of 2017 would have been 35.8%.~~

The effective tax rates in all periods, excluding the effect of the discrete item relating to the treatment of excess tax benefits as discussed above, were lower than our combined statutory federal and state tax rate of 38.8% primarily as the result of the estimated impact of the section 199 domestic manufacturing deduction, partially offset by the 50% deductibility-disallowance of meals and entertainment expenses.

Our principal source of liquidity is cash flow generated by operations and supplemented by borrowings under our credit facilities. We expect that this cash generating capability will provide us with financial flexibility in meeting operating and investing ~~needs.~~needs, but there can be no assurance that will be the case in future periods. Our primary capital requirements are to fund working capital needs, meet required debt service payments on our credit facilities and fund capital expenditures.

~~Consolidated Cash Flows~~The following table summarizes our cash flow results for the first three months of 2022 and 2021:

Operating activities. Cash provided by operating activities during the first ~~nine~~three months of ~~2017~~2022 was ~~$34.7~~$17.3 million, compared to ~~$33.2~~cash used in operating activities of $1.4 million in the first ~~nine~~three months of ~~2016.~~2021. The ~~reduction~~increase in cash provided by operating activities for the first ~~nine~~three months of ~~2017,~~2022, as compared to the first ~~nine~~three months of ~~2016,~~2021, of $18.7 million, was due to the factors set forth in the table below.

Direct cash flows from operations for the first ~~nine~~three months of ~~2017~~2022 and ~~2016~~2021 are as follows:

Days sales outstanding (DSO), which we calculate as accounts receivable divided by quarterly average daily sales, was 42 days at September 30, 2017, compared to 36 days at October 1, 2016. Our DSO’s to begin the month of September 2017, were 36 days, but were negatively impacted by Irma, which caused disruptions to our customers’ invoice-payment activities, resulting in an increase in our accounts receivable balance

Inventory as of ~~September 30, 2017. DSO’s were also affected by certain larger customer projects for CGI and WinDoor, which have longer payment terms.~~

~~Inventory on hand as of September 30, 2017,~~April 2, 2022, was ~~$39.1~~$97.4 million, compared to ~~$30.5~~$91.4 million at ~~December 31, 2016,~~January 1, 2022, an increase of ~~$8.6~~$6.0 million. ~~The increase in inventory was due to the seasonal inventorybuild-up~~ due to the summer continuation of the repair and remodeling season, but also due to delivery disruptions caused by Irma, which affected our customers’ ability to accept deliveries of our products, which required us to return finished productsInventory at April 2, 2022 includes $8.7 million relating to our ~~warehouses until such time as our customers were able to accept deliveries.~~investment in Anlin.

We monitor and evaluate raw material inventory levels based on the need for each discrete item to fulfill short-term requirements calculated from current order patterns and to provide appropriate safety stock. Because ~~all~~a significant portion of our products aremade-to-order, we have ~~only~~ a ~~small~~low amount of ~~finished goods and~~work-in-process inventory. As a result of these factors, our inventories are not excessive, and we believe the value of such inventories will be realized through sales.

Investing activities.Cash used in investing activities was ~~$9.6~~$8.2 million for the first ~~nine~~three months of ~~2017,~~2022, compared to cash used in investing activities of ~~$114.6~~$100.8 million for the first ~~nine~~three months of ~~2016. We used $101.3 million of cash in the first nine months of 2016 to acquire businesses. Excluding cash used to acquire businesses, there was~~2021, a decrease in cash used in investing activities ~~due~~of $92.6 million. There was no cash used to ~~a decrease~~acquire businesses in the first three months of 2022. Cash used to acquire businesses in the first three months of 2021 totaled $94.3 million, related to our acquisition of Eco. There was an increase in cash used in capital expenditures of ~~$3.6~~$1.7 million, which went from ~~$13.3~~$6.5 million in the first ~~nine~~three months of ~~2016,~~2021, to ~~$9.7~~$8.2 million in the first ~~nine~~three months of ~~2017.~~2022. Proceeds from the sales of assets was less than $0.1 million in both the first three months of 2022 and 2021.

Financing activities.Cash used in financing activities was ~~$19.6~~$1.7 million in the first ~~nine~~three months of ~~2017,~~2022, compared to cash provided byin financing activities of ~~$49.8~~$60.9 million in the first ~~nine~~three months of ~~2016,~~2021, a ~~decrease~~change in cash provided to cash used in financing activities totaling $62.6 million. In the first three months of ~~$69.4~~2021, we issued the $60.0 million of Second Additional Senior Notes, with a

premium of $3.3 million, which provided proceeds totaling $63.3 million. The proceeds of $63.3 million from the issuance of the Second Additional Senior Notes were used to partially fund our acquisition of Eco.

We ~~made repayments of long-term debt of $20.1~~paid financing costs totaling $1.4 million in the first ~~nine~~three months of ~~2017,~~2021, including ~~a total of $20.0 million in voluntary prepayments of outstanding borrowing under~~financing costs relating to bank fees and professional services costs relating to the ~~term loan facility~~offering and issuance of the 2016 Credit Agreement, compared to cash used for repayments of long-term debt in the first nine months of 2016 of $203.5 million. Cash used for payments of long-term debt of $203.5 million in the first nine months of 2016 was the result of the February 2016 refinancing and contemporaneous~~pay-down~~ of $197.5 million of our then existing credit facility. Subsequent to the refinancing, $2.0 million had been repaid as scheduled debt repayments through the end of the third quarter of 2016. In addition, we made a voluntary prepayment of $4.0 million on September 30, 2016.

The February 2016 refinancing resulted in $261.0 million in net proceeds from the issuance of long-term debt. In addition, there were payments of financing costs of $7.2 million related to the refinancing.Second Additional Senior Notes. Taxes paid relating to common stock withheld from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock awards were ~~$0.2~~$1.7 million in the first ~~nine~~three months of ~~2017,~~2022, versus ~~$0.1~~$1.0 million in the first ~~nine~~three months of ~~2016,~~2021, an increase in cash used of ~~$0.1~~$0.7 million. There was a decrease of $2.7 million in cash used to purchase treasury shares. Proceeds from the exercises of stock options were approximately equal in the first nine months of 2017, versus the first nine months of 2016. Also, there was a $1.6 million decrease relating to excess tax benefits due to our adoption of ASU~~2016-09,~~ ~~which no longer requires excess tax benefits to be presented as a financing activity.~~

On September 24, 2021, we completed the issuance of $575.0 million aggregate principal amount of 4.375% senior notes (“2021 Senior Notes due 2029”), issued at 100% of their principal amount. The 2021 Senior Notes due 2029 are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future restricted subsidiaries, other than any restricted subsidiary of the Company that does not guarantee the existing senior secured credit facilities or any permitted refinancing thereof. The 2021 Senior Notes due 2029 are senior unsecured obligations of the Company and the guarantors, respectively, and rank pari passu in right of payment with all existing and future senior debt and senior to all existing and future subordinated debt of the Company and the guarantors. The 2021 Senior Notes due 2029 were offered under Rule 144A of the Securities Act, and in transactions outside the United States under Regulation S of the Securities Act, and have not been, and will not be, registered under the Securities Act.

The 2021 Senior Notes due 2029 mature on October 1, 2029. Interest on the 2021 Senior Notes due 2029 is payable semi-annually, in arrears, beginning on April 1, 2022, with interest accruing at a rate of 4.375% per annum from September 24, 2021. We incurred financing costs relating to bank fees and professional services costs relating to the offering and issuance of the 2021 Senior Notes due 2029 totaling $8.7 million, which included a 1.25% lender spread on the total principal value of the 2021 Senior Notes due 2029, or $7.2 million, and $1.5 million of other costs, all of which are being amortized under the effective interest method.

As of April 2, 2022, the face value of debt outstanding under the 2021 Senior Notes due 2029 was $575.0 million, and interest began accruing on September 24, 2021. Proceeds from the 2021 Senior Notes due 2029 were used, in part, to redeem in full the $425.0 million of 2018 Senior Notes due 2026, including the related fees, costs and the prepayment call premium of $21.5 million, representing 5.063% of the $425.0 million face value then outstanding, prepay the outstanding term loan borrowings under the 2016 Credit Agreement of $54.0 million and the related fees and costs, and finance the Anlin Acquisition in the fourth quarter of 2021. See Note 6, Acquisitions, for a discussion of the Anlin Acquisition.

The indenture for the 2021 Senior Notes due 2029 gives us the option to redeem some or all of the 2021 Senior Notes due 2029 at the redemption prices and on the terms specified in the indenture governing the 2021 Senior Notes due 2029. The indenture governing the 2021 Senior Notes due 2029 does not require us to make any mandatory redemptions or sinking fund payments. However, upon the occurrence of a change of control, as defined in the indenture, the Company is required to offer to repurchase the notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. We also may make optional redemptions at various premiums including a make-whole call at the then current treasury rate plus 50 basis points prior to October 1, 2024, then 102.188% on or after August 1, 2024, 101.094% on or after August 2025, then at 100.000% on or after August 1, 2026.

The indenture for the 2021 Senior Notes due 2029 includes certain covenants limiting the ability of the Company and any guarantors to, (i) incur additional indebtedness; (ii) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments; (iii) enter into agreements that restrict distributions from restricted subsidiaries; (iv) sell or otherwise dispose of assets; (v) enter into transactions with affiliates; (vi) create or incur liens; merge, consolidate or sell all or substantially all of the Company’s assets; (vii) place restrictions on the ability of subsidiaries to pay dividends or make other payments to the Company; and (viii) designate the Company’s subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.

On February 16, 2016, we entered into the 2016 Credit Agreement due 2024, among us, the lending institutions identified in the 2016 Credit Agreement due 2024, and ~~Deutsche Bank AG New York Branch,~~Truist Financial Corporation (formerly known as SunTrust Bank), as Administrative Agent and Collateral Agent. The 2016 Credit Agreement due 2024 establishes ~~new~~ senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility originally maturing in ~~six years~~February 2022 that ~~will amortize~~amortizes on a basis of 1% annually during ~~the~~its six-year term, and a $40.0 million revolving credit facility originally maturing in ~~five years~~February 2021 that ~~includes~~included a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement due 2024 are, subject to exceptions, guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries that are restricted subsidiaries and secured by substantially all of our assets as well as our direct and indirect restricted subsidiaries’ assets.

On October 25, 2021, we entered into an amendment of ~~September 30, 2017, there were $0.2 million of letters of credit outstanding and $39.8 million available on the revolver.~~

~~Interest on all loans under the~~our 2016 Credit Agreement is payable either quarterly or at the expiration of any LIBOR interest period applicable thereto. Prior to amending the 2016 Credit Agreement on February 17, 2017, as described below, borrowings under the term loans and the revolving credit facility accrued interest at("Fourth Amendment"). The Fourth Amendment provides for, among other things, a rate equal to, at our option, LIBOR (with a floor of 100 basis points in respect of the term loan), or a base rate (with a floor of 200 basis points in respect of the term loan) plus an applicable margin. The applicable margin was 575 basis pointsthree-year Term A loan in the ~~case~~aggregate maximum available amount of ~~LIBOR and 475 basis points in~~$60.0 million (the "Incremental Term A Loan"), proceeds from which were used to fund the ~~case of~~Anlin Acquisition. The Fourth Amendment does not change any terms relating to the ~~base rate. We~~Revolving Facility, under which we pay quarterly fees on the unused portion of the revolving credit facility equal to ~~50 basis points per annum as well as~~ a ~~quarterly letter~~percentage spread (ranging from 0.25% to 0.35%) based on our first lien net leverage ratio. As of April 2, 2022, there were $5.7 million in letters of credit ~~fee at 575 basis points per annum plus a 12.5 basis point facing fee per annum on~~outstanding and $74.3 million available under the ~~face amount of any outstanding letters of credit.~~ Revolving Facility.

The weighted averageall-in interest rate for borrowings under the term-loan portion of the 2016 Credit Agreement due 2024 was ~~6.02%~~2.46% as of ~~September 30, 2017,~~April 2, 2022, and was ~~5.75%~~2.10% at ~~December 31, 2016.~~January 1, 2022.

On February 17, 2017, we entered into an amendment of our 2016 Credit Agreement. The First Amendment, among other things, (a) decreases the applicable interest rate margins for the Initial Term Loans (as defined in the Credit Agreement) from (i) 4.75% to 3.75%, in the case of the Base Rate Loans (as defined in the Credit Agreement), and (ii) 5.75% to 4.75%, in the case of the Eurodollar Loans (as defined in the Credit Agreement), and (b) adds a soft call premium equal to 1.0% of the principal repaid or repriced if the Initial Term Loans are voluntarily refinanced or repriced pursuant to certain refinancing transactions within twelve months of the effective date of the First Amendment.Deferred Financing Costs

The 2016 Credit Agreement contains a springing financial covenant, if we draw in excess of twenty percent (20%) of the revolving facility, which requires us to maintain a maximum total net leverage ratio (based on the ratio of total debt for borrowed money to EBITDA, each as defined in the 2016 Credit Agreement), and is tested quarterly based on the last four fiscal quarters and is set at levels as described in the 2016 Credit Agreement. As of September 30, 2017, no test is required as we have not exceeded 20% of our revolving capacity. During 2017, the maximum permitted total net leverage ratio as stated in the 2016 Credit agreement is 4.25:1. We believe that our total net leverage ratio during 2017 has been and will continue to be in compliance with the 2016 Credit Agreement, and that we are in compliance with all covenants.

The activity relating to deferred financing costs, composed of third-party fees and costs, and lender fees, ~~and discount~~ for the three months ended ~~September 30, 2017,~~April 2, 2022, are set forth in the table below. As a result of the voluntary prepayments of debt discussed above, we accelerated the amortization of lenders fees and discount relating to the term-loan portion of the 2016 Credit Agreement of $1.0 million, which is included in interest expense in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2017.as follows. All ~~debt-related fees,~~deferred financing costs ~~and original issue discount~~ are classified as a reduction of the carrying value of long-term debt:

~~As a result of the voluntary prepayments totaling $20.0 million we made during the third quarter of 2017, we~~

We have no ~~future scheduled repayments under~~schedule payments of outstanding debt until the contractual maturity of the 2016 Credit Agreement ~~until the maturity of the facility on February 21, 2022. The~~in October 2024. Our contractual future maturities of long-term debt ~~outstanding, including the financing arrangement described as other debt, as of September 30, 2017,~~ are as follows (at face value):

Capital Expenditures.Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. For the first ~~nine~~three months of ~~2017,~~2022, capital expenditures were ~~$9.7~~$8.2 million, compared to ~~$13.3~~$6.5 million for the first ~~nine~~three months of ~~2016. In 2017,~~2021. Our capital expenditure program is directed towards making investments in capital assets that we ~~expect to spend approximately$12-$15 million~~ onbelieve will increase both gross sales and margins, but also includes capital expenditures ~~primarily including machinery~~for maintenance capital.

Aluminum Forward and ~~equipment, and distribution equipment such as tractors and trailers.~~

~~Share Repurchase Program~~~~. On October 28, 2015,~~Midwest Transaction Premium Contracts.We enter into aluminum forward contracts to hedge the ~~Board of Directors authorized and approved a share repurchase program of up to $20 million. Repurchases are made~~fluctuations in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, our 2016 Credit Agreement, and other relevant factors. We do not intend to repurchase any shares from directors, officers, or other affiliates. The program does not obligate us to acquire any specific number of shares. The timing, manner, price and amount of repurchases will be determined at the ~~Company’s discretion,~~

subject to the approval of its Board of Directors, and the program may be suspended, terminated or modified at any time for any reason. During the first nine months of 2017, we made no repurchases of our common stock under this program. In the future, we may make opportunistic repurchases of our common stock as we see fit, subject to the approval of our Board of Directors.

~~Sale of Door Glass Processing Assets.~~ On September 22, 2017, we entered into an Asset Purchase Agreement (APA) with Cardinal LG Company (Cardinal) for the sale to Cardinal of certain manufacturing equipment we used in processing glass components for~~PGT-branded~~ ~~doors for a cash~~ purchase price of ~~$28 million. Contemporaneously with~~aluminum extrusions we use in production. Beginning late in the first half of 2021, we began entering into forward contracts to hedge the ~~APA, we entered into a seven-year supply agreement (SA) with Cardinal for Cardinal to supply us with glass components forPGT-branded~~ ~~doors. The Company determined to sell these assets, whose net book~~fluctuations in the price of the delivery component of our aluminum extrusion purchases, known as the Midwest Transaction Premium (MTP).

At April 2, 2022, the fair value ~~at September 30, 2017,~~of our aluminum forward contracts was ~~$5.6 million, and enter into the SA~~ in ~~order to allow us to heighten our focus in our core areas~~an assetposition of ~~window and door manufacturing and, at the same time, strengthen our supply chain for high-quality door glass from a supplier with whom we have been doing business for many years.~~

~~The APA provides~~$9.1 million. We had 23 outstanding forward contracts for the ~~transfer~~purchase of 36.3 million pounds of aluminum through December 2022, at an average price of $1.32 per pound, which excludes the ~~assets from~~Midwest premium, with maturity dates of between two months and ten months.We assessed the risk of non-performance of the Company to ~~Cardinal~~these contracts and determined it was immaterial and, therefore, did not record any adjustment to fair value as of April 2, 2022.

At April 2, 2022, the fair value of our MTP contracts was in ~~two phases, with~~an asset position of $4.4 million. We had 7 outstanding MTP contracts to hedge the ~~first date being on or about November 1, 2017, and~~Platt US MW Transaction price per pound for the ~~second date being on or about March 1, 2018. Under the APA, the cash purchase~~delivery of 17.0 million pounds of aluminum through December 2022, at an average price of ~~$28 million is to be paid by Cardinal to~~$0.12 per pound, with maturity dates of between two months and ten months.We assessed the risk of non-performance of the Company ~~in three separate payments~~to these contracts and determined it was immaterial and, therefore, did not record any adjustment to fair value as of ~~$3 million at~~April 2, 2022.

We assess the ~~time~~effectiveness of our aluminum forward contracts by comparing the ~~first transfer of the assets to Cardinal, $10 million on January 15, 2018, and $15 million at the time of the second transfer of assets to Cardinal.~~

~~The SA provides that the Company will purchase, and Cardinal will supply, all of the Company’s requirements for certain glass components used~~change in PGT-branded doors through the end of 2024. The terms of the manufacture by Cardinal and purchase by the Company of such glass components as to purchase orders, forecasts of purchases, pricing, invoicing, delivery and payment terms and other terms, are all as described in the SA.

The Company has determined that, although the APA and SA are separate agreements, they were negotiated contemporaneously. Therefore, the Company has concluded that the $28 million of proceeds under the APA should be bifurcated between the sale of the door glass manufacturing assets, and payment for the Company’s commitment to buy glass components for~~PGT-branded~~ ~~doors from Cardinal under the SA, and that such bifurcation is predicated on~~ the fair value of the ~~door glass manufacturing assets being sold on or about~~forward contract to the ~~date of sale.~~change in the expected cash to be paid for the hedged item. The ~~Company has engaged an independent machinery and equipment valuation specialist to provide a fair market value appraisal~~effective portion of the ~~assets sold to Cardinal, which~~gain or loss on our aluminum forward contracts is ~~currently~~reported as a component of accumulated other comprehensive income (loss) and is reclassified into earnings in ~~process. Accordingly,~~the same line item in the income statement as the ~~fair market value appraisal is not yet finalized, and there had been no exchanges~~hedged item in the same period or periods during which the transaction affects earnings. The amount of ~~assets or cash under~~income (loss), net, recognized in the ~~APA as of September 30, 2017, and no purchases or sales of glass components forPGT-branded~~ ~~doors under the SA as of September 30, 2017, no amounts relating to either the APA or SA have been recognized~~“accumulated other comprehensive income (loss)” line item in the accompanying condensed consolidated ~~financial statements~~balance sheet as of ~~and for~~April 2, 2022, that we expect will be reclassified to earnings within the ~~three and nine~~next twelve months, ~~ended September 30, 2017.~~will be approximately $13.4 million.

There have been no significant changes to the “Disclosures of Contractual Obligations and Commercial Commitments” table in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form~~10-K~~ ~~for the year ended December 31, 2016.~~

Estimates. Our consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Significant accounting policies are those that are both important to the accurate portrayal of a Company’s financial condition and results, and those that require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the condensed consolidated financial statements and the possibility that future events may be significantly different from our expectations.

We identified our significant accounting policies in our Annual Report on Form10-K ~~annual report~~ for the year ended ~~December 31, 2016.~~January 1, 2022. There have been no changes to our critical accounting policies during the first ~~nine~~three months of ~~2017.~~

Pronouncements. Reference Rate Reform. In ~~addition to the pronouncements issued during 2017, ASU2016-02,~~ ~~“Leases”, and ASU2014-09,~~ ~~“Revenue from Contracts with Customers”, presented below, see Note 3 to the consolidated financial statements included in our recently filed Annual Report on Form10-K~~ ~~for the year ended December 31, 2016.~~

~~In August 2017,~~March 2020, the FASB issued ASU~~2017-12,~~ ~~“Derivatives~~ 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ~~Hedging~~in March 2021, a subsequent amendment to the initial guidance, ASU 2021-01, “Reference Rate Reform (Topic ~~815)~~848): ~~Targeted Improvements~~Scope” (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to ~~Accounting for Hedging Activities.”~~contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments ~~under ASU2017-12~~ ~~refine~~apply only to contracts, hedging relationships, and ~~expand hedge accounting requirements for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face~~other transactions that reference LIBOR or another reference rate expected to be discontinued because of ~~the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU2017-12~~ ~~becomes effective for us in the first quarter of 2019.~~reference rate reform. The guidance generally can be applied from March 12, 2020 through December 31, 2022. We ~~are currently assessing the impact the~~have not elected adoption of this ~~ASU will have~~optional guidance and do not intend to elect this guidance before the sunset date of December 31, 2022, as there is no material impact on our consolidated financial statements.

We utilize derivative financial instruments to hedge price movements in aluminum materials used in our manufacturing process and to hedge the ~~FASB issued ASU2017-05,~~ ~~“Other Income - Gain and Losses from the Derecognition~~delivery component of ~~Nonfinancial Assets.” ASU2017-05~~ ~~clarifies the scope of Subtopic610-20,~~ ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, and adds guidance for partial sales of nonfinancial assets. Subtopic610-20,~~ ~~which was issued in May 2014 as a part of ASU2014-09,~~ ~~provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts withnon-customers.~~ ~~This update is effective at the same time~~our aluminum needs, known as the ~~amendments in ASU2014-09,~~ ~~therefore,~~Midwest Transaction Premium (“MTP”). As of April 2, 2022, we are covered for approximately 77% of our ~~fiscal year beginning after December 15, 2017, and may apply them either under a full- or modified-retrospective basis. We do not expect~~anticipated aluminum needs for the ~~adoption~~remainder of ~~this guidance to have a significant effect~~2022 at an average price of $1.32 per pound. These calculations are based only on the ~~Company’s consolidated financial statements.~~

~~In January 2017,~~LME price of aluminum and excludes an estimate for the ~~FASB issued ASU2017-04,~~ ~~“Intangibles - Goodwill and Other (Topic 350): Simplifying~~MTP, which we hedge separately. As of April 2, 2022, we are covered for approximately 36% of our anticipated MTP costs for the ~~Test for Goodwill Impairment.” ASU2017-04~~ ~~simplifies the subsequent measurement~~remainder of goodwill by eliminating “Step 2” from the goodwill impairment test. The amendment also eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This update is effective for our fiscal year beginning after December 15, 2019, and shall be adopted prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption2022 at an average price of ~~this guidance to have a significant effect on the Company’s consolidated financial statements.~~

~~In January 2017, the FASB issued ASU2017-01,~~ ~~“Business Combinations (Topic 805) – Clarifying the Definition~~$0.12 per pound. As of ~~a Business.” ASU2017-01~~ affects all companies and other reporting organizations that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU~~2017-01~~ provides a more robust framework to use in determining when a set of assets and activities is a business. It also provides more consistency in applying the guidance, reduces the costs of application, and makes the definition of a business more operable. This update is effective for our fiscal year beginning after December 15, 2017, including interim periods therein. We do not expect adoption of this guidance to have a significant effect on the Company’s consolidated financial statements.

~~In February 2016, the FASB issued ASU2016-02,~~ ~~“Leases (Topic 842)”. This guidance supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU2016-02~~ requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU~~2016-02~~ ~~requires a modified retrospective approach for all leases existing at, or entered into after,~~ the date of ~~initial application, with an option to elect to use certain transition relief. The Company is continuing to evaluate the impact of~~ this ~~new standard on its consolidated financial statements.~~report, we had not added any further coverage since April 2, 2022. However, we may add more coverage for our anticipated aluminum needs in 2022 and/or 2023, as we deem necessary.

~~Approaching Adoption of ASU2014-09,~~ ~~��Revenue from Contracts with Customers”~~

~~statements), or modified-retrospective (recording~~price of aluminum per pound would decrease the ~~impact~~fair value of ~~adoption~~our forward contracts of aluminum by an estimated $5.7 million. This calculation utilizes our actual commitment of 36.3 million pounds under contract (to be settled through December 2022) and the market price of aluminum as of April 2, 2022. This calculation is based only on the LME price of aluminum and excludes an ~~adjustment to retained earnings at~~estimate for the ~~beginning~~MTP. Regarding our MTP contracts for hedging of the ~~year~~delivery component of ~~adoption) transition methods. Since its issuance,~~our aluminum needs, as of April 2, 2022, a 10% decrease in the ~~FASB has also amended several aspects~~Platts MW US Transaction price per pound would decrease the fair value of ~~the new guidance, including; ASU2016-08,~~ “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; which clarifies the Topic 606 guidance on principal versus agent considerations, ASU~~2016-10,~~ ~~“Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing”, which clarifies identification~~our MTP contracts an estimated $0.6 million. This calculation utilizes our actual commitment of ~~a performance obligation and addresses revenue recognition associated with the licensing of intellectual property, ASU2016-12,~~ ~~“Revenue from Contracts with Customers (Topic 606), Narrow Scope Improvements and Practical Expedients”, which clarifies assessment of collectability criterion,non-cash~~ ~~consideration and other technical corrections, and ASU2016-20,~~ “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”, which is the result of the FASB Board decision to issue a separate Update for technical corrections and improvements. The Company currently plans to adopt the provisions of this new accounting standard at the beginning of fiscal year 2018, using the modified-retrospective method.

~~The Company completed its preliminary assessment of the impact of its upcoming adoption of ASU2014-09~~ ~~on its consolidated financial statements. The Company recognizes revenue currently~~17.0 million pounds under existing generally accepted accounting principles, which is a model based on the transfer of the risks and rewards of ownership. Predominantly, for the Company, this has been at the point in time that possession of goods has transferred to the customer upon delivery. The model for recognizing revenue will change under ASU~~2014-09,~~ ~~to one based on the transfer of control of the product to the customer. Under ASU2014-09,~~ revenue is recognized when an entity satisfies its obligation by transferring control of the goods or services to the customer, and transfer of possession of the product is not required in order for transfer of control of the product to the customer to have occurred.

~~ASU2014-09~~ ~~states that if any one of three defined criteria is met, it is likely that an entity will~~contract (to be required to recognize revenue over time, where previously the entity has recognized revenue at the point in time which possession of the goods or services pass to the customer. Pursuant to our preliminary assessment, we believe that, of these three criteria, the Company meets the criteria which states that revenue is recognized over time if an entity’s performance (i.e. creation of a good or service for the customer) does not create an asset with an alternative use to the entity,settled through December 2022) and the ~~entity has an enforceable right to payment for performance completedto-date.~~ ~~ASU2014-09~~ ~~further states that, when evaluating whether or not the goods or services have an alternative use, an entity should consider the level~~then current Platts MW US Transaction price per pound as of customization of the goods or services. A high level of customization is a strong indicator that the goods or services do not have an alternative use and, therefore, revenue would be recognized over time as an entity performs.April 2, 2022.

The Company is a manufacturer of fully-customized windows and doors, and manufactures products based on design specifications, measurements, colors, finishes, framing materials, glass-types, and other options selected by the customer at the point in time an order is received from the customer. The Company’s initial assessment is that its goods have no alternative use, as that term is defined in ASU~~2014-09,~~ and that control of the product passes to the customer no later than completion of the manufacturing of each or all of the products in an order, but before delivery of the products to the customer. Additionally, the Company has an enforceable right to payment at the agreed-upon sales prices contained in our agreements with our customers for all manufacturing efforts expended by the Company on behalf of its customers.

Based on this initial assessment, the Company believes that it will be required to change its method of recognizing revenue, to one of potentially recognizing revenue as products are manufactured, but no later than completion of the manufacturing process, from its current method of recognizing revenue upon delivery of the product to the customer. The Company is continuing to evaluate its manufacturing processes in order to assess at what point the products have no alternative use and the recognition of revenue should begin. However, because revenue will have been recognized on at least all products for which manufacturing has been completed, the Company believes that upon adoption of ASU~~2014-09,~~ ~~inventories on its consolidated balance sheets will no longer include finished goods. The Company also believes that it will recognize revenue at an earlier point than prior to the adoption of ASU2014-09,~~ but that such effect may not materially affect its consolidated statements of operations post-adoption due to the fact that such effects will exist at both the beginning and end of fiscal periods after the initial transition.

~~ASU2014-09~~ also requires entities, primarily in the manufacturing segment, to make policy elections relating to shipping and handling charges. Entities may elect to treat shipping and handling as a separate performance activity, and recognize revenue from shipping and handling as performance occurs. Conversely, entities may also elect to treat shipping and handling as a fulfillment activity, which will require shipping and handling costs for undelivered products to be accrued in order to match this cost with the revenue previously recognized over time. The Company currently recognizes shipping and handling costs as a fulfillment activity, and has preliminarily determined to continue to treat such costs as a fulfillment activity.

~~The Company expects to continue to evaluate the impact of the adoption of ASU2014-09~~ ~~on its consolidated financial statements, and will provide updates and additional information as the effective date of adoption approaches.~~

We experience changes in interest expense when market interest rates change. Changes in our debt could also increase these risks. Based on debt outstanding with a variable rate as of the date of filing of this Quarterly Report on Form10-Q of ~~$244.0~~$60.0 million, a 100 ~~basis point~~basis-point increase in interest rate would result in approximately ~~$2.4~~$0.6 million of additional interest costs annually.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

A control system, however, no matter how well conceived and operated, can at best provide reasonable, not absolute, assurance that the objectives of the control system are met. Additionally, a control system reflects the fact that there are resource constraints, and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within our Company have been detected, and due to these inherent limitations, misstatements due to error or fraud may occur and not be detected.

Our chief executive officer and chief financial officer, with the assistance of management, evaluated the design, operation and effectiveness of our disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act) as of the end of the period covered by this report (“Evaluation Date”). Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective for the purposes of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in our internal control over financial reporting identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are involved in various claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities with respect to claims and lawsuits. We do not believe that the ultimate resolution of the matters pending or threatened against us at this time will have a material adverse impact on our financial position or results of operations.

Although our business and facilities are subject to federal, state, and local environmental regulation, environmental regulation does not have a material impact on our operations. We believe that our facilities are in material compliance with such laws and regulations. As owners and lessees of real property, we can be held liable for the investigation or remediation of contamination on such properties, in some circumstances without regard to whether we knew of or were responsible for such contamination. Our current expenditures with respect to environmental investigation and remediation at our facilities are minimal, although no assurance can be provided that more significant remediation may not be required in the future as a result of spills or releases of petroleum products or hazardous substances, or the discovery of previously unknown environmental conditions.

~~In addition~~Our operations are subject to ~~the other information set forth~~a number of risks. When considering an investment in ~~this report,~~our securities, you should carefully read and consider these risks, together with all other information in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, including the risk factors ~~discussed~~set forth in Part 1, “Item 1A. Risk Factors” of our Annual Report on Form10-K ~~annual report~~ for the year ended ~~December 31, 2016, which could materially affect~~January 1, 2022. If any of the events described in the risk factors actually occur, our business, financial condition or ~~future results.~~

~~Additional risk and uncertainties not currently known to us or that we currently deem to~~operating results, as well as the market price of our securities, could be ~~immaterial, may also~~ materially adversely ~~affect our business, financial condition, and/or operating results.~~affected.

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 thereunto duly authorized.


Title of each class	~~Page~~ Trading Symbol(s)
	~~Number~~	Name of each exchange on which registered
~~Part I. Financial Information~~Common stock, par value $0.01 per share	PGTI	New York Stock Exchange, Inc.


				Page
				Number
Part I.	Financial Information			3
	Item 1.		Condensed Consolidated Financial Statements (unaudited):			3
			Condensed Consolidated Statements of Operations	3
			Condensed Consolidated Statements of Comprehensive Income		3	4
			Condensed Consolidated Balance Sheets		4	5
			Condensed Consolidated Statements of Cash Flows		5	6
			Condensed Consolidated Statements of Shareholders’ Equity	7
			Notes to Condensed Consolidated Financial Statements		6	8
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		19	29
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk		32	38
	Item 4.		Controls and Procedures		32	38
~~Part II. Other Information~~
Part II.	~~Item 1. Legal Proceedings~~Other Information				33	39
	Item ~~1A. Risk Factors~~1.		Legal Proceedings		33	39
	Item 1A.		Risk Factors	39
	Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		33	39
	Item ~~3. Defaults Upon Senior Securities~~6.		Exhibits		33	40
			~~Item 4. Mine Safety Disclosure~~Signature		33	41
~~Item 5. Other Information~~		33
~~Item 6. Exhibits~~		34


	Three Months Ended
	April 2,			April 3,
	2022			2021
	(unaudited)
Net income	$	23,826		$	12,795

Other comprehensive income (loss) before tax:
Change in fair value of derivatives		6,075			8,288
Reclassification to earnings		(2,062	)		(1,775	)

Other comprehensive income before tax		4,013			6,513

Income tax expense related to other comprehensive income		1,030			1,618

Other comprehensive income, net of tax		2,983			4,895

Comprehensive income		26,809			17,690

Less: Comprehensive income attributable to redeemable non-controlling interest		(657	)		(411	)

Comprehensive income attributable to the Company	$	26,152		$	17,279


	September 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	44,727		$	39,210
Accounts receivable, net		55,949			41,646
Inventories		39,131			30,511
Prepaid expenses		2,959			2,645
Other current assets		6,329			8,365

Total current assets		149,095			122,377
Property, plant and equipment, net		84,469			84,209
Trade name and other intangible assets, net		116,702			120,930
Goodwill		108,060			108,060
Other assets, net		1,272			1,072

Total assets	$	459,598		$	436,648

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	40,338		$	22,803
Current portion of long-term debt		290			—

Total current liabilities		40,628			22,803
Long-term debt, less current portion		231,177			247,873
Deferred income taxes		31,838			31,838
Other liabilities		1,466			1,282

Total liabilities		305,109			303,796

Shareholders’ equity:
Preferred stock; par value $.01 per share; 10,000 shares authorized; none outstanding		—			—
Common stock; par value $.01 per share; 200,000 shares authorized; 52,376 and 51,887 shares issued and 49,660 and 49,176 shares outstanding at September 30, 2017 and December 31, 2016, respectively		524			519
Additionalpaid-in-capital		251,733			249,647
Accumulated deficit		(85,009	)		(104,555	)

Shareholders’ equity		167,248			145,611
Less: Treasury stock at cost		(12,759	)		(12,759	)

Total shareholders’ equity		154,489			132,852

Total liabilities and shareholders’ equity	$	459,598		$	436,648


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,		October 1,			September 30,		October 1,			April 2,			April 3,
	2017		2016			2017		2016			2022			2021
	(unaudited)					(unaudited)					(unaudited)
Net sales	$	126,876	$	129,807		$	376,981	$	349,046		$	358,662		$	271,092
Cost of sales		87,128		88,721			260,941		240,507			224,069			177,130

Gross profit		39,748		41,086			116,040		108,539			134,593			93,962

Selling, general and administrative expenses		24,950		22,533			72,385		63,209			95,882			69,766
Fair value adjustment to contingent consideration		—		(3,000	)		—		(3,000	)

Income from operations		14,798		21,553			43,655		48,330			38,711			24,196

Interest expense, net		5,514		5,495			14,992		14,935			7,080			7,457
Debt extinguishment costs		—		—			—		3,431

Income before income taxes		9,284		16,058			28,663		29,964			31,631			16,739

Income tax expense		2,992		5,262			9,117		10,339			7,805			3,944

Net income	$	6,292	$	10,796		$	19,546	$	19,625			23,826			12,795

Net income per common share:
Less: Net income attributable to redeemable non-controlling interest												(657	)		(411	)

Net income attributable to the Company											$	23,169		$	12,384

Calculation of net income per common share attributable to common shareholders:
Net income attributable to the Company											$	23,169		$	12,384
Change in redemption value of redeemable non-controlling interest												(2,136	)		—
Net income attributable to common shareholders											$	21,033		$	12,384

Net income per common share attributable to common shareholders:
Basic	$	0.13	$	0.22		$	0.40	$	0.40		$	0.35		$	0.21

Diluted	$	0.12	$	0.21		$	0.38	$	0.39		$	0.35		$	0.21

Weighted average shares outstanding:
Weighted average number of common shares outstanding:
Basic		49,629		48,941			49,455		48,782			59,831			59,286

Diluted		51,809		50,672			51,670		50,528			60,219			59,894

Comprehensive income	$	6,292	$	10,796		$	19,546	$	19,625


	PGT Innovations, Inc. Shareholders' Equity
										Accumulated
							Additional			Other
	Common stock						Paid-in			Comprehensive		Retained			Treasury
	Shares			Amount			Capital			Income (Loss)		Earnings			Stock			Total
THREE MONTHS ENDED APRIL 3, 2021
Balance at January 2, 2021		58,998,711		$	625		$	420,202		$	2,720	$	79,896		$	(18,309	)	$	485,134
Vesting of restricted stock		147,106			—			—			—		—			—			—
Grants of restricted stock		—			3			(3	)		—		—			—			—
Forfeitures of restricted stock		—			(1	)		1			—		—			—			—
Purchases of treasury stock		(42,414	)		—			—			—		—			(1,005	)		(1,005	)
Retirement of treasury stock		—						(844	)		—		(161	)		1,005			—
Stock-based compensation		—			—			1,750			—		—			—			1,750
Issuance in acquisition of Eco		357,797			4			6,104			—		—			—			6,108
Net income attributable to the Company		—			—			—			—		12,384			—			12,384
Change in redemption value of redeemable non-controlling interest		—			—			—			—		—			—			—
Other comprehensive income, net of tax expense of $1,618		—			—			—			4,895		—			—			4,895
Balance at April 3, 2021		59,461,200			631			427,210			7,615		92,119			(18,309	)		509,266

THREE MONTHS ENDED APRIL 2, 2022
Balance at January 1, 2022		59,696,117		$	635		$	433,347		$	7,006	$	106,398		$	(18,289	)	$	529,097
Vesting of restricted stock		288,962			—			—			—		—			—			—
Grants of restricted stock		—			5			(5	)		—		—			—			—
Purchases of treasury stock		(84,492	)		—			—			—		—			(1,663	)		(1,663	)
Retirement of treasury stock		—			(1	)		(1,335	)		—		(327	)		1,663			—
Stock-based compensation		—			—			2,205			—		—			—			2,205
Net income attributable to the Company		—			—			—			—		23,169			—			23,169
Change in redemption value of redeemable non-controlling interest		—			—			—			—		(2,136	)		—			(2,136	)
Other comprehensive income, net of tax expense of $1,030		—			—			—			2,983		—			—			2,983
Balance at April 2, 2022		59,900,587		$	639		$	434,212		$	9,989	$	127,104		$	(18,289	)	$	553,655


	Previously Reported			After Adoption
Deferred income taxes	$	32,171		$	31,838

Total liabilities	$	304,129		$	303,796

Additionalpaid-in-capital	$	249,469		$	249,647

Accumulated deficit	$	(104,710	)	$	(104,555	)

Shareholders’ equity	$	145,278		$	145,611

Total shareholders’ equity	$	132,519		$	132,852


	Beginning				Charged								End of
Accrued Warranty	of Period		Acquired		to Expense		Adjustments			Settlements			Period
(in thousands)
Three months ended September 30, 2017	$	5,679	$	—	$	2,593	$	46		$	(2,412	)	$	5,906
Three months ended October 1, 2016	$	5,103	$	10	$	2,875	$	(19	)	$	(2,493	)	$	5,476
Nine months ended September 30, 2017	$	5,569	$	—	$	8,681	$	(18	)	$	(8,326	)	$	5,906
Nine months ended October 1, 2016	$	4,237	$	274	$	8,111	$	751		$	(7,897	)	$	5,476


	September 30, 2017		December 31, 2016
	(in thousands)
Raw materials	$	29,591	$	24,946
Work-in-progress		3,543		2,521
Finished goods		5,997		3,044

	$	39,131	$	30,511


	Final Allocation
Accounts and notes receivable	$	3,882
Inventories		6,778
Prepaid expenses		246
Property and equipment		5,029
Intangible assets		47,100
Goodwill		41,856
Accounts payable and accrued liabilities		(2,320	)

Purchase price	$	102,571

Consideration:
Cash	$	99,571
Earn-out contingency		3,000

Total fair value of consideration	$	102,571


	Nine Months Ended
	October 1, 2016
(in thousands, except per share amounts)
Pro Forma Results
Net sales	$	351,507

Net income	$	18,280

Net income per common share:
Basic	$	0.37

Diluted	$	0.36


(in thousands)	Total
Remainder of 2017	$	670
2018		2,785
2019		2,966
2020		3,224
2021		3,011
2022		381

Total	$	13,037



Three months ended April 2, 2022	Aluminum			MTP
(in thousands)	Contracts			Contracts			Total
Balance at January 1, 2022	$	3,610		$	3,396		$	7,006
Change in fair value of derivatives		5,607			468			6,075
Amounts reclassified from other comprehensive income		(1,378	)		(684	)		(2,062	)
Tax effect		(1,055	)		25			(1,030	)
Net current-period other comprehensive income		3,174			(191	)		2,983
Balance at April 2, 2022	$	6,784		$	3,205		$	9,989


	Three Months Ended
	April 2, 2022			April 3, 2021
	Net Sales		% of sales	Net Sales		% of sales	% change
By segment:
Southeast segment	$	271.8	75.8%	$	233.6	86.2%	16.3%
Western segment		86.9	24.2%		37.5	13.8%	132.0%

Total net sales	$	358.7	100.0%	$	271.1	100.0%	32.3%


	Three Months Ended
	September 30, 2017					October 1, 2016
	Sales		% of sales			Sales		% of sales			% change
Product category:
Impact-resistant windows and door products	$	108.8		85.7	%	$	110.2		84.9	%		(1.3	)%
Non-Impact window and door products		18.1		14.3	%		19.6		15.1	%		(7.7	)%

Total net sales	$	126.9		100.0	%	$	129.8		100.0	%		(2.3	)%


	Components of Cash Flows
	Three Months Ended
	April 2,			April 3,
(in millions)	2022			2021
Cash provided by (used in) operating activities	$	17.3		$	(1.4	)
Cash used in investing activities		(8.2	)		(100.8	)
Cash (used in) provided by financing activities		(1.7	)		60.9

Increase (decrease) in cash and cash equivalents	$	7.4		$	(41.3	)


							Direct Operating Cash Flows
	Direct Operating Cash Flows						Three Months Ended
	Nine Months Ended						April 2,			April 3,
(in millions)	September 30, 2017			October 1, 2016			2022			2021
Collections from customers	$	373.4		$	341.5		$	332.9		$	245.0
Other collections of cash		3.9			3.9			4.5			3.9
Disbursements to vendors		(230.2	)		(208.2	)		(165.0	)		(163.2	)
Personnel related disbursements		(99.1	)		(93.9	)		(141.7	)		(74.4	)
Income taxes refunded, net		—			1.3
Debt service payments		(13.3	)		(11.4	)		(13.5	)		(12.8	)
Other cash activity, net								0.1			0.1

Cash from operations	$	34.7		$	33.2

Cash provided by (used in) operations							$	17.3		$	(1.4	)



10.131.1		First Amendment to Supply Agreement, dated July 1, 2017, by and between PGT Industries, Inc. and ENERGI Fenestration Solutions USA, Inc., which amends that certain Supply Agreement, dated April 28, 2014, by and between PGT Industries, Inc. and Royal Group, Inc., which such Supply Agreement subsequently was assigned to ENERGI Fenestration Solutions USA, Inc., in connection with ENERGI Fenestration Solutions USA, Inc.’s purchase of the window and door division of Royal Group, Inc.

~~10.2~~		Supply Agreement dated as of September 22, 2017, by and between PGT Industries, Inc. and Cardinal LG Company (incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K dated September 22, 2017, filed with the Securities and Exchange Commission on September 22, 2017, Registration No. 001-37971)

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*
101.INS	Inline XBRL Instance Document
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101.SCH*
101.SCH	Inline XBRL Taxonomy Extension Schema

101.CAL*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF*
101.DEF	Inline XBRL Taxonomy Definition Linkbase

101.LAB*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase

101.PRE*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)


		~~PGT INNOVATIONS, INC.~~
		~~(Registrant)~~

~~Date: November 2, 2017~~		~~/s/ Bradley West~~PGT INNOVATIONS, INC.
		~~Bradley West~~(Registrant)


Date: May 12, 2022	By: /s/ John Kunz
	Name: John Kunz
	Title: Senior Vice President and Chief Financial Officer

Large accelerated filer☑

Accelerated filer☐

Non-accelerated filer☐

~~☐ (Do not check if a smaller reporting company)~~

Smaller reporting company☐

Emerging growth company