Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 02, 2016 | May. 04, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 2, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PGTI | |
Entity Registrant Name | PGT, Inc. | |
Entity Central Index Key | 1,354,327 | |
Current Fiscal Year End Date | --01-02 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,683,412 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 100,206 | $ 95,301 |
Cost of sales | 70,223 | 64,254 |
Gross profit | 29,983 | 31,047 |
Selling, general and administrative expenses | 20,061 | 17,664 |
Income from operations | 9,922 | 13,383 |
Interest expense, net | 4,158 | 2,913 |
Debt extinguishment costs | 3,431 | |
Other expense, net | 99 | |
Income before income taxes | 2,333 | 10,371 |
Income tax expense | 854 | 3,719 |
Net income | $ 1,479 | $ 6,652 |
Net income per common share: | ||
Basic | $ 0.03 | $ 0.14 |
Diluted | $ 0.03 | $ 0.13 |
Weighted average shares outstanding: | ||
Basic | 48,694 | 47,721 |
Diluted | 50,474 | 50,032 |
Comprehensive income | $ 1,479 | $ 6,685 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 16,704 | $ 61,493 |
Accounts receivable, net | 39,660 | 31,783 |
Inventories | 29,252 | 23,053 |
Prepaid expenses | 3,292 | 2,170 |
Other current assets | 8,377 | 8,473 |
Total current assets | 97,285 | 126,972 |
Property, plant and equipment, net | 77,903 | 71,503 |
Trade name and other intangible assets, net | 125,144 | 79,311 |
Goodwill | 108,179 | 65,635 |
Other assets, net | 639 | 607 |
Total assets | 409,150 | 344,028 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 24,731 | 19,578 |
Current portion of long-term debt | 2,612 | 1,949 |
Total current liabilities | 27,343 | 21,527 |
Long-term debt, less current portion | 248,362 | 188,818 |
Deferred income taxes | 25,894 | 25,894 |
Other liabilities | 1,015 | 828 |
Total liabilities | $ 302,614 | $ 237,067 |
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; 51,452 and 51,146 shares issued and 48,682 and 48,806 shares outstanding at April 2, 2016 and January 2, 2016, respectively | $ 515 | $ 511 |
Additional paid-in-capital | 245,758 | 244,944 |
Accumulated deficit | (126,978) | (128,457) |
Shareholders' equity | 119,295 | 116,998 |
Less: Treasury stock at cost | (12,759) | (10,037) |
Total shareholders' equity | 106,536 | 106,961 |
Total liabilities and shareholders' equity | $ 409,150 | $ 344,028 |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Apr. 02, 2016 | Jan. 02, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, Shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, Shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 51,452,000 | 51,146,000 |
Common stock, shares outstanding | 48,682,000 | 48,806,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 1,479 | $ 6,652 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 2,185 | 1,550 |
Amortization | 1,267 | 818 |
Provision for allowance for doubtful accounts | 40 | 22 |
Stock-based compensation | 545 | 474 |
Amortization and write-off of deferred financing costs and debt discount | 4,530 | 215 |
Derivative financial instruments | 55 | |
Deferred income taxes | 22 | |
Excess tax benefits on stock-based compensation | (233) | (470) |
Loss (gain) on disposal of assets | (6) | 9 |
Change in operating assets and liabilities (net of the effect of the acquisition): | ||
Accounts receivable | (4,924) | (7,907) |
Inventories | 579 | (1,301) |
Prepaid expenses, other current and other assets | (113) | 192 |
Accounts payable, accrued and other liabilities | 558 | 9,902 |
Net cash provided by operating activities | 5,907 | 10,233 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (3,662) | (3,952) |
Business acquisition | (100,259) | |
Proceeds from sale of equipment | 6 | |
Net cash used in investing activities | (103,915) | (3,952) |
Cash flows from financing activities: | ||
Payments of long-term debt | (198,175) | (500) |
Proceeds from issuance of long-term debt | 261,030 | |
Payments of financing costs | (7,178) | |
Purchases of treasury stock | (2,776) | (4) |
Proceeds from exercise of stock options | 85 | 35 |
Proceeds from issuance of common stock under employee stock purchase plan | 8 | |
Excess tax benefits on stock-based compensation | 233 | 470 |
Other | (8) | (9) |
Net cash provided by (used in) financing activities | 53,219 | (8) |
Net increase (decrease) in cash and cash equivalents | (44,789) | 6,273 |
Cash and cash equivalents at beginning of period | 61,493 | 42,469 |
Cash and cash equivalents at end of period | 16,704 | 48,742 |
Non-cash activity: | ||
Earn-out contingency in accrued liabilities | 3,000 | |
Property, plant and equipment additions in accounts payable | $ 617 | $ 225 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Apr. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements include the accounts of PGT, Inc. and its wholly-owned subsidiary, PGT Industries, Inc., and its wholly-owned subsidiaries CGI Window and Holdings, Inc. (“CGI”), and WinDoor, Incorporated (collectively the “Company”), after elimination of intercompany accounts and transactions. Through PGT Industries, Inc., we purchased all of the issued and outstanding shares of common stock of WinDoor, Incorporated, a Florida corporation, and all of the issued and outstanding membership units of LTE, LLC, a Florida limited liability company (together with WinDoor Incorporated, “WinDoor”) effective on February 16, 2016 pursuant to a stock purchase agreement (“SPA”) by and among PGT Industries, Inc., and the sellers as identified in the SPA. As a result of the SPA, WinDoor became a wholly-owned subsidiary of PGT Industries, Inc. The fair value of consideration transferred in the acquisition was $103.3 million, including the estimated fair value of contingent consideration of $3.0 million, which has been preliminarily allocated to the net assets acquired and liabilities assumed as of the acquisition date, in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations”. For a more detailed discussion of this acquisition, see Note 6 herein. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. 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 periods are 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 Company’s fiscal quarters ended April 2, 2016, and April 4, 2015, consisted of 13 weeks. The condensed consolidated balance sheet as of January 2, 2016, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of January 2, 2016, and the unaudited condensed consolidated financial statements as of and for the period ended April 2, 2016, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended January 2, 2016, included in the Company’s most recent Annual Report on Form 10-K. Accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K. Recently Adopted Accounting Pronouncements In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805) – Simplifying the Accounting for Measurement-Period Adjustments”. This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments in a business combination. This guidance requires that the cumulative impact of a measurement-period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. This ASU was effective for the Company on January 3, 2016. The adoption of this ASU did not have an impact on our financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” (ASU 2015-03) )which will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts (“original issue discount” or “OID”). The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This ASU is effective in financial statements issued for fiscal years beginning after December 15, 2015. In August 2015, the FASB issued ASU No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting,” which amends Subtopic 835-30 to add SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, regarding the SECs views of the classification of debt issuance costs relating to line-of-credit arrangements as deferred assets when no borrowings exist under the arrangement. We retrospectively adopted ASU 2015-03 in the interim period ended April 2, 2016, with respect to all deferred financing costs, lender fees and original issue discount, including those associated with the revolving credit portion of the 2016 Credit Agreement (see Note 8). The effect of this change did not have a material impact on the Company’s consolidated financial condition. The effects on the Company’s consolidated balance sheet as of January 2, 2016 relating to the reclassification of deferred financing costs is as follows (in thousands): Previously As Reported Reclassified Other current assets $ 8,490 $ 8,473 Total current assets $ 126,989 $ 126,972 Other assets $ 2,291 $ 607 Total assets $ 345,729 $ 344,028 Current portion of long-term debt $ 1,966 $ 1,949 Total current liabilities $ 21,544 $ 21,527 Long-term debt, less current portion $ 190,502 $ 188,818 Total liabilities $ 238,768 $ 237,067 Total liabilities and shareholders’ equity $ 345,729 $ 344,028 In June 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. The update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. We prospectively adopted ASU in the first quarter ended April 2, 2016. The adoption of this ASU did not have a material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In addition to the pronouncements presented below, see Note 3 to the consolidated financial statements included in our recently filed Annual Report on Form 10-K for the year ended January 2, 2016. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property, addressing issues raised by stakeholders and discussed by the Transition Resource Group. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. This new standard has the same effective date and transition requirements as ASU 2014-09. We are currently evaluating the impact of adopting this guidance. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation, Improvements to Employee Share-Based payment Accounting (Topic 718)”. This update is intended to provide simplification of the accounting for share based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This update is effective for our fiscal year beginning January 1, 2017. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which is an amendment to the new revenue recognition standard on assessing whether an entity is a principal or an agent in a revenue transaction. This amendment addresses implementation issues that were discussed by the Revenue Recognition TRG to clarify the principal versus agent assessment and lead to more consistent application. This new standard has the same effective date and transition requirements as ASU 2014-09. We are currently evaluating the impact of adopting this guidance. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323), “Simplifying the Transition to the Equity Method of Accounting”. This update eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income/(loss) (“AOCI”) will be recognized through earnings. This update is effective for our fiscal year beginning January 1, 2017 with early adoption permitted. The adoption of this update is not expected to have a material impact on our financial condition, results of operations or cash flows. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, “Leases (Topic 842)”. This guidance supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 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 application 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 currently evaluating the impact of this new standard on its consolidated financial statements. |
Warranty
Warranty | 3 Months Ended |
Apr. 02, 2016 | |
Guarantees [Abstract] | |
Warranty | NOTE 2. WARRANTY Most of our manufactured products are sold with warranties. Warranty periods, which vary by product components, generally range from 1 to 10 years; however, the warranty period for a limited number of specifically identified components in certain applications is a lifetime. The majority of the products sold have warranties on components which range from 1 to 3 years. The reserve for warranties is based on management’s assessment of the cost per service call and the number of service calls expected to be incurred to satisfy warranty obligations on the current net sales. During the three months ended April 2, 2016, we recorded warranty expense at a rate of approximately 2.32% of sales. This rate is in line with the 2.25% of sales accrued in the fourth quarter of 2015. The following table summarizes: current period charges, adjustments to previous estimates, if necessary, as well as settlements, which represent actual costs incurred during the period for the three months ended April 2, 2016, and April 4, 2015. The reserve is determined through specific identification and assessing Company history. Expected future obligations are discounted to a current value using a risk-free rate for obligations with similar maturities. The following provides information with respect to our warranty accrual: Beginning Charged End of Accrued Warranty of Period Acquired to Expense Adjustments Settlements Period (in thousands) Three months ended April 2, 2016 $ 4,237 $ 264 $ 2,328 $ 357 $ (2,473 ) $ 4,713 Three months ended April 4, 2015 $ 3,302 $ — $ 1,908 $ 189 $ (1,791 ) $ 3,608 |
Inventories
Inventories | 3 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 3. INVENTORIES Inventories consist principally of raw materials purchased for the manufacture of our products. We have limited finished goods inventory since all products are custom, made-to-order and usually ship upon completion. Finished goods inventory costs include direct materials, direct labor, and overhead. All inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Inventories consisted of the following: April 2, January 2, 2016 2016 (in thousands) Raw materials $ 24,913 $ 18,609 Work in progress 1,145 1,246 Finished goods 3,194 3,198 $ 29,252 $ 23,053 |
Stock Based-Compensation
Stock Based-Compensation | 3 Months Ended |
Apr. 02, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based-Compensation | NOTE 4. STOCK BASED-COMPENSATION Exercises For the three months ended April 2, 2016, there were 91,881 options exercised at a weighted average exercise price of $0.92 per share. Issuance On March 3, 2016, we granted 251,370 restricted stock awards to certain executives and non-executive employees of the Company. The restrictions on these stock awards lapse over time based solely on continued service. However, the quantity of restricted shares granted on half of these shares, or 125,685 shares, is fixed, whereas the quantity granted on the remaining half, or 125,685 shares, is subject to Company-specific performance criteria. The restricted stock awards have a fair value on date of grant of $9.23 per share based on the closing NASDAQ market price of the common stock on the day prior to day the awards were granted. Those restricted shares whose quantity is fixed vest in equal amounts over a three-year period on the first, second and third anniversary dates of the grant. Those restricted shares whose quantity is subject to Company performance criteria vest in equal amounts over a two-year period on the second and third anniversary dates of the grant. The performance criteria, as defined in the share awards, provides for a graded awarding of shares based on the percentage by which the Company meets earnings before interest and taxes, as defined, in our 2016 business plan. The performance percentages, ranging from less than 80% to greater than 120%, provide for the awarding of shares ranging from no shares to 150% of the original amount of shares. Stock Compensation Expense We record stock compensation expense over an award’s vesting period based on the award’s fair value at the date of grant. We recorded compensation expense for stock based awards of $0.5 million for the three months ended April 2, 2016 and $0.5 million for the three months ended April 4, 2015. As of April 2, 2016, and April 4, 2015, there was $3.1 million and $2.7 million, respectively, of total unrecognized compensation cost related to non-vested stock option agreements and restricted share awards. These costs are expected to be recognized in earnings on a straight-line basis over the weighted average remaining vesting period of 1.7 years at April 2, 2016, and 2.0 years at April 4, 2015. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Apr. 02, 2016 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | NOTE 5. NET INCOME PER COMMON SHARE Basic EPS is computed by dividing net income available to common shareholders, by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the dilutive effect of potential common shares from securities such as stock options. Weighted average shares outstanding for the three months ended April 2, 2016, and April 4, 2015, excludes underlying options and restricted stock awards of 55 thousand and 20 thousand, respectively, because their effects were anti-dilutive. The table below presents the calculation of EPS and a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS for our Company: Three Months Ended April 2, April 4, 2016 2015 (in thousands, except per Net income $ 1,479 $ 6,652 Weighted-average common shares - Basic 48,694 47,721 Add: Dilutive effect of stock compensation plans 1,780 2,311 Weighted-average common shares - Diluted 50,474 50,032 Net income per common share: Basic $ 0.03 $ 0.14 Diluted $ 0.03 $ 0.13 |
Acquisition
Acquisition | 3 Months Ended |
Apr. 02, 2016 | |
Business Combinations [Abstract] | |
Acquisition | NOTE 6. ACQUISITION On February 16, 2016 (the “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 $103.3 million, including the estimated fair value of contingent consideration of $3.0 million, which has been preliminarily 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 with borrowings under the 2016 Credit Agreement, and with $43.5 million of cash on hand. The estimated fair value of assets acquired and liabilities assumed as of the closing date, are as follows: Current Preliminary allocation: Accounts and notes receivable $ 3,882 Inventories 6,778 Prepaid expenses 246 Property and equipment 5,029 Intangible assets 47,100 Goodwill 42,544 Accounts payable and accrued liabilities (2,320 ) Purchase price $ 103,259 Consideration: Cash $ 100,259 Earn-out contingency 3,000 Total fair value of consideration $ 103,259 The fair value of working capital related items, such as accounts receivable, inventories, prepaids, and accounts payable and accrued liabilities, approximated their book values at the date of acquisition. The fair value of property and equipment and remaining useful lives were estimated by management, neither of which significantly differed from the net books values and remaining book lives of WinDoor’s property and equipment at the acquisition date. Valuations of the intangible assets (See Note 7) were valued using income and royalty relief approaches based on projections provided by management, which we consider to be Level 3 inputs. Acquisition costs totaling $0.9 million are included in selling, general, and administrative expenses on the condensed consolidated statement of operations for the three months ended April 2, 2016, and relate to legal expenses, representations and warranties insurance, diligence, and accounting services. The remaining consideration, after identified intangible assets and the net assets and liabilities recorded at fair value, was preliminarily determined to be $42.5 million, all of which is expected to be deductible for tax purposes, subject to the outcome of the earn-out contingency described below. Goodwill represents the increased value of the combined entity through additional sales channel opportunities as well as operational efficiencies. If our preliminary value of assets and liabilities changes, there will be an equal and offsetting change to the recorded goodwill. The SPA provides for the potential for an earn-out contingency payment to sellers should WinDoor achieve a certain level of sales in the year ended December 31, 2016. Pursuant to the SPA, the Company is required to pay 5.9% of WinDoor’s sales in excess of $46.0 million for 2016 (including both the pre-acquisition and post-acquisition periods of 2016), up to a maximum sales amount of $51.0 million. The potential undiscounted amount of all future payments that could be required to be paid under the contingent earn-out consideration arrangement is between $0 and $3.0 million. We have recorded an earn-out contingency liability of $3.0 million, representing its estimated fair value using undiscounted cash flows, based on probability adjusted level of revenues with a range whose minimum is $51.0 million. Estimated sales is a significant input that is not observable in the market, which ASC 820 considers to be a Level 3 input. 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 this earn-out contingency is known. The SPA has a post-closing working capital calculation whereby we are required to prepare, and deliver to sellers, a final statement of purchase price, including our calculation of the amount we find net working capital to actually be as of the closing date. We finalized and delivered to sellers our calculation of closing date net working capital, as defined in the SPA. Pursuant to the SPA, sellers have 30 days to review our calculations and agree to our calculations by allowing the review period to expire, or dispute our calculations by delivering to us a notice of purchase price dispute within the 30-day period. As of the date of the filing of this Quarterly Report on Form 10-Q, we have not received a notice of dispute from sellers. 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 reflect 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. Three Months Ended April 2, April 4, 2016 2015 (in thousands, except per Pro Forma Results Net sales $ 102,667 $ 101,832 Net income $ 134 $ 2,152 Net income per common share: Basic $ 0.00 $ 0.05 Diluted $ 0.00 $ 0.04 |
Goodwill, Trade Names and Other
Goodwill, Trade Names and Other Intangible Assets | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Trade Names and Other Intangible Assets | NOTE 7. GOODWILL, TRADE NAMES, AND OTHER INTANGIBLE ASSETS Goodwill, trade names, and other intangible assets, net, are as follows: Initial April 2, January 2, Useful Life 2016 2016 (in years) (in thousands) Goodwill $ 108,179 $ 65,635 indefinite Trade names and other intangible assets: Trade names $ 75,841 $ 57,441 indefinite Customer relationships 106,100 79,700 8-10 Developed technology 3,000 1,700 9-10 Non-compete agreement 1,600 600 2-5 Less: Accumulated amortization (61,397 ) (60,130 ) Subtotal 49,303 21,870 Other intangible assets, net $ 125,144 $ 79,311 Goodwill at January 2, 2016 $ 65,635 Increase in goodwill from allocation of WinDoor purchase price 42,544 Goodwill at April 2, 2016 $ 108,179 Tradenames at January 2, 2016 $ 57,441 Increase in tradenames from the acquisition of WinDoor 18,400 Tradenames at April 2, 2016 $ 75,841 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Apr. 02, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | NOTE 8. LONG-TERM DEBT On February 16, 2016, we entered into a Credit Agreement (the “2016 Credit Agreement”), among us, the lending institutions identified in the 2016 Credit Agreement, and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent. The 2016 Credit Agreement establishes senior secured credit facilities in an aggregate amount of $310.0 million, consisting of a $270.0 million Term B term loan facility maturing in six years that will amortize on a basis of 1% annually during the six-year term, and a $40.0 million revolving credit facility maturing in five years that includes a swing line facility and a letter of credit facility. Our obligations under the 2016 Credit Agreement are secured by substantially all of our assets as well as our direct and indirect subsidiaries’ assets. As of April 2, 2016, there were $0.4 million of letters of credit outstanding and $39.6 million available on the revolver. Interest on all loans under the 2016 Credit Agreement is payable either quarterly or at the expiration of any LIBOR interest period applicable thereto. Borrowings under the term loans and the revolving credit facility accrue interest at 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 is 575 basis points in the case of LIBOR and 475 basis points in the case of the base rate. We will 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 of credit fee at 575 basis points per annum plus a 12.5 basis point facing fee per annum on the face amount of any outstanding letters of credit. 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 April 2, 2016, no such test is required as we have not exceeded 20% of our revolving capacity. 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. 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 DeutscheBank, as administrative agent and collateral agent (the “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. The face value of the 2016 Credit Agreement at the time of issuance was $270 million of which $0.675 million was repaid as a scheduled debt repayment in the first quarter of 2016. As of April 2, 2016, the face value of debt outstanding under the 2016 Credit Agreement was $269.3 million. The Company incurred third-party fees and costs totaling $1.5 million, and additional lender fees and discount of $14.6 million. The activity relating to third-party fees and costs, lender fees and discount for the three months ended April 2, 2016 are as follows. With our adoption of ASU 2015-03, all debt-related fees, 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 $ 6,733 Amortization expense through refinancing (128 ) At time of refinancing 6,605 Add: Fees, costs and OID relating to the 2016 Credit Agreement 16,148 Less: Debt extinguishment costs (3,431 ) Less: Third-party fees and cost classified within SG&A (627 ) Less: Amortization expense after refinancing (344 ) Total $ 18,351 Estimated amortization expense relating to third-party fees and costs, lender fees and discount for the years indicated as of April 2, 2016, is as follows: (in thousands) Total Remainder of 2016 $ 2,044 2017 2,864 2018 3,035 2019 3,221 2020 3,490 2021 3,281 2022 416 Total $ 18,351 The contractual future maturities of long-term debt outstanding as of April 2, 2016, are as follows (at face value): (in thousands) Remainder of 2016 $ 2,025 2017 2,700 2018 2,700 2019 2,700 2020 2,700 2021 2,700 2022 253,800 Total $ 269,325 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | NOTE 9. ACCUMULATED OTHER COMPREHENSIVE LOSS The following table shows the components of accumulated other comprehensive loss for the three months ended April 4, 2015. There was no activity for the three months ended April 2, 2016: Aluminum Three months ended April 4, 2015 Forward (in thousands) Contracts Balance at January 3, 2015 $ (1,671 ) Amounts reclassified from accumulated other comprehensive loss 55 Tax effect (22 ) Net current-period other comprehensive income 33 Balance at April 4, 2015 $ (1,638 ) The following table shows the reclassification out of accumulated other comprehensive loss for the three months ended April 4, 2015. There was no activity for the three months ended April 2, 2016: Amounts Reclassified From Accumulated Other Comprehensive Loss Three Affected Line Item (in thousands) Debit (Credit) Aluminum forward contracts - effective portion $ 55 Cost of sales Tax effect (22 ) Tax expense |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10. COMMITMENTS AND CONTINGENCIES Litigation Our Company is a party to various legal proceedings in the ordinary course of business. Although the ultimate disposition of those proceedings cannot be predicted with certainty, management believes the outcome of any claim that is pending or threatened, either individually or in the aggregate, will not have a materially adverse effect on our operations, financial position or cash flows. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11. INCOME TAXES Income tax expense was $0.9 million for the three months ended April 2, 2016, compared with $3.7 million for the three months ended April 4, 2015. Our effective tax rate for the three months ended April 2, 2016, was 36.6%, and was 35.9% for the three months ended April 4, 2015. The effective tax rates in both periods 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. |
Derivatives
Derivatives | 3 Months Ended |
Apr. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | NOTE 12. DERIVATIVES The following represents the gains (losses) on derivative financial instruments for the three months ended April 4, 2015, and their classifications within the accompanying condensed consolidated statements of comprehensive income. There were no amounts recognized in or reclassified from accumulated OCI(L) for the three months ended April 2, 2016: Derivatives in Cash Flow Hedging Relationships (in thousands) Location of Gain or Amount of Gain or Amount of Gain or Derivatives Three Months Ended Three Months Ended April 4, April 4, 2015 2015 Aluminum contracts Cost of sales $ (55 ) $ — Aluminum contracts Other expense, net — (99 ) $ (55 ) $ (99 ) |
Fair Value
Fair Value | 3 Months Ended |
Apr. 02, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value | NOTE 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 an instrument-by-instrument basis as they are acquired or incurred. During the three months ended April 2, 2016, or April 4, 2015, we did not make any transfers between Level 1 and Level 2 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, 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 long-term debt. The fair value of our long-term debt is based on debt with similar terms and characteristics and was approximately $254.5 million as of April 2, 2016, and $192.5 million as of January 2, 2016, both of which approximate face value, less term-loan lender fees and discount. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Apr. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805) – Simplifying the Accounting for Measurement-Period Adjustments”. This guidance eliminates the requirement to restate prior period financial statements for measurement period adjustments in a business combination. This guidance requires that the cumulative impact of a measurement-period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. This ASU was effective for the Company on January 3, 2016. The adoption of this ASU did not have an impact on our financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” (ASU 2015-03) )which will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts (“original issue discount” or “OID”). The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This ASU is effective in financial statements issued for fiscal years beginning after December 15, 2015. In August 2015, the FASB issued ASU No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting,” which amends Subtopic 835-30 to add SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, regarding the SECs views of the classification of debt issuance costs relating to line-of-credit arrangements as deferred assets when no borrowings exist under the arrangement. We retrospectively adopted ASU 2015-03 in the interim period ended April 2, 2016, with respect to all deferred financing costs, lender fees and original issue discount, including those associated with the revolving credit portion of the 2016 Credit Agreement (see Note 8). The effect of this change did not have a material impact on the Company’s consolidated financial condition. The effects on the Company’s consolidated balance sheet as of January 2, 2016 relating to the reclassification of deferred financing costs is as follows (in thousands): Previously As Reported Reclassified Other current assets $ 8,490 $ 8,473 Total current assets $ 126,989 $ 126,972 Other assets $ 2,291 $ 607 Total assets $ 345,729 $ 344,028 Current portion of long-term debt $ 1,966 $ 1,949 Total current liabilities $ 21,544 $ 21,527 Long-term debt, less current portion $ 190,502 $ 188,818 Total liabilities $ 238,768 $ 237,067 Total liabilities and shareholders’ equity $ 345,729 $ 344,028 In June 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. The update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. We prospectively adopted ASU in the first quarter ended April 2, 2016. The adoption of this ASU did not have a material impact on our consolidated financial statements. Recently Issued Accounting Pronouncements In addition to the pronouncements presented below, see Note 3 to the consolidated financial statements included in our recently filed Annual Report on Form 10-K for the year ended January 2, 2016. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property, addressing issues raised by stakeholders and discussed by the Transition Resource Group. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. This new standard has the same effective date and transition requirements as ASU 2014-09. We are currently evaluating the impact of adopting this guidance. In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation, Improvements to Employee Share-Based payment Accounting (Topic 718)”. This update is intended to provide simplification of the accounting for share based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This update is effective for our fiscal year beginning January 1, 2017. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which is an amendment to the new revenue recognition standard on assessing whether an entity is a principal or an agent in a revenue transaction. This amendment addresses implementation issues that were discussed by the Revenue Recognition TRG to clarify the principal versus agent assessment and lead to more consistent application. This new standard has the same effective date and transition requirements as ASU 2014-09. We are currently evaluating the impact of adopting this guidance. In March 2016, the FASB issued ASU 2016-07, Investments - Equity Method and Joint Ventures (Topic 323), “Simplifying the Transition to the Equity Method of Accounting”. This update eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss in accumulated other comprehensive income/(loss) (“AOCI”) will be recognized through earnings. This update is effective for our fiscal year beginning January 1, 2017 with early adoption permitted. The adoption of this update is not expected to have a material impact on our financial condition, results of operations or cash flows. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, “Leases (Topic 842)”. This guidance supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 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 application 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 currently evaluating the impact of this new standard on its consolidated financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Reclassification of Deferred Financing Costs | The effects on the Company’s consolidated balance sheet as of January 2, 2016 relating to the reclassification of deferred financing costs is as follows (in thousands): Previously As Reported Reclassified Other current assets $ 8,490 $ 8,473 Total current assets $ 126,989 $ 126,972 Other assets $ 2,291 $ 607 Total assets $ 345,729 $ 344,028 Current portion of long-term debt $ 1,966 $ 1,949 Total current liabilities $ 21,544 $ 21,527 Long-term debt, less current portion $ 190,502 $ 188,818 Total liabilities $ 238,768 $ 237,067 Total liabilities and shareholders’ equity $ 345,729 $ 344,028 |
Warranty (Tables)
Warranty (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Guarantees [Abstract] | |
Information Regarding Warranty Accrual | The following provides information with respect to our warranty accrual: Beginning Charged End of Accrued Warranty of Period Acquired to Expense Adjustments Settlements Period (in thousands) Three months ended April 2, 2016 $ 4,237 $ 264 $ 2,328 $ 357 $ (2,473 ) $ 4,713 Three months ended April 4, 2015 $ 3,302 $ — $ 1,908 $ 189 $ (1,791 ) $ 3,608 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: April 2, January 2, 2016 2016 (in thousands) Raw materials $ 24,913 $ 18,609 Work in progress 1,145 1,246 Finished goods 3,194 3,198 $ 29,252 $ 23,053 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Earnings Per Share [Abstract] | |
Calculation of EPS and Reconciliation of Weighted Average Common Shares Used in Calculation of Basic and Diluted EPS | The table below presents the calculation of EPS and a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS for our Company: Three Months Ended April 2, April 4, 2016 2015 (in thousands, except per Net income $ 1,479 $ 6,652 Weighted-average common shares - Basic 48,694 47,721 Add: Dilutive effect of stock compensation plans 1,780 2,311 Weighted-average common shares - Diluted 50,474 50,032 Net income per common share: Basic $ 0.03 $ 0.14 Diluted $ 0.03 $ 0.13 |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Business Combinations [Abstract] | |
Schedule of Estimated Fair Value of Assets and Liabilities Assumed | The estimated fair value of assets acquired and liabilities assumed as of the Closing Date, are as follows: Current Preliminary allocation: Accounts and notes receivable $ 3,882 Inventories 6,778 Prepaid expenses 246 Property and equipment 5,029 Intangible assets 47,100 Goodwill 42,544 Accounts payable and accrued liabilities (2,320 ) Purchase price $ 103,259 Consideration: Cash $ 100,259 Earn-out contingency 3,000 Total fair value of consideration $ 103,259 |
Summary of Unaudited Proforma Results | 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 2, April 4, 2016 2015 (in thousands, except per Pro Forma Results Net sales $ 102,667 $ 101,832 Net income $ 134 $ 2,152 Net income per common share: Basic $ 0.00 $ 0.05 Diluted $ 0.00 $ 0.04 |
Goodwill, Trade Names and Oth25
Goodwill, Trade Names and Other Intangible Assets (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill, Trade Names and Other Intangible Assets Net | Goodwill, trade names, and other intangible assets, net, are as follows: Initial April 2, January 2, Useful Life 2016 2016 (in years) (in thousands) Goodwill $ 108,179 $ 65,635 indefinite Trade names and other intangible assets: Trade names $ 75,841 $ 57,441 indefinite Customer relationships 106,100 79,700 8-10 Developed technology 3,000 1,700 9-10 Non-compete agreement 1,600 600 2-5 Less: Accumulated amortization (61,397 ) (60,130 ) Subtotal 49,303 21,870 Other intangible assets, net $ 125,144 $ 79,311 Goodwill at January 2, 2016 $ 65,635 Increase in goodwill from allocation of WinDoor purchase price 42,544 Goodwill at April 2, 2016 $ 108,179 Tradenames at January 2, 2016 $ 57,441 Increase in tradenames from the acquisition of WinDoor 18,400 Tradenames at April 2, 2016 $ 75,841 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Debt Disclosure [Abstract] | |
Activity Relating to Third-Party Fees and Costs, Lender Fees and Discount | The activity relating to third-party fees and costs, lender fees and discount for the three months ended April 2, 2016 are as follows. With our adoption of ASU 2015-03, all debt-related fees, 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 $ 6,733 Amortization expense through refinancing (128 ) At time of refinancing 6,605 Add: Fees, costs and OID relating to the 2016 Credit Agreement 16,148 Less: Debt extinguishment costs (3,431 ) Less: Third-party fees and cost classified within SG&A (627 ) Less: Amortization expense after refinancing (344 ) Total $ 18,351 |
Estimated Amortization Expense Relating to Third-Party Fees and Costs, Lender Fees and Discount | Estimated amortization expense relating to third-party fees and costs, lender fees and discount for the years indicated as of April 2, 2016, is as follows: (in thousands) Total Remainder of 2016 $ 2,044 2017 2,864 2018 3,035 2019 3,221 2020 3,490 2021 3,281 2022 416 Total $ 18,351 |
Contractual Future Maturities of Long-term Debt | The contractual future maturities of long-term debt outstanding as of April 2, 2016, are as follows (at face value): (in thousands) Remainder of 2016 $ 2,025 2017 2,700 2018 2,700 2019 2,700 2020 2,700 2021 2,700 2022 253,800 Total $ 269,325 |
Accumulated Other Comprehensi27
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The following table shows the components of accumulated other comprehensive loss for the three months ended April 4, 2015. There was no activity for the three months ended April 2, 2016: Aluminum Three months ended April 4, 2015 Forward (in thousands) Contracts Balance at January 3, 2015 $ (1,671 ) Amounts reclassified from accumulated other comprehensive loss 55 Tax effect (22 ) Net current-period other comprehensive income 33 Balance at April 4, 2015 $ (1,638 ) |
Reclassification Out of Accumulated Other Comprehensive Loss | The following table shows the reclassification out of accumulated other comprehensive loss for the three months ended April 4, 2015. There was no activity for the three months ended April 2, 2016: Amounts Reclassified From Accumulated Other Comprehensive Loss Three Affected Line Item (in thousands) Debit (Credit) Aluminum forward contracts - effective portion $ 55 Cost of sales Tax effect (22 ) Tax expense |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Apr. 02, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Gains (Losses) on Derivative Financial Instruments | The following represents the gains (losses) on derivative financial instruments for the three months ended April 4, 2015, and their classifications within the accompanying condensed consolidated statements of comprehensive income. There were no amounts recognized in or reclassified from accumulated OCI(L) for the three months ended April 2, 2016: Derivatives in Cash Flow Hedging Relationships (in thousands) Location of Gain or Amount of Gain or Amount of Gain or Derivatives Three Months Ended Three Months Ended April 4, April 4, 2015 2015 Aluminum contracts Cost of sales $ (55 ) $ — Aluminum contracts Other expense, net — (99 ) $ (55 ) $ (99 ) |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands | Apr. 02, 2016 | Feb. 16, 2016 | Apr. 02, 2016 | Mar. 31, 2016 |
Business Acquisition [Line Items] | ||||
Estimated fair value of contingent consideration | $ 3,000 | |||
WinDoor [Member] | ||||
Business Acquisition [Line Items] | ||||
Fair value of consideration | $ 103,259 | $ 103,300 | ||
Effective date of acquisition | Feb. 16, 2016 | |||
Estimated fair value of contingent consideration | $ 3,000 | $ 3,000 |
Basis of Presentation - Summary
Basis of Presentation - Summary of Reclassification of Deferred Financing Costs (Detail) - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other current assets | $ 8,377 | $ 8,473 |
Total current assets | 97,285 | 126,972 |
Other assets | 639 | 607 |
Total assets | 409,150 | 344,028 |
Current portion of long-term debt | 2,612 | 1,949 |
Total current liabilities | 27,343 | 21,527 |
Long-term debt, less current portion | 248,362 | 188,818 |
Total liabilities | 302,614 | 237,067 |
Total liabilities and shareholders' equity | $ 409,150 | 344,028 |
Previously Reported [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other current assets | 8,490 | |
Total current assets | 126,989 | |
Other assets | 2,291 | |
Total assets | 345,729 | |
Current portion of long-term debt | 1,966 | |
Total current liabilities | 21,544 | |
Long-term debt, less current portion | 190,502 | |
Total liabilities | 238,768 | |
Total liabilities and shareholders' equity | $ 345,729 |
Warranty - Additional Informati
Warranty - Additional Information (Detail) | 3 Months Ended | |
Apr. 02, 2016 | Jan. 02, 2016 | |
Product Warranty Liability [Line Items] | ||
Warranty expense, average rate | 2.32% | 2.25% |
Minimum [Member] | ||
Product Warranty Liability [Line Items] | ||
Warranty periods | 1 year | |
Warranty period of the majority of products sold | 1 year | |
Maximum [Member] | ||
Product Warranty Liability [Line Items] | ||
Warranty periods | 10 years | |
Warranty period of the majority of products sold | 3 years |
Warranty - Information Regardin
Warranty - Information Regarding Warranty Accrual (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Guarantees [Abstract] | ||
Accrued Warranty, Beginning of Period | $ 4,237 | $ 3,302 |
Accrued Warranty, Acquired | 264 | |
Accrued Warranty, Charged to Expense | 2,328 | 1,908 |
Accrued Warranty, Adjustments | 357 | 189 |
Accrued Warranty, Settlements | (2,473) | (1,791) |
Accrued Warranty, End of Period | $ 4,713 | $ 3,608 |
Inventories - Inventories (Deta
Inventories - Inventories (Detail) - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 24,913 | $ 18,609 |
Work in progress | 1,145 | 1,246 |
Finished goods | 3,194 | 3,198 |
Total inventory | $ 29,252 | $ 23,053 |
Stock Based-Compensation - Addi
Stock Based-Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Mar. 03, 2016 | Apr. 02, 2016 | Apr. 04, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of stock options exercised | 91,881 | ||
Weighted average exercise price of options exercised | $ 0.92 | ||
Compensation expense for stock based awards | $ 545 | $ 474 | |
Total unrecognized compensation cost related to non-vested stock option and restricted stock awards | $ 3,100 | $ 2,700 | |
Weighted average remaining period of stock option | 1 year 8 months 12 days | 2 years | |
Restricted Stock Award [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance criteria defined in share awards | The performance percentages, ranging from less than 80% to greater than 120%, provide for the awarding of shares ranging from no shares to 150% of the original amount of shares. | ||
Restricted Stock Award [Member] | Executives And Non-executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards | 251,370 | ||
Fair value of common stock | $ 9.23 | ||
Company Performance Criteria [Member] | Executives And Non-executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards | 125,685 | ||
Options vesting period | 2 years | ||
Fixed Criteria [Member] | Executives And Non-executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted stock awards | 125,685 | ||
Options vesting period | 3 years |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding excluding underlying options and restricted stock awards | 55 | 20 |
Net Income Per Common Share - C
Net Income Per Common Share - Calculation of EPS and Reconciliation of Weighted Average Common Shares Used in Calculation of Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Earnings Per Share [Abstract] | ||
Net income | $ 1,479 | $ 6,652 |
Weighted-average common shares - Basic | 48,694 | 47,721 |
Add: Dilutive effect of stock compensation plans | 1,780 | 2,311 |
Weighted-average common shares - Diluted | 50,474 | 50,032 |
Net income per common share: | ||
Basic | $ 0.03 | $ 0.14 |
Diluted | $ 0.03 | $ 0.13 |
Acquisition - Additional Inform
Acquisition - Additional Information (Detail) - USD ($) | Apr. 02, 2016 | Feb. 16, 2016 | Apr. 02, 2016 | Jan. 02, 2016 |
Business Acquisition [Line Items] | ||||
Estimated fair value of contingent consideration | $ 3,000,000 | |||
Goodwill | $ 108,179,000 | $ 108,179,000 | $ 65,635,000 | |
Earn-out contingency liability, basis for amount | Pursuant to the SPA, the Company is required to pay 5.9% of WinDoor’s sales in excess of $46.0 million for 2016 (including both the pre-acquisition and post-acquisition periods of 2016), up to a maximum sales amount of $51.0 million. The potential undiscounted amount of all future payments that could be required to be paid under the contingent earn-out consideration arrangement is between $0 and $3.0 million. We have recorded an earn-out contingency liability of $3.0 million, representing its estimated fair value using a undiscounted cash flows, based on probability adjusted level of revenues with a range whose minimum is $51.0 million. | |||
WinDoor [Member] | ||||
Business Acquisition [Line Items] | ||||
Fair value of consideration | 103,259,000 | $ 103,300,000 | ||
Cash payment to acquire business | 100,259,000 | 43,500,000 | ||
Estimated fair value of contingent consideration | 3,000,000 | $ 3,000,000 | ||
Business combination, acquisition related costs | $ 900,000 | |||
Goodwill | 42,544,000 | 42,544,000 | ||
Earn-out contingency liability | 3,000,000 | $ 3,000,000 | ||
percentage of earn out contingency payment on sales revenue goods net | 5.90% | |||
Fair value of contingent consideration, undiscounted low range of estimates | $ 0 | |||
Fair value of contingent consideration, undiscounted high range of estimates | 3,000,000 | |||
Fair value of contingent consideration based on undiscounted probability adjusted minimum revenue estimates | $ 51,000,000 | $ 51,000,000 | ||
Sellers calculation period | 30 days | |||
WinDoor [Member] | Minimum [Member] | ||||
Business Acquisition [Line Items] | ||||
Sales revenue achievement level for recording earn out contingency payment | $ 46,000,000 | |||
WinDoor [Member] | Maximum [Member] | ||||
Business Acquisition [Line Items] | ||||
Sales revenue achievement level for recording earn out contingency payment | $ 51,000,000 |
Acquisition - Schedule of Estim
Acquisition - Schedule of Estimated Fair Value of Assets and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Apr. 02, 2016 | Feb. 16, 2016 | Apr. 02, 2016 | Jan. 02, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 108,179 | $ 108,179 | $ 65,635 | |
Earn-out contingency | 3,000 | |||
WinDoor [Member] | ||||
Business Acquisition [Line Items] | ||||
Accounts and notes receivable | 3,882 | 3,882 | ||
Inventories | 6,778 | 6,778 | ||
Prepaid expenses | 246 | 246 | ||
Property and equipment | 5,029 | 5,029 | ||
Intangible assets | 47,100 | 47,100 | ||
Goodwill | 42,544 | 42,544 | ||
Accounts payable and accrued liabilities | (2,320) | (2,320) | ||
Purchase price | 103,259 | $ 103,259 | ||
Cash | 100,259 | $ 43,500 | ||
Earn-out contingency | 3,000 | 3,000 | ||
Total fair value of consideration | $ 103,259 | $ 103,300 |
Acquisition - Summary of Unaudi
Acquisition - Summary of Unaudited Pro forma Results (Detail) - WinDoor [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Business Acquisition [Line Items] | ||
Net sales | $ 102,667 | $ 101,832 |
Net income | $ 134 | $ 2,152 |
Net income per common share: | ||
Basic | $ 0 | $ 0.05 |
Diluted | $ 0 | $ 0.04 |
Goodwill, Trade Names, and Othe
Goodwill, Trade Names, and Other Intangible Assets - Schedule of Goodwill, Trade Names and Other Intangible Assets Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 02, 2016 | Apr. 02, 2016 | Jan. 02, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 108,179 | $ 108,179 | $ 65,635 |
Less: Accumulated amortization | (61,397) | (60,130) | |
Subtotal | 49,303 | 21,870 | |
Other intangible assets, net | 125,144 | 79,311 | |
Goodwill at January 2, 2016 | 65,635 | ||
Goodwill at April 2, 2016 | 108,179 | ||
Trade names at January 2, 2016 | 57,441 | ||
Trade names at April 2, 2016 | $ 75,841 | ||
Customer Relationships [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Customer relationships | 106,100 | 79,700 | |
Customer Relationships [Member] | Minimum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 8 years | ||
Customer Relationships [Member] | Maximum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 10 years | ||
Developed Technology [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Customer relationships | 3,000 | 1,700 | |
Developed Technology [Member] | Minimum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 9 years | ||
Developed Technology [Member] | Maximum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 10 years | ||
Noncompete Agreements [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Customer relationships | 1,600 | 600 | |
Noncompete Agreements [Member] | Minimum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 2 years | ||
Noncompete Agreements [Member] | Maximum [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Initial Useful Life (in years) | 5 years | ||
Trade Names [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Trade names | 75,841 | $ 57,441 | |
WinDoor [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 42,544 | $ 42,544 | |
Increase in goodwill from allocation of WinDoor purchase price | 42,544 | ||
Goodwill at April 2, 2016 | 42,544 | ||
Increase in trade names from the acquisition of WinDoor | $ 18,400 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Feb. 16, 2016 | Apr. 02, 2016 |
Line of Credit Facility [Line Items] | ||
Letters of credit outstanding | $ 400,000 | |
Revolving Credit Facility Percentage Margin Over Base Rate | 20.00% | |
Face value of debt | $ 269,325,000 | |
Term note payable in quarterly installments | $ 675,000 | |
LIBOR [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on LIBOR | 5.75% | |
Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on LIBOR | 4.75% | |
Credit Agreements [Member] | ||
Line of Credit Facility [Line Items] | ||
Face value of debt | $ 270,000,000 | |
Term Notes Payable [Member] | ||
Line of Credit Facility [Line Items] | ||
Face value of debt | $ 269,300,000 | |
Senior Secured Credit Facilities [Member] | ||
Line of Credit Facility [Line Items] | ||
Amount available under credit facility | $ 310,000,000 | |
Term Loan Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Amount available under credit facility | $ 270,000,000 | |
Maturity term of credit agreement | 6 years | |
Credit facility amortization percentage | 1.00% | |
Term Loan Facility [Member] | LIBOR [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on LIBOR | 1.00% | |
Term Loan Facility [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on LIBOR | 2.00% | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Amount available under credit facility | $ 40,000,000 | |
Maturity term of credit agreement | 5 years | |
Credit facility amortization percentage | 0.50% | |
Credit available on revolver | $ 39,600,000 | |
Letter Of Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit facility amortization percentage | 5.75% | |
Facing fee per annum | 0.125% | |
2016 Credit Agreement [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit agreement date | Feb. 16, 2016 | |
Credit agreement termination date | Sep. 22, 2014 | |
Third-party fees and costs | $ 1,500,000 | |
Additional lender fees and discount | $ 14,600,000 |
Long-Term Debt - Activity Relat
Long-Term Debt - Activity Relating to Third-Party Fees and Costs, Lender Fees and Discount (Detail) $ in Thousands | 3 Months Ended |
Apr. 02, 2016USD ($) | |
Debt Instrument [Line Items] | |
At beginning of year | $ 6,733 |
Amortization expense through refinancing | (128) |
At time of refinancing | 6,605 |
Less: Debt extinguishment costs | (3,431) |
Less: Amortization expense after refinancing | (344) |
Total | 18,351 |
Selling, General and Administrative Expenses [Member] | |
Debt Instrument [Line Items] | |
Less: Third-party fees and cost classified within SG&A | (627) |
2016 Credit Agreement [Member] | |
Debt Instrument [Line Items] | |
Add: Fees, costs and OID relating to the 2016 Credit Agreement | $ 16,148 |
Long-Term Debt - Estimated Amor
Long-Term Debt - Estimated Amortization Expense Relating to Third-Party Fees and Costs, Lender Fees and Discount (Detail) - USD ($) $ in Thousands | Apr. 02, 2016 | Jan. 02, 2016 |
Debt Disclosure [Abstract] | ||
Remainder of 2016 | $ 2,044 | |
2,017 | 2,864 | |
2,018 | 3,035 | |
2,019 | 3,221 | |
2,020 | 3,490 | |
2,021 | 3,281 | |
2,022 | 416 | |
Total | $ 18,351 | $ 6,605 |
Long-Term Debt - Contractual Fu
Long-Term Debt - Contractual Future Maturities of Long-Term Debt (Detail) $ in Thousands | Apr. 02, 2016USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2016 | $ 2,025 |
2,017 | 2,700 |
2,018 | 2,700 |
2,019 | 2,700 |
2,020 | 2,700 |
2,021 | 2,700 |
2,022 | 253,800 |
Total | $ 269,325 |
Accumulated Other Comprehensi45
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss (Detail) - Aluminum Forward Contracts [Member] $ in Thousands | 3 Months Ended |
Apr. 04, 2015USD ($) | |
Components of Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning Balance | $ (1,671) |
Amounts reclassified from accumulated other comprehensive loss | 55 |
Tax effect | (22) |
Net current-period other comprehensive income | 33 |
Ending Balance | $ (1,638) |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Loss - Reclassification Out of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of sales | $ 70,223 | $ 64,254 |
Tax expense | $ 854 | 3,719 |
Amounts Reclassified From Accumulated Other Comprehensive Loss [Member] | Aluminum Forward Contracts [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of sales | 55 | |
Tax expense | $ (22) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 02, 2016 | Apr. 04, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 854 | $ 3,719 |
Effective tax rates | 36.60% | 35.90% |
Effective income tax rate reconciliation, change in enacted tax rate, percent | 38.80% | 38.80% |
Derivatives - Gains (Losses) on
Derivatives - Gains (Losses) on Derivative Financial Instruments (Detail) $ in Thousands | 3 Months Ended |
Apr. 04, 2015USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income (Effective Portion) | $ (55) |
Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion) | (99) |
Aluminum Contracts [Member] | Cost of Sales [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Amount of Gain or (Loss) Reclassified from Accumulated OCI(L) into Income (Effective Portion) | (55) |
Aluminum Contracts [Member] | Other Expense, net [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion) | $ (99) |
Fair Value - Additional Informa
Fair Value - Additional Information (Detail) - USD ($) | Apr. 02, 2016 | Jan. 02, 2016 | Apr. 04, 2015 |
Debt Instrument Fair Value Carrying Value [Abstract] | |||
Fair value of assets, level 1 to level 2 transfers | $ 0 | $ 0 | |
Fair value of assets, level 2 to level 1 transfers | 0 | $ 0 | |
Fair value of current long-term debt | $ 254,500,000 | $ 192,500,000 |