EXHIBIT 99.1
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PLY GEM REPORTS THIRD QUARTER 2004 RESULTS
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November 15, 2004. Ply Gem Holdings, Inc. ("Ply Gem"), a leading
manufacturer of residential exterior building products in North America, today
announced third quarter 2004 net sales of $178.7 million, a 14.2% increase over
$156.5 million for the same period in 2003. For the combined and consolidated
nine months ended October 2, 2004, net sales were $445.1 million or 6.2% higher
than the $419.0 million of net sales for the full nine months ended October 4,
2003. The results for 2004 include the operations of the Company's subsidiary,
MWM Holdings, Inc. ("MW") which was acquired by Ply Gem on August 27, 2004. MW
contributed $29.2 million of net sales for both the third quarter and nine
months ended October 2, 2004.
Operating earnings for the third quarter of 2004 were $24.4 million
compared to $21.5 million for the third quarter 2003. For the nine months ended
October 2, 2004, operating earnings were $50.7 million compared to $41.4 million
for the full nine months ended October 4, 2003. MW contributed $4.0 million of
operating earnings for both the third quarter and nine months ended October 2,
2004 period.
Net income for the third quarter of 2004 was $9.6 million compared to
$7.9 million for the third quarter 2003. For the nine months ended October 2,
2004, net income was $15.5 million (which included $1.0 million of after tax
impact of a foreign currency gain), compared to $9.7 million for the full nine
months ended October 4, 2003. Net income for the third quarter of 2004 and the
nine months ended October 2, 2004 included $1.0 million of after tax impact of a
foreign currency gain. Net income in 2003 did not include any currency
translation gains or losses. MW contributed $3.9 million of net income for both
the third quarter and nine months ended October 2, 2004.
Adjusted EBITDA for the third quarter of 2004 was $29.5 million
compared to $25.2 million for the third quarter 2003. For the nine months ended
October 2, 2004, Adjusted EBITDA was $64.4 million compared to $53.9 million for
the full nine months ended October 4, 2003. MW contributed $4.8 million of
Adjusted EBITDA for both the third quarter and nine months ended October 2,
2004. Adjusted EBITDA for all periods presented excluded currency translation
gain.
Lee D. Meyer, President and CEO, said "Our net sales and operating
earnings reflect the positive impact of Ply Gem's recent acquisition of MW. The
transition of MW into the Ply Gem organization has to date gone extremely well,
with MW expected to deliver on both the performance we expected and the
synergies that exist between the two organizations. Ply Gem's net sales,
excluding those of MW, were down for the third quarter, driven by the hurricanes
and the resulting wet weather in the southeast region of the United States
(which accounted for approximately 39% of Ply Gem's net sales in the third
quarter of 2004), weaker demand for our repair and remodeling windows, lower
volume in our fencing products as our customers reduced inventories in the third
quarter in response to our improved service capabilities, and finally the impact
of the 2003 third quarter net sales of Thermal-Gard, Inc., the assets of which
were sold in the second quarter of this year.
Ply Gem's third quarter Adjusted EBITDA reflects the positive impact of
our acquisition of MW, continued operational improvements and our ability to
respond to higher raw material costs in the market place. We launched price
increases in the late third quarter in an attempt to offset the margin
compression from escalating PVC resin and aluminum costs."
On February 12, 2004, Ply Gem Investment Holdings, Inc., through its
wholly-owned subsidiary Ply Gem Holdings, Inc., acquired all of the outstanding
shares of capital stock of Ply Gem Industries, Inc. (the "Ply Gem Acquisition"),
in accordance with a stock purchase agreement entered into among Ply Gem
Investment Holdings, Inc., Nortek and WDS LLC on December 19, 2003, for
aggregate consideration of approximately $560.0 million, subject to a working
capital adjustment, and less net assumed indebtedness of $29.6 million, and the
aggregate value of certain stock options cancelled or forfeited in connection
with the Ply Gem Acquisition. Prior to February 12, 2004, Ply Gem Holdings, Inc.
had no operations.
On August 27, 2004, Ply Gem Industries, Inc. acquired all of the
outstanding shares of MWM Holdings, Inc. (the "MW Acquisition") in accordance
with a stock purchase agreement entered into among Ply Gem Industries, Inc. and
Investcorp., on July 23, 2004, for aggregate consideration of approximately
$320.0 million, subject to a working capital adjustment and the aggregate value
of certain stock options cancelled or forfeited in connection with the MW
Acquisition.
Ply Gem Industries, Inc. is a leading manufacturer of residential
exterior building products. The company sells a broad range of vinyl siding,
vinyl and wood windows, aluminum trim coil, aluminum siding and accessories, and
vinyl and composite fence, railing and decking products. Ply Gem is a
wholly-owned subsidiary of Ply Gem Holdings, Inc., which is controlled by
affiliates of Caxton-Iseman Capital. For more information, please visit the
company's website at www.plygem.com.
Caxton-Iseman Capital is a New York-based private equity investment
firm specializing in leveraged buyouts. The firm's investment vehicles currently
have equity capital in excess of $1.8 billion available for buyout investments.
The firm was founded in 1993 by Frederick Iseman and Caxton Corporation. Caxton
Corporation is a New York-based investment management firm managing funds
currently in excess of $7.5 billion. Since the firm's inception in 1993,
Caxton-Iseman Capital has made equity investments in the following industries:
restaurants, food service, information technology services, leisure and gaming,
print and database publishing, defense, medical devices and hotel management.
Ply Gem Management will host a conference call on November 15, 2004 at
10:00 AM EST to report third quarter results. To participate please call
(866)-552-7206 and use call confirmation number 29483823.
NOTE: AS USED HEREIN, THE TERM "PLY GEM" REFERS TO PLY GEM HOLDINGS,
INC. AND ALL ITS SUBSIDIARIES, INCLUDING PLY GEM INDUSTRIES, INC.,
UNLESS THE CONTEXT INDICATES OTHERWISE. THIS TERM IS USED FOR
CONVENIENCE ONLY AND IS NOT INTENDED AS A PRECISE DESCRIPTION OF ANY OF
THE SEPARATE CORPORATIONS.
This document and oral statements made from time to time by our representatives
may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are based on the
Company's current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors impacting such forward-looking statements include the
availability and cost of raw materials and purchased components, the level of
construction and remodeling activity, changes in general economic conditions,
the rate of sales growth, and product liability claims. The Company undertakes
no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. For further information,
please refer to the reports and filings of the Company with the Securities and
Exchange Commission.
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PLY GEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
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POST-NORTEK
RECAPITALIZATION CONSOLIDATED
OCTOBER 4, 2003 OCTOBER 2, 2004
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(AMOUNTS IN THOUSANDS)
(UNAUDITED)
NET SALES $ 156,549 $ 178,732
COST AND EXPENSES:
Cost of products sold 114,496 132,657
Selling, general and administrative expense 19,492 19,723
Amortization of intangible assets 1,072 1,974
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135,060 154,354
Operating earnings 21,489 24,378
Interest expense (8,638) (10,332)
Other 49 1,657
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Income before provision for income taxes
12,900 15,703
Provision for income taxes 5,000 6,101
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Net income $ 7,900 $ 9,602
=============== ===============
PLY GEM HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
PRE-NORTEK POST-NORTEK PLY GEM PLY GEM
RECAPITALIZATION RECAPITALIZATION INDUSTRIES, INC. HOLDINGS, INC.
JANUARY 1, 2003 JANUARY 10, 2003 JANUARY 1, 2004 JANUARY 23, 2004
TO TO TO TO
JANUARY 9, 2003 OCTOBER 4, 2003 FEBRUARY 11, 2004 OCTOBER 2, 2004
---------------- ---------------- ---------------- --------------
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
NET SALES $ 8,824 $ 410,147 $ 40,612 $ 404,507
COST AND EXPENSES:
Cost of products sold 7,651 308,259 33,611 303,872
Selling, general and administrative
expense 1,529 56,977 8,345 45,413
Amortization of intangible assets 70 3,130 201 3,000
---------------- -------------- ---------------- --------------
9,250 368,366 42,157 352,285
Operating earnings (426) 41,781 (1,545) 52,222
Interest expense (976) (24,733) (3,684) (23,356)
Other 2 152 29 1,677
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Income before provision (benefit) for
income taxes (1,400) 17,200 (5,200) 30,543
Provision (benefit) for income taxes (500) 6,600 (1,850) 11,740
---------------- -------------- ---------------- --------------
Net income (loss) $ (900) 10,600 $ (3,350) $ 18,803
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS UNAUDITED CONDENSED
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS.
1. The accompanying unaudited condensed consolidated statements of operations
of Ply Gem Holdings, Inc. and the combined statements of operations of Ply
Gem Industries, Inc. and CWD Windows and Doors, Inc. (collectively, "Ply
Gem Industries, Inc.") do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the period from January 1, 2004
through February 11, 2004 and January 23, 2004 through October 2, 2004 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2004.
The selected balance sheet data for the periods presented in Note 4 has
been derived from the December 31, 2003 audited combined financial
statements of Ply Gem Industries, Inc. and the unaudited consolidated
financial statements of Ply Gem Holdings, Inc. as of October 2, 2004, and
does not include all of the information and footnotes required by generally
accepted accounting principles for completed financial statements.
The Company's fiscal quarters are based on periods ending on the last
Saturday of the last week in the quarter. Therefore the financial results
of certain fiscal quarters will not be exactly comparable to the prior and
subsequent fiscal quarters.
Ply Gem Holdings, Inc., a wholly-owned subsidiary of Ply Gem Investment
Holdings, Inc., was incorporated on January 23, 2004 for the purpose of
acquiring Ply Gem Industries, Inc. The
acquisition was completed on February 12, 2004, as Nortek sold Ply Gem
Industries, Inc., to Ply Gem Holdings, Inc., an affiliate of Caxton-Iseman
Capital, Inc., pursuant to the terms of the Stock Purchase Agreement among
Ply Gem Investment Holdings, Inc. and Nortek, Inc. and WDS LLC dated as of
December 19, 2003, as amended (the "Purchase Agreement"). Prior to February
12, 2004, Ply Gem Holdings, Inc. had no operations and Ply Gem Industries,
Inc. was wholly-owned by a subsidiary of WDS LLC, which was a wholly-owned
subsidiary of Nortek, Inc. (collectively with subsidiaries "Nortek").
The accompanying statements of operations include the consolidated results
of operations for the period from January 23, 2004 to October 2, 2004, of
Ply Gem Holdings, Inc. and Subsidiaries (the "Company" or "Ply Gem") and
the combined results of operations of Ply Gem Industries, Inc. for the
periods from January 1, 2004 to February 11, 2004, January 1, 2003 to
January 9, 2003, and January 10, 2003 to October 4, 2003. The periods
presented during 2004 provide the combined operating results of Ply Gem
Industries, Inc. from January 1, 2004 until the date of Acquisition,
February 12, 2004, and of Ply Gem Holdings, Inc. from January 23, 2004, the
date of its inception, through October 2, 2004. As previously stated, prior
to February 12, 2004 Ply Gem Holdings, Inc. had no operations.
The periods presented during 2003 provide the combined operating results of
Ply Gem Industries, Inc. from January 1, 2003, through January 9, 2003. On
January 9, 2003, Nortek Holdings was acquired by certain affiliates and
designees of Kelso & Company L.P. and certain members of Nortek management
in accordance with the Agreement and Plan of Recapitalization by and among
Nortek, Inc., Nortek Holdings, Inc. and K Holdings, Inc. dated as of June
20, 2002, (the "Recapitalization").
Nortek accounted for the Recapitalization as a purchase in accordance with
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations" ("SFAS No. 141"), which resulted in a new
valuation for the assets and liabilities of Nortek Holdings and its
subsidiaries based upon fair values as of the date of the Recapitalization.
As allowed under SEC Staff Accounting Bulletin No. 54, "Push Down Basis of
Accounting Required in Certain Limited Circumstances", Ply Gem Industries,
Inc. reflected certain applicable purchase accounting adjustments recorded
by Nortek Holdings in the Ply Gem Industries, Inc. financial statements as
of December 31, 2003 and for the period from January 10, 2003 through the
end of the quarter, October 4, 2003.
Data for the predecessor periods, which includes the Pre-Nortek
Recapitalization period of January 1, 2003 through January 9, 2003 and the
Post-Nortek Recapitalization periods of January 10, 2003 through October 4,
2003 and January 1, 2004 through February 11, 2004, were prepared using the
historical basis of accounting for Ply Gem Industries, Inc. As a result of
the Acquisition on February 12, 2004, we applied purchase accounting to the
period January 23, 2004 through October 2, 2004. During the period of
January 23, 2004 through February 11, 2004 there were no operations of Ply
Gem Holdings, Inc.
2. Adjusted EBITDA means net income (loss) plus interest expense (net of
investment income), provision (benefit) for income taxes, depreciation and
amortization, non-cash foreign currency gain/(loss) and amortization of
non-cash write-off of the portion of excess purchase price from
acquisitions allocated to inventories. Other companies may define Adjusted
EBITDA differently and, as a result, our measure of Adjusted EBITDA may not
be directly comparable to Adjusted EBITDA of other companies. Management
believes that the presentation of Adjusted EBITDA included in this press
release provide useful information to investors regarding our results of
operations because it assist in analyzing and benchmarking the performance
and value of our
business. Although we use Adjusted EBITDA as a financial measure to assess
the performance of our business, the use of Adjusted EBITDA is limited
because it does not include certain material costs, such as interest and
taxes, necessary to operate our business. Adjusted EBITDA included in this
press release should be considered in addition to, and not as a substitute
for, net earnings in accordance with GAAP as a measure of performance in
accordance with GAAP. You are cautioned not to place undue reliance on
Adjusted EBITDA. The following table sets forth the reconciliation of
Adjusted EBITDA to net income (loss):
PRE-NORTEK POST-NORTEK PLY GEM
RECAPITALIZATION RECAPITALIZATION PLY GEM HOLDINGS, INC.
JANUARY 1, 2003 JANUARY 10, 2003 INDUSTRIES, INC. JANUARY 23, 2004
TO TO JANUARY 1, 2004 TO TO
JANUARY 9, 2003 OCTOBER 4, 2003 FEBRUARY 11, 2004 OCTOBER 2, 2004
---------------- ---------------- ---------------- --------------
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
NET INCOME (LOSS) $ (900) $ 10,600 $ (3,350) $ 18,803
Interest expense, net 974 24,581 3,655 23,275
Provision (benefit) for income taxes (500) 6,600 (1,850) 11,740
Depreciation and amortization 327 10,827 1,373 10,334
Non Cash gain on currency translation - - - (1,596)
Non Cash charge of purchase price
allocated to inventories $ - $ 1,387 $ - $ 1,974
---------------- ---------------- ---------------- --------------
ADJUSTED EBITDA (99) 53,995 (172) 64,530
FOR THE THREE MONTHS ENDED
OCTOBER 4, 2003 OCTOBER 2, 2004
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(AMOUNTS IN THOUSANDS)
(UNAUDITED)
NET INCOME (LOSS) 7,900 9,602
Interest expense, net 8,589 10,271
Provision for income taxes 5,000 6,101
Depreciation and amortization 3,734 5,117
Non Cash gain on foreign currency - (1,596)
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ADJUSTED EBITDA 25,223 29,495
3. Long-term debt amounts in the select balance sheets at October 2, 2004 and
December 31, 2003 consisted of the following:
DECEMBER 31, OCTOBER 2
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2003 2004
(UNAUDITED)
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(AMOUNTS IN THOUSANDS)
$ $ 310,000
Senior term loan facility -
-
Senior revolver credit facility 18,000
-
Senior subordinated notes 360,333
Notes payable to a wholly-owned subsidiary of
Nortek 394,735 -
Mortgage notes and bonds payable 22,503 6,604
Capital lease and other borrowings 7,059 7,000
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424,297 701,937
Less current maturities 1,136 2,350
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$ 423,161 $ 699,587
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4. The following is a summary of selected balance sheet amounts at
October 2, 2004 and December 31, 2003:
OCTOBER 2
DECEMBER 31, 2004
2003 (UNAUDITED)
----------- ------------
(AMOUNTS IN THOUSANDS)
Unrestricted cash and cash equivalents 8,517 20,540
Unrestricted cash and cash equivalents 8,517 20,540
Restriced cash and cash equivalents 1,538 -
Accounts receivable, less allowances 45,236 92,262
Inventories 44,136 62,949
Prepaid expenses and other current assets 5,280 8,157
Property and equipment, net 122,816 114,652
Goodwill 219,977 551,583
Intangible assets, net 44,363 155,951
Accounts payable 18,876 45,951
Current maturities of long-term debt 1,136 2,350
Long-term debt, less current maturities 423,161 699,587
Stockholder's Equity / Parent Company Deficit (27,699) 191,464
* LONG-TERM DEBT AT DECEMBER 31, 2003 INCLUDED $394,735 OF
INTERCOMPANY INDEBTEDNESS TO A WHOLLY-OWNED NORTEK SUBSIDIARY THAT
WAS ELIMINATED IN CONNECTION WITH THE PLY GEM
ACQUISITION.
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