Exhibit 99.1
FOR IMMEDIATE RELEASE
PGT Reports Record Second Quarter and Year-to-Date 2006 Results
VENICE, FL, August 2, 2006--PGT, Inc. (Nasdaq: PGTI), the leading U.S.
manufacturer and supplier of residential impact-resistant windows and doors,
today announced record sales and earnings from operations for its quarter ended
July 1, 2006.
"We delivered outstanding results in the second quarter by leveraging our
competitive strengths and aggressively executing our strategy," said Rod
Hershberger, PGT's President and Chief Executive Officer. "Our year-to-date
accomplishments were highlighted by the successful completion of our initial
public offering and record first half sales of $205.0 million, which represents
an increase of 30% over the prior year period. In addition, our adjusted net
income in the first half increased by 127% year-over-year after adjusting for
items related to the IPO and refinancing transactions."
A reconciliation of non-GAAP financial measures to their GAAP equivalents is
attached to this release and can also be found on the company's website.
Second Quarter 2006 Financial Results
- -------------------------------------
(See accompanying financial schedules for full financial details and
reconciliations of non-GAAP financial measures to their GAAP equivalents.)
o Total sales for the second quarter were $108.7 million, an increase
of 39%, versus $78.2 million for the same period in 2005. This growth
is largely due to increased sales volume of our WinGuard(R)
Impact-Resistant Windows and Doors.
o Gross margin percentage for the second quarter was 43.3%, compared to
35.1% in the same quarter of 2005. The primary drivers of gross
margin expansion include an increase in sales of our WinGuard
impact-resistant products, which carry a higher margin than our other
product lines, as well as overall higher prices and improved
manufacturing efficiencies. WinGuard sales represented 65.9% of our
total sales for the second quarter of 2006, compared to 51.6% for the
second quarter of 2005.
o Second quarter net income of $10.0 million grew 169% from $3.7
million for the comparable period of 2005. On an adjusted basis,
second quarter net income was $13.0 million, an increase of 239% over
the comparable period of 2005.
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(PGT Reports Record Second Quarter and Year-to-Date 2006 Results, continued)
o Diluted weighted average shares outstanding for the second quarter of
2006 were 18,173,432 compared to 17,221,477 for the same quarter last
year. The higher share count was due to the company's initial public
offering (IPO), which was completed on June 27, 2006, and inclusion
of options in the current year that were considered anti-dilutive
last year. Assuming the IPO was completed at the beginning of the
respective reporting periods, the pro forma diluted weighted average
shares outstanding for the second quarters of 2006 and 2005 were
27,932,643 and 27,368,535, respectively.
o Net income per diluted share for the second quarter of $0.55
increased from $0.22 for the comparable period of 2005. On an
adjusted basis, net income per pro forma diluted share of $0.47
increased from $0.14 for the prior year period.
o EBITDA for the second quarter was $27.4 million, an increase of 119%,
versus $12.5 million for the comparable period of 2005. On an
adjusted basis, EBITDA for the second quarter was $28.4 million, an
increase of 122%, versus $12.8 million for the comparable period of
2005.
Commenting on the second quarter results, Jeff Jackson, PGT's Chief Financial
Officer, said, "We closed our second quarter on solid financial footing by
reporting double digit gains in sales and more than doubling net income for the
quarter compared to the prior year. Overall, we benefited from a strong demand
for our WinGuard impact-resistant products, price increases, improved operating
efficiencies, and leverage of our operating expenses."
First Half 2006 Financial Results
- ---------------------------------
(See accompanying financial schedules for full financial details and
reconciliations of non-GAAP financial measures to their GAAP equivalents.)
o Total sales for the first half were $205.0 million, an increase of
30%, versus $157.6 million for the same period in 2005. This growth
is largely due to increased sales volume of our WinGuard
impact-resistant products.
o Gross margin percentage for the first half of 2006 was 40.4% compared
to 36.3% in the same period of 2005. Gross margin expansion was
largely driven by price increases, improved manufacturing
efficiencies, and an increase in sales of our WinGuard
impact-resistant products, which carry a higher margin than our other
product lines.
o First half 2006 net income/(loss) was ($4.1) million compared to $8.5
million in the same period in 2005. The loss in 2006 was largely due
to the $26.9 million cash payment to option holders in connection
with the payment of dividends to our shareholders. On an adjusted
basis, first half 2006 net income was $19.8 million, an increase of
127% year-over-year.
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o Diluted weighted average shares outstanding for the first half of
2006 were 15,950,129, compared to 17,221,477 for the same period last
year. The lower share count was largely due to the exclusion of
options in the diluted share calculation in 2006 as a result of our
net loss position. Assuming the IPO was completed at the beginning of
the respective reporting periods, the pro forma diluted weighted
average shares outstanding for the first half of 2006 and 2005 were
27,890,530 and 27,368,535, respectively.
o EBITDA for the first half was $18.6 million, compared to $26.5
million for the same period of 2005, such decrease was due to the
$26.9 million payment to option holders in 2006. On an adjusted
basis, EBITDA was $47.0 million, an increase of 74%, versus $27.0
million for the same period in 2005.
Financing Activities
- --------------------
(See accompanying financial schedules for full financial details.)
o Subsequent to the end of our second fiscal quarter, we repaid $137
million of long term debt through the use of the proceeds generated
from our initial public offering of $115 million and cash on hand of
$22 million. Following this debt repayment, total outstanding debt
was $183 million and cash on hand was $10 million.
o On July 27, 2006, IPO underwriters exercised their over-allotment
option in full and, on August 1, 2006, purchased 1,323,529 additional
shares that generated approximately $17 million in net proceeds for
the company which we expect to use to pay down long term debt.
Following this debt repayment, we expect total outstanding debt to be
approximately $166 million and cash on hand to be $17 million.
Outlook
- -------
Commenting on the company's outlook, Mr. Hershberger said, "We exceeded our
goals in the first half of 2006 and anticipate a solid back half as demand for
our WinGuard products remains robust and we continue to penetrate the active
impact-resistant market. We also believe that our enhanced product mix and
expanded marketing efforts will drive our top line growth and help maintain our
margins."
Mr. Hershberger concluded, "We remain committed to enhancing shareholder value
by continuing to leverage our competitive strengths and executing our long-term
growth strategy. We believe we are well positioned to continue our positive
momentum and look forward to 2007 with confidence."
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Conference Call
- ---------------
As previously announced, PGT will hold a conference call Thursday, August 3,
2006, at 10:30 a.m. Eastern Time and will simultaneously broadcast it live over
the Internet. To participate in the teleconference, please dial into the call a
few minutes before the start time: 866-510-0705 (U.S. and Canada) and
617-597-5363 Eastern Time (international). A replay of the call will be
available from 3:00 p.m. Eastern Time through August 17, 2006. To access the
replay, please dial 888-286-8010 (U.S. and Canada) and 617-801-6888
(international). Please refer to pass code 38944732. To access the webcast, go
to www.pgtinc.com and click on "Investors". The online archive of the webcast
will be available for approximately 14 days.
About PGT
- ---------
PGT(R) pioneered the U.S. impact-resistant window and door industry and today
is the nation's leading manufacturer and supplier of residential
impact-resistant windows and doors. PGT is also one of the largest window and
door manufacturers in the United States. In its 25th year, the company employs
approximately 2,400 at its 485,000-square-foot manufacturing, glass tempering
and laminating plants, and delivery fleet facilities in Venice, FL, and its
225,000-square-foot production facility in Lexington, NC. Sold through a
network of over 1,300 independent distributors, the company's total line of
custom windows and doors is now available throughout the eastern United States,
the Gulf Coast and in a growing international market, which includes the
Caribbean, South America and Australia. PGT's product line includes PGT(R)
Aluminum and Vinyl Windows and Doors; WinGuard(R) Impact-Resistant Windows and
Doors; Multi-Story Series 800 Windows and Doors; and Eze-Breeze(R) Sliding
Panels.
Use of Non-GAAP Financial Measures
- ----------------------------------
This press release and the financial schedules hereto include financial
measures and terms not calculated in accordance with generally accepted
accounting principles in the United States (GAAP). We believe that presentation
of non-GAAP measures such as adjusted net income, pro forma net income per
share, EBITDA and adjusted EBITDA provides investors and analysts with an
alternative method for assessing our operating results in a manner that enables
investors and analysts to more thoroughly evaluate our current performance
compared to past performance. We also believe these non-GAAP measures provide
investors with a better baseline for assessing our future earnings potential.
The non-GAAP measures included in this release are provided to give investors
access to the types of measures that we use in analyzing our results.
Pro forma net income per share consists of GAAP net income per share adjusted
for the items included in the accompanying reconciliation. We believe this
measure enables investors and analysts to more thoroughly evaluate our current
performance as compared to past performance and provides a better baseline for
assessing the company's future earnings potential. However, this measure does
not provide a complete picture of our operations. Therefore, net income per
share and adjusted net income, on both a GAAP and non-GAAP pro forma basis, may
need to be considered to get a comprehensive view of our results.
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EBITDA consists of GAAP net income adjusted for the items included in the
accompanying reconciliation. Adjusted EBITDA consists of EBITDA adjusted for
the items included in the accompanying reconciliation. We believe that EBITDA
and adjusted EBITDA provide useful information to investors and analysts about
the company's performance because they eliminate the effects of period to
period changes in taxes, costs associated with capital investments and interest
expense. EBITDA and adjusted EBITDA do not give effect to the cash the company
must use to service its debt or pay its income taxes and thus do not reflect
the funds generated from operations or actually available for capital
investments.
Our calculations of pro forma net income per share, EBITDA and adjusted EBITDA
are not necessarily comparable to calculations performed by other companies and
reported as similarly titled measures. These non-GAAP measures should be
considered in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for or superior to GAAP measures. Schedules that
reconcile adjusted net income, pro forma net income per share, EBITDA and
adjusted EBITDA to GAAP net income are included in the financial schedules
accompanying this release.
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Forward-looking Statements
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Statements in this news release and the schedules hereto which are not purely
historical facts or which necessarily depend upon future events, including
statements about forecasted financial performance or other statements about
anticipations, beliefs, expectations, hopes, intentions or strategies for the
future, may be forward-looking statements within the meaning of Section 21E of
the Securities and Exchange Act of 1934, as amended. Readers are cautioned not
to place undue reliance on forward-looking statements. All forward-looking
statements are based upon information available to PGT, Inc. on the date this
release was submitted. PGT, Inc. undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Any forward-looking statements involve risks and
uncertainties that could cause actual events or results to differ materially
from the events or results described in the forward-looking statements,
including risks or uncertainties related to the Company's revenues and
operating results being highly dependent on, among other things, the
homebuilding industry, aluminum prices, and the economy. PGT, Inc. may not
succeed in addressing these and other risks. Further information regarding
factors that could affect our financial and other results can be found in the
risk factors section of PGT, Inc.'s Form S-1 (File No. 333-132365) filed with
the Securities and Exchange Commission. Consequently, all forward-looking
statements in this release are qualified by the factors, risks and
uncertainties contained therein.
# # #
Jeffrey T. Jackson
Chief Financial Officer and Treasurer
PGT, Inc.
941-486-0100, extension 22786
Email: jjackson@pgtindustries.com
Financial Schedules to Follow
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PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited - dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
---------------------- -----------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------- --------- ---------- ----------
Net sales $ 108,689 $ 78,217 $ 205,044 $ 157,581
Cost of sales 61,579 50,800 122,213 100,436
---------- --------- ---------- ----------
Gross margin 47,110 27,417 82,831 57,145
Stock compensation expense related to dividend - - 26,898 -
Selling, general and administrative expenses 23,796 18,482 45,664 37,973
---------- --------- ----------- ----------
Income (loss) from operations 23,314 8,935 10,269 19,172
Other expense, net (357) 157 (766) 77
Interest expense 7,282 3,203 17,641 6,346
---------- --------- ----------- ----------
Income (loss) before income taxes 16,389 5,575 (6,606) 12,749
Income tax expense (benefit) 6,365 1,851 (2,554) 4,234
---------- --------- ----------- ----------
Net income (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
========== ========= =========== ==========
Basic net income (loss) per common share $ 0.62 $ 0.24 $ (0.25) $ 0.54
Diluted net income (loss) per common and
common equivalent share $ 0.55 $ 0.22 $ (0.25) $ 0.49
Weighted average common shares
outstanding:
Basic 16,151 15,720 15,950 15,720
Diluted 18,173 17,221 15,950 17,221
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PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
July 1, December 31,
2006 2005
------------- ----------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 39,692 $ 3,270
Accounts receivable, net 41,508 45,193
Inventories 14,222 13,981
Deferred income taxes 6,497 3,133
Other current assets 12,309 11,360
Subscriptions receivable related to proceeds from IPO 114,882 -
------------- ----------------
Total current assets 229,110 76,937
Property, plant and equipment, net 79,504 65,508
Goodwill 169,648 169,648
Other intangible assets, net 104,703 107,760
Other assets, net 5,753 5,700
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Total assets $ 588,718 $ 425,553
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 34,763 $ 31,137
Current portion of long-term debt 2,050 -
------------- ----------------
Total current liabilities 36,813 31,137
Long-term debt less current portion 317,437 183,525
Deferred income taxes 54,319 54,320
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Total liabilities 408,569 268,982
------------- ----------------
Total shareholders' equity 180,149 156,571
------------- ----------------
Total liabilities and shareholders' equity $ 588,718 $ 425,553
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PGT, INC. AND SUBSIDIARY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
THEIR GAAP EQUIVALENTS
(unaudited - dollars and shares in thousands,
except per share amounts)
Three Months Ended Six Months Ended
----------------------- ------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------- ---------- ----------- ---------
Reconciliation to Adjusted Net Income and Adjusted
Net Income per Share:
Net income / (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
Reconciling items:
Cash payment to stock option holders (1) - - 26,898 -
Write-off of unamortized debt issuance costs
in connection with the February 2006 refinancing (2) - - 4,617 -
Reduction / (increase) in interest expense assuming
February 2006 debt refinancing and repayment of
debt with IPO proceeds were completed at the
beginning of each period (2) 3,897 (69) 5,941 (135)
Management fee (3) 973 253 1,434 491
Tax effect of reconciling items at 38.6% (1,880) (71) (15,012) (137)
---------- ---------- ----------- ---------
Adjusted net income $ 13,014 $ 3,837 $ 19,826 $ 8,734
========== ========== =========== =========
Weighted average shares outstanding:
Diluted shares 18,173 17,221 15,950 17,221
Incremental shares for IPO (4) 9,759 10,147 9,953 10,147
Incremental shares for stock incentive awards (5) - - 1,987 -
---------- ---------- ---------- ---------
Pro forma diluted shares 27,933 27,369 27,891 27,369
========== ========== =========== =========
Adjusted net income per pro forma share - diluted $ 0.47 $ 0.14 $ 0.71 $ 0.32
========== ========== =========== =========
Reconciliation to EBITDA and Adjusted EBITDA:
Net income / (loss) $ 10,024 $ 3,724 $ (4,052) $ 8,515
Reconciling items:
Depreciation and amortization expense 3,772 3,748 7,591 7,390
Interest expense 7,282 3,203 17,641 6,346
Income tax expense / (benefit) 6,365 1,851 (2,554) 4,234
---------- ---------- ---------- ---------
EBITDA 27,443 12,526 18,626 26,485
Add: Cash payment to stock option holders (1) - - 26,898 -
Management fee (3) 973 253 1,434 491
---------- ---------- ---------- ---------
Adjusted EBITDA $ 28,416 $ 12,779 $ 46,958 $ 26,976
========== ========== =========== =========
Adjusted EBITDA as percentage of sales 26.1% 16.3% 22.9% 17.1%
(1) Represents cash payment made to stock option holders (including applicable
payroll taxes) in lieu of adjusting exercise prices in conjunction with the
payment of dividends to our shareholders. This amount is included as a
separate line item in the consolidated statement of operations of which
$5,069 and $21,829 related to cost of sales and selling, general and
administrative expenses, respectively.
(2) This amount is included in interest expense.
(3) Represents management fees paid to our majority stockholder. Since
consummating the initial public offering, these fees will no longer be
paid. The fees are included in selling, general and administrative
expenses.
(4) Represents incremental shares related to the company's IPO assuming 10,147
shares sold by the company (including the over-allotment option of 1,324
shares) were issued at the beginning of the respective periods.
(5) Represents incremental shares for stock options that were excluded in the
calculation of earnings per share for the six months ended July 1, 2006
because their effect would have been anti-dilutive.
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