Exhibit 99.1
[PGT GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
PGT Reports Record Third Quarter and Year-to-Date 2006 Results
VENICE, FL, November 1, 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
September 30, 2006.
"We are pleased to report strong results for the third quarter," said Rod
Hershberger, PGT's President and Chief Executive Officer, "Despite the
significant slowdown in Florida new home construction, we grew sales by 12.9%
over the prior year quarter by focusing on our core strategy of continued market
penetration with our higher margin WinGuard(R) product line and increased sales
in our Multi-Story product line.
In addition, net income grew to $5.1 million in the third quarter, an increase
of $4.9 million from the prior year quarter of $0.2 million. On an adjusted
basis, net income grew 51.4% over the prior year quarter after adjusting for
items related to our initial public offering (IPO) and refinancing transactions.
Our year-to-date accomplishments were highlighted by record sales of $303.4
million, which represents an increase of 24.0% over the prior year period, and
adjusted net income through September 2006 of $27.6 million, an increase of
97.5% year-over-year."
Mr. Hershberger cautioned that, "Despite these results, we expect the
significant slowdown in Florida new home construction will continue and
adversely affect our operating results and period-over-period comparisons."
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.
Third 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 third quarter were $98.3 million, an increase of
12.9%, versus $87.1 million for the same period in 2005. This growth is
largely due to increased sales volume of our WinGuard impact-resistant
product line and the positive effect of price increases.
o Gross margin percentage for the third quarter was 39.9%, compared to
37.2% 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 products, as well
as overall higher prices and improved manufacturing efficiencies.
o SG&A spending as a percentage of sales decreased approximately 160
basis points from the prior year quarter as we leveraged these costs
against increasing sales despite increased investment in targeted
marketing expenditures, higher sales commissions and distribution costs
related to our sales growth, as well as incremental costs associated
with being a public company.
o Third quarter net income grew by approximately $4.9 million to $5.1
million versus $0.2 million for the comparable period of 2005. On an
adjusted basis, third quarter net income was $8.0 million versus $5.3
million in the same quarter of 2005, an increase of 51.4%.
o Diluted weighted average shares outstanding for the third quarter of
2006 were 27,747,707 compared to 17,221,477 for the same quarter last
year. The higher share count was due to our IPO, which was completed in
June 2006, and the inclusion of options in the current year that were
considered anti-dilutive last year. Assuming the IPO were completed at
the beginning of the respective reporting periods, the pro forma
diluted weighted average shares outstanding for the third quarters of
2006 and 2005 were 28,198,580 and 27,368,535, respectively.
o Net income per diluted share for the third quarter of $0.18 increased
from $0.01 for the comparable period of 2005. On an adjusted basis, net
income per pro forma diluted share was $0.28, an increase of 47.4% from
$0.19 for the prior year period.
o EBITDA for the third quarter was $20.0 million, an increase of 140.3%,
versus $8.3 million for the comparable period of 2005. On an adjusted
basis, EBITDA for the third quarter was $20.0 million, an increase of
23.3%, versus $16.2 million for the comparable period of 2005.
Commenting on the third quarter results, Jeff Jackson, PGT's Chief Financial
Officer, said, "Our third quarter performance reflects a combination of the
effects of a challenging housing market, consistent execution of our long term
growth strategy to expand our share in the active hurricane protection market,
and to shift our sales mix toward higher margin products, including WinGuard and
Multi-Story. WinGuard and Multi-Story sales were collectively $71.8 million, an
increase of 33.2% over the prior year quarter. In addition, these product
categories grew from 61.9% of our sales in the third quarter last year to 73.0%
in the third quarter of 2006. As a result of leveraging the top-line
performance, our adjusted net income grew 51.4% over the prior year."
Year-to-Date 2006 Financial Results
- -----------------------------------
(See accompanying financial schedules for full financial details and
reconciliations of non-GAAP financial measures to their GAAP equivalents.)
o Total year-to-date sales were $303.4 million, an increase of 24.0%,
versus $244.7 million for the same period in 2005. This growth is
largely due to increased sales volume of our WinGuard impact-resistant
products, up 49.1% year over year.
o Gross margin percentage through September 2006 was 40.2% compared to
36.6% in the same period 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 products, as well
as overall higher prices and improved manufacturing efficiencies.
o SG&A spending as a percentage of sales decreased by approximately 180
basis points from the prior year as we leveraged these costs against
increasing sales despite increased investment in targeted marketing
expenditures, higher sales commissions and distribution costs related
to our sales growth, as well as incremental costs associated with being
a public company.
o Year-to-date 2006 net income was $1.0 million compared to $8.7 million
in the same period in 2005. The decrease 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, year-to-date
2006 net income was $27.6 million, an increase of 97.5% year-over-year.
o Diluted weighted average shares outstanding through September 2006 were
21,207,499, compared to 17,221,477 for the same period last year. The
higher share count was due to the company's IPO, which was completed in
June 2006, and inclusion of options in the current year that were
considered anti-dilutive last year. Assuming the IPO were completed at
the beginning of the respective reporting periods, the pro forma
diluted weighted average shares outstanding through September 2006 and
2005 were 27,993,213 and 27,368,535, respectively.
o EBITDA through September 2006 was $38.6 million, compared to $34.8
million for the same period of 2005. EBITDA was negatively impacted by
the $26.9 million payment to option holders in 2006. On an adjusted
basis, EBITDA was $67.0 million, an increase of 55.0%, versus $43.2
million for the same period in 2005.
Mr. Hershberger further commented, "We exceeded our goals through the first nine
months of 2006 in the face of a significant slowdown during the third quarter in
the Florida housing market. We plan to continue to shift our product mix toward
higher margin WinGuard branded products, grow our Multi-Story product line and
expand our sales into the repair and remodeling market. We are confident that
this proven strategy will continue to allow us to grow our business over the
long-term and maintain our strong market position regardless of cyclical
declines in housing demand."
Conference Call
---------------
As previously announced, PGT will hold a conference call Thursday, November 2,
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: 800-291-5365 (U.S. and Canada) and
617-614-3922 (international). Refer to passcode 78003742. A replay of the call
will be available beginning November 2, 2006 at 3:00 pm Eastern time through
November 16, 2006. To access the replay, please dial 888-286-8010 (U.S. and
Canada) and 617-801-6888 (international) and refer to passcode 78891432. 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 26th year, the company employs approximately 2,600
at its manufacturing, glass laminating and tempering plants, and delivery fleet
facilities in Venice, Fla. and Salisbury, N.C. 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; PGT(R) Multi-Story; and
Eze-Breeze(R) Sliding Panels. PGT Industries is a wholly owned subsidiary of
PGT, Inc. (NASDAQ: PGTI).
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.
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.
Forward-looking Statements
--------------------------
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.
# # #
CONTACT: PGT, Inc.
Jeffrey T. Jackson, 941-486-0100, ext. 22786
jjackson@pgtindustries.com
or
Brunswick Group
Nina Devlin/Erin Becker, 212-333-3810
pgt@brunswickgroup.com
Financial Schedules to Follow
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited -
dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
--------------------------------- -----------------------------------
September 30, October 1, September 30, October 1,
2006 2005 2006 2005
---------------- -------------- --------------- ----------------
Net sales $ 98,324 $ 87,089 $ 303,369 $ 244,669
Cost of sales 59,089 54,691 181,301 155,127
---------------- -------------- --------------- ----------------
Gross margin 39,235 32,398 122,068 89,542
Stock compensation expense related to dividend - 6,605 26,898 6,605
Selling, general and administrative expenses 22,691 21,544 68,355 59,517
---------------- -------------- --------------- ----------------
Income from operations 16,544 4,249 26,815 23,420
Other expense (income), net 439 (86) (325) (9)
Interest expense 7,791 4,022 25,432 10,368
---------------- -------------- --------------- ----------------
Income before income taxes 8,314 313 1,708 13,061
Income tax expense 3,240 104 686 4,338
---------------- -------------- --------------- ----------------
Net income $ 5,074 $ 209 $ 1,022 $ 8,723
================ ============== =============== ================
Basic net income per common share $ 0.20 $ 0.01 $ 0.05 $ 0.55
Diluted net income per common and
common equivalent share $ 0.18 $ 0.01 $ 0.05 $ 0.51
Weighted average common shares
outstanding:
Basic 25,920 15,720 19,273 15,720
Diluted 27,748 17,221 21,207 17,221
PGT, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
September 30, December 31,
2006 2005
---------------- ----------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 28,488 $ 3,270
Accounts receivable, net 37,294 45,193
Inventories 13,649 13,981
Deferred income taxes 10,039 3,133
Other current assets 7,249 11,360
---------------- ----------------
Total current assets 96,719 76,937
Property, plant and equipment, net 82,551 65,508
Goodwill 169,648 169,648
Other intangible assets, net 103,311 107,760
Other assets, net 3,083 5,700
---------------- ----------------
Total assets $ 455,312 $ 425,553
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 28,246 $ 31,137
---------------- ----------------
Total current liabilities 28,246 31,137
Long-term debt 165,488 183,525
Deferred income taxes 54,319 54,320
---------------- ----------------
Total liabilities 248,053 268,982
---------------- ----------------
Total shareholders' equity 207,259 156,571
---------------- ----------------
Total liabilities and shareholders' equity $ 455,312 $ 425,553
================ ================
- -
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 Nine Months Ended
--------------------------- ------------------------------
September 30, October 1, September 30, October 1,
2006 2005 2006 2005
-------------- ----------- --------------- -------------
Reconciliation to Adjusted Net Income and Adjusted Net Income
per pro forma share:
Net income $ 5,074 $ 209 $ 1,022 $ 8,723
Reconciling items:
Cash payment to stock option holders (1) - 6,605 26,898 6,605
Write-off of unamortized debt issuance costs
in connection with the February 2006 refinancing and
prepayment of debt in Q3 2006 (2) 2,009 - 6,626 -
Refinancing fees incurred in connection with September
2005 refinancing (3) - 404 - 404
Prepayment penalty resulting from debt repayment
in July 2006 and September 2005 (2) 2,300 450 2,300 450
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) 414 (75) 6,355 (210)
Management fee (4) - 889 1,434 1,380
Tax effect of reconciling items at 39% (1,842) (3,227) (17,009) (3,365)
-------------- ----------- --------------- -------------
Adjusted net income $ 7,955 $ 5,255 $ 27,626 $ 13,987
============== =========== =============== =============
Weighted average shares outstanding:
Diluted shares 27,748 17,221 21,207 17,221
Incremental shares for IPO (5) 451 10,147 6,786 10,147
-------------- ----------- --------------- -------------
Pro forma diluted shares 28,199 27,369 27,993 27,369
============== =========== =============== =============
-------------- ----------- --------------- -------------
Adjusted net income per pro forma share - diluted $ 0.28 $ 0.19 $ 0.99 $ 0.51
============== =========== =============== =============
Reconciliation to EBITDA and Adjusted EBITDA:
Net income $ 5,074 $ 209 $ 1,022 $ 8,723
Reconciling items:
Depreciation and amortization expense 3,890 3,985 11,481 11,376
Interest expense 7,791 4,022 25,432 10,368
Income tax expense 3,240 104 686 4,338
-------------- ----------- --------------- -------------
EBITDA 19,995 8,320 38,621 34,805
Add: Cash payment to stock option holders (1) - 6,605 26,898 6,605
Management fee (4) - 889 1,434 1,380
Refinancing fees incurred in connection with September
2005 refinancing (3) - 404 - 404
-------------- ----------- --------------- -------------
Adjusted EBITDA $ 19,995 $ 16,218 $ 66,953 $ 43,194
============== =========== =============== =============
Adjusted EBITDA as percentage of sales 20.3% 18.6% 22.1% 17.7%
(1) Represents cash payments 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, for 2006, and $1,290 and $5,315
related to cost of sales and selling, general and administrative expenses,
respectively, for 2005.
(2) This amount is included in interest expense.
(3) This amount is included in selling, general and administrative expenses.
(4) Represents management fees paid to our majority stockholder. Since
consummating the initial public offering, these fees are no longer paid. The
fees are included in selling, general and administrative expenses.
(5) 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.