PGTI - Earnings call transcript Q3 2017

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Operator

Good morning, everyone, and welcome to the PGT Innovations Inc.'s Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] And please do note that today's event is being recorded. I'd now like to turn the conference over to Brad West, Senior Vice President and Chief Financial Officer. sir. ahead, go Please

Brad West

Chairman and provide conference Welcome the West, call. I'm as we an Rod CFO, William, our as Jeff XXXX This well XXXX President. the PGT of third third balance and morning, Hershberger, by today quarter I pleased joined for CEO; good you, XXXX. and to Jackson, to morning. are Innovations' company's and our Thank outlook am results Brad quarter

to a the website. posted on presentation of quarterly results Relations have our Investor We the portion

involve could contain XX-K. undertake Before cause Litigation release like earnings and company's results uncertainties we forward-looking of meaning our begin report actual in to revise or materially. XXXX XXXX outlook. remind Risk our a section Securities statements remarks XXXX statements. to formal to Act press Reform comments, you detailed are number I'd any that These that our Factors of today's forward-looking Private We performance factors annual other including no the risks, Form that obligation within factors publicly fall of of the update the and the financial remarks in differ on These

Investor we'll to we the results comparison GAAP counterparts for measures report section note non-GAAP available measures, and our using Relations present the which of past of also should to help You of reconciliation believe non-GAAP these that information additional website. the provide our investors facilitate performance. in A is

Now, I'll Hershberger. CEO, Rod turn call our the over to

Rod Hershberger

path million, our believe the near in XX the The XXXX. the Atlantic, our then first Florida. hurricanes powerful event. largest compared prior sales in you, in landfall of ever hit path. major hurricane years, Marathon. to Coast, western made and make Hurricane Florida, today's of After third wind-borne into Keys for in $XX million its with its Florida recorded call. devastation massive a impacted X% our during Marco an in joining Good together market the which Keys in Caribbean, way such September market made second We to thanks, of incredibly from destruction Floridians storm customers $XXX areas made the Florida. direct coastal and the On its up and storm to particularly hit this quarter Key storm the that first through by our and in the took and we since in intense leaving This quarter. eastern everyone, per category I'm most XXX-mile with XXX-mile Due Thank was between headed many ended negatively Cudjoe sales storm year. of Florida's wide wind. surge flooding weather hour major and core Brad. a fellow market landfall Island morning, came was proud XX, severe employees, the damage Naples, Irma, direct Irma widespread, landfall from sustained additional Gulf Florida Irma in down in destruction for leaving significant causing

to which XX% our of Irma approximately hard felt took our Florida, the impacts South and market, especially market, the state represents XX% Florida, represents of from an approximately which degree. of hit entire Irma from some

is for in Irma traditional and note Harvey. Hurricane Hurricane caused have more third set Harvey's to hurricanes in massive order $XXX and primary Hurricane Florida, damage flooding, be Hurricane behind intense billion It's ever XXX-mile where six which falls associated seen. Katrina important Irma, by Irma combined Carolina, and both another hour between was most path, storm rains, by costly Katrina U.S. history the and For Alabama to and during estimated that record to Hurricane is caused Hurricane $XX the considered damages. this South winds in Georgia, and damages following example, in in Florida damage people most billion North hours. maintaining evacuated includes has and regard, the between five per debris country winds, million Hurricane were windborne which evacuation was XX million Irma, and a like largest

Budget caused that fully While To approximately billion $XX far average XXXX between all billion it in hurricane on damages. season $XXX the damage takes damage year. years hurricane to $XXX give the a account cost comparison, so and of for repairs, billion the Office estimated Congressional estimates averages per has you an

market. the has and been of we what While then, damage the into since of worked created preparing these the record, XXXX new caused. set heightened have launched Since is help of a next have and XXXX for and the season windows regulatory storms first impact-resistant bodies awareness communities impact-resistant with exactly This we units to Innovations hurricane our closely millions shipped certainly the PGT storm. products were for ensure prepared doors when

weather commitment say of to Irma. communities our the helps safety the such impact event drafting that that our Hurricane catastrophic across in areas the codes safety, and a of has relentless our of states and of strengthen buildings lessen our the participation safety as potentially I'm to undoubtedly and has paid new the Our employees hurricane-prone pleased off. state of coastal Florida homes in

storm thankful our losses. incredibly or through came over serious employees the any injuries First, we without that X,XXX are

minimal advanced as to our to preparation, up back which to due our us facilities possible. came as speed get through Second, damage, allowed quickly impact with

and a and from Third, sources reducing storm. the how storm in buildings we damage stronger how reports our and part numerous well on the the after commenting new products perform major have from received played homes various important codes

to Florida growing. confident how awareness am In Hurricane steadily team the continues hurricane beyond future confidence located especially an damage businesses has for still well products high Innovations, Irma. Florida responded market weather have guarding in is be homes seeing hurricane than injuries such because and I season role Irma event of property the a more Florida after also, resilient major PGT relating is impact-resistant important the how on important our challenging are slowed as and ahead, also throughout our the ever such future played Looking a coastline. we products to against and to in XXXX, My may such time, limited a down strong. reinvigorated the for a Not only how us is near community, are but the bright. and

prior PGT products changing discussions at here these code organizations team how any devastating writing on fenestration to to how product Our strongly in and standard encourages performed storm this assisted. review

CEO like XX an say you to that to PGT's I'm been for what to know customers associates has and on the over X, good be during CEO. support about And company the I XXXX role Jeff to the Board of as I'd given in time. honor continuing assumes after Finally, I'm serve me grateful CEO Jeff excited the service company our takes all have when January will the as all of the hands and Chairman past years. shareholders, that for of

the like to I'd and review Jeff? will recent to Now, who detail events in over Jeff, our turn more call performance. operational

Jeff Jackson

Thank you, Rod, everyone. and good morning

same compared sales we and X% year. quarter, August delivered with up third our results through period two-month last the solid to July During

to during margin XX.X% volume quarter this operating second -- compared XX.X% of with solid two-month during EBITDA produced adjusted at year. period our the solid And results approximately

of of Irma, Hurricane the beginning During the these prior trends feeling September, effects to continue. us

due X% distribution back certain much quarter The to sales, related the increased also we XX% at many daily of volumes times month, we the suspended were Hurricane costs million, to disruption. the storm caused order last the have to advanced plants incremental X warehousing as ended to in record production as to included began $XXX forced costs operating initiated did in sales during $XX which dropping impact sales not impact other get ship $X.X of to after towards our storm Irma the our up for the of another costs with quarter decrease, it help just company compared approximately production. Florida, outreach believe also an at the that as days on operations. down for the and third during were after added facilities, areas any to things customers These to those year. period million would cease by water However, storm third unfavorable community And At time in full we with certain we operations we in estimate as as other that storm, a of the and and third providing to the million. community generators, the set and the Despite free members quarter, we in solid markets quarter food, tracking to up efforts local performance. before affected products. Florida, XXXX with We we like We supplies. sales lastly, approximately facilities serve of chainsaws,

impact, While achieved the to half October to of Hurricane show the in the first began resulting XX% stronger total normal, returning million, XX% signs were state weeks two of EBITDA compared to October, XX.X% XXXX sales of of sales October, over continued second process of $XX.X as the up October approximately of the in XXXX. in an margin October for about producing estimated of Irma's of month

as our quarter Vinyl XX% new repair from impact-resistant Additionally, rate many market provide XX% to remodeling these last while and believe impact of they activity to of and a Vinyl gain XX% grown WinGuard growth despite which sales second our and and from sales ability offerings, by the XX% of driven sales, of the to after storm. the for few From recent at they a their have days a market a repair have increase compared contributor sales Sales return normal the style, our prior sustained work Winguard to towards third construction our stopped call-in from the customers a We products quarter. than negative the leading outstanding customers, experienced slightly mix the develop XXXX, Since unfavorable the the storm, over with per from share. our efficiency, to construction, product about most perspective order and in new post-storm. in year. operations increasing product confirmed hurricane, of included quarters higher volumes year. customers was mix the is compound energy modeling We been had products

repairs season up We quarter And construction. impact-resistant hurricane National in quarter residential From belief points belief that XXXX our or its the certainly remodelers the better are serious at types across caused expect These index never year. for home invigorated October starts continue increasing in of for that our Association Home growing reporting customers over as may within to markets, awareness sales that its year. fourth and a in have the new population there show several with experienced is and for our to the estimated metrics these rise demand for to the trend starts start of It will by awareness third about our hurricane, communities events due XX,XXX strengthening the heightened Florida. finish how above per in supported continues will and remodeling be. storms housing towards Florida market conversation confidence can upward four demand the single-family rising of XX. forgotten is our our solid will This next the Builder's those that beyond, have were confidence years new has has perspective and XXX,XXX these increased we XX%, that Builder Irma doors preparing Florida the most benefit windows future. and higher repair of for

are we industry, during starting to and additional products forefront know And These of XXXX. in to builders. impact-resistant the educate fourth As ensure we on XXXX into make to the that TV plan the XXXX weather. help people property the consumers in safety how investments investments of advertising be awareness ads time and since the leaders severe of better for and to include renewed first critical running quarter

PGT XX innovations show the technologically extremely dedicated research into resources performed toughest And For reports our more development has can that some and advanced withstand years, wind-borne of products that impacts. well. products of early countless than debris

are approaches, we solid believe year. XXXX for we another As well-positioned

market. all housing our the have favorable markets. remain strong a We in throughout Conditions backlog

the September of to we cost in we those components Industries glass capacity we supplier company our the on our At believe benefit profitability We supply focus return. more this increased I'd impact-resistant sold while us in deal time and produce continue customers. no for of that and XXXX this -- beyond. we us doors, in update for shareholders impact assets doors. This But in growing those Florida. quarter. PGTI locations the great doors off, for timing market and price entered to us our to we X glass time, of created demand be on windows a residential processing the provide From the XX% freeing is investment an investing we a and for the over and the the and window will partnership $XX Cardinal And assembly XX the the given will from Ocala, paid demand agreement current to Glass was Cardinal was sold On and an is increasing strategic assets. in importantly, used advertising largest a in in season. one to glass the increase The in windows to awareness including we seven-year producing Back to even up by represent for financial more in our the valuable across had significant and deal in expected -- employees and Cardinal door storms manufacture perspective, took an for when like that of company for to and is manufacturer States, ongoing, for action we between capture with share win-win investing -- use another a announced Cardinal of glass into purchase our key annualized components provides produce. during as our facility generating their many X,XXX XX, United other largest products, employing and partnership glass. million supplier at us plant of largest strong residential been a production industry-leading supply advantage has residential in impact impact years the this and labor to XXXX, invested industry for

over more financial to Now, call in for to the detail. discuss results turn Brad? the I'd like to quarter Brad

Brad West

year. sales Thank Slide we sales for quarter million of the X% Jeff. compared you, lost net give from the that reported last We you a of On Hurricane million Irma. decrease $XX in to breakdown quarter. the approximately to we sales $XXX.X of third quarter, estimate We due in X,

sales of grew by increase XX% offset our products, WinGuard to our Our last which sales which by in impact decrease in overall This Vinyl impact was compared part solid driven in Vinyl grew year. last versus an XX% for growth was year. products, demand

impact due compared prior to Our aluminum to impact product sales fell well. sales fell in X% as the quarter the non- year, storm third and product

cost per pricing forward of fixes depreciation portions pound per gross needs. pound of from impact per-pound meaningful end third spending and material price the scrap aluminum lower to today. income we counter costs please of increases of aluminum, our were was efficiencies aluminum recent points our Now, start storm decrease With quarter, operational gross relating by Irma change will XX.X%, turn and had basis and Improvements these impacted last and through year The negative To our in volume $X.XX to XXXX points our cash in at a statement XX in of Hurricane to stabilize third decreases pound with higher in XX which $X.XX Hurricane for to leadership quarter. our per I by regards for we margin was as gross After prices, Irma, transition Gross an last on to beginning $X.X decreased transition the glass the a sales than since basis margin, rates items. pricing Slide higher offset the and of fell the year. versus and seen XX have margin the in aluminum in briefly due major contracts $X.XX active basis and cover million the year. the years. quarter caused capital chain effective at suppliers of our during program aluminum window a profit, by also in few from have that of was effects which our supply the more points gross of costs. This margin of adjusting XX items, impact down were help to our

our for remainder of As XX% price we of of of delivered in an are needs average estimated today, covered approximately at $X.XX per the XXXX pound.

our of have have contracts XXXX cover for also XX% an into average to of our of needs for begun and per needs the forward We and of approximately half first price delivered entered coverage for pound. $X.XX XXXX

and distribution delivery $X.X an the accrued to and $XX.X million higher when we coverage the arises, by was year. finally in it administrative Irma, We our of expense will of add community from in X.X to increase incentive depreciation -- and expenses our sense million, quarter, costs, processes disruptions believe $XXX,XXX last outreach was expense million mainly our of opportunity compensation makes $X.X general and to million driven of year. costs increase This by so. XXXX costs in to the look spending were $ third coverage $XXX,XXX of Selling, do and additional additional from unchanged in quarter programs. Interest our relating last $XXX,XXX caused to due years, the capital of recent additional

our prepayment quarter, a we funded the borrowings XXXX credit prepayments million under with of operations. cash $XX in These agreement. were from voluntary made During total of

decrease higher due amortization Depreciation of $X.X $X.X expectations, repriced our increased resulted million expense in also to February discount to and quarter in of from the lender with write-off year, by a was our higher expense included offset XXXX depreciation interest non-cash recent capital compared of an as Consistent year. percentage years. additional third last in spending results. decreases quarter of margin million was third amortization in is and depreciation were rate. this These We deferred which in portion $XXX,XXX, this and point the which facility fees the X interest

third in represents tax rate Tax in $X.X income was the XX.X% to expense XX.X%. the the This quarter million benefits. last third of of million $X.X reduced been quarter by expense tax tax of an year. and excess and compares $XXX,XXX has Our effective in quarter

would for prior of of estimated income lost generated, sales net exceeded due those the both and share to well margin our quarter. belief been voluntary as $X.X share costs negatively measures from tax recent earnings third flow the related would costs accrued per storm as been to debt, with or $XX and highly sales of our affected in quarter storm -- impacted million to back, was would This result to incentive Excluding the million discounts the capital of diluted income not million adjusted financial $X.XX costs Both last million write-offs and Incremental Adjusted diluted depreciation $XX.X or storm, $X.XX per to have have your to net related adding million these non-GAAP XX.X%. EBITDA recorded benefits, or reference. EBITDA decrease Irma. primarily $XX.X and has higher of the and million decreased $X.XX year. their income and net was per adjusted was It A have by is the share, effective third approximately prepayment adjusted EBITDA $X.XX costs in sorry, equivalents relating net of $X.X We release such After diluted year. fees the in of costs XX.X% rate GAAP from were versus the net due the EBITDA reconciliation WinDoor or they our our per or income that XXXX. I'm transition spending the last lender included million compared XX.X% $X.X $XX.X of year. additional non-cash diluted our higher and as the income in share years. to which adjusted

We $XX.X for Slide also discussion to from to operations. quarter XX cash sheet was XXXX of $XX.X We the in million year-to-date. million fund capital ended third cash million turn flow third a of nearly and the items. for million balance please million $X.X the of funded of voluntarily $XX by $XX.X XXXX. from spending the debt, with $X up of balance Free prepay the of during a Now, we third a cash all quarter, million, end cash quarter used quarter

We was net of of a decrease the intend strong WinDoor Our net into to that sheet X.Xx. the balance acquisition focus further on Cardinal from flexibility leverage glass agreements make partner continue we end post quarter X.Xx at to leverage September investments maintaining Glass fund on with entered XX announced Industries. our our XXXX, third our give will us a needs. that of X We and long-time future

agreement doors equipments production asset return for an branded our original was $XX are components the for the glass annualized represents certain purchase which PGT million. a investment. of This selling currently we First using in XX% on

foot We building these will retain XX,XXX-square that assets. the houses

newly production glass will be our used capacity Spacer retain acquired which to add also our We equipment, lines. Plastic insulating Thermal window to will glass

components down areas seven-year enables with Additionally, of we core branded This doors future supply with where they door to to heighten our allows needs into some us proceeds a costs. agreement new agreement with debt entered PGT excel our will window in us we equipment requirements capital our and whereby Cardinal, pay us for our period. glass remove supply for that focus maintenance of and and manufacturings, the and during

to proceeds upon at in and will from production part our the based we received upon sale agreement, glass which addition, EBITDA transferring impact the of be in mostly no be expect of The be time unfavorable pricing the equipment agreed there completed. margins. first supply In the XXXX will will

outlook. Slide to Please turn take let's XXXX to our discuss moment a Now, XX.

solid be and a continues recent storm. and quarter, normal stronger steady to remodeling expect We than to likely repair due as be fourth demand will the

by impacted the to $XX in quarter fourth to XXXX. continue the some of the our track expected starts be storm, remainder for expected in is due to estimate company approximately anticipates housing XX,XXX which of year. to sales the were towards third fall single-family The XXXX with quarter XXXX million Additionally, negatively recovered

the for XXXX, million adjusted $XX the of EBITDA as to time, some consolidated be with due and in sales from guidance of SG&A associated year spending to sales $XX EBITDA investments, full advertising the to it to range Rod like this on are television awareness $XXX for At expect lower the remarks. closing impact-resistant products, to million to as Rod? previous well the back of turn storm. would million effect million from For to the additional including as I range revised a the we over finish result $XXX within

Rod Hershberger

Thank you, Brad.

As the you know, record Board Jeff Jeff I will PGT our corporate recently the the everyone successes Chief track building executive, Jeff and to we've a is future team From And with to family, an as remain has stage my look into years XXXX since the and be over and seasoned with with talking of XX PGT and company. worked the for of family dreams in is all him announced ago. me partners that new Chairman. the as the products sitting PGTI PGTI a of our company our about evening our forward effective Officer on transition Innovations people of time with January XXXX. make that a who I continuing and join Jackson PGT Jeff goals commitment Directors a our Jeff seeing our Innovations I of PGT as together now summer and by back part hearing late Lisa, for patio Executive he also as We've work be of will highly career. and on and X, industry. of enlighten to family. and customers in on confident appointed extensive for in and I'm thrilled regarded in

ahead. devote remain While and chairman changing spend the customers organization involved Board carry as I Directors. the day-to-day Jeff with for help or will for continue diligently other our have which things business call will the continuity lab, with management supporting of operations of works won't as to the operator my industry. be time to Q&A to a means innovations closely to forward. while known develop PGT to PGTI executive the fundamentally, forward products in begin to that the to believe of advance accomplished I the will our like the for further over closely the PGT cutting-edge to William? vision of we'd our be look aren't future years XX this the dedicate to we the engaging in and I prouder throughout great time, are efforts also past of At to the be the continues strong and time couldn't we I hands. Board also turn Innovations bright Directors will of our I the Jeff, portion. of on what in conference that brands. members

Operator

questioner session. Thank Sam now with instructions] question-and-answer will the Please [Operator you. begin ahead. We'll be Our first Darkatsh James. Raymond go

Sam Darkatsh

Good you? Jeff, Brad. morning, How Rod, are

Rod Hershberger

Sam. Great

Sam Darkatsh

ballpark posting. and contemplating could. wishes on sense quarter. it's that million you with you're you the next your to exceeded mentioned here, a on that give math? million chapter that us doing And have third would Brad, questions an $XX the Brad, the A impact have if best of year? the pleasure with prior in might shipped sales been you Had $XX me Can incremental absolute your margin life, years, you EBITDA new the for as over I million few of been and Jeff, you income net that always congratulations $XX what on

Brad West

we Basically Sam. that year cost quarter. XX% Sure, in the we the second had the XX% in through short to the because deal be about to third EBITDA our obviously place and flow-through the growth and this with that that's estimated had to term, of is

we're is XX% estimating. XX% a what about EBITDA that's flowthrough So, to

Sam Darkatsh

fourth have marketing and Can the fourth in might impact what what you're up then second leverage you. you marketing the in awareness new likely in quarter with spend question, quarter TV help plans? the And ad SG&A the then stepping and spending spend XXXX and be quantify then the and XXXX for product

Jeff Jackson

is Yes. this Jeff. Sam,

next little gave we And been into XXXX. and should SG&A, but wider a clarity, currently million provides quarter have spend quarter million first this going to the XXXX is of you the at are a That the anywhere range. that's will it be why finalized start throes have? now, Hope fourth $X.X do $X.X that week. We through of But bleed a going Brad, on from in point. leverage to that

Brad West

next new year on as some we'll Yeah, get to Miami, call. cost to, up will color the some continue growing good that we we and do should quarter be we and in get leverage will we more with February in facility when but have to able able first to fixed SG&A, provide expect to we be your expand next adding we year be

Sam Darkatsh

if prepared Can I question and last of then present you in the day? about your well of, remarks quarter as I backlog missed And third talk in it, And both could. as mentioned at end this I if the you terms apologize.

Brad West

Yes.

Just of up a And X.X% been of the million seen Backlog from in quarter. what second. at end is some little finished also bit, at was quarter, nice the present-day into it the year. give third $XX a and last that of quarter have at but end we've somewhat, me demand it backlog, fourth the the we

much. changed hasn't all probably that So

Sam Darkatsh

gentlemen. Thank I you it. very much appreciate

Brad West

Thanks Sam.

Operator

Dougherty go be next question will Hamblin Jeremy And ahead. Company. Please and with our

Jeremy Hamblin

million ask my next Hey. on Rod I as congratulations to a Jeff, guys. estimated chapter. Good about add morning, wanted you, the to I to this question, $XX Brad, just well impact. as

storm implies close is if what the million not that sales, that $XXX for to net in think I disruption.

sales impact have comparison had would $XXX because $XX acceleration I simply sales million sales What indicated for quarter. increase into the you that year-over-year storm? that represented August how would the X%, end Is that an have X% do of seen figure? or easier through that would think estimated million represent September about an you about ex of that in September you back up were

Brad West

last first year last third have Yes, Jeremy. the would said But months. there the not -- quarter three of the like in growth was August you had of storm accelerated the we the to Actually, Actually, as definitely towards September, was a growth even same end about if it came that time not accelerated. their September year remember, comp, weakest in of there through then was an X% week and and easier seen X% July, impactful you nearly and that degree. through

what up were have representation we we up that would on delivering where -- ended the a for had ended number where we an and So, handle was good quarter. we absolute pretty good

Jeremy Hamblin

tropical you're like. your you've seen in think maybe then there seems storms, improvement but this maybe even year's related another remodel Irma terms repair not to Hurricane of, Matthew as well and business and some that it clearly were I And is year, in to which storm like referring last impacted,

different? look in we Should of positive this your your of like looking to could split. materially And be be construction be the here, business very you for from been assume XX-XX split that mix we kind forward see then it's XX-XX at next R&R because of you more forward and shift in do QX expect QX kind that do mix As R&R what into year, we running to range, that new versus should margins? expect

Jeff Jackson

Yes, Jeremy, Jeff. this is

with XXXX, you'll that think benefit also fourth the market we split. like R&R in see I But look see of meaningful just mentioned you XX-XX a too my I'm it comfortable I change quarter, had I growth because state. see still some don't across the new in into being of the construction as of kind in remarks. in the

-- the So, you be now. I will same I it would have split modeling about it keep if it, you're

If a you just at couple see advertising to given some because going a will going we estimate It's -- point. to free favor do, of we're points we're to this want for the that I spike. think hard it to

Jeremy Hamblin

we majority how between think expenses to here that $X.X to QX? about half, half I how model million is and And it of Should you've Is -- split an million be QX look SG&A and your that trying to QX? spend. the in think just I'm QX incremental into going then to and $X.X indicated ad assuming of that

Jeff Jackson

this at in happens know, Yes, almost I would expensive immediately you what are, QX. first, think point the get production costs so. those they hit certainly and as And

Jeremy Hamblin

last operations. question, in And then just of terms the the

facilities I for employees, think around being. time typically are you your the and closed the production there's down guys for while which treat time some holidays period

or on In side? the terms than QX we of few extra you the that might in would for product, anticipate demand in may there related normally you you to anticipated run production days is should be any increased increase demand, the a change where

Jeff Jackson

one reason it's look is of Thanksgiving into as Christmas. Yeah, and you quarter, a tough QX, because

in on Thanksgiving a two up demand. anticipate well. as are have Christmas. for two-day year weekend, don't off I off at the awful bit past, And are more fall In we been We for typically this we week the and lenient given little days the that happen to if week being they weekends a holidays the to Christmas season.

days they going distributors. or dealer will to it. here the It time see more driven and to you period. be product, that in be by two production there three are maybe will we're the extra make to think If take I

thought. So, our current that's

Brad West

just busy product, the allows there like depend weekend, this to Yes, be the probably the to get their right convenient. Christmas on with definitely to on being it customers fall on then during it's customers as is on holidays. mean really work that are be year, it. for going frame able But whether going back. Jeff our to build being a holidays us our to the -- I a houses week and us and if can far pretty take as the take It's it said, to the demand matter that of in Monday,

Jeremy Hamblin

and guys luck. good Thanks Great.

Brad West

Jeremy. Thanks

Operator

questioner next with be instructions] [Operator the today will KeyBanc. go Please Ken Zener And ahead.

Ken Zener

congratulations demand wonder I and morning, Good roles. your storm new gentlemen, their good. Jeff, is obviously, Hey, -- on activity

on get bought core terms the your you take the bought given step or September. i.e., window sale So, from your for context, internally? you prospects be I different could you could the glass in a the things lot that a wonder return the context might assets what's see businesses, Obviously, was the the things got to to assets, changed of you maybe and when you of there's to your at of a good growth be in because and if structurally, try rid decision assets. how PGTI of doing in on them. and the it, different desire to on But core idea business, you vertically it door in put focus this integrated. context focus And put you back in put what you are still Cardinal

Brad West

put business of lot really products. strong for picking door some predicted door demand and we're saw is pretty answer, recently the we door some with starting start go a recession but we our and a And out if can our to growth went impact-resistant over I different little few industry to introduced we also, out of industry we you in going actually handle the to that we would Cardinal contract about about see I needs talked in next years. the was nervous the we are and And couple a could a the bit that up bit to some of jump back to products to again, product predicted manufacturers, primarily ability strongly this of glass, definitely the number and the particularly think grow the next side need to going everyone on years. in how Jeff coming the we in included as little you in saying much

product it sure a growth care to us thought we that that everyone far care to that so make would build capability more say we of vertically up the needed don't convinced it, make handle I could think in and a even it who's take really needs it board to sure to as so to to the customer happened production glass. willing produce actually facility enough met. to and thought all anyone we going our capacity we necessarily integrate and So, everything Fast happened forward and happen went as place and manufacture the few our we to about than take way talked we years, put of make our for had extra plunge your that always we're and that wasn't was to customers,

but faster we core, thought it's not would is at capacity that that it's we to, grow thought now So, windows something and we is grew and but we we're can and plant we need core it's ourselves, faster doing for industry And also might doors. the our the there in manufacturing than something that good industry grew the industry. than our produce

investment. to that impact-resistant and there, and buy core, it on our out get from commitment focus that made supplier they from got So, sense can enough us, the now that more on we in having little at with of the us. can it partner time glass particularly, industry think a what right and fortunately up a best outside that And capacity make good invested we the Residential is make for we for the bit them sure return

Jeff Jackson

TPS ownership our reminders. retain just, we line couple on quick And using production. did We window the I'll will of Ken, land the building both and the that and a just be

strategy not products. and So, for PGT windows, from just we branded standpoint, the a for glass still all our doors, make our

make are Labor So, I needs we prior this of extremely our on in mentioned Also, key, for and still impact labor. was market. XX% plus we calls, glass. have labor is what -- is tight

be assembly. so GPX those we in employees And plus have will over utilized XXX throughout that

windows, already on are obviously awareness actually very They're year with with have to think seen be enough the They produce in we storm, up to us expanded. positions make a stepped heightened redeploying allow labor we more obviously now open and facility this strong year just will boards that fill need. door also that expanding and to to had. the need supply We and given we've the and And the windows. to Ocala. a is Cardinal XXXX And we folks that going capacity and and their demand

Ken Zener

take Understood, about Does your yeah, count that over employee that... give or be of to is seemed XX% it of your that -- transferring seems?

Brad West

more we're that Ultimately, couldn't as as into have going building to over, Transferring if consolidate other still well the that same currently production be building. mean buildings we we'll building equipment in like maintenance. as I they lease, in

employees So, a are work versus staying glass. producing and windows lot just there on of

Ken Zener

bottlenecks? how Right. I business? terms looking versus at you X the mean you're And capacity that's if changing it's is to Ultimately, that there category? interesting obviously of in been of your your up, may years other that -- that's something assets, X And applied Could or service logic terms stuff you're in vertically with internally, said of you same ago say could structure I of things now. obviously right when your just helpful XX% doing within balancing do integrated capacity of parts your your labor, perhaps but of requirements, that cost idea follow

Brad West

product think expansion our what is the our to Miami in produce efforts I area. see No, you'll of

you with of before first the much half moving facility there XXXX robust. labor we mentioned into market's As know, all more the expanding we're at and new

strong. labor we compound XX% market so, Vinyl we obviously introduced to the would the to growth the since as product of grow, continues of use incredibly aluminum locally, that And a produce here with actually some

do windows else and able because kind to core will, windows. want still glass nobody if our we we impact So, to will you be can. lead a meet that time We future, impact that's of key, for for our think

of our even that doors, we somebody the still, but to, make can current change sure we though, panel things do had doing else glass So, door have want makeup is if equipment, flexibility we we in future. through a should our to

So, assets I glass into the at don't see any farming more out of point. future this the

Ken Zener

you. Thank

Brad West

bet. You

Operator

with Wetenhall take RBC. our be next -- questioner will ahead. go we And instructions] [Operator will Please Bob

Bob Wetenhall

Jeff, press a could Jeff, then characterize the an kind release of the us helpful, of you're in there congratulations October. Any new commentary, good way you where of before hits. the like and in on job it Good where you're do would give in your Hey. There's little a a transition. going context amazing and be back I to Is storm? your to that on based how XX%-XX% interruption luck, like some storm, EBITDA a on kind track. right margin lag snap then morning there the kind is and were it? the sounds business of the and back you very of orderly trending on Rod. was And And you're color think Best role. before

Jeff Jackson

before -- million was that week part calculated first and September September $XX.X into well close loss the to to simply first X for Bob. very week storm, months going quarter, of even in very a sales plus strong of million performing $XX how stated, were week Yes, I simple million the of $XX the XX% think was We we the week. first

percentage our some about challenges we've a had a into distribution EBITDA and up storm, network had going good. our worked We storm, it way entire had state. looks with we October's the XX% the us. EBITDA approximately. at -- -- along points -- Sales and of October, And XX disrupted we operational strong looking out So, in unadjusted on that then

the good quarter. looking for So, fourth

Bob Wetenhall

insight bigger to company thinking and about PGTI little XX even couple more robust going a So, you strategic When of action two confident, how years, done recovery under which well. three the us to of executing made I a M&A. into very in you're of means bit company XXXX. leadership into a you're you've after of have sounds and Rod like? Give through in last and demand to think months years. disruption, sharp the the trends It obviously the like for taken bit like What's you you are what next XX a kind look your going

Brad West

the we expanding forward that our and said markets we in under as and that think look I the prior the well core you offerings our we Yeah, to brand. and PGT this with we're executing doing the Florida and dominate market, with want to product continue think acquisitions past,

out evidenced it and You'll share of out-of-state window point grown We've continue attack here. year. We're to gain with going this as on see invest more to the maintain our do business had has advertising. that sales good market I to our with and to out want door luck state.

though XX% distribution still probably the out the in that but through range, XX% growing of it's up even it's network to up state, number, think smaller state. out XX% of I

future to we're markets looking So, that the going play as will commodity-based a in -- to be window right be as the company. to We're not as I for look to think to I the team, a we our strings. look

and high-end, look and philosophy door going up mindset. high line that to acquisitions will We We're are for same kind customer or -- a touch high touch window maintain that to company. that momentum of potential XX state. the over outside We don't think with acquisition would the necessarily where they outside XX so us companies I I And talked various expand next an to months, see the you state. to are. know

track a margin to -- and Assuming high-teens continue perspective. continues carrying from forward results execute everything its we'll keep those EBITDA

Bob Wetenhall

a into any What's basis. next just sheet outlook thoughts down on paid on year, also, $XX And going balance for million the that? you the voluntary

Jeff Jackson

a continue in expect that position I and generated mentioned, more. do $XX might capital, do normal get to are so some at million working X.Xx we to to be additional we year. to as able with the Yeah, end the to be able in trend, even is fourth and from were are, quickly. cash that than some the the from we we lower We quite that we quarter, cash delever of generally operations, this Actually,

that of which the it we couple will acquisitions. was really last X.Xx each good, we about as So, level, approaching time looks the be that did

we having So, strong I to balance need. that's us we're flexibility very going the a think sheet give

Bob Wetenhall

efficiencies EBITDA thanks final think driving detail Hey, years? if all three today. product expansion in margin, Jeff, the And current the to do operational of it trends kind next to continue something for question, achievable productivity, potentially you're you the and the doing that's the are you and improve is two XX%

Jeff Jackson

three to Yes. Two years?

Florida. is State going challenges. state, the Within outside of acquisition as Again, to the present every its we march

an So, opportunity.

EBITDA it if the two-to within company that in done three-year will State us. and profile period. But depend on outside XX% our it's almost definitely into have year. We've two the hit state layered Florida, its of long-term, goal another it years, margin margin we this So, in to

quarter. two first the of XX% or the hit in this have months We year

Bob Wetenhall

luck the XX% that and congratulations transition, well leadership on well telegraphed Well, best excellent target. smooth much. a very street, on planned, of Thanks to

Jeff Jackson

All you. right. Thank

Operator

further look And no there be questioners. to

turn back So. any and session. to conclude would Hershberger, closing Chairman conference question-and-answer Rod remarks. the the CEO I for over of the this like will to Board, the

Rod Hershberger

call. I just to talk today's is Have day. glad great CFO, If there joining additional he'd your today. for Thanks Brad a call joining want be conference and answer questions. please West, on to to our in and questions, us us thank for everybody

Operator

has Thank attending concluded. today's for presentation. all you And now the conference

You may now disconnect.

PGT Innovations (PGTI) 4 Nov 172017 Q3 Earnings call transcript