PGTI - Earnings call transcript Q4 2017

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Operator

Good day and welcome to the PGT Innovations Inc.'s Fourth Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note this event is being recorded. I'd now like to turn the conference over to Brad West, Chief Financial Officer. ahead. go Please

Brad West

today and provide XXXX Nichole, an I everyone. to fiscal we as I'm Welcome Brad and results our Thank This year XXXX President. quarter good for fourth and outlook Innovations' morning, joined and CFO, fourth the pleased call. as Jeff fiscal PGT XXXX. Jackson, West, CEO to you, are company's morning by our year well am and conference quarter

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

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

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

I'll Now, over call our Jackson. turn the Jeff to CEO, Jeff?

Jeff Jackson

massive life with share this as have XX captured everyone. solid we hurricane high-quality XXXX hitting impressive a of a storm. of accomplishments. I'm today's that our performed We PGT Irma another nation. our disruption and call. good finished state incredibly meet in month year testament fourth industry-leading after and Reports is Irma stringent core our against proud to customers of each momentum for produce confirm quarter. grew that achieved and to was are and increased for September. morning results, execution some our Innovations and hurricane Brad, tested our gaining to demand Thanks hit entire for damage strong you, us joining market. Thank team’s our received market growth delivered causing the in over of promised, from standards and This products property Florida a products the powerful protecting across homeowners home commitment most years as we

share of of XXXX, $XXX sales EBITDA and million For reflects XX% sales we than more of $X.XX. and EBITDA more adjusted of and million, year the per adjusted growth earnings full $XX.X growth of XX%. This diluted delivered adjusted of EPS than

increased line operations improved fell gains Our made investment and $X adjusted incentive were from million with compensation, margin marketing normalized brand EBITDA strong year mix partially awareness over in of as capture to sales heightened by Irma. offset prior and post

experienced times Over plant, levels. us its year, the allowed of the our quarter our backlog we these of in in in surge increased output Miami team our an and highest significantly at in history. the our the improvements meet maintaining produced at and increase Both fourth without from to course its our demand lead plant efficiencies Venice

in the branded of our to production previously glass door quarter. transfer began announced, we of Cardinal As we PGT fourth the

be substantially XXXX. We finished with complete steps of has as during and are this initiative half is the pleased planned first progressed final to expected

Miami. our major of is the strategic in production construction new initiative facility Another lease

first XXXX, about by this We expect quarter provides XXX,XXX end facility to begin flexibility this production excited of are production the the new additional and foot of space square us. in facility and

were environment in experienced rising fuel aluminum, return these able an we cost we inflationary also year, wages. built during margin pressures is that our a to We competitive and of the raise a increases we of half believe price to testament company's second prices have gain the to we year. glass, the pressures to share from advantage which offset ability over During the We while with our entire continuing to announced saw history.

equity focus the and relentless had be and Our built to customers driven of base. by which continues innovation products, our brand continuous a of distribution [ten-year] broad team’s and both loyal industry-leading our

million. XXXX delivering vision to us prepay strength to remain This priorities. debt teams $XX million free results nearly we Our in long-term cash quarter. financial voluntary during fourth the strategic XXXX, the continued payment in demonstrate flow on by million $XX including our that focused our improve and of In $XX year, a enabled

than and from growth investment delivered business is last is of by boost of strategy operational executed a in and down have opportunities. debt of Irma expect related our product place hand times, growth We the XX% XX% success XXXX quarter. efforts of a strategy for awareness to impact sales strategic and for benefit this at We XXXX. into support $XXX as strength net the sound fourth specifically driving needs We XXXX quarter, generating hurricane EBITDA believe early ratio We adjusted help after with customers in continue to invest shown asking liquidity, of cash to make their this initial decisions, acquisitions Feedback caused sales delever of XXXX. marketing X.X from we consumers will capital to of us We our that our ended $XX ability on continue sheet our future to In million. the million, flexibility our plan solid over including to with year. believe on was future of the sales and consistently balance in marketing our demonstrates provides drive into end the our our allocation increasing more PGTI our advertising products. meaningful

repair past additional repair a adjusted compared shift months, Sales in and EBITDA During the adjusted and XX.X%. XX.X% prior over XX towards operational XX%, by on compared of summary, quarter XX% America's of EBITDA the improvements into to the the the and demand made XX%. of EBITDA quarter, our These we market share XXXX. heightened margins fourth remodeling. our well-positioned year believe resulted This one from and which In drove mix we grew new was growth margin adjusted to also is PGT quarter from products factors to markets. leverage strongest impact-resistant the remodeling increased of XX% construction in also increase an capture reflects in sales of

we the profitable strategy growth continued of Our – we remain in our for brand and momentum and up proud and continued product capital disciplined us built sets strong, I'm of against positioning success very XXXX. our teams believe execute to have allocations.

financial to of quarter discuss detail, outlook. turn the the the to in fourth I XXXX over Brad? results Now for Brad would to like call XXXX more give the and

Brad West

quarter, Thank give for to $XXX.X We which an net the of you, enabled to team’s and Jeff. last increased X, in year. demand. you us for Irma, the On result increase post- a million of sales able We breakdown fourth XX% compared of to Irma response quarter. our to satisfy planning achieve were reported sales we through this Slide

which versus solid XX% increase our XX% increases XX% impact demand includes and Our This vinyl products, growth driven year. vinyl by in products products overall was impact our last year. sales of of impact to grew our for last WinGuard compared of of in aluminum XX% of sales

needs, PGT windows products vinyl our and WinGuard products energy our and attractive those Our shift in compound annual meet XXXX, innovative products. those of to at the ability rate growth have our and to doors including Since impact vinyl highlights grown markets efficient WinGuard vinyl design XX%. towards an

statement items. few income turn and will briefly I to Slide X, a cover please Now

increased For XXX fourth gross year. the was quarter million XXXX, points gross basis versus last $XX.X of up our our margin profit and

to manufacturing quarter mentioned, increases of aluminum, product beginning included today. of WinDoor thermoplastic gross basis XX gross XX.X% After considering per this programs, our pound the year's line benefited have glass for of in start strategy at effects pound to related $X.XX and since Last the WinDoor. Our points costs per costs. with basis prices margin increase start-up end was efficiencies pound per inflationary per previously aluminum costs. increased and cover we active of impacted planned After in the as compared for year, cash transitioning of an by to in of XXXX regards XX.X% suppliers fourth gross operating we meaningful forward of buy volume, price to $X.XX from costs was related quarter, impact as of in these to from margin a seen year changes a at the the though $X.XX With of last year fourth market higher our mix to effectiveness negative management the the adjusting fourth increases new favorable those to pound improved on margin our Gross to costs had points. senior sales. [glass] the items, system and due associated relocation and margin XXX quarter

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

sales, This initiatives, million fourth coverage is Interest slightly products expense last general as quarter, for additional spending depreciation sales. were additional of accrued increase additional costs million year. year. expense compensation $XXX,XXX fit. we the increase due in contracts increase fourth our $X mainly costs additional than of capital advertising incentive to higher of hedging last in XXXX stock $X.X from our expense compensation was Selling, $XX.X million from investment and expense same million estimate forward, driven $X we included higher increase was million. an higher $X.X in $X.X Going was of in $X.X other may years. in buy forward higher $X to was higher million costs, for of distribution stock and due by compensation the recent that to see million remaining The and or and expenses SG&A million, XXXX quarter administrative

a fourth charge Jobs in of prepayment generated million in amortization the expense. quarter deferred depreciation $X.X expenses fourth-quarter a of decrease XXXX, over we tax debt $XX to recorded percentage million a interest relating higher interest quarter. and effect $XXX,XXX expectations, Consistent the year debt from were rate a of repayments. of made levels we This the as margin borrowings, point prior increased and from million a non-cash accounting on due We Cuts deferred was compared in includes recent higher years. amortization our Act $X.X amount year. our net capital tax and depreciation $X.X adjustment the benefit spending million a last our the in and of liability. previous Tax million with lenders the repricing which resulted $XX.X portion in and of which benefit voluntary to and the in offsets to X additional lower completed of savings the write-off February of discount This fees non-cash During Depreciation resulted

this of tax effective would our Excluding million fourth last job $X.X in the tax credits in have income year fourth quarter million been year. in expense XX.X% at This of reduced income was tax of quarter. reduced in Tax has XXXX an by compares $XXX,XXX been fourth benefits $XXX,XXX $X.X the the adjustment, and of and quarter to by fourth excess last XX.X%. in rate quarter the

and diluted improved EBITDA non-GAAP and XX.X% Excluding $XX.X tax we benefited been our or rate or XX%. $X.X the primarily from higher fourth write-off reference. Cuts of by or XXXX. the some were for glass result WinDoor section year. profit gross for the discount the Tax of each income of year. per $X.XX quarter voluntary manufacturer’s of of which of an diluted fees After A $X.XX management Both or have net and increased for XXXX recovery of additional reconciliation have fourth these costs, financial quarter benefits, XX.X% to and have to increases adjusted per of diluted as This last are debt, operating XXXX and margin $X.XX last and corporate in adjusted of supplier tax adjusting affected margin, compared income Act, your versus recently recorded lender Adjusted million, including of due the of or effective to rates a Jobs factors in impact gross measures the our the same and adjusted We included sales decreases quarter million net XXXX, $XX.X for enacted EBITDA release increase Tax our the EBITDA share Because that versus and million well Irma deduction, per and $X.XX diluted for as income operations costs, effective in quarter. $X.X share, Cuts was approximately year. of and was quarter effectiveness. Act, to volume improved tax per expecting would equivalents the fourth prepayment non-cash transition fourth of Jobs share rate million, [indiscernible] which earnings the XXX GAAP their $X.X in million the for been share quarter XX.X% of last $XX.X net was million

please for XXXX. voluntarily million balance discussion ended of Now decreased sheet a use from to turn the did We a Slide We end which XXXX cash year million cash of with $X.X balance of the XX, of $XX.X million, $XX to during prepay debt. items.

nearly $XX.X capital funded quarter the flow for year from the by in million million. operations. for We Free expenditures also invested was cash cash $XX

made by we hurricane temporary an tax Our federal release actually Therefore on even $X benefit income million, those estimated January payment affected Florida tax estimated in with to free which cash did XXXX, related XXXX. businesses Irma. of flow payments in from XXXX

was that post point, in X.Xx end call this XXXX. intend Jeff turn over XXXX, of our leverage and would sheet At net for flexibility I strong to XXXX fund continue back balance maintaining WinDoor comments. at closing from leverage to future to make outlook further focus to We a the Jeff? us should some net investments needs. on a early of give and acquisition the the decrease Our X.Xx like our

Jeff Jackson

Brad. Thanks

can single-family shape. full in well Florida’s Starts quarter XXXX steady, that XXXX. and of the XX,XXX with both economic than ahead, growing year XX% fourth in more our Looking starts very factors the what in starts still business are by we impact believe are market good below but grew Housing support.

Builder the confidence year think a points, fourth rose XX of have National Builder's single-family As Florida’s the with year. we confidence Association housing up finishing support quarter said, previously we high. can population of XXX,XXX record in the starts to at per

to XXX XXXX expect an between representing sales X% between million, and and million versus be year. We XX% XXX increase last

EBITDA company is adjusted at percentages million change. given increase its of an of be generate Beginning will level amount million, adjusted comparison and and also consolidated sales periods We XX%. the to to this and representing above XX% Therefore expect This reflect this XXX XXXX, between expense. XX stock-based between updating in XXXX this non-cash compensation increase EBITDA change. exclude will EBITDA adjusted adjusted reporting reflect

$X.XX, outstanding. shares in which XX We XXXX of are $X.XX targeting average diluted adjusted million per between net weighted share income assumes diluted and

expectations million We $XX are glass targeting capital free XXXX, further in certain finalizing received strong use to will discipline. and This be that cash the from in flow to of for XX growth we and million plant of million between our reflecting XXXX Cardinal deleverage. sale XX assets includes of cash proceeds to

in of of free payment XXXX. $X for also estimated for flow Our million January of federal an that includes target the impact income tax we made cash XXXX XXXX

this support. and want we I entire work PGTI your thank the Q&A At turn questions, Nichole, call say our we conference the our family, portion. your is the operator the taking for to and great over you for to question to place value shareholders. would remain Before please? to to customers generating PGT our a begin shareholders focused time, to first on like

Operator

Michael Our comes Thank question you. Capital Instructions] [Operator go of Eisen first Markets. Please ahead. RBC from

Michael Eisen

morning gentlemen, Good great on congrats quarter. a and

increase upcoming with and wanted product have the start trajectory the this past about know big to these into being awareness marketing marketing spending builder last want we and year month. to of start quarters, and of that should the had efforts you feedback a on how just Just – is at in earlier about kind guys effect? gotten that off the the talked increased to first guys presence increasing spend, I wanted good going next over you any SG&A the few into show on the think indicators year this of off often because

Jeff Jackson

are this have dealers are average solid we both just three promotions. customer. were advertising gotten in the some our they targeted that Yes, TV our They highlighted in. brands very through feedback from markets the in and specific All marketing

across Brad customer the some quite see XXXX. quarter. of first We both that season storm both spends some depends you. has distributor the on it feedback highlight those base the can in have do it the the our we that been throughout for developing very of and have I in year So positive. average frankly

this storm ran just terms We advertising groups feedback. having of will remind highest our of received done had We and and the benefits ever did but additional of in study success. and run particular it's we a particular we products company before overall season the group focus to the everyone ratings by do them that that on been focus way, commercial a

Brad West

Michael. just add that will on to I

that SG&A SG&A quarter. first related an just will in the quarter percent side the you of year. storm have side the I the we we to so last and But of SG&A [indiscernible] the quarter normal. On likely and higher year to that in should year the see in that like think bit is I said will fourth first It's rest did see show little full for of perspective, that we I the somewhat be like spend are continue in think and awareness

Just first it's mindful heavier. little be on bit the a quarter

Michael Eisen

should the there? throughout we because norms first year the and then of stronger and we the XXXX than helpful effects any seasonality first about thinking few going that think cadence of of of coast, change in year increase are when awareness see the sales storms of the kind How half of pace big the and hit we product thinking you the kind historical That's should expect of of that into the usual?

Brad West

year easy an year Last little interesting slower. also Yes. creates the quarter first quarter bit [complexes] and anomalies different this couple of third had the third in comp in we last for that off a creates a in started the year us quarter storm

bit uneasier this little of year first has comp. So quarter

quarters the really in we think second a I strong and fourth quarter fourth had XXXX. obviously

comps So of comps the year kind see easier the QX, we plays year. and this QX year. be QX than the for giving those this out guidance Again full QX think the a tougher bit gave will little you comps should have tougher I but

Michael Eisen

Super helpful. Appreciate it Good guys. luck.

Jeff Jackson

Thank you.

Operator

of question next ahead. Our Darkatsh comes Please James. Raymond from Sam go

Unidentified Analyst

Josh for Jeff. questions Sam. congratulations in taking the for quarter. Brad, year morning for Thanks This Good is and filling

Jeff Jackson

you Thank Josh.

Unidentified Analyst

question. Clarification

your backlog end was quarter. fourth so unchanged at it said of the was $XX You million

Jeff Jackson

Yes.

Unidentified Analyst

Okay in and then are your gross margin assuming you what guidance?

Jeff Jackson

the going midpoint by range [indiscernible] good quarter you going to probably somewhere EBITDA I this gross that going metric of around in think some and SG&A. that's overall of are by Again that change but improve a XXX year are we our some in Well. is to to see of [indiscernible] margin

Unidentified Analyst

give a February how and you and sense will trending? us Okay can January of be

Jeff Jackson

February, – yet, month We not said out could if you at this closed from talk March. laid I like comparison the February X% that's X%, look but January, that the months XX% way was year last year-over-year of

we comp. March off but good was year growth So comp it and difficult the relatively start pretty will again but different in be easy more with January then

for but see going to is you I be stronger year the first of the think guidance quarter quarters. the the what one full full So is year-over-year growth

Unidentified Analyst

Thank you.

Jeff Jackson

You are welcome.

Operator

next comes from [indiscernible] Alex Our please go ahead. question

Unidentified Analyst

quarter. Good nice you. Very morning gentlemen. Thank

Jeff Jackson

Thanks Alex.

Unidentified Analyst

questions. of Couple

environment begin it's getting to said relates timeline moment that about quarters capacity. of are will production of the raw upon run of in First, increases getting and you can then up rate price can take facility XQ got some suspect kind at Thank there, competitive a competitive you that out secondly, and you of Miami like believe XXX% sounds is fact bit on. touch to talk the many I as of Florida? going kind you you. it a It inflation I moderate facility so kind to it How price material the some little so the have environment you

Jeff Jackson

Sure.

competitive target windows But terms that grate, of I it's that builder we in think don't compete end to environment that actually strong. from we dominate. middle we got to [indiscernible] upper and yet. market you really The in so fairly the lower perspective remember market

a more the that's it's will based local really competition little there a there. of players where So competition competitors you the market From national have nd regional ton is Miami footprint of and come but bit play. you in still have into don't obviously

we talking as what on really So you look are the about. at market depends competition it

in that. starts are high speaking towards construction we end get and So R&R are that fight market our dominate to that to new going more volume to we in higher out to have more generally assuming given our the way that like home homes If homes don't and going we end for of play strong are lower area. starts their ability end to

So just and the on line. there product region depends the competitions

about our plans is Miami to time as out at itself of are soon move to We period. get place move building the quarter move will at weeks terms physical the is move of In take a over would and we actual so end – end from don't in four over to this have we time. new the not we that any sections pressured a

For weak line service the move, be etc. be the will admin window line instance, another door shared weak, will

day in however, the couple three, four is so to So us capacity full second up for being run launches our time for new we we of mean over through production quarter a moving about period all running producing it will and just facility. new of quarters will the quarter take and be CGI, our in then a to terms week expect busy I take

again quarter and would I third quarters So up first, by issues the that be new with end at the and cranking all. for it the from minor facility should minor, headwinds third no running second, expect of

Unidentified Analyst

mix a under-leveraged. about sheet talk the And might lastly to it bit you? Thank how your play acquisition modestly that and strategy little XXXX? balance Can you

Jeff Jackson

sure. questions. you And Yes the thank for

We acquired one XXXX deleveraged. deleveraged. acquired one XXXX As we another looked, we we in companies two in we

do we our be in a our that the out accredited will So well opportunities to ultimately not getting We strategy on commodity-based impact window look gross have very that company. allocations as disciplined will capital at of want look to we both on EBITDA the as margins. our as be and of are terms we state we at

We target opportunities EBITDA acquisition end with margins. high strong will

that be given We here demand strategy busy think look as So [indiscernible] opportunities. to I of are XXXX there is going impact some still the we to here. in Florida

So be the acquisition look. XXXX goes looking we XXXX from it's are do selective growth will you but when again see we robust we and standpoint plenty of market Florida in in as will very

Unidentified Analyst

you. Thank helpful. Very

Jeff Jackson

Thank you.

Operator

next Instruction] Hamblin Jeremy comes Please & from question ahead. of Dougherty Our [Operator Company. go

Jeremy Hamblin

Good morning, Congrats execution. Guys. on and excellent results

Jeff Jackson

Thank you, Jeremy.

Jeremy Hamblin

the actual to that kind damaged a you carry to bit through marketing doing speak is is did impact level how and through repair the speak little I Can ask business or R&R lived of when I high it you Kind in In years raised you is last think to could that? maybe that. looking over to that questions with last significant a have maybe since your this speak a decade, to then, can hurricanes a like storm is selling you sense of and effect this an there just through QX area the there halo of a little or what very impacted to of about a help you roll impacts wanted you're of a back you and with of bump awareness real so there homes. of short a having effect a see like question. increased storm predominant short XX just And wide kind within bit the past, event I Florida. going lasting And get just a term think markets.

Jeff Jackson

XX here, category Because that been -- without significant really weeks was it's one share was of will it hitting three last years started Jeremy. I heard thoughts of state. XXXX, storms a category before I here. The the some Yes. October fared literally

to that water. dynamics down and demand demand there. unique we've sales, result on to That that population of been who major capture The storm literally So, experiencing to as to has folks been sheer that One that's Florida it you us. can, our we're come of move our thing is that there and new reflected new also able growth treading about strong. still ever kind It's make to first demand, hit our is want the hurricane. awareness for down without people Florida a

constant And sustained of trend going So, to factor. if modeling for do, typically individuals with given us. the the this growth is base, there market is I repairing will, us of renewing for kind be that you that think awareness those

along of why kind we just of in the well more that of with tip us. think you our a to you of brands when also to decided and impact that's So, tongue end be consumer to of invest product, efforts try push as marketing think

If like to before we XX% next hurricane. several you boom really is lot less one into the look, you hurricanes, to growth or is that's or about I years retiring driven; up think teams grew. grow don’t thing four If our them look regardless Its that going we had population; XXXX baby the the five be got Florida still XXXX over over of favor before topline our XX+ of to we a million; is I hurricane, in growing moving averages, brought Florida. that code have in years; the

do dynamics impact for new pushes and drive terms product the So, all build of they and right the I think awareness. consumers. their the hurricane just adds to homes is when that builders in R&R it of market thing stronger It again for that helps

Jeremy Hamblin

thanks for that I we've you Great that. to color, higher. wanted little a here move this aluminum pricing gears seen and about bit switch talk mentioned

price another increase in February. took X% for just to guys you X% orders of think beginning in I here

potentially Brad, think the lift raise competitors of high because me seen as the of lot side. Can you in give to benefit aluminum getting twice And raise And QX mentioned demand I due around last the a of in gross offset on kind then six I type in the is price are you we've marketplace, think gross aluminum question about I margin points. a As would look what impact second kind sense surge. the basis your from I competitors from the price increase well months. you a part this terms price XX you that of think of raising the all of the are of prices was versus again for margins your cost

covered of on you more think $X.XX per Brad? now you're you your this have point pound a that, I you at just needs cost. a color little Can delivered add mentioned but XX% at to

Brad West

the lower And now, just $X.XX and that towards that it fact was in a to wanted price Yes. was aluminum increase price to end price And announced of of was the right or by it's the we probably is Jeremy, actually $X.XX. the closer announced announce a last now $X.XX actually year Jeremy. actually $X.XX; to increases when I than probably

the of that -- us possible; go or opportunity last has potentially spiked been bad, bit So, the of has It quite weeks. it aluminum question year. this we would raise a give it's a price in allow four the it the as certainly, prices again is end towards given where us to

so costs does we uncertainty around in because guidance. and compare you to the that at And part so, you could a range aluminum the affect our to increase gave it that see stands middle just way. it's a this $X.XX margins. this It get it's of if the of likely as and high right is it It very in part we year pretty last our it price EBITDA sustains as now of

up not growth it's from another of But to and EBITDA would comfortable continues then probably I out here, the And consider increase I because think ability its competitive it. go cover that have increase. price we'll original as to aluminum put inflationary that So, we do margin mostly obviously environment. to to was we price stick say mindsets likely with the has it

Jeremy Hamblin

Okay.

what the the current program So, it full the guidance versus hedging gross stands price the as given kind to cost take your year from look impact benefit? the then, What's and pound, net $X.XX drag I margins of at is as aluminum per let's today?

Brad West

would XX I $X.XX, a At bips. say probably

Jeremy Hamblin

XX or point basis net? drag benefit

Brad West

That -- drag.

Jeremy Hamblin

Okay.

Jeff Jackson

with like to comfortable where may step margins; Jeremy, the headwind But to a of could at stay with wise; that comfortable position an somewhat premium again, cover less aluminum said, spot hedges, that on of product just with where margins more they're if services prices And headwind. what Brad a be be price we're offer to said, uncover we would. we're taking it take increase we all a for try We're only at, that. price net cover our do of and products the of aluminum ability we aluminum we're will and pricing to still competitor given product take look at top prices to targeting the usual share normal comfortable our

Jeremy Hamblin

that on lines? about gross delivered imagine on terms a for versus extraordinary Well, improvements in a your thinking Okay. margins And that some margins pretty historically of that getting as that our of you it there like gap back, you aluminum the XXXX, have that I color in you're we the sales implying Winguard Vinyl now look line. some that has of Any in product just line. leverage. And lot been and sales How out gap of a close I presentation total be the of some products. growth know because a better higher you deck, the your would that level you're line sounds helpful. But much Vinyl is generate on productivity in mentioned Vinyl of a is

Brad West

to launched some year, of Jeremy. Winguard our was Yes, think product. I I material kind the we our always do that targeted goals targeted that LABOR side improvements for better, of margin the We think on from And we're when got and year saw striving that the benefitted we efficiencies we some Last last on for product. go definitely through on while to top that. lines improvement one LABOR of improvements cost Vinyl

going we're not our and the I higher mainly coming like sales going we're improve really efficiencies to so in that leverage from margin So, you continue much the to forward Vinyl there mentioned, also the seeing year about fact that it's think improvement this is Winguard.

I pretty achieved think much we've that one.

Jeremy Hamblin

Last on question allocation. Okay. is capital

So, in flow guidance you pretty cash have impressive some free here.

million of of made pay door you've already got coming another closure processing sales some assets. It from downs. like looks the You've those $XX the glass

prioritizing you of repayment allocation about debt are share buybacks? forward, how say let's versus terms thinking In capital moving

Jeff Jackson

Yes.

to demonstrated I deleverage. think here our we the ability Jeremy, years is XX I've what over been

investing So, the repayment say again, looking would debt to it in point around at be and terms priority, this share growth. of also versus buyback

safe, you more in changing and So, for the Vinyl and outside the terms growth well in example. our as to more with had as is we're Technology discussed capital we'll Brad lines the make acquisitions. our do opportunities potential gain had them guys state that investing to plans within technology mentioned, efficient continue of

had that's we potential brand opportunity our for if we'll we then more two, again. of And that with of As a prior out demonstrated a to after quote so. also make sure look state in say stage the row we acquisition, I in XXXX I tend bolt-on for to kind we're looking is wait, de-lever think got decks and next our

Jeremy Hamblin

And for Great. taking questions, the for year. guys. my continued Thanks you wish success this best

Jeff Jackson

Thanks, Jeremy.

Brad West

Jeremy. Thanks,

Operator

from comes go SunTrust. ahead. Please Keith next Hughes Our question of

Keith Hughes

Thank have industry-wide one, you. Most just questions But answered. been my of question.

about ago. saw announced on M&A sized yourself. We good talked a window a or transaction for so pretty You players the month

we while? you on guess X) you? space pick like window I has of X) M&A kind activity like feel impact And that up feel So, starting you that just Do in are do any or the to see

Brad West

Yes.

I thoughts did think of we're a the they their multiple windows. set our Keith. of business There Because play middle-to-the-higher building a for I the window than they to not middle-to-lower necessarily different much couple end the on us, think end is market, window products, market. of business. there, Impact

a kind ours the the I into however of think in So, to some you're that a future. again commands of acquisition, There terms company set for much bigger to acquisitions like premium a considered multiple. be window multiple referring

we going or accretive again margins our at the at will to look think can we line look year with something window be like bringing we're also what to as everyday I at, going that's dry in first within PGTI cut in is are I'd that's technology. you mentioned and new look Jeremy, earlier what to not Innovations products market; about and be is your something with door. and

companies there. out tend to those be So,

more leads I did industry I activity least than I saw think my at to heightened. year at from way definitely bankers or deals is this coming the least personally in 'XX.

were $XXX So, And I you're sales one players to. to smaller that of sales I've unlike million they million companies do that think seen. referring range the bigger of say topline most type $XX in of them a

continue see that you think to definitely. 'XX I in

Keith Hughes

that look million was $XX that you your hits something would to spot, if range? do out Would acquisitions, something willing $XX be sweet what it in there at million when be one million you more So, $XX there?

Brad West

now Again, if a it door $X.X makes to sense, direction concentrated the billion as be different strategic I and company. we've team over high want in one state. end do to niche in window change Granted that to big, a but sales set not

the had the would that's don’t PGT and try shareholders, drive share do the more to course. that, state, be it. they the those focus number will opportunities type company of at company, it from what deployed. mentioned often; a similar If So, shareholder PGTI the Yet, the to generate bigger with looked along similar don’t one than get for range we you we My profile. capital come type at outside because we we and capital the look assets return was the

small shareholders large more any to to add So, acquisition. our kind value has the dynamics, that up before move size, create forward the or for on the return, all of we

Keith Hughes

Okay, you. thank

Jeff Jackson

Thanks, Keith.

Operator

over will conference session. to turn concludes for closing Brad and the to like This I back remarks. any West answer our question

Jeff Jackson

to you for call forward to again. joining We thank questions. with today. look if speaking have hesitate I'll quarter. Thanks you any don’t us you And next

Operator

The today's has concluded. now conference attending Thank presentation. you for

disconnect. You now may

PGT Innovations (PGTI) 20 Feb 182017 Q4 Earnings call transcript